APPLIANCE RECYCLING CENTERS OF AMERICA INC /MN
AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>arca023983_ex10-1.txt
<DESCRIPTION>AGREEMENT
<TEXT>
                                                                    EXHIBIT 10.1


                 2002 STATEWIDE RESIDENTIAL APPLIANCE RECYCLING
                                PROGRAM AGREEMENT




                                     BETWEEN




                              ARCA CALIFORNIA, INC.


                                       AND


                       SOUTHERN CALIFORNIA EDISON COMPANY














   THIS PROGRAM IS FUNDED BY CALIFORNIA UTILITY CUSTOMERS AND ADMINISTERED BY
 SOUTHERN CALIFORNIA EDISON COMPANY UNDER THE AUSPICES OF THE CALIFORNIA PUBLIC
                              UTILITIES COMMISSION.

<PAGE>


        2002 STATEWIDE RESIDENTIAL APPLIANCE RECYCLING PROGRAM AGREEMENT

                                TABLE OF CONTENTS


                                                                 Page
1     DEFINITIONS                                                 2
2     GENERAL TERMS                                               5
3     CONTRACT DOCUMENTS                                          5
4     CONTRACTOR RECYCLING SERVICES                               6
5     CONTRACTOR REPORTS                                          10
6     CONTRACTOR CUSTOMER COMPLAINT
      AND DISPUTE RESOLUTION PROCESS                              12
7     ELIGIBLE CUSTOMERS AND REFRIGERATORS AND FREEZERS           12
8     INELIGIBLE CUSTOMERS AND REFRIGERATORS AND FREEZERS         13
9     CONTRACTOR'S COMPENSATION                                   14
10    CONTRACTOR BILLING                                          16
11    SCE RESPONSIBILITIES                                        17
12    OWNERSHIP AND CUSTOMER CONFIDENTIALITY REQUIREMENTS         17
13    CONFLICT OF INTEREST                                        19
14    RIGHT TO AUDIT                                              20
15    CHANGES                                                     20
16    PERMITS, CODES AND STATUTES                                 20
17    WARRANTY                                                    21
18    TITLE                                                       21
19    INSURANCE                                                   21
20    INDEMNITY                                                   23
21    TERM AND TERMINATION                                        24
22    WRITTEN NOTICES                                             25


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        2002 STATEWIDE RESIDENTIAL APPLIANCE RECYCLING PROGRAM AGREEMENT

                                TABLE OF CONTENTS


                                                                 Page
23    SUBCONTRACTS                                                26
24    INDEPENDENT CONTRACTOR NON-DISCRIMINATION CLAUSE            26
25    NON-DISCRIMINATION CLAUSE                                   26
26    CPUC AUTHORITY TO MODIFY                                    27
27    NON-WAIVER                                                  27
28    ASSIGNMENT                                                  27
29    FORCE MAJEURE                                               27
30    DISPUTE RESOLUTION                                          27
31    SEVERABILITY                                                28
32    GOVERNING LAW                                               28
33    SECTION HEADINGS                                            29
34    SURVIVAL                                                    29
35    NONRELIANCE                                                 29
36    ATTORNEYS' FEES                                             29
37    COOPERATION                                                 29
38    ENTIRE AGREEMENT                                            29
39    COUNTERPARTS                                                30


                                      -ii-
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             2002 STATEWIDE RESIDENTIAL APPLIANCE RECYCLING PROGRAM
                                    AGREEMENT


THIS AGREEMENT ("Agreement") is made and entered into as of the lst day of
April, 2002, by and between SOUTHERN CALIFORNIA EDISON COMPANY, a California
corporation ("SCE") and ARCA CALIFORNIA, INC., a California corporation and
wholly owned subsidiary of Appliance Recycling Centers of America, Inc.
("Contractor"). SCE and Contractor are also each individually referred to herein
as "Party" and collectively as "Parties."


                                    RECITALS

         WHEREAS the Parties desire to implement an appliance recycling program
in 2002 under the terms and conditions required by the California Public
Utilities Commission and as set forth herein, for the removal of older, working
inefficient refrigerators and freezers ("Eligible Refrigerators and Freezers")
from customer residences in the separate service territories of SCE, Pacific Gas
& Electric ("PG&E"), and San Diego Gas & Electric ("SDG&E") ("the 2002 Statewide
Residential Appliance Recycling Program" or "Program").

         WHEREAS, SCE desires to ensure the safe, lawful recovery and recycling
or lawful disposal, as necessary, of CFCs, HCFCS, HFCS, PCBS, mercury, and used
oil and Hazardous Materials.

         WHEREAS, in furtherance thereof, SCE desires to contract with
Contractor for comprehensive management of the 2002 Statewide Residential
Appliance Recycling Program.

         WHEREAS, Contractor desires to contract with SCE for the comprehensive
management of the 2002 Statewide Residential Appliance Recycling Program, said
management to include, but is not limited to, collection and dismantling of
primary and secondary working Eligible Refrigerators and Freezers; removal of
CFCs, HCFCS, HFCS, PCBs and other Hazardous Materials from collected Eligible
Refrigerators and Freezers; handling storage and legal disposal of compressor
oil, PCBs and other Hazardous Materials; recycling of metal, sulfur dioxide,
CFCs, HCFCS, HFCs and oil; providing incentives to participating Utility
customers who relinquish Eligible Refrigerators and Freezers, performance of a
Program Participant survey, and providing reports and data to assist SCE in
tracking program goals and expenditures and evaluating the program.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT


         WHEREAS, Contractor represents (i) that it has knowledge of the federal
Clean Air Act, the Resource Conservation and Recovery Act, and Toxic Substances
Control Act as well as the California Health and Safety Act (Article 10.1,
commencing with Section 25211 of Chapter 6.5 of Division 20), the California
Public Resources Code (Chapter 3.5, commencing with Section 42160 of Part 3 of
Division 30), and all other applicable federal, state, and local regulations
regarding the proper processing and recycling of refrigerators and freezers and
hazardous materials contained within the 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 established and will continue
to operate and maintain its recycling center in the City of Compton or other
areas acceptable to Contractor and SCE.

         WHEREAS, 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.

         NOW THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants contained herein, the payments and agreement to be made and performed
by SCE as set forth, the Parties agree as follows:


1.       DEFINITIONS

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

         1.2      Amendment: Future document signed by the authorized
                  representatives of both Parties which changes or modifies the
                  terms of this Agreement.

         1.3      Business Day: The period from one midnight to the following
                  midnight, excluding Saturdays, Sundays, and holidays.

         1.4      Calendar Day: The period from one midnight to the following
                  midnight, including Saturdays, Sundays, and holidays.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         1.5      CFCs: Chlorofluorocarbons. (See also HCFCs and HFCS.)

         1.6      CFC-11: Chlorofluorocarbons used as the blowing agent in the
                  refrigerator and freezer polyurethane foam insulation.

         1.7      Change Order: Document issued by SCE to Contractor and
                  accepted by Contractor that changes or modifies the terms of
                  this Agreement.

         1.8      Contract Period: APRIL 1, 2002 TO DECEMBER 31, 2002 for
                  completion of the Work. Contractor's final report shall be
                  submitted to SCE on or before January 31, 2003, or as extended
                  by order of the CPUC. (See also Section 21 - "Term and
                  Termination.")

