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.

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        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.

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        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

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        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.

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        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.

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        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 

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        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 

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        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 recovered,
                              amount of compressor oil recycled, and weight of
                              metals and nonrecyclable materials sold for
                              shredding.

                    6.8.3     A quarterly report presented within fifteen (15)
                              days of the new quarter summarizing the monthly
                              Customer Comment Tracking System information in
                              Section 6.5.1.

                    6.8.4     By the 15th day of each month during the term of
                              this Agreement, Contractor shall provide Edison
                              with monthly aging

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


                              reports indicating the number of Refrigerators and
                              Freezers that were collected during the preceding
                              month and that were scheduled for collection from
                              customers during that month, the date of the
                              initial contact with the Customer, the date or
                              dates the appliance was scheduled for collection,
                              and the actual collection date.

                    6.8.5     Final summary reports covering all activity
                              requested in monthly reports plus information from
                              any incomplete month.

                    6.8.6     A final report by October 31 of all amounts paid
                              by Contractor in compliance with any unclaimed
                              property laws pursuant to Section 6.7.3, hereof.

                    6.8.7     Upon reasonable written request from an authorized
                              representative of Edison, special and nonrecurring
                              reports during course of the 1998 Program. Such
                              report content will be developed by the parties in
                              anticipation of requests from the CPUC, Edison
                              internal audits, or compilation of data relevant
                              to Rebuild LA 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.

                    6.8.8     Contractor shall modify its current computer
                              software program so that the Contractor's
                              Appliance Turn-In Order Form ("ATO") has a
                              disposition code which can be coded for each 1998
                              Program Participant indicating which Incentive was
                              selected by the 1998 Program Participant. In all
                              cases, when Contractor picks up an Eligible
                              Refrigerator or Eligible Freezer from a 1998
                              Program Participant, Contractor shall obtain the
                              1998 Program Participant's signature on the
                              Contractor's ATO. On a weekly basis, Contractor
                              shall prepare an invoice for Edison to evidence
                              the Cooler Fees due for Contractor's delivery of
                              Coolers under the Cooler Promotion and the costs,
                              if any, incurred by Contractor pursuant to Section
                              10.6 of the First Amendment ("Invoice"). The
                              Invoice shall include an ATO report showing the
                              delivery of Coolers during the billing period. All
                              Invoices will be paid pursuant to Section 10.5.3.

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


7.        CUSTOMER AND REFRIGERATOR ELIGIBILITY

          7.1       Customer eligibility for the 1998 Program shall depend on
                    the following:

                    7.1.1     Customer is a resident in the Edison service
                              territory and occupies a single-family residential
                              (Domestic Rate) or multi-unit dwelling or mobile
                              home.

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

                    7.1.3     Customer turns in no more than two Eligible
                              Refrigerators and two Eligible Freezers per year
                              unless written Edison approval is obtained for any
                              additional Refrigerator or Freezer.

          7.2       Commercial customers do not qualify for the 1998 Program.

          7.3       Refrigerator and Freezer eligibility for the 1998 Program
                    shall depend on the following:

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

                    7.3.2     Refrigerator or Freezer minimum size is 10 cubic
                              feet and maximum size is 25 cubic feet.

                    7.3.3     Refrigerator or Freezer is certified by the
                              customer to have been in use for a minimum of six
                              months as a Second Refrigerator or Freezer, as the
                              case may be.

          7.4       Commercial refrigerators, ammonia-containing gas
                    refrigerators, commercial freezers, and room air
                    conditioners do not qualify for the 1998 Program.

8.        OWNERSHIP AND CONFIDENTIALITY

          8.1       All information disclosed by Edison during meetings or
                    negotiations with regard to the 1998 Program, and any
                    information contained in drawings, specifications, technical
                    reports, and data provided by Edison to Contractor during
                    performance of this Agreement shall be

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


                    held in confidence by Contractor and used only for the
                    performance of the Work pursuant to this Agreement.

