**Exhibit 10.35**

 

Contract No. 5600012228

 

AGREEMENT

 

for

 

GENERAL SERVICES

 

between

 

SAN DIEGO GAS & ELECTRIC COMPANY

 

And

 

APPLIANCE RECYCLING CENTERS OF AMERICA - CALIFORNIA, INC.

 

for

 

2004 Statewide Appliance Recycling Program

 

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TABLE OF CONTENTS

 
| **ARTICLE** |                                                   |
|-------------|--------------------------------------------------------|
| 1.          | SCOPE                                                  |
| 2.          | COMMENCEMENT  AND COMPLETION OF SERVICES               |
| 3.          | REPRESENTATIVES                                        |
| 4.          | COMPENSATION                                           |
| 5.          | PAYMENT                                                |
| 6.          | NOTICES OR DEMANDS                                     |
| 7.          | RESPONSIBILITY  OF CONTRACTOR                          |
| 8.          | INSPECTION                                             |
| 9.          | COMPANY RULES                                          |
| 10.         | CHANGES                                                |
| 11.         | EXCUSABLE DELAYS                                       |
| 12.         | SUSPENSION OF  SERVICES                                |
| 13.         | REPORTS                                                |
| 14.         | SUBCONTRACTORS                                         |
| 15.         | SUPPLIER DIVERSITY                                     |
| 16.         | AUDIT                                                  |
| 17.         | TAXES                                                  |
| 18.         | INDEPENDENT  CONTRACTOR                                |
| 19.         | WARRANTY                                               |
| 20.         | INSURANCE                                              |
| 21.         | INDEMNITY                                              |
| 22.         | ENVIRONMENTAL TERMS                                    |
| 23.         | HAZARDOUS  SUBSTANCE INFORMATION                       |
| 24.         | GOVERNING LAW                                          |
| 25.         | COMPLIANCE WITH LAWS                                   |
| 26.         | DEFAULT                                                |
| 27.         | TERMINATION                                            |
| 28.         | LIENS                                                  |
| 29.         | ASSIGNMENT                                             |
| 30.         | NONWAIVER                                              |
| 31.         | DISPUTES                                               |
| 32.         | CONFIDENTIALITY                                        |
| 33.         | GOVERNMENT CONTRACT  CLAUSES INCORPORATED BY REFERENCE |
| 34.         | TIME OF ESSENCE                                        |
| 35.         | VALIDITY                                               |
| 36.         | SURVIVAL                                               |
| 37.         | NO ORAL  MODIFICATIONS                                 |
| 38.         | CAPTIONS                                               |
| 39.         | COUNTERPARTS                                           |
| 40.         | AUTHORITY                                              |
| 41.         | CONSTRUCTION OF  AGREEMENT                             |
| 42.         | ORDER OF PRECEDENCE                                    |
| 43.         | COMPLETE AGREEMENT                                     |

 

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**GENERAL SERVICES AGREEMENT**

 

ThisGeneral Services Agreement (“Agreement”) is made effective as of March 1,2004 (“Effective Date”) between **SAN DIEGO GAS& ELECTRIC COMPANY**(“Company”) and **APPLIANCE RECYCLING CENTERS OF AMERICA - CALIFORNIA, INC.**(“Contractor”).

 

TheParties hereby agree as follows:

 

**1.****                                     ****SCOPE**

 

Contractorshall perform, at its own proper cost and expense, in the most substantial andskillful manner, to the satisfaction of Company, the following generallydescribe General Services (hereinafter, the “Services”):

 

Thescheduling, pick-up, and recycling of residential refrigerators and freezers.

 

**2.****                                     ****COMMENCEMENT AND COMPLETIONOF SERVICES**

 

ThisAgreement shall commence as of the Effective Date and shall be in full forceand effect through 12/31/2004, unless terminated earlier in accordance withArticle 27. Contractor agrees to commence and perform the Services inaccordance with the requests of Company Representative. The nature of theServices is such that timely performance is critical to the orderly progress ofrelated work and to the operating schedule of Company.

 

**3.****                                     ****REPRESENTATIVES**

 

3.1.                             Company Representative: Neil Sybert

 

Companydesignates, and Contractor accepts, the individual named above as CompanyRepresentative for all matters relating to Contractor’s performance of Servicesunder this Agreement. The actions taken by the Company Representative regardingsuch performance shall be deemed the acts of Company. Company may at any timeupon written notice to Contractor, pursuant to Article 6 hereof, changethe designated Company Representative.

 

3.2.                            Contractor Representative: Edward Cameron

 

Contractordesignates, and Company accepts, the individual named above as ContractorRepresentative for all matters relating to Contractor’s performance of Servicesunder this Agreement. The actions taken by Contractor Representative shall bedeemed the acts of Contractor.

 

**4.****                                     ****COMPENSATION**

 

Contractorhereby agrees to accept as full compensation for satisfactory performance ofthe Services as described in Article 1.** **All payments shall be made inaccordance with Article 5.