         1.9      CPUC: the California Public Utilities Commission.

         1.10     Disposition Code: Code assigned to each customer appliance
                  turn-in order form (ATO) that identifies whether a working or
                  non-working Refrigerator or Freezer was collected, or disabled
                  with the customer's permission, if the order was cancelled by
                  the customer, which incentive was selected, and other similar
                  details regarding each order.

         1.11     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.

         1.12     Eligible Customer: A resident in a participating Utility
                  service territory who occupies an existing single-family
                  residential (Domestic Rate) or multi-unit dwelling or mobile
                  home, or is the owner or authorized representative of existing
                  multifamily housing and who may qualify-for the 2002 Statewide
                  Residential Appliance Recycling Program. Eligible Customers
                  include customers who reside in a participating Utility
                  service territory but who take distribution services from an
                  entity other than a participating Utility. (See Section 7 of
                  this Agreement.)

         1.13     Eligible Refrigerators and Freezers: Refrigerators and
                  freezers that meet the 2002 Statewide Residential Appliance
                  Recycling Program refrigerator and freezer eligibility
                  criteria as set forth in Section 7 of this Agreement.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         1.14     Hard-to-Reach: Eligible Customers who are residents of areas
                  other than the Los Angeles basin, San Francisco Bay Area, San
                  Diego Area or Sacramento and/or are moderate income and/or
                  multifamily or mobile home tenants and are within the zip
                  codes.

         1.15     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 "Materials which
                  require special handling" as defined in California Public
                  Resources Code Section 42167 or other applicable code, rule or
                  regulation, which is contained in or is derived from the
                  Eligible Refrigerators or Freezers.

         1.16     HCFCs and HFCS: hydrochlorofluorocarbons, and
                  hydrofluorocarbons. (See also CFCs.)

         1.17     PCB: Polychlorinated Biphenyl.

         1.18     PGC funds: Public Goods Charge Funds. The source of the funds
                  used to pay Contractor for work performed pursuant to this
                  Agreement.

         1.19     Primary Refrigerator or Freezer: Refrigerator or freezer
                  currently in use by customer as the main refrigerator or
                  freezer.

         1.20     Program Participants: Eligible Customers who turn in Eligible
                  Refrigerators or Freezers during the Contract Period.

         1.21     Purchase Order: Document issued by SCE to facilitate payment
                  to Contractor for the Work described herein.

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

         1.23     Recycling Charge: Per-unit price paid by SCE for services
                  performed by Contractor for the Work. The Recycling Charge
                  does not include marketing, incentive or handling fee charges.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         1.24     Remote Area: A city or town that, because of its population
                  and distance from the Contractor's base of operations,
                  justifies the use of an extended timeframe (up to 25 Business
                  Days from the initial customer contact) to complete collection
                  when mutually agreed to by the Parties.

         1.25     Secondary Refrigerator or Freezer: Surplus refrigerator or
                  freezer currently in use and utilized by customer concurrently
                  with primary refrigerator or freezer.

         1.26     2002 Statewide Residential Appliance Recycling Program: 2002
                  Program implemented in the separate service territories of
                  SCE, PG&E, and SDG&E. Contractor's specific authorized
                  activities to be performed in the Utilities' respective
                  service territories.

         1.27     Subcontractor: An entity contracting directly or indirectly
                  with Contractor to furnish services or materials as part of or
                  directly related to Contractor's Work.

         1.28     Utility or Utilities: SCE, PG&E, and/or SDG&E.

         1.29     Work: Any and all obligations of Contractor to be performed
                  for SCE, PG&E and SDG&E and Eligible Customers of SCE, PG&E
                  and SDG&E pursuant to this Agreement, any Amendment to this
                  Agreement, or a subsequent Purchase Order or Change Order
                  incorporating this Agreement. The Work shall include the
                  services described in Sections 4, 5, 6, and 10 of this
                  Agreement, but is not limited to, Eligible Refrigerator and
                  Freezer collection, Eligible Refrigerator and Freezer
                  processing, handling, storing, recycling, and legal disposal
                  of Hazardous Materials and Documentation preparation, customer
                  complaint resolution and other related activities.

2.       GENERAL TERMS

         Contractor shall perform the Work and its associated obligations
         described below as an independent contractor.

3.       CONTRACT DOCUMENTS

         This Agreement shall consist of the following documents: this
         Agreement, any amendments to this Agreement, Purchase Orders, and
         Change Orders.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         In the event of any conflict or apparent conflict between any of the
         provisions of the documents comprising this Agreement, the following
         order of construction of the documents shall apply:

                  (i)      Amendments to the Agreement in chronological order
                           from the most recent to the earliest;
                  (ii)     Change Orders incorporating and reflecting any
                           Amendments to the Agreement in chronological order
                           from the most recent to the earliest;
                  (iii)    This Agreement including all attachments; and
                  (iv)     Purchase Order incorporating this Agreement.

         Each Party shall notify the other immediately upon the identification
         of any such conflict or inconsistency.

4.       CONTRACTOR RECYCLING SERVICES

         4.1      Contractor shall be responsible for Program participant
                  service activities, including providing an inbound 800
                  telephone number for customers to access in English or
                  Spanish, a web page which allows statewide customer access for
                  inquiries and/or qualification and to signup for appointments
                  24 hours a day, seven days a week, all communication services,
                  verification of customer and refrigerator or freezer
                  eligibility, scheduling Eligible Refrigerator and Freezer
                  collection appointments, documentation of Program Participant
                  data, and other activities. The web site content shall be
                  approved by SCE. Any changes to the content must be reviewed
                  and approved by SCE prior to implementation.

         4.2      Contractor shall be responsible for the following collection
                  services in the service territory of each Utility:

                  (i)      Collect all Eligible Refrigerators and Freezers from
                           Eligible Customers' residences within 20 Business
                           Days from the date the Refrigerator or Freezer was
                           scheduled for pickup (unless otherwise requested by
                           the Eligible Customer). In Remote Areas of the
                           service territory, or as approved by SCE's Program
                           Manager, collection shall be no later than 25
                           Business Days from the date the Eligible Refrigerator
                           or Freezer was scheduled for pickup, unless otherwise
                           requested by the Eligible Customer. In the event of


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                           unanticipated high demand (beyond the projected
                           monthly participation estimates) for Program
                           services, Contractor and the SCE Program Manager
                           shall, by mutual agreement, establish other
                           appropriate time limitations as necessary.

                           A twenty-five percent (25%) reduction in the
                           Recycling Charge shall be made by SCE if Eligible
                           Refrigerators and Freezers are collected later than
                           20 Business Days after the Eligible Refrigerator or
                           Freezer was scheduled for pickup and 25 Business Days
                           in Remote Areas of each Utility's service territory
                           after the Eligible Refrigerator or Freezer was
                           scheduled for pickup or unless the Eligible Customer
                           requested the later collection date or unless the
                           Contractor and the SCE Program Manager shall, by
                           mutual agreement, establish other appropriate time
                           limitations as necessary.