          8.2       Contractor, its employees, and any subcontractors shall not
                    disclose any 1998 Program or customer information to any
                    person other than Edison's personnel either during the term
                    of this Agreement or after its completion, without
                    Contractor having obtained the prior written consent of
                    Edison, except as provided by lawful court order or subpoena
                    and provided Contractor gives Edison advance written notice
                    of such order or subpoena. Prior to any approved disclosure,
                    persons receiving said information, including Contractor,
                    its employees, or third parties, must enter into a
                    nondisclosure agreement with Edison. Contractor agrees to
                    require its employees and subcontractors to execute a
                    nondisclosure agreement prior to performing any services
                    under this Agreement.

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

          8.4       All information, material, and documents prepared or caused
                    to be prepared under this Agreement by Contractor shall
                    become the property of Edison. Such information, or
                    derivative information, materials, and documents, shall be
                    used by Contractor only for work done directly for Edison,
                    shall not be used in Contractor's general course of
                    business, and shall neither be disclosed nor revealed in any
                    way to a third party without the prior express written
                    consent of Edison.

          8.5       All information disclosed by Contractor to Edison during
                    meetings or negotiations with regard to the 1998 Program,
                    and any information contained in drawings, specifications,
                    technical reports, and data provided by contractor to Edison
                    during performance of this Agreement, shall be held in
                    confidence by Edison, and used only in relation to the Work
                    pursuant to this Agreement.

          8.6       Except as required by the CPUC, Edison, its employees and
                    any subcontractors of Edison shall not disclose any
                    confidential or proprietary information of Contractor
                    ("Contractor's 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

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


                    example, Contractor's Confidential Information shall
                    include, without limitation, Contractor's systems for oil
                    degassing, CFC recovery, CFC-11 recovery and Contractor's
                    computer software. Prior to any approved disclosure, persons
                    to receive Contractor's Confidential Information, including
                    Edison, its employees or any third-party, must enter into a
                    nondisclosure agreement with Contractor. Edison agrees to
                    require its employees to execute appropriate nondisclosure
                    agreements prior to any contact with, or evaluation of
                    Contractor's Confidential Information.

          8.7       Edison 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:

                    8.7.1     Is not generally known to the public or in the
                              industry;

                    8.7.2     Has been treated by Contractor or any of its
                              subsidiaries as confidential or proprietary; and

                    8.7.3     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.

          8.8       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 Paragraph 8.

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


9.        COMMERCIAL TERMS

          9.1       Payment

                    No payment shall be made under this Agreement until Edison
                    has received a signed "Acceptance Copy" of the Purchase
                    Order from Contractor. Edison shall pay to Contractor, as
                    full compensation for completing the Work, the prices set
                    forth in Exhibit A in accordance with the payment provisions
                    set forth in Sections 9.2 through 9.4.

          9.2       Summary of Charges

                    9.2.1     Recycling Charge Edison shall pay to Contractor a
                              per-unit Recycling Charge for the greater of the
                              number of units collected, or specified per
                              Section 9.3.2 below, pursuant to this Agreement at
                              the price or prices set forth in Section 9.3
                              below. The Recycling Charge covers the scope of
                              work described in Section 6, including CFC-11
                              Recovery and excluding bond or incentive
                              purchasing and financing services.

                    9.2.2     Other Charges. All other costs for services shall
                              be negotiated between the parties and implemented
                              by an amendment to the Agreement.

                    9.2.3     Pursuant to the terms of Section 10.5.3, Edison
                              shall pay Contractor a fee of Two Dollars ($2.00)
                              ("Cooler Fee") per Cooler for each Cooler
                              distributed to 1998 Program Participants. The
                              Cooler Fee shall compensate Contractor for the
                              storage, handling and delivery of the Coolers,
                              additional labor, and any and all other costs and
                              expenses in connection with the Cooler Promotion,
                              including any additional documentation and reports
                              that may be necessary or required as a result of
                              the Cooler Promotion. Edison shall not be
                              responsible for any other compensation or
                              reimbursement to Contractor as a result of the
                              Cooler Promotion except for the Cooler Fee.

                    9.2.4     Bond or Incentive Cost and Finance Charges. Edison
                              shall pay to Contractor bond and Incentive costs
                              and finance charges as specified in Section 9.4,
                              below.

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


          9.3       Pricing Recycling Charge

                    9.3.1     The per-unit Recycling Charge to be paid by Edison
                              for the Contract Period shall be as set forth in
                              Exhibit A.