 

**5.****                                     ****PAYMENT**

 

5.1.                              Contractor shall invoice Company****on a monthly basis for Services performedin the previous calendar month, or in accordance with an established milestonecompletion schedule. All invoices submitted shall have complete supportdocumentation of all

 

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chargesincurred, including any data required to calculate fees or variable ratecharges, plus support documentation for any authorized reimbursable expenses bycategory.

 

5.2.                              Company may upon written notice toContractor, setoff any amount due from Contractor, whether or not under thisAgreement, against any amount due Contractor or claimed to be due by Contractorunder this Agreement. In addition, Company may withhold from Contractor anyamount sufficient to reimburse Company for any loss, damage, expense orliability for Contractor’s actual, alleged or reasonably probable failure,based on factual evidence, to comply with the terms and conditions of this Agreement.

 

5.3.                              Contractor shall submit invoices in duplicatein a format approved by Company and as set forth in this Article 5 to:

 

Original to: San Diego Gas & Electric Company

Attention: Accounts Payable

PO Box 129007

San Diego, CA 92112-9007

 

Copy to: San Diego Gas & Electric Company

Attention: Neil Sybert

8335 Century Park Court

San Diego, CA 92123-1569

 

5.4.                              Company shall make payment within thirty (30)days after receipt and approval of an invoice to the following address:

 

**Appliance Recycling Centers ofAmerica**

**7400 Excelsior Blvd**

**Minneapolis, MN 55426**

 

**6.****                                     ****NOTICES OR DEMANDS**

 

Anynotice, request, demand or other communication required or permitted under thisAgreement, shall be deemed to be properly given by the sender and received bythe addressee if made in writing and (1) if personally delivered; (2) as ofdate of signed return receipt after deposit with the U.S. Postal Service bycertified or registered mail, postage prepaid, with a return receipt requested;or (3) if sent by facsimile with confirmation sent as provided in (2) above.All correspondence shall reference the contract number specified on the coverpage of this Agreement. Notices shall be addressed as follows to:

 
| Company:    | Hal  Snider                                   |
|-------------|-----------------------------------------------|
|        | 101  Ash Street                               |
|        | San  Diego, CA 92101-3017                     |
|        | Facsimile  No: (619) 699-5177                 |
|        | Attention:  Director - Procurement Department |
|        |                                          |
| Contractor: | Edward  Cameron                               |
|        | Appliance  Recycling Centers of America       |
|        | 7400  Excelsior Blvd                          |
|        | Minneapolis,  MN 55426                        |
|        | Facsimile  No: 952-930-1800                   |
|        | Attention:  President & CEO               |

 

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**7.****                                     ****RESPONSIBILITY OF CONTRACTOR**

 

Contractorshall perform the Services in accordance with established professional andbusiness standards and ethics, and in conformity with each and every term ofthis Agreement. Contractor shall remedy any and all deficiencies in itsServices which result from Contractor’s failure to adhere to the Scope of Work.

 

**8.****                                     ****INSPECTION**

 

AllServices performed by Contractor shall be subject to the inspection andapproval of Company at all times, but such right of inspection of the Servicesshall not relieve Contractor of responsibility for the proper performance ofthe Services, nor shall such inspection waive Company’s right to reject theServices at a later date. Contractor shall provide to Company (or its designee)access to Contractor’s facility or facilities where the Services are beingperformed and sufficient, safe and proper work conditions for such inspection.Contractor shall furnish to Company such information concerning its operationsor the performance of the Services as Company shall reasonably request.

 

**9.****                                     ****COMPANY RULES**

 

9.1.                              Contractor shall conduct its operations instrict observation of access routes, entrance gates or doors, parking andtemporary storage areas as designated by Company. Under no circumstances shallany of Contractor’s personnel, vehicles or equipment enter, move or be storedupon any area not authorized by Company.

 

9.2.                              Contractor shall abide by all CompanySecurity procedures, rules and regulations, and cooperate with Company Securitypersonnel whenever on Company premises.

 

**10.****                              ****CHANGES**

 

10.1.                        Either Company or Contractor may propose anamendment (“Amendment”) in the Services by advising the other party in writing.As soon as practicable, Contractor shall prepare and forward to Company inwriting the proposed changes to the Scope of Work and/or compensation payableunder this Agreement as a result of the proposed Amendment.

 

10.2.                        Should the proposed Amendment be authorizedby Company, Contractor shall perform the Services as changed. All authorizedchanges in the Services and the compensation shall be confirmed and directedthrough a written Amendment. The compensation shall be negotiated by theparties in good faith to achieve a commercially reasonable result which includeall costs associated with the deletion or performance of the additional orchanged Services, including the impact on the original Scope of Work,inefficiencies created by the additional, deleted or changed Services, andoverhead associated with the additional, deleted or changed Services.

 

10.3.                        If any proposed Amendment is rejected byCompany, Contractor shall provide Company Representative with the details ofthe estimate of its proposed change. If the parties fail to agree on anAmendment to this Agreement, Company reserves the option to retain the servicesof others to perform such Services.