                  (ii)     Ensure that the Eligible Refrigerator or Freezer is a
                           working unit before removing it from a residence;
                  (iii)    Disable the Eligible Refrigerator or Freezer prior to
                           leaving pick-up location; and
                  (iv)     Transport and process the Eligible Refrigerator or
                           Freezer at its Recycling Center.

         4.3      Contractor shall be solely responsible for all methods,
                  techniques, sequences, and procedures for the dismantling of
                  Eligible Refrigerators and Freezers, processing of metal
                  panels and components, recycling of recovered scrap metal,
                  removal and management including, but not limited to,
                  recycling or lawful disposal of Hazardous Materials.

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

         4.5      For each Utility, Contractor and SCE shall establish and
                  implement a financial incentive service as follows:


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         4.5.1    Each Program Participant will be entitled to receive a check
                  in the amount of Thirty-five Dollars ($35.00) or a 5-pack set
                  of compact fluorescent lamps (CFL Pack) which will be provided
                  to Contractor by SCE. The check and the CFL Pack are each
                  referred to individually as the "Incentive".

         4.5.2    SCE shall arrange for the CFL Packs to be delivered to
                  Contractor at a location to be mutually agreed upon by the
                  Parties. SCE shall require the manufacturer to deliver the CFL
                  Pack in packages designed to diminish the possibility of
                  damage to the units during transit.

         4.5.3    Upon receipt of each shipment of CFL Packs, Contractor shall
                  inspect the shipment for any damaged or defective CFL Packs.
                  Contractor shall contact the SCE Program Manager for
                  instructions regarding the disposition of any damaged and/or
                  defective CFL Pack. SCE shall reimburse Contractor for all
                  costs associated with the return of any such damaged and/or
                  defective CFL Pack.

         4.5.4    Contractor shall deliver CFL Pack to Program Participants at
                  the time the Eligible Refrigerator or Freezer is picked up.
                  Each Program Participant who receives a CFL Pack must sign a
                  receipt acknowledging that he/she received the CFL Pack.

         4.5.5    If, after a CFL Pack is delivered by Contractor, a Program
                  Participant alleges that a CFL Pack is damaged or defective,
                  SCE shall replace such defective and/or damaged CFL Pack. SCE
                  shall be responsible for the replacement of the damaged and/or
                  defective CFL Pack, including, but not limited to, the Program
                  Participant's receipt of a new CFL Pack. If the damage to a
                  CFL Pack is the result of any action by Contractor, SCE shall
                  be relieved of any obligation to pay Contractor a Handling Fee
                  in connection with the damaged CFL Pack.

         4.5.6    Contractor shall process and mail Incentive checks via the
                  U.S. Postal System within 15 Business Days of the date the
                  Eligible Refrigerator or Freezer was picked up.

         4.5.7    As required under Section 10, Contractor shall provide SCE
                  with a weekly listing of Program Participants qualifying for
                  an Incentive check or CFL Pack for SCE's approval. The weekly
                  listing shall include the date of pickup and date the
                  Incentive check was mailed or date the CFL Pack was provided
                  to Program Participants.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT


         4.5.8    Upon SCE's reimbursement of Contractor for the Incentives
                  described in Section 4 of this Agreement, SCE 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 Program Participants entitled
                  to receive Incentives. Moreover, upon SCE's payment to
                  Contractor of such reimbursement, Contractor shall be deemed
                  the holder of such property as far as the interests of the
                  Program Participants 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. SCE shall
                  not assume any responsibility for other disposition of the
                  reimbursement payments after such reimbursement is paid to
                  Contractor and shall not be entitled to the reversion of any
                  amounts so paid.

         4.6      Contractor Exceptions List. Contractor shall provide SCE with
                  its Customer Exceptions list within five (5) Business Days of
                  receipt of the relevant customer records information from SCE.

         4.7      Contractor services documentation and record maintenance
                  services. Contractor shall document and maintain records for
                  services performed under this Agreement on a Utility-specific
                  basis, as follows:

         4.7.1    Appliance Turn-in Order Form (ATO) to collect data such as (a)
                  customer name, address, home and work phone numbers, (b)
                  Utility account number, (c) Eligible Refrigerator or Freezer
                  manufacturer's name model and style, (d) defrost type, color,
                  size, amperage, and estimated age of unit; (e) location of
                  Eligible Refrigerator or Freezer within the residence, (f)
                  disposition code for each Program Participant indicating which
                  Incentive was selected, (g) disposition code which indicates
                  operating condition of Eligible Refrigerator or Freezer, (h)
                  identification of units containing CFC-11, HCFCs and HFCS, (i)
                  special pick-up instructions (if applicable), and j) in all
                  cases each participating Eligible Customer's signature, when
                  Contractor picks up an Eligible Refrigerator or Freezer.
                  Contractor shall obtain the signature of customer in the event
                  refrigerator or freezer is discovered not to be an Eligible
                  Refrigerator or Freezer.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  ATO data shall be compiled in electronic mode, employing a
                  software program suitable for exchange of information with
                  SCE, subject to the approval of SCE's Program Manager.

                  Contractor shall utilize a computer software program designed
                  to assign a Disposition Code to each ATO for each Program
                  Participant.

                  ATO originals shall be maintained at the Contractor's
                  Recycling Center and made available to SCE in accordance with
                  Section 14 of this Agreement.

         4.8      Contractor Survey. Contractor shall conduct a Program
                  Participant telephone survey throughout the year using a
                  stratified purposeful sample of 5% to 20% of the total number
                  of Program Participants. The stratification and frequency of
                  the survey may be modified periodically by SCE, provided that
                  an Amendment to this Agreement or a separate agreement shall
                  be entered into if any such modification 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 refrigerator or freezer use, customer
                  demographics and customer satisfaction. Survey questions,
                  stratification and frequency of survey may be modified
                  periodically as determined by SCE.

5.       CONTRACTOR REPORTS

         5.1      Contractor shall provide SCE with separate reports for each
                  participating Utility for the services performed under this
                  Agreement. Required data shall be compiled in electronic mode,
                  employing a software suitable to exchange information with
                  SCE, subject to approval of SCE's Program Manager. SCE may
                  request that Contractor submit program documentation,
                  including invoices, electronically.

         5.1.1    A weekly invoice report as described below in Section 10;

         5.1.2    A monthly report, provided no later than the 15th Calendar Day
                  of the preceding month's activity which shall contain the
                  following:


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  (i)      Number of Eligible Refrigerators and Freezers
                           processed through the Recycling Center during the
                           previous month and the size in cubic feet, year of
                           manufacture, style, and defrost type.

                  (ii)     Environmental data such as an estimated breakdown of
                           amount of CFCs/HCFCs/HFCs recovered; number of pounds
                           of PCB articles removed; number of pounds of mercury
                           articles removed, number and size of recycled
                           Eligible Refrigerators and Freezers containing
                           CFC-11; amount of compressor oil recycled; and weight
                           of metals materials sold for recycling: and the
                           weight of non-recyclable materials disposed.

                  (iii)    An unaudited accounting of CFL packs remaining in
                           Contractor's inventory of CFL packs. At the end of
                           the program year, Contractor shall complete and
                           provide SCE with a reconciliation to account for the
                           CFL packs that were defective, damaged, or stolen.
                           Contractor shall reimburse SCE for any and all CFL
                           Packs stolen from Contractor after delivery to
                           Contractor.