                    9.3.2     Edison's Specified Volume for the Contract Period
                              shall be 25,000 units.

                    9.3.3     If at the end of the Contract Period the Specified
                              Volume has not been achieved, Edison shall pay to
                              Contractor a per-unit Recycling Charge for each
                              unit in the shortfall.

                              9.3.3.1   The shortfall shall be determined by
                                        subtracting from the Specified Volume
                                        all units collected from Edison for the
                                        Contract Period.

                              9.3.3.2   If this Agreement should be assigned to
                                        the California Board for Energy
                                        Efficiency ("Board") prior to September
                                        1, 1998, the shortfall shall be prorated
                                        by month and Edison shall pay 50% of the
                                        per unit Recycling Charge for each unit
                                        in the shortfall.

                              9.3.3.3   If this Agreement is assigned to the
                                        Board prior to September 1, 1998, Edison
                                        shall have no further payment
                                        obligations to Contractor as of the
                                        effective date of the assignment except
                                        for any payments due under Section
                                        9.3.3.2.

          9.4       Pricing Bond or Incentive Costs and Finance Charges

                    9.4.1     Edison shall reimburse Contractor for the cost of
                              each bond or incentive payment distributed to 1998
                              Program Participants.

                    9.4.2     Edison shall pay to Contractor monthly interest at
                              the rate of three-quarter of one percent (0. 75%)
                              on the average monthly balance of the outstanding
                              bond or incentive costs.

          9.5       Miscellaneous

                    Contractor agrees that any agreement it has, or in which it
                    may enter with other utilities or agencies for a recycling
                    program, shall not detrimentally affect Contractor's
                    services under this Agreement.

<PAGE>


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


10.       BILLING

          10.1      Contractor shall submit a weekly invoice reflecting the
                    per-unit charge for the refrigerators and freezers
                    collected, processed, and recycled, and for the purchase and
                    approval of U.S. Savings Bonds and incentives. Contractor
                    shall apply a per-unit charge on units that have been
                    disabled and only for the following transactions:

                    10.1.1    Collection of an Eligible Refrigerator or Freezer.

                    10.1.2    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.

                    10.1.3    Collection of an oversized Eligible Refrigerator
                              or Freezer that requires additional trips,
                              personnel, or equipment to execute removal.
                              Additional services for removal of an oversized
                              Eligible Refrigerator or Freezer shall be charged
                              as a single appointment with no extra charge for
                              said additional services.

                    10.1.4    Collection of an Eligible Refrigerator or Freezer
                              that could not be inspected for eligibility
                              confirmation.

          10.2      Contractor shall submit a final invoice for the Contract
                    Period in hard copy and in electronic format acceptable to
                    Edison.

          10.3      Contractor shall apply a 25% per unit discount to the
                    Recycling Charge to any additional units when two or more
                    refrigerators or freezers are removed during a single
                    collection appointment from Customer's residence. Said
                    discount shall be clearly documented and identified in
                    Contractor's invoice.

          10.4      Contractor shall submit a weekly invoice for the purchase
                    price of the bonds and for other incentive payments and a
                    monthly invoice for the interest charge identified in
                    paragraph 9.5.

          10.5      Edison shall make payment (less any unsubstantiated or
                    incorrect charge):

<PAGE>


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


                    10.5.1    For bond and check incentive services, within
                              thirty days of receipt of an Invoice by Edison's
                              Accounts Payable Department.

                    10.5.2    Of Recycling Fee, within thirty days of receipt of
                              an Invoice from Contractor approved by Edison..

                    10.5.3    For Cooler Fees within thirty days of receipt of
                              an Invoice from Contractor approved by Edison.

          10.6      Upon receipt of each shipment of the Coolers, Contractor
                    shall inspect the shipment for any damaged or defective
                    Coolers. Contractor shall return any damaged and/or
                    defective Cooler directly to the manufacturer for a
                    replacement Cooler. Pursuant to Sections 6.8.8 and 10.5.3,
                    Edison shall reimburse Contractor for all costs associated
                    with the return of any such damaged and/or defective
                    Coolers.

          10.7      On a weekly basis, Contractor shall provide Edison with an
                    unaudited accounting of Coolers remaining in Contractor's
                    inventory of Coolers. At the end of the Cooler Promotion,
                    Contractor shall complete and provide Edison with a
                    reconciliation to account for the Coolers that were
                    defective, damaged, or stolen. Contractor shall reimburse
                    Edison for any and all Coolers stolen from Contractor after
                    delivery to Contractor.