 

10.4.                        Company may request in writing from time totime, minor changes or revisions within the existing Scope of Work, if thechanges do not materially affect the cost of providing such Services, withoutCompany having to process an Amendment and without such changes altering thecompensation payable under this Agreement.

 

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10.5.                        Contractor shall implement a change in theServices only after Contractor has received a written Amendment to this Agreementexecuted by an authorized representative of Company. All changes shall beperformed under the terms and conditions of this Agreement. Contractor herebyexpressly waives any compensation, reimbursement of expenses and any otherright to receive payment with respect to any proposed Amendment not authorizedby a written Amendment to this Agreement.

 

**11.****                              ****EXCUSABLE DELAYS**

 

Contractorshall notify Company in writing immediately of any delay, or anticipated delayin Contractor’s performance of this Agreement due to causes or circumstancesbeyond the reasonable control of Contractor, and the reason for and anticipatedlength of such delay. Company may determine, in its sole judgment, to extendthe date of performance for a period equal to the time lost by reason of thedelay. Contractor shall not be eligible under any circumstances for additionalcompensation due to any such extension of time. Any extension to the contractterm pursuant to this Article 11 shall be documented by a writtenAmendment to this Agreement signed by both parties. Examples of such possiblyexcusable delays are natural calamities, strikes and boycotts, war or civilunrest or governmental actions, and other events which are commonly deemedForce Majeure. None of the foregoing, however, shall require Company to grantany extension.

 

**12.**                               **SUSPENSION OF SERVICES**

 

Companymay, at any time, by written notice, require Contractor to stop all, or anyportion, of the Services for a period of ninety (90) days and any furtherperiod to which the parties mutually agree. Upon receipt of notice, Contractorshall immediately cease performance under this Agreement. Within ninety (90)days after a Suspension of Services order is delivered hereunder, Company shalleither (a) cancel the Suspension of Services order, or (b) terminate thisAgreement pursuant to the provisions of Article 27. If the Suspension ofServices order is canceled, Contractor shall be granted a correspondingadjustment to all time periods and completion dates. Company shall not be liablefor any payments to Contractor for expenses incurred during the Suspension ofServices.

 

**13.****                              ****REPORTS**

 

Contractorshall provide periodic status reports as requested by Company Representative.The status reports shall make periodic comparisons of the Services rendered todate against the Scope of Work, including any milestones and costs. Suchreports shall include an explanation of any significant variations, anidentification of any potential or known developments which may impact Companyor the Services, and any corrective actions implemented.

 

**14.**                               **SUBCONTRACTORS**

 

Allsubcontractors utilized by Contractor under this Agreement, must be approved inadvance, in writing by Company. Company shall not unreasonably refuse toapprove Contractor’s subcontractors if such subcontractors meet all Company’sstandard requirements. Contractor shall at all times be responsible the actsand omissions of subcontractors and agents employed directly or indirectly byContractor. Contractor shall be responsible for performance of all theServices, whether performed by Contractor or its subcontractors or agents. ThisAgreement shall not give rise any contractual relationship between Company andany subcontractor or agent of Contractor. Company shall not undertake anyobligation to pay or to be responsible for the payment of any sums to anysubcontractor or

 

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agentof Contractor. Upon request of Company, Contractor shall furnish to Companycopies of any executed subcontracts entered into between Contractor and anysubcontractor or agent.

 

Contractorshall utilize only those COMPANY approved final disposal sites, transportersand other approved environmental vendors (collectively “EnvironmentalSubcontractors”) for subcontracted services in furtherance of this Agreement.COMPANY reserves the right to approve and add additional EnvironmentalSubcontractors in its sole discretion. Company also reserves the right toremove existing Environmental Subcontractors in its sole discretion.

 

**15.**                               **SUPPLIER DIVERSITY**

 

Itis the policy of Company to provide maximum opportunity for women, minor andservice disabled veteran business enterprises, hereinafter referred to as DBE(Diverse Business Enterprises), to participate in the performance of contracts.Company expects as performance to this Agreement, Contractor to utilize DBEsubcontractors and suppliers and to make good faith efforts to set and attaingoals in parity with Company goals when contracting for work with Company.Contractor shall submit on a timely basis all documentation required by Companyto report such verified DBE expenditures.

 

**16.****                              ****AUDIT**

 

16.1.                        Company reserves the right to designate itsown employee representative(s) or its contracted representative with acertified public accounting firm, who shall have the right to audit and toexamine any cost, payment, settlement or other supporting documentation fromany Services performed under this Agreement. Any such audit(s) shall beundertaken by Company or its contracted representative at reasonable timesduring normal business hours and in conformance with generally acceptedauditing standards. Contractor agrees to fully cooperate with any suchaudit(s).