         5.1.3    A final Program report summarizing year-to-date Program
                  information, if required, shall be submitted to SCE no later
                  than thirty (30) Calendar Days after the termination of this
                  Agreement.

         5.1.4    Customer Comments and Complaints Report. Contractor shall
                  provide SCE with a monthly status report on customer comments
                  and status of customer complaints (on a cumulative basis) as
                  described below in Section 6.

         5.1.5    Aging Reports. A report indicating the number of Eligible
                  Refrigerators and Freezers that were collected during the
                  preceding month and that were scheduled for collection from
                  Eligible Customers during that month, the date of the initial
                  contact with the Eligible Customer, any subsequent rescheduled
                  dates initiated by Eligible Customer, the date or dates the
                  Eligible Refrigerator or Freezer was scheduled for collection,
                  and the actual collection date.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         5.1.6    Upon reasonable written request from an authorized
                  representative of SCE, special and nonrecurring reports during
                  the course of the 2002 Statewide Residential Appliance
                  Recycling Program. Such report content will be developed by
                  the Parties in anticipation of or response to requests from
                  the CPUC, SCE internal audits, or compilation of data relevant
                  to the 2002 Statewide Residential Appliance Recycling Program
                  activities. An amendment to this Agreement or a separate
                  agreement shall be entered into only if any such report
                  necessitates unreasonable labor, as substantiated by
                  Contractor, requiring the negotiation of a charge separate
                  from the Recycling Charge.

6.       CONTRACTOR CUSTOMER COMPLAINT AND DISPUTE RESOLUTION PROCESS.

         6.1      Contractor shall be responsible, to the complete satisfaction
                  of SCE, for developing and implementing a process for the
                  management of customer complaints. Contractor shall undertake
                  activities to resolve customer complaints in an expedited
                  manner including, but not limited to: (a) ensuring adequate
                  levels of professional customer service staff, (b) direct
                  access of customer complaints to supervisory and/or management
                  personnel, and (c) ensuring sufficient levels of delivery
                  personnel expected during times of high volume.

         6.2      For each Utility, a Customer Comment Tracking System for
                  recording customer inquiries, complaints, and positive
                  feedback. This Customer Comment Tracking System is to include,
                  but is not limited to, dates of customer complaints,
                  information on the number, characterization, resolution of
                  customer complaints, date of each complaint resolution, and
                  tracking of the total number of telephone calls, duration of
                  calls, number of calls placed on hold, duration of time calls
                  are on hold, and number of cancelled calls (hang-ups).

7.       ELIGIBLE CUSTOMERS AND REFRIGERATORS AND FREEZERS

         7.1      ELIGIBLE CUSTOMERS for the 2002 Statewide Residential
                  Appliance Recycling Program shall include the following:

                  7.1.1    Customer is a resident in a participating Utility
                           service territory and occupies an existing
                           single-family residential (Domestic


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT


                           Rate) or multi-unit dwelling or mobile home, or is
                           the owner or authorized representative of existing
                           multifamily housing and who may qualify for the 2002
                           Statewide Residential Appliance Recycling Program.
                           Eligible customers include customers who reside in a
                           participating Utility service territory but who take
                           distribution services from an entity other than a
                           participating Utility.

                           (i)      Contractor shall determine a customer's
                                    eligibility status BEFORE Contractor picks
                                    up a unit from a customer.

                           (ii)     Failure to verify customer eligibility shall
                                    result in nonpayment of fees.

                  7.1.2    Customer is the owner of the Eligible Refrigerator or
                           Freezer or possesses written consent from the actual
                           owner to turn in the Eligible Refrigerator or
                           Freezer.

                  7.1.3    Customer turns in no more than two Eligible
                           Refrigerators or Freezers or one each Eligible
                           Refrigerator and Freezer per year unless written SCE
                           approval is obtained for any additional Eligible
                           Refrigerator or Freezer. SCE shall not be obligated
                           to pay Contractor the Incentive check amount or
                           Handling Fee nor Recycling Charge for Eligible
                           Refrigerators or Freezers picked up from an Eligible
                           Customer that exceeds the limit of two Eligible
                           Refrigerators or Freezers.

         7.2      ELIGIBLE REFRIGERATORS AND FREEZERS for the 2002 Statewide
                  Residential Appliance Recycling Program shall depend on the
                  following:

                  7.2.1    Refrigerator or freezer must be capable of cooling or
                           freezing, or both, as applicable, at time of
                           collection.

                  7.2.2    Refrigerator or freezer minimum size is 10 cubic feet
                           and maximum size is 27 cubic feet.

8.       INELIGIBLE CUSTOMERS AND REFRIGERATORS AND FREEZERS

         8.1      Ineligible Customers


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  8.1.2    Low income customers who participate in a Utility's
                           refrigerator replacement program for low-income
                           customers in 2002.

                  8.1.3    Commercial customers who are on commercial Utility
                           rates 8.1.4 A resident in a non-participating utility
                           service territory.

         8.2      Ineligible Refrigerators and Freezers

                  8.2.1    Refrigerators or freezers sizes less than 10 cubic
                           feet or greater than 27 cubic feet.

                  8.2.2    Commercial refrigerators or freezers,
                           ammonia-containing gas refrigerators, commercial
                           freezers, and room air conditioners

                  8.2.3    Refrigerators or freezers not capable of cooling or
                           freezing or both, as applicable.

9.       CONTRACTOR'S COMPENSATION

         9.1      Summary of Fees Payable to Contractor

         SCE shall pay to Contractor, as full compensation for completing the
         Work at the prices set forth. The total amount to be paid to Contractor
         for work performed in each Utility's service territory shall not exceed
         the amounts included.

         9.1.1    Recycling Charge (All Utilities). For the Contract Period, SCE
                  shall pay to Contractor a per-unit Recycling Charge for the
                  number of units collected pursuant to this Agreement at the
                  price or prices set forth.

         9.1.2    Incentive Cost (All Utilities). For the Contract Period, SCE
                  shall reimburse Contractor $35 for each Incentive check
                  payment distributed to Program Participants under the terms
                  and conditions set forth in this Agreement.

         9.1.3    Handling Fee (All Utilities). For the Contract Period, SCE
                  shall pay Contractor a fee of Two Dollars ($2.00) ("Handling
                  Fee") per CFL Pack for each CFL Pack distributed to Program.
                  Participants under the terms and conditions set forth in this
                  Agreement. The Handling Fee shall compensate Contractor for


                                      -14-
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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  the storage, handling and delivery of the CFL Pack, additional
                  labor, and any and all other costs and expenses in connection
                  with the CFL Pack Incentive, including any additional
                  documentation and reports that may be necessary or required as
                  a result of the CFL Pack Incentive. SCE shall not be
                  responsible for any other compensation or reimbursement to
                  Contractor as a result of the CFL Pack Incentive except for
                  the Handling Fee.