          10.8      If after a Cooler is delivered by Contractor any 1998
                    Program Participant alleges that a Cooler is damaged or
                    defective, Edison shall replace such defective and/or
                    damaged Cooler. Edison shall be responsible for the
                    replacement of the such damaged and/or defective Cooler,
                    including, but not limited to, the deliver of a new Cooler
                    to the 1998 Program Participant. If the damage to a Cooler
                    is the result of any action by Contractor, Edison shall be
                    relieved of any obligation to pay Contractor a Cooler Fee
                    for the damaged Cooler.

11.       RIGHT TO AUDIT

          Edison, or its Authorized Representative, shall have the right and
          free access, at any reasonable time during normal business hours, to
          examine,

<PAGE>


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


          audit, and copy all Contractor's records and books as related to
          Contractor's obligations under this Agreement, including, but not
          limited to, verification of costs to Edison, as claimed by Contractor.

12.       CHANGES

          Changes to this Agreement shall be made by mutual agreement of the
          Parties through a written amendment to the Agreement, which shall be
          incorporated into the Purchase order by Change Order.

13.       PERMITS, CODES, AND STATUTES

          13.1      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.

          13.2      Contractor shall comply with all applicable local, state,
                    and federal safety and health laws in effect an the date of
                    this 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 Edison shall, in good faith,
                    negotiate an amendment to this Agreement reasonably
                    compensating Contractor for its additional costs.

14.       WARRANTY

          Contractor warrants to Edison 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
          Refrigerators

<PAGE>


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


          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.

15.       TITLE

          15.1      Title to the Hazardous Materials shall pass to Contractor
                    when Contractor collects refrigerators and freezers from
                    customers.

          15.2      Title of collected Refrigerators and Freezers shall pass to
                    Contractor.

16.       INSURANCE

          16.1      Without limiting Contractor's liability to Edison, including
                    the requirements of Section 18.0 Indemnity, Contractor shall
                    maintain For the work, and shall require that each
                    Subcontractor of the first tier 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 he materially altered,
                    except on thirty days prior written notice to Edison.
                    Contractor shall furnish Edison with certificates of
                    insurance an forms acceptable to Edison and shall require
                    each Subcontractor of the first tier to furnish Contractor
                    with certificates of insurance, as evidence that policies do
                    provide the required coverages and limits of insurance
                    listed below. Such certificates shall be furnished to
                    Edison's 1998 Program Manager by Contractor upon receipt of
                    the Purchase Order, and by Subcontractor for the first tier
                    upon receipt of its subcontract, but in any event prior to
                    start of its portion of the Work. Any other insurance
                    carried by Edison, 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 Edison,
                              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

<PAGE>


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


                              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
                              Edison, its officers, agents, and employees, and
                              additional insureds; (b) be primary for all
                              purposes; and (c) 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 Edison 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 non-sudden and/or non-accidental
                              discharge, release or escape of polluting
                              materials. Such insurance shall acknowledge Edison
                              as an additional insured and be primary for all
                              purposes.

                              Contractor shall report immediately to Edison 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 16.0, Contractor shall,
                              at its own cost, defend, indemnify, and hold
                              harmless Edison, 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

<PAGE>


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


                              damage to any property to the extent that Edison
                              would have been protected had Contractor complied
                              with all of the provisions of this Section.

17.       RESERVED.

18.       INDEMNITY

          18.1      Contractor shall, at its own cost, indemnify, defend,
                    reimburse, and hold harmless Edison, its 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, Edison shall be indemnified by
                    Contractor for any and all liability except to the extent
                    such death or injury results -from the negligence of Edison.

          18.2      Contractor shall, at its own cost, indemnify, defend,
                    reimburse, and hold harmless Edison, its officers,
                    directors, employees, and agents, assigns, and successors in
                    interest, from and against any and all liability imposed
                    upon, or to he imposed upon Edison, under any law imposing
                    liability for the environmental clean-up of the Hazardous
                    Materials at any location (other than Edison'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.

          18.3      The indemnities set forth in this Section 18.0 shall not be
                    limited by the insurance requirements set forth in Section
                    16.0.