 

16.2.                        Contractor shall include a similar clause inits agreements with its subcontractors reserving the right to designate Contractor’sown employee representative(s), its contracted representative from a certifiedpublic accounting firm, and/or representative(s) from Company, who shall havethe right to audit and to examine any cost, payment, settlement or othersupporting documentation resulting from any item related to the Services.

 

16.3.                        Contractor shall be notified in writing ofany exception taken as a result of an audit of Contractor or a subcontractor.Contractor shall refund the amount of any exception to Company within ten (10)days. If Contractor fails to make such payment, Contractor shall pay intereston any unpaid portion of such payment, accruing monthly, at a rate equal to thelesser of ten percent (10%) per annum or the maximum lawful rate. Interestshall be computed from the date of written notification of exception(s) to thedate Contractor reimburses Company in full for any exception(s). In the eventan audit in accordance with this Article 16 discloses an overcharge offive percent (5%) or greater, then Contractor shall reimburse Company for thecost for the performance of such audit.

 

16.4.                        Company’s right to audit shall extend for aperiod of five (5) years following the date of final payment under thisAgreement. Contractor and each subcontractor shall retain all necessary recordsand documentation for the entire length of this audit period.

 

**17.****                              ****TAXES**

 

17.1.                        Contractor assumes exclusive liability forand shall pay before delinquency, all federal, state, regional, municipal orlocal sales, use, excise and other taxes, charges or contributions imposed on,or with respect to, or measured by the equipment,

 

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materials,labor furnished hereunder, or the wages, salaries or other remunerations paidto individuals employed in connection with, the performance of the Services.Provided that the conditions of indemnification as set forth in Article 21are satisfied, Contractor shall indemnify, defend and hold Company, and itscurrent and future, direct and indirect parent Company(ies), subsidiaries,affiliates and their respective directors, officers, shareholders, employees,agents, representatives, successors and assigns harmless from and against anyclaim, liability, penalty, interest and expense arising by reason ofContractor’s failure to pay such taxes, charges or contributions.

 

17.2.                        Without limiting the generality of thisArticle 17, Contractor agrees to treat all individuals performing theServices under this Agreement as employees of Contractor for purposes offederal and state income taxes, Social Security and Medicare taxes,unemployment and disability insurance premiums. No exceptions shall bepermitted under this Article 17 without a written Amendment to thisAgreement prior to any individual performing any required Services under thisAgreement. Contractor agrees that, at any time during the performance of thisAgreement, Company shall have the right to audit Contractor’s compliance withthis provision in accordance with Article 16.

 

17.3.                        To the extent any portion of the Services areperformed in the State of California, either (a) Contractor represents thatContractor is a California resident and shall provide Company with an originaland a copy of Form 590, Certificate of Residence, in accordance with CaliforniaRevenue and Taxation Code Section 18662 and regulations thereunder; or (b)seven percent (7%) of all compensation payable to Contractor for Servicesperformed in California shall be withheld in accordance with applicableCalifornia Franchise Tax Board (“FTB”) or successor regulations, unless Companyhas been notified in writing by FTB****that withholding is waived or alower rate or withholding is authorized.

 

17.4.                        Contractor and Company shall makecommercially reasonable efforts to cooperate with each other to minimize thetax liability of both parties to the extent legally permissible (and with noduty to increase either parties tax liability), including separately statingtaxable charges on Contractor’s invoices and supplying resale and exemptioncertificates, if applicable, and any other information as reasonably requested.

 

**18.****                              ****INDEPENDENT CONTRACTOR**

 

18.1.                        It is agreed that Contractor shall performthe Services under this Agreement as an independent Contractor and noprincipal-agent or employer-employee relationship or joint- venture orpartnership shall be created with Company.

 

18.2.                        Contractor represents to Company thatContractor and its subcontractors and agents are properly licensed, fullyexperienced and qualified to perform the class and type of the Services asspecified in this Agreement, in addition to being properly insured, equipped,organized, staffed and financed to handle such Services.

 

18.3.                        Contractor shall perform the Services in anorderly and professional manner in accordance with industry standards.Contractor shall not employ on the Services any personnel, agent orsubcontractor unskilled in the work assigned.

 

18.4.                        Contractor shall use prudent businesspractices in its relationships with subcontractors suppliers and agents.

 

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18.5.                        Contractor, its subcontractors and agents shallnot engage in any advertising, publicity or other promotional activities whichin any way directly or indirectly refers to this Agreement.

 

**19.****                              ****WARRANTY**

 

Contractorexpressly warrants that all the Services performed hereunder shall be incompliance with the performance standards, drawings, specifications and anyother description of services set forth in the Scope of Work, and the terms andconditions of this Agreement. Company may reject any Services furnishedhereunder failing to meet such standards, and require Contractor to repeat,correct or replace such defective Services, at NO charge to Company.