         9.1.4    Marketing and Advertising Costs (PG&E and SDG&E only). During
                  the Contract period, SCE shall pay Contractor per unit
                  recycled (pick-up and properly disposed of) in the service
                  territories of PG&E and SDG&E respectively, as full
                  compensation for approved marketing activities conducted by
                  Contractor in the service territories of PG&E and SDG&E.
                  Contractor must submit all marketing materials to the SCE
                  Program Manager for review and approval before using the
                  materials. SCE will be responsible for obtaining the approvals
                  of PG&E and SDG&E as needed.

         9.2      Payment schedule.

                  SCE shall transmit payments to Contractor for the Work
                  (subject to offset by SCE for any amount that is
                  unsubstantiated or found to be incorrect) as follows:

                  (i)      For Incentive check reimbursement, within thirty (30)
                           Calendar Days of receipt of Contractor's weekly
                           invoice and approval by SCE;

                  (ii)     For Recycling Charges incurred, within thirty (30)
                           Calendar Days of receipt of Contractor's weekly
                           invoice and approval by SCE;

                  (iii)    For CFL Pack Handling Fees incurred, within thirty
                           (30) Calendar Days of receipt of Contractor's weekly
                           invoice and approval by SCE.

                  SCE shall attempt to review and approve all weekly invoices
                  within 5 Business Days of receipt of a properly documented
                  invoice.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

10.      CONTRACTOR BILLING

         10.1     On a weekly basis, in arrears, Contractor shall prepare and
                  submit a weekly invoice to SCE to substantiate the Recycling
                  Charges, Advertising Costs, Handling Fees, and Incentive check
                  amounts due for Contractor's payments to Program Participants
                  for the prior week. Contractor shall provide SCE with a weekly
                  listing of prospective Program Participants who have been
                  qualified as eligible for an Incentive check or CFL Pack for
                  SCE's approval. The weekly listing shall include the date of
                  unit pickup, the date the Incentive check was mailed, and the
                  date the CFL Pack was provided to a Program Participant.

                  The weekly invoice shall also include the applicable ATO
                  number, per- unit Recycling Charge for the Eligible
                  Refrigerators and Freezers collected, processed, and recycled,
                  and the total Handling Fee due for the CFL Packs distributed
                  during the invoice period.

         10.2     SCE will not pay any invoice which does not contain all
                  required documentation and information.

         10.3     SCE will not pay any invoice that includes charges (Recycling
                  Charges, marketing/advertising costs, Incentive check amounts,
                  or CFL Pack Handling Fees) for Work performed or services
                  rendered more than 60 days prior to the date the invoice is
                  received by SCE unless the delay is solely attributable to
                  SCE's failure to timely furnish the information referenced in
                  Section 11.

         10.4     Contractor shall apply a per-unit Recycling Charge on units
                  that have been disabled, and only for the following
                  transactions:

         10.4.1   Collection of an Eligible Refrigerator or Freezer.

         10.4.2   Collection contact made for Eligible Refrigerator or Freezer
                  that cannot be removed due to obstruction because of size or
                  structural barrier provided that Contractor obtains written
                  permission from Customer to permanently disable said unit, and
                  Contractor then permanently disables the unit.

         10.5     Contractor shall apply a 25% per unit discount to the
                  Recycling Charge to any additional units when two, or more in
                  the case of multifamily, Eligible Refrigerators or Freezers
                  are removed during a single collection appointment from
                  Customer's residence or multifamily site.


                                      -16-
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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  Said discount shall be clearly documented and identified in
                  Contractor's invoice and accompanying report.

         10.6     Contractor shall submit a final invoice for the Contract
                  Period within 15 Calendar Days after the termination of this
                  Agreement or final Eligible Refrigerator or Freezer pickup,
                  whichever occurs later, in hard copy and in electronic format
                  acceptable to SCE. Failure to submit the invoice and required
                  documentation to SCE within 15 Calendar Days may result in
                  nonpayment of the invoice by SCE.

11.      SCE RESPONSIBILITIES

         11.1     SCE shall provide to Contractor the following services:
         11.1.1   Bi-weekly updates of Customer Records for purposes of
                  identifying Eligible Customers.
         11.1.2   Customer exceptions lookups within five (5) Business Days of
                  receipt of Contractor's customer's exceptions list.
         11.1.3   If SCE fails to provide Contractor the required data within
                  the time frames specified above in this section, then the
                  reporting time frames stipulated in Section 5 shall be
                  extended by the number of Business Days the information is
                  delayed.

12.      OWNERSHIP AND CUSTOMER CONFIDENTIALITY REQUIREMENTS

         12.1    Contractor, its employees, and any Subcontractors shall not
                 disclose any Confidential Customer Information to any person
                 other than SCE's personnel either during the term of this
                 Agreement or after its completion, without Contractor having
                 obtained the prior written consent of SCE, except as provided
                 by lawful court order or subpoena and provided Contractor gives
                 SCE advance written notice of such order or subpoena.

         12.1.1  Confidential Customer Information includes, but is not limited
                 to, the customer's name, address and all billing and usage
                 information. If Contractor is uncertain whether any information
                 concerning a customer should be considered Confidential
                 Customer Information, Contractor shall contact SCE prior to
                 disclosing the customer information.


                                      -17-
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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         12.1.2   Prior to any approved disclosure of Confidential Customer
                  Information, persons receiving said information, including
                  Contractor, its employees, or third parties, must enter into a
                  nondisclosure agreement with SCE. Contractor agrees to require
                  its employees and subcontractors to execute a nondisclosure
                  agreement prior to performing any services under this
                  Agreement.

         12.1.3   This provision does not prohibit Contractor from disclosing
                  non-confidential information concerning the 2002 Statewide
                  Residential Appliance Recycling Program to the CPUC in any
                  CPUC proceeding, or any CPUC-sanctioned meeting or proceeding
                  or other public forum.

         12.2     All materials provided by SCE to Contractor during the
                  performance of this Agreement shall be returned to SCE after
                  this Agreement is terminated or at the request of SCE.
                  Contractor shall not duplicate any material furnished by SCE
                  without prior written approval from SCE.

         12.3     All new, original information, material, and documents
                  prepared or caused to be prepared under this Agreement by
                  Contractor using PGC funds shall become the property of the
                  CPUC. Such information, or derivative information, materials,
                  and documents, shall be used by Contractor only for work
                  performed pursuant to this Agreement, and shall not be used in
                  Contractor's general course of business, disclosed nor
                  revealed in any way to a third party without the prior express
                  written consent of SCE.

         12.4     All information disclosed by Contractor to SCE during meetings
                  or negotiations with regard to the 2002 Statewide Residential
                  Appliance Recycling Program, and any information contained in
                  drawings, specifications, technical reports, and data provided
                  by contractor to SCE during performance of this Agreement,
                  shall be held in confidence by SCE, and used only in relation
                  to the Work pursuant to this Agreement.