<PAGE>


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


19.       TERM AND TERMINATION

          19.1      This Agreement shall commence on January 1, 1998 and shall
                    continue in effect until September 30, 1998, or until
                    Contractor has picked up all units called in prior to
                    September 30, 1998, whichever is later. This Agreement may
                    be extended as agreed to in writing by the Parties.

          19.2      Either Party may terminate the Agreement for cause by 60
                    days advance written notice, and failure to cure, to the
                    other Party. If the default has not been cured within said
                    time period, the non-defaulting party may declare this
                    Agreement terminated, effective the last day of said notice
                    period. Contractor shall be paid for its services rendered
                    to the date of said termination with all required specified
                    volumes prorated to the date of termination.

          19.3      Edison shall have the right to terminate this Agreement by
                    30 days advance written notice to Contractor upon CPUC
                    mandate, or upon depletion of the amount of funding
                    authorized by the CPUC for the Contract Period. In the event
                    the Agreement is terminated upon CPUC mandate, Edison shall
                    pay Contractor all amounts owed under the Agreement as of 30
                    days after Edison's written notice to Contractor of the
                    CPUC's mandate (the "Termination Date"). In such event,
                    Edison shall only be obligated to pay contractor for such
                    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 but
                    which would otherwise be required to be paid for as units
                    comprising Edison's Specified Volume.

          19.4      In the event of termination pursuant to this Section 19,
                    Contractor and Edison shall work cooperatively to
                    facilitate the termination of the 1998 Program.

          19.5      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 effect the 1998 Program or
                    which addresses the 1998 Program in any manner.

20.       SUBCONTRACTS

          20.1      Contractor shall contractually require each Subcontractor of
                    the first tier providing service in connection with the Work
                    to be bound by

<PAGE>


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


                    general terms and conditions protecting Edison which are
                    equivalent to the terms and conditions of this Agreement.

          20.2      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. The Purchase Order and this
                    Agreement shall not constitute a contractual relationship
                    between any Subcontractor and Edison nor any obligation for
                    payment to any Subcontractor.

21.       CALIFORNIA PUBLIC UTILITIES COMMISSION

          This Agreement and the Purchase Order incorporating 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.

22.       NON-WAIVER

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

23.       ASSIGNMENT

          Edison may be required to assign its rights, duties and obligations
          under this Agreement to the California Board for Energy Efficiency
          ("Board") or, at the Board's discretion, to the Board's Administrator.
          Contractor hereby consents to such assignment. Other than Edison's
          assignment to the Board or the Board's administrator, 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.

24.       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.

<PAGE>


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


25.       GOVERNING LAW

          The contract 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.

26.       SECTION HEADINGS

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

27.       SURVIVAL

          Notwithstanding completion or termination of the Work, of this
          Agreement, any amendment to the Agreement, or of any Purchase Order or
          Change Order, the Parties shall continue to be bound by the provisions
          of this Agreement and any Purchase order incorporating this Agreement,
          Amendment to this Agreement and Change Orders, which by their nature
          shall survive such completion or termination. Such provisions shall
          include, but not be limited to, Contractor's indemnity protecting
          Edison from any liability for environmental clean up as provided in
          Section 18 of this Agreement.

28.       NONRELIANCE

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

29.       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.

<PAGE>


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


30.       COOPERATION

          Each of the parties agrees to cooperate with the other in whatever
          manner reasonably required to facilitate such parties' successful
          completion of the Agreement.

31.       ENTIRE AGREEMENT

          This Agreement contains the entire agreement and understanding between
          the Parties and merges and supersedes all prior representations and
          discussions pertaining to the Agreement, including Contractor's
          proposal. Any changes, exceptions, or different terms and conditions
          proposed by Contractor, or contained in Contractor's acknowledgment of
          the Agreement, or Change Order, are hereby rejected unless expressly
          stated in the Agreement or incorporated by a Change Order.

CONTRACTOR:
          APPLIANCE RECYCLING CENTERS         SOUTHERN CALIFORNIA
            OF AMERICA. INC.                    EDISON COMPANY

          BY:                                 By: 
              ------------------------------      ------------------------------
              Its:                                Its:
                   -------------------------           -------------------------

          Dated as of:                        Dated as of:
                       ---------------------               ---------------------