 

**20.****                              ****INSURANCE**

 

Insurancerequirements are set forth as follows, but shall not in any way limit theamount or scope of liability of Contractor under this Agreement. The followingconstitutes the minimum insurance and requirements relating thereto:

 

20.1.                        On or before the effective date of thisAgreement, and thereafter during its term, Contractor shall provide Companywith current certificates of insurance, executed by a duly authorizedrepresentative of each insurer, as evidence of all insurance policies requiredunder this Article 20. No insurance policy may be canceled, materiallyrevised, or subject to non- renewal without at least thirty (30) days priorwritten notice being given to Company. Insurance shall be maintained withoutlapse in coverage during the term of this Agreement. Company shall also begiven certified copies of Contractor’s policies of insurance, upon request.

 

20.2.                        Company shall be named as an additionalinsured in each general liability policy. Such general liability insuranceshall provide a severability of interest or cross-liability clause.

 

20.3.                        The required policies, and any ofContractor’s policies providing coverage excess of the required policies, shallprovide that the coverage is primary for all purposes and Contractor shall notseek any contribution from any insurance or self-insurance maintained byCompany.

 

20.4.                        All required policies of insurance shall bewritten by companies having an A.M. Best rating of “A-” or better, orequivalent.

 

20.5.                        Contractor shall be solely responsible forany deductible or self-insured retention on insurance required hereunder thisAgreement.

 

20.6.                        At all times during this Agreement, Contractorshall provide and maintain, at Contractor’s expense, the following types ofinsurance:

 

20.6.1.               **General Liability Insurance:**Contractor shall maintain anoccurrence form commercial general liability policy or policies, insuringagainst liability arising from bodily injury, property damage, personal andadvertising injury, independent Contractors liability, products and completedoperations and contractual liability. Such coverage shall be in an amount ofnot less than $1,000,000.00 (One Million Dollars) combined single limit peroccurrence.

 

20.6.2.               **Automobile LiabilityInsurance:**Contractor shallmaintain an automobile liability policy or policies insuring against liabilityfor damages because of bodily

 

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injury,death, or damage to property, (including loss of use thereof), and occurring inany way related to the use, loading or unloading of any of Contractor’sautomobiles (including owned, non-owned, leased, rented and/or hired vehicles).Such coverage shall be in an amount of not less than $1,000,000.00 (One MillionDollars) each accident.

 

20.6.3.               **Workers CompensationInsurance:**In accordancewith the laws of the State(s) in which the Services shall be performed,Contractor shall maintain in force workers compensation insurance for all ofits employees. If applicable, Contractor shall obtain U.S. Longshoremen’s andHarbor Workers compensation insurance, separately, or as an endorsement toworkers compensation insurance. Contractor shall also maintain employer’sliability coverage in an amount of not less than $1,000,000.00 (One MillionDollars) per accident and per employee for disease. In lieu of such insurance,Contractor may maintain a self-insurance program meeting the requirements ofthe State(s) in which the Services shall be performed along with the requiredemployer’s liability insurance.

 

20.6.4.               **Environmental Impairment****Liability Insurance:**Contractorshall maintain a comprehensive environmental impairment liability policy orpolicies insuring against liability for environmental activities contemplatedunder this Agreement as required by federal, state, regional, municipal andlocal laws, but not less than $1,000,000.00 (One Million Dollars) each claim.

 

20.7.                        Each policy of property, general liabilityand automobile (including automobile physical damage) insurance maintained byContractor shall contain a waiver of subrogation in favor of Company.

 

**21.****                              ****INDEMNITY**

 

21.1.                        As between Company and Contractor, Contractorshall be solely responsible for and Contractor shall indemnify, defend and holdCompany, and its current and future, direct and indirect parent Company(ies),subsidiaries, affiliates and their respective directors, officers,shareholders, employees, agents, representatives, successors and assignsharmless from and against any and all claims, actions, suits, proceedings,losses, liabilities, penalties, fines, damages, costs or expenses includingwithout limitation, attorneys fees (including fees and disbursements ofin-house and outside counsel) of any kind whatsoever resulting from (a)injuries to or death of any and all individuals, including, without limitation,members of the general public, or any employee, agent, independent Contractoror consultant or affiliate of either Company or Contractor, arising out of orconnected in any manner with the performance of Services, whether or not theconduct of Contractor or any subcontractor was tortious and whether or notCompany’s tortious conduct contributed to the injuries or death, (b) damage to,loss, and/or destruction of property, including, without limitation, to,property of Company or Contractor arising out of or connected in any mannerwith the performance of Services, whether or not the conduct of Contractor orany subcontractor was tortious and whether or not Company’s tortious conductcontributed to the property damages, or (c) third party claims of any kind,whether based upon negligence, strict liability or otherwise, arising out of orconnected in any manner to Contractor’s or any of its subcontractor’s acts oromissions in breach of this Agreement. This indemnification obligation shallnot apply to the extent that injuries, death, loss, damage or destruction iscaused by either the willful misconduct of Company, its employees, agents orrepresentatives, or Company’s sole negligence.