         12.5     Confidential Contractor Information

         12.5.l   Except as required by the CPUC, SCE, its employees and any
                  Subcontractors of SCE shall not disclose any confidential or
                  proprietary information provided by Contractor ("Contractor's


                                      -18-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  Confidential Information") to any person other than
                  Contractor's personnel, either during the term of the
                  Agreement, or after its completion, without having obtained
                  the prior written consent of Contractor. By way of example,
                  Contractor's Confidential Information shall include, without
                  limitation, Contractor's systems for oil degassing, CFC
                  recovery, CFC-11 and HCFC and HCF recovery and Contractor's
                  computer software. Prior to any approved disclosure, persons
                  to receive Contractor's Confidential Information, including
                  SCE, its employees or any third-party, must enter into a
                  nondisclosure agreement with Contractor. SCE agrees to require
                  its employees to execute appropriate nondisclosure agreements
                  prior to any contact with, or evaluation of Contractor's
                  Confidential Information.

         12.5.2   SCE agrees that, without the prior written consent of
                  Contractor, it will not, during the term or after termination
                  of this Agreement, directly or indirectly, disclose to any
                  individual, corporation, or other entity, or use for its own
                  or such other's benefit, any of Contractor's Confidential
                  Information, whether reduced to written or other tangible
                  form, which:

                  (i)      Is not generally known to the public or in the
                           industry;

                  (ii)     Has been treated by Contractor or any of its
                           subsidiaries as confidential or proprietary; and

                  (iii)    Is of a competitive advantage to Contractor or any of
                           its subsidiaries and in the confidentiality of which
                           Contractor or any of its subsidiaries has a legally
                           protectable interest.

         12.5.3   Contractor's Confidential Information which becomes generally
                  known to the public or in the industry, or, in the
                  confidentiality of which, Contractor and its subsidiaries
                  cease to have a legally protectable interest, shall cease to
                  be subject to the restrictions of this Section 12.

13.      CONFLICT OF INTEREST

         Contractor agrees that time is of the essence for the services
         described herein. Contractor further agrees that any agreement it has,
         or in which it may enter with other parties (e.g., utilities or
         government agencies) for a


                                      -19-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         recycling program, shall not detrimentally affect the quality or
         timeliness of Contractor's performance of the services required under
         this Agreement.

14.      RIGHT TO AUDIT

         SCE or its designated representatives shall have the right to
         periodically review and copy during normal business hours, the records
         and documents in Contractor's possession or under its control, relating
         to the Work, upon reasonable advance written notice to Contractor. This
         right to audit shall extend for a period of three (3) years beyond the
         termination or cancellation of this Agreement. Contractor agrees to
         allow the auditor(s) reasonable access to such records during normal
         business hours and to allow interviews of any employees who might
         reasonably have information related to such records. Further,
         Contractor agrees to contractually require all Subcontractors to
         provide access to relevant records and staff of all Subcontractors
         concerning the Work.

15.      CHANGES

         Changes to this Agreement shall be made by mutual agreement of the
         Parties through a written amendment to the Agreement. Such written
         amendment may be incorporated into this Agreement through a subsequent
         Purchase Order or Change Order.

16.      PERMITS, CODES, AND STATUTES

         16.1     Contractor shall perform the Work set forth in this Agreement
                  in accordance with all applicable federal, state, and local
                  laws, rules, and/or ordinances. Prior to performance of any
                  services, Contractor shall, at its own cost, have obtained,
                  and shall have required all Subcontractors to obtain, all
                  licenses and permits required by law, rule, regulation, and
                  ordinance, or any of them, to engage in the activities
                  required in connection with this transaction. Contractor also
                  represents and warrants that, to the best of its knowledge,
                  based upon reasonable and prudent inquiry, any storage site
                  and any disposal facility to which the Hazardous Materials may
                  be moved are in compliance with any and all federal, state and
                  local laws and regulations pertaining thereto and that such
                  storage sites and disposal facilities are suitable and may
                  lawfully receive and/or dispose of the Hazardous materials.

         16.2     Contractor shall comply with all applicable local, state, and
                  federal safety and health laws in effect an the date of this
                  Agreement,

                                      -20-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  including, but not limited to, EPA, California EPA, RCRA, the
                  Occupational Safety and Health Act of 1970 (OSHA), and all
                  standards, rules, regulations, and orders issued pursuant to
                  such local, state, and federal safety and health laws. Should
                  any such law, rule, or regulation be enacted or promulgated
                  subsequent to the date of this Agreement, which renders
                  Contractor's performance impractical, Contractor and SCE
                  shall, in good faith, negotiate an amendment to this Agreement
                  reasonably compensating Contractor for its additional costs.

17.      WARRANTY

         Contractor warrants to SCE that the Work shall be performed in a
         competent manner, in accordance with this Agreement, and that the
         acceptance, handling, storage, recycling, and disposal of the Eligible
         Refrigerators and Freezers and the Hazardous Materials shall be in
         accordance with (i) the requirements of this Agreement, and (ii) the
         applicable local, state, and federal laws and regulations in effect at
         the time of the Work performed.

18.      TITLE

         18.1     Title to the Hazardous Materials shall pass to Contractor when
                  Contractor collects Eligible Refrigerators and Freezers from
                  customers.

         18.2     Title of collected Eligible Refrigerators and Freezers shall
                  pass to Contractor.

19.      INSURANCE

         19.1     Without limiting Contractor's liability to SCE, including the
                  requirements of Section 20, Indemnity, Contractor shall
                  maintain for the Work, and shall require that each
                  Subcontractor maintain, at all times during the Work and at
                  its own expense, valid and collectible insurance as described
                  below. This insurance shall not be terminated, expire, not be
                  materially altered, except on thirty (30) Calendar Days prior
                  written notice to SCE. Contractor shall furnish SCE with
                  certificates of insurance and forms acceptable to SCE and
                  shall require each Subcontractor to furnish Contractor with
                  certificates of insurance, as evidence that policies do
                  provide the required coverage and limits of insurance listed
                  below. Such certificates shall be furnished to SCE's Program
                  Manager by Contractor WITHIN 30 DAYS OF EXECUTION OF THIS
                  AGREEMENT, and by Subcontractor upon receipt of its
                  subcontract, but in any event prior to start of its portion of
                  the Work. Any other


                                      -21-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  insurance carried by SCE, its officers, agents, and employees,
                  which may be applicable, shall be deemed to be excess
                  insurance, and Contractor's insurance shall be deemed primary
                  for all purposes notwithstanding any conflicting provision in
                  Contractor's policies to the contrary.

                  (i)      Workers' Compensation Insurance with statutory
                           limits, as required by the state in which the Work is
                           performed, and Employer's Liability Insurance with
                           limits of not less than $5,000,000. Carriers
                           furnishing such insurance shall be required to waive
                           all rights of subrogation against SCE, its officers,
                           agents, employees, and other contractors and
                           subcontractors.

                  (ii)     Comprehensive Bodily Injury and Property Damage
                           Liability Insurance, including owners, and
                           contractors' protective liability, product/completed
                           operations liability, contractual liability, and
                           coverage for liability incurred as a result of sudden
                           and accidental discharge, dispersal, release or
                           escape of polluting materials, (excluding automobile)
                           with a combined single limit of not less than
                           $3,000,000 for each occurrence. Such insurance shall:
                           (a) acknowledge SCE, its officers, agents, and
                           employees, and additional insureds; (b) be primary
                           for all purposes; and (e) contain standard
                           cross-liability provisions.