 

21.2.                       Contractor shall indemnify, defend and holdCompany, and its current and future, direct and indirect parent Company(ies),subsidiaries, affiliates and their respective directors, officers,shareholders, employees, agents, representatives, successors and assignsharmless from and against any and all claims, actions, suits, proceedings,losses, liabilities, penalties, fines, damages, costs or expenses includingattorneys fees (including fees and

 

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disbursementsof in-house and outside counsel) of any kind whatsoever arising from (a) actualor alleged infringement or misappropriation by Contractor or any subcontractorof any patent, copyright, trade secret, trademark, service mark, trade name, orother intellectual property right in connection with the Services, includingwithout limitation, any deliverable, and (b) Contractor’s violation of anythird party license to use intellectual property in connection with theServices, including, without limitation, any deliverable.

 

21.3.                        If any claim or action is brought againstCompany, then Contractor shall be entitled to participate in, and, unless inthe opinion of counsel for Company a conflict of interest between Company andContractor may exist with respect to such claim or action, assume the defenseof such claim or action, with counsel reasonably acceptable to Company. IfContractor does not assume the defense of Company, or if a conflict precludesContractor from assuming the defense, then Contractor shall reimburse Companyon a monthly basis for Company’s defense through separate counsel of Company’schoice. Even if Contractor assumes the defense of Company with acceptablecounsel, Company, at its sole option and expense, may participate in thedefense with counsel of Company’s own choice without relieving Contractor ofany of its obligations hereunder.

 

21.4.                        Contractor’s obligation to indemnify Companyunder this Article 21 shall not be limited in any way by any limitation onthe amount or type of damages, compensation, penalty or benefits payable by orfor Contractor under any statutory scheme, including without limitation, anyWorkers Compensation Acts, Disability Benefit Acts or other Employee BenefitActs.

 

**22.**                               **ENVIRONMENTAL TERMS**

 

22.1.                        For purposes of this Agreement, the followingterms shall have the following meanings:

 

22.1.1.               The term “Hazardous Material” means anychemical, substance, material, product, controlled substance, object,condition, solid or hazardous waste or any combination thereof, which is or maybe hazardous to human health or safety or the environment due to itsradioactivity, ignitability, reactivity, toxicity, or other harmful orpotentially harmful properties or affects. Hazardous Material includes, withoutlimitation, oil or petroleum and petroleum products, asbestos and any asbestoscontaining materials, radon, polychlorinated biphenyls (“PCBs”), ureaformaldehyde insulation, lead paints and coatings, and all of those chemicals,substances, materials, products, controlled substances, objects, conditions andwaste or any combinations thereof which are currently or become in the futurelisted, defined or regulated in any manner by any federal, state, regional,municipal or local Environmental Law (as that term is defined below).

 

22.1.2.               The term “Environmental Law” means any andall applicable federal, state, regional, municipal or local law, regulation,decision of the courts, ordinance, rule, code, order, directive, guideline,authorization or approval, permit or permit condition, currently existing or asamended, enacted, issued or adopted in the future which relates in any way toworker or workplace safety, environmental conditions, environmental quality orpolicy, health and/or safety issues or concerns (including product safety).Environmental Law includes, without limitation, the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, as amended (42 USC,Section 9601 et seq.), the Resource Conservation and Recovery Act (42 USC,Section 6901 et seq.), the Carpenter-Presley-Tanner Hazardous SubstanceAccount Act (California Health & Safety Code, Section 25300 et seq.),the California Hazardous Waste Control Law (California Health & SafetyCode, Section 25100 et seq.), the Occupational Safety and Health Act (29USC Sections 651 et seq.), the California Occupational

 

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Safetyand Health Act (California Labor Code Sections 6300 et seq.), and anyregulations or rules promulgated thereunder.

 

22.1.3.               The term “Governmental Agency” shall mean anyfederal, state regional, municipal or local governmental agency or other publicor political body having the jurisdiction, mandate, authority or power toregulate, implement, coordinate, administer or enforce any Environmental Law.

 

22.2.                        Contractor agrees to use, and agrees that itshall require each of its subcontractors, if any, to use only personnel who arequalified and properly trained and who possess every license, permit,registration, certificate or other approval required by any applicableEnvironmental Law or Governmental Agency to enable such personnel to performtheir work involving any part of Contractor’s obligations under this Agreement.

 

22.3.                        Contractor agrees that all materials andequipment to be supplied or used by Contractor, its subcontractors, if any, inthe performance of its obligations under this Agreement, including, but notlimited to vehicles, loading equipment, and containers, shall be in goodcondition and fit for the use(s) for which they are employed by Contractor orits subcontractor, if any. Such materials and equipment shall at all times bemaintained, inspected and operated as required by applicable Environmental Law.Contractor further agrees that all licenses, permits, registrations andcertificates or other approvals required by any Environmental Law orGovernmental Agency shall be procured and maintained for such materials andequipment at all times during the use of the same by Contractor or itssubcontractors, if any, in the performance of any of Contractor’s obligationsunder this Agreement.