                  (iii)    Automobile Bodily Injury and Property Damage
                           Liability Insurance with a combined single limit of
                           not less than $3,000,000 for each occurrence. Such
                           insurance shall cover liability arising out of the
                           use by Contractor and Subcontractors of owned, non
                           owned and hired automobiles in the performance of the
                           Work. As used herein, the term "automobile" means
                           vehicles licensed or required to be licensed under
                           the Vehicle Code of the state in which the Work is
                           performed. Such insurance shall acknowledge SCE as an
                           additional insured and be primary for all purposes.

                  (iv)     Environmental Impairment Expense Insurance with a
                           combined single limit of not less than $5,000,000 for
                           each occurrence and overall limits of $10,000,000.
                           Such insurance shall provide coverage for necessary
                           costs or expense of removing, cleaning- up,
                           transporting, nullifying, and, rendering ineffective,
                           or any of them, any substance which has caused
                           environmental impairment and such insurance shall
                           contain no exclusions for


                                      -22-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                           non-sudden and/or non-accidental discharge, release
                           or escape of polluting materials. Such insurance
                           shall acknowledge SCE as an additional insured and be
                           primary for all purposes.

                           Contractor shall report immediately to SCE and
                           confirm in writing any injury, loss, or damage
                           incurred by Contractor or Subcontractors in excess of
                           $500.00, or its receipt of notice of any claim by a
                           third party in excess of $500.00, or any occurrence
                           that might give rise to such claim.
                           If Contractor fails to comply with any of the
                           provisions of this Section 19, Contractor shall, at
                           its own cost, defend, indemnify, and hold harmless
                           SCE, its officers, agents, employees, assigns, and
                           successors in interest, from and against any and all
                           liability, damages, losses, claims, demands, actions,
                           causes of action, costs, including attorney's fees
                           and expenses, or any of them, resulting from the
                           death or injury to any person or damage to any
                           property to the extent that SCE would have been
                           protected had Contractor complied with all of the
                           provisions of this Section 19.

20.      INDEMNITY

         20.1     Contractor shall, at its own cost, indemnify, defend,
                  reimburse, and hold harmless SCE, PG&E, and SDG&E, their
                  officers, directors, employees, agents, assigns, and
                  successors in interest, from and against any and all
                  liability, damages, losses, claims, suits, demands, actions,
                  causes of action, costs, expenses, including attorney's fees
                  and expenses, or any of them resulting from the death or
                  injury to any person or damage to or destruction of any
                  property caused by Contractor, Subcontractors, and employees,
                  officers and agents of either Contractor or Subcontractors, or
                  any of them, and arising out of or attributable to the
                  performance or nonperformance of Contractor's obligations
                  under this Agreement and including, without limitation,
                  failure to comply fully with every federal, state, or local
                  law, statute, regulation, rule, ordinance, or government
                  directive which directly or indirectly regulates or affects
                  the handling, storage, recycling, or disposal of the Hazardous
                  Materials to be managed by Contractor hereunder.

                  In all cases of death or injury to employees, officers or
                  agents of either Contractor or Subcontractors, whether or not
                  caused by Contractor,


                                      -23-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  SCE, PG&E, or SDG&E, shall be indemnified by Contractor for
                  any and all liability except to the extent such death or
                  injury results from the negligence of SCE, PG&E, or SDG&E.

         20.2     Contractor shall, at its own cost, indemnify, defend,
                  reimburse, and hold harmless SCE, PG&E, and SDG&E, their
                  officers, directors, employees, and agents, assigns, and
                  successors in interest, from and against any and all liability
                  imposed upon, or to be imposed upon SCE PG&E, or SDG&E as
                  applicable, under any law imposing liability for the
                  environmental clean-up of the Hazardous Materials at any
                  location (other than SCE's property) where the Hazardous
                  Materials have been placed, stored or disposed of in the
                  performance or nonperformance of Contractor's obligations
                  under this Agreement, or any other site to which the Hazardous
                  Materials have migrated.

         20.3     The indemnities set forth in this Section 20 shall not be
                  limited by the insurance requirements set forth in Section 19.

21.      TERM AND TERMINATION

         21.1     This Agreement shall commence on April 1, 2002 and continue in
                  effect until one of the following occurs: (a) December 31,
                  2002; (b) SCE determines that Contractor has picked up all
                  units called in prior to December 31, 2002; (c) SCE determines
                  that Contractor has exhausted all available funding; (d) SCE
                  learns that Contractor has filed a petition in bankruptcy or
                  that an involuntary petition ha been filed against Contractor
                  and said petition(s); OR (e) the CPUC discontinues funding for
                  the 2002 Statewide Residential Appliance Recycling Program or
                  this Agreement.

         21.2     Either Party may terminate the Agreement for any reason by
                  providing thirty (30) Calendar Days advance written notice to
                  the other Party. The termination shall become effective on the
                  last day of said notice period ("Termination Date").
                  Contractor shall be paid for all Work performed prior to the
                  Termination Date. In such event, SCE shall only be obligated
                  to pay contractor for such Eligible Refrigerators and Freezers
                  actually collected by Contractor for recycling as of the
                  Termination Date, and shall not be obligated to pay Contractor
                  for units not collected.

         21.3     In the event of termination pursuant to this Section 21,
                  Contractor and SCE shall work cooperatively to facilitate the
                  termination of the 2002 Statewide Residential Appliance
                  Recycling Program.


                                      -24-
<PAGE>


                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         21.4     Each Party shall immediately provide at no cost to the other
                  any testimony, or any communications with the CPUC, or any
                  board, division, committee or member thereof, which could
                  reasonably be anticipated to affect the 2002 Statewide
                  Residential Appliance Recycling Program or which addresses it
                  in any manner.

22.      WRITTEN NOTICES

         22.1     Any written notice, demand or request required or authorized
                  in connection with this Agreement, shall be deemed properly
                  given if delivered in person or sent by facsimile, nationally
                  recognized overnight courier, or first class mail, postage
                  prepaid, to the address specified below, or to another address
                  specified in writing by SCE as follows:

         SCE:              Southern California Edison Company
                           Refrigerator/Freezer Recycling Program Manager
                           2244 Walnut Grove Avenue - Quad 2A
                           Rosemead, CA 91770
                           (626) 302-8626 telephone
                           (626) 302-1834 facsimile

         CONTRACTOR:       ARCA, Inc.
                           Attention: Mr. Jack Cameron, President
                           7400 Excelsior Boulevard
                           Minneapolis, MN 55426
                           (952) 930-1717 telephone
                           (952) 930-1800 facsimile


         22.2     Notices shall be deemed received (a) if personally or
                  hand-delivered, upon the date of delivery to the address of
                  the person to receive such notice if delivered before 5:00
                  p.m., or otherwise on the Business Day following personal
                  delivery; (b) if mailed, three (3) Business Days after the
                  date the notice is postmarked; (e) if by facsimile, upon
                  electronic confirmation of transmission, followed by telephone
                  notification of transmission by the noticing Party; or (d) if
                  by overnight courier: on the Business Day following delivery
                  to the overnight courier within the time limits set by that
                  courier for next-day delivery.


                                      -25-
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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

23.      SUBCONTRACTS

         23.1     Contractor shall contractually require each Subcontractor to
                  be bound by general terms and conditions protecting each
                  participating Utility which are equivalent to the terms and
                  conditions of this Agreement.