 

22.4.                        Contractor specifically agrees that in theperformance of its obligations under this Agreement, Contractor shall at alltimes fully comply with and cause each of its subcontractors, if any, to fullycomply with all applicable Environmental Laws. Contractor further specificallyagrees that at all times during its performance of the Services, Contractorshall have and cause its subcontractors, if any, to have and keep in effect alllicenses, permits, registrations, certificates, and approvals required by anyEnvironmental Law or by any Governmental Agency for the Services undertaken byContractor or its subcontractors, if any, in the performance of Contractor’sobligations under this Agreement.

 

22.5.                        Contractor hereby specifically agrees toindemnify, defend and hold Company, its current and future, direct and indirectparent Company(ies), subsidiaries, affiliates and their respective directors,officers, shareholders, employees, agents, representatives, successors andassigns (hereinafter, collectively the “Indemnitees”) harmless from and againstany and all claims, actions, suits, proceedings, losses, liabilities,penalties, fines, damages, demands, causes of action, costs and expensesincluding, but not limited to, all reasonable consulting, engineering,attorneys (in-house and outside counsel) or other professional fees includingdisbursements, which Indemnitees, or any of them, may incur or suffer by reasonof:

 

(1)                                  any unauthorized release of a HazardousMaterial,

 

(2)                                  any enforcement or compliance proceedingcommenced by or in the name of any Governmental Agency because of an alleged,threatened or actual violation of any Environmental Law,

 

(3)                                  any action reasonably necessary to abate,remediate or prevent a violation or threatened violation of any EnvironmentalLaw, and/or

 

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(4)                                  any other cause of whatsoever nature,

 

arisingout of or in any way connected with Contractor’s performance of its obligationsunder this Agreement and/or Contractor’s willful or negligent acts or omissionsin connection therewith; except to the extent the same were caused by thenegligent or willful misconduct or omissions of the Indemnitees, or any ofthem. Contractor’s obligation to indemnify Indemnitees under thisArticle 22 shall not be limited in any way by any limitation on the amountor type of damages, compensation, penalty or benefits payable by or forContractor under any statutory scheme, including without limitation, anyWorkers Compensation Acts, Disability Benefit Acts or other Employee BenefitActs.

 

22.6.In the event of any release of a Hazardous Material, Contractor shall performthe following actions:

 

(1)                                  Take all reasonable steps necessary to stopand contain said release

 

(2)                                  Make any report of such release as requiredunder Environmental Law

 

(3)                                  Clean up such release as required byGovernmental Agency

 

Contractorshall immediately notify Company Representative of the following informationupon the occurrence of any release of Hazardous Material in connection with theperformance of the Services:

 

(1)                                  A description of the release

 

(2)                                  The identification of the Hazardous Materialand the volume released.

 

(3)                                  Death of any person

 

(4)                                  Property damage

 

(5)                                  Any communication from any GovernmentalAgency that alleges that Contractor is not acting in compliance withEnvironmental Law.

 

(6)                                  Any communication from any GovernmentalAgency that affects any permits or licenses necessary to perform the Services.

 

Contractorshall promptly submit within 36 hours to Company Representative a writtenreport, in a format as required by Company, describing in detail any event ofany release of a Hazardous Material of which shall include the followinginformation:

 

(1)                                  Name and address of Contractor and, ifapplicable, any subcontractor(s) or agent(s) involved.

 

(2)                                  Name and address of Contractor’s commercialand environmental liability insurance carrier.

 

(3)                                  Name and address of any injured or deceasedpersons, if applicable.

 

(4)                                  Name and address of any property damage, ifapplicable.

 

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(5)                                  A detailed description of the releaseincluding the identification of the Hazardous Material, the date and time ofthe release, the volume released, and the nature of the any environmentalcontamination.

 

(6)                                  A determination of whether any of Company’spersonnel, equipment, tools or materials were involved.

 

(7)                                  A detailed description of all reports made toany Governmental Agency, and a description of the actions taken to respond tothe release.

 

22.7.                        Contractor shall NOT (a) transport anyof Hazardous Material of which Company is the generator for purposes oftreatment, storage, recycling and/or disposal; or (b) conduct any treatment,storage, recycling and/or disposal of any Hazardous Material of which Companyis the generator, unless specifically authorized by Company to perform suchactivities under this Agreement. If Contractor is authorized by Company toperform such activities under this Agreement, then the following terms andconditions shall also apply:

 

22.7.1.               Contractor shall not transport any HazardousMaterial of which Company is the generator to any treatment, storage, recyclingand/or disposal facility (hereinafter called “TSDF”) not authorized by Companyin writing. Moreover, notwithstanding the fact that Company has identified anauthorized TSDF, Contractor agrees that before Contractor transports anyHazardous Material to any such TSDF, Contractor shall confirm that such TSDFhas, as of the date of each shipment, procured and maintained in effect alllicenses, permits, registrations, certificates or other authorizations requiredby any Environmental Law or Governmental Agency, for such TSDF to lawfullyreceive, handle, transport, store, treat, recycle, incinerate, dispose of, orotherwise manage or use such Hazardous Material as authorized by Company.Contractor shall not transport any Hazardous Material of which Company is thegenerator to any TSDF which is unable or fails to provide such confirmation,and immediately provide written notification of such condition to Company.Further, notwithstanding that Company has identified an authorized TSDF,Company reserves the right at any time, at Company’s sole discretion, to cancelits authorization of any such TSDF upon written notification to Contractor.

 

22.7.2.               Subject to the obligations of Contractordescribed in this Agreement, Company shall, when required by applicableEnvironmental Law, provide Contractor with a complete and executed HazardousWaste Manifest or other shipping documentation for any Hazardous Material ofwhich Company is the generator to be transported for treatment, storage, recyclingand/or disposal under this Agreement. Contractor’s transportation, recycling,treatment, storage, and/or disposal of any such Hazardous Material inaccordance with this Agreement shall be fully documented by Contractorutilizing, among other things, the Hazardous Waste Manifest tracking system orother records as required by Environmental Law, copies of which documentationshall be promptly provided to Company.

 

**23.**                               **HAZARDOUS SUBSTANCEINFORMATION**

 

Contractorshall provide the following to Company for each material which Contractorfurnishes to a Company facility, at any time, for use in fulfilling itsobligations under this Agreement: (a) a completed Material Safety Data Sheet(MSDS) for each material which contains a *hazardousmaterial*as defined by California Health and Safety CodeSection 25501(o); and (b) a written statement for each such material thatis a Mixture or Trade Name Product which contains a *Toxic Chemical*subject to the reporting requirements ofSection 313 or EPCRA (40 CFR Section 372 et seq.) including: (1) thename and associated CAS (Chemical Abstract Services Registry) number of the *Toxic Chemical;*(2) the specificconcentration at which each such *ToxicChemical*is present in each such Mixture or Trade Name Product; and

 

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(3)the weight of each such *Toxic Chemical*ineach such Mixture or Trade Name Product. Contractor shall indemnify, defend andhold Company, and its current and future, direct and indirect parentCompany(ies), subsidiaries, affiliates and their respective directors,officers, shareholders, employees, agents, representatives, successors andassigns harmless from and against any and all claims, actions, suits,proceedings, losses, liabilities, penalties, fines, damages, administrativeactions, judgments, costs or expenses including expert witness, consulting andattorneys fees (including fees and disbursements of in-house and outsidecounsel) that Company may suffer as a result of Contractor’s failure to complywith these requirements.

 

**24.**                               **GOVERNING LAW**

 

Theformation, interpretation and performance of this Agreement shall be governedby and enforced under the laws of the State of California, without reference toprinciples of conflicts of laws.

 

**25.**                               **COMPLIANCE WITH LAWS**

 

Contractorand its subcontractors at all times during performance of the Services shallcomply with and observe, all applicable federal, state, regional, municipal andlocal laws, ordinances, rules, codes, regulations, executive orders, allapplicable employment, safety and environmental orders and all orders ordecrees of administrative agencies, courts or other legally constitutedauthorities having jurisdiction or authority over Contractor, Company or theServices.

 

**26.**                               **DEFAUL T**

 

Contractoragrees that if (a) Contractor abandons the Services, or (b) Contractor shallbecome bankrupt or insolvent, or shall assign this Agreement, or sublet anypart thereof, without the express prior written authorization of Company, or(c) Contractor, in the sole opinion of Company Representative, violates any ofthe provisions of this Agreement, or (d) Contractor executes this Agreement inbad faith, or (e) Contractor, in the sole opinion of the Company Representativeis not performing the Services in accordance with the terms of this Agreement,Company may notify Contractor, pursuant to Article 6, to discontinue allor any part of the Services and Contractor shall thereupon discontinue theServices or such parts thereof. Company shall thereupon have the right tocontinue and complete the Services or any part thereof, by contract orotherwise, and Contractor shall be liable to Company for any and all loss,penalties, fines, excess cost and consequential, special, incidental andindirect damages incurred by Company in completing the Services caused byContractor’s failure to execute the requirements of this Agreement. Theremedies herein shall be inclusive and additional to any other rights orremedies in law or equity, and no action by Company shall constitute a waiverof any such other rights or remedies. If it is determined for any reason by atribunal of competent jurisdiction that Contractor was not in default, theparties rights and obligations shall be the same as if notice of terminationhad been issued pursuant to Article 27.

 

**27.****                              ****TERMINATION**

 

Itis also expressly agreed that Company shall have the right to terminate thisAgreement, or any part thereof, at any time for its sole convenience upon two(2) business days written notice, pursuant to Article 6, to Contractor.Contractor shall fully justify and document to Company in writing anytermination charges claimed by Contractor (which shall not exceed 110% of thereasonable and actual cost of direct labor, materials and overhead). In noevent shall Contractor be entitled to payment for any Services which has notbeen authorized by Company, or is not yet performed