         23.2     Contractor shall, at all times, be responsible for the Work,
                  and acts and omissions, of Subcontractors and persons directly
                  or indirectly employed by them for services in connection with
                  the Work. This Agreement shall not constitute a contractual
                  relationship between any Subcontractor and SCE nor any
                  obligation for payment by SCE to any Subcontractor.

24.      INDEPENDENT CONTRACTOR

         The Contractor, and its employees, Subcontractors, and agents of
         Contractor in the performance of this Agreement, shall act in an
         independent capacity and not as officers or employees or agents of SCE.

25.      NON-DISCRIMINATION CLAUSE

         Contractor and its Subcontractors shall not unlawfully discriminate,
         harass, or allow harassment against any employee or applicant for
         employment because of sex, race, color, ancestry, religious creed,
         national origin, physical disability (including HIV and AIDS), mental
         disability, medical condition (cancer), age (over 40), marital status,
         and denial of family care leave. Contractor and Subcontractors shall
         insure that the evaluation and treatment of their employees and
         applicants for employment are free from such discrimination and
         harassment. Contractor and its Subcontractors shall comply with the
         provisions of the Fair Employment and Housing Act (Government Code
         Section 12990 (a-f) et seq.) and the applicable regulations promulgated
         thereunder (California Code of Regulations, Title 2, Section 7285 et
         seq.). The applicable regulations of the Fair Employment and Housing
         Commission implementing Government Code Section 12990 (a-f), set forth
         in Chapter 5 of Division 4 of Title 2 of the California Code of
         Regulations, are incorporated into this Agreement by reference and made
         a part hereof as if set forth in full. Contractor and its
         Subcontractors shall give written notice of their obligations under
         this clause to labor organizations with which they have a collective
         bargaining or other Agreement.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         Contractor shall include the nondiscrimination and compliance
         provisions of this clause in all subcontracts for the Work.

26.      CPUC AUTHORITY TO MODIFY

         This Agreement shall at all times be subject to such changes or
         modifications by the CPUC as it may from time to time direct in the
         exercise of its jurisdiction.

27.      NON-WAIVER

         None of the provisions of this Agreement shall be considered waived by
         either Party unless such waiver is specifically stated in writing.

28.      ASSIGNMENT

         SCE may be required to assign its rights, duties and obligations under
         this Agreement to the CPUC and/or its designee. Contractor hereby
         consents to such assignment. Other than the aforementioned assignment,
         neither Party shall delegate or assign this Agreement or any part or
         interest thereof, without the prior written consent of the other Party,
         and any assignment without such consent shall be void and of no effect.

29.      FORCE MAJEURE

         Failure of Contractor to perform any of the provisions of this
         Agreement by reason of any of the following shall not constitute an
         event of default or breach of this Agreement: strikes, picket lines,
         boycott efforts, earthquakes, fires, floods, war (whether or not
         declared), revolution, riots, insurrections, acts of God, acts of
         government (including, without limitation, any agency or department of
         the United States of America), acts of the public enemy, scarcity or
         rationing of gasoline or other fuel or vital products, inability to
         obtain materials or labor, or other causes which are reasonably beyond
         the control of the Contractor.

30.      DISPUTE RESOLUTION

         30.1     Should any dispute arise between the Parties regarding this
                  Agreement, the Parties agree to enter into good faith
                  negotiations as


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

                  soon as practicable to resolve such disputes within five (5)
                  Business Days of receipt of a written notice describing the
                  dispute. If the Parties are unable to resolve the dispute, the
                  Parties agree to refer the matter to the Energy Division for
                  resolution by the CPUC.

         30.2     All negotiations, mediation and/or arbitration conducted
                  pursuant to this clause are confidential and shall be treated
                  as compromise and settlement negotiations, to which Section
                  1119 of the California Evidence Code shall apply, and Section
                  1119 is incorporated herein by reference.

         30.3     Notwithstanding the foregoing provisions, a Party may seek a
                  preliminary injunction or other provisional judicial remedy if
                  in its judgment such action is necessary to avoid irreparable
                  damage or to preserve the status quo.

         30.4     Each Party is required to continue to perform their
                  obligations under this Agreement that are not related to the
                  dispute, pending final resolution of a dispute arising out of
                  or relating to this Agreement.

31.      SEVERABILITY

         In the event that any of the terms, covenants or conditions of this
         Agreement, or the application of any such term, covenant or condition,
         shall be held invalid as to any person or circumstance by any court,
         regulatory agency, or other regulatory body having jurisdiction, all
         other terms, covenants, or conditions of this Agreement and their
         application shall not be affected thereby, but shall remain in full
         force and effect, unless a court, regulatory agency, or other
         regulatory body holds that the provisions are not separable from all
         other provisions of this Agreement.

32.      GOVERNING LAW

         This Agreement shall be interpreted, governed, and construed under the
         laws of the State of California as if executed and to be performed
         wholly within the State of California. Any action brought to enforce or
         interpret this Agreement shall be filed in Los Angeles County,
         California.


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

33.      SECTION HEADINGS

         Section headings appearing in this Agreement are for convenience only
         and shall not be construed as interpretations of text.

34.      SURVIVAL

         Notwithstanding completion or of this Agreement, the Parties shall
         continue to be bound by the provisions of this Agreement which by their
         nature survive such completion or termination. Such provisions shall
         include, but not be limited to, Contractor's indemnity protecting SCE,
         PG&E, and SDG&E from any liability for environmental clean up arising
         out of Contractor's Work.

35.      NONRELIANCE

         Neither Party has relied upon any representation, warranty, projection,
         estimate or other communication from the other not specifically so
         identified in this Agreement.

36.      ATTORNEYS'FEES

         In the event of any legal action or other proceeding between the
         Parties arising out of this Agreement or the transactions contemplated
         herein, the prevailing Party in such legal action or proceeding shall
         be entitled to have and recover from the other Party all costs and
         expenses incurred therein, including reasonable attorneys' fees.

37.      COOPERATION

         Each Party agrees to cooperate with the other Party in whatever manner
         reasonably required to facilitate the successful completion of this
         Agreement.

38.      ENTIRE AGREEMENT

         This Agreement contains the entire agreement and understanding between
         the Parties and merges and supersedes all prior representations and
         discussions


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                2002 STATEWIDE RESIDENTIAL REFRIGERATOR RECYCLING
                                    AGREEMENT

         pertaining to this Agreement, including Contractor's proposal. Any
         changes, exceptions, or different terms and conditions proposed by
         Contractor are hereby rejected unless expressly stated in this
         Agreement.

39.      COUNTERPARTS

         This Agreement may be executed in one or more counterparts, each of
         which shall be deemed to be an original, but all of which together
         shall be deemed to be one and the same instrument.




         ARCA CALIFORNIA INC.                 SOUTHERN CALIFORNIA
                                              EDISON COMPANY

         By: /s/ Jack Cameron                 By:  /s/ Pamela Bass
             --------------------------            ----------------------------
         Its:  President                      Its:  Sr. Vice President
         Date: June 18, 2002                  Date: July 10, 2002


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</TEXT>
</DOCUMENT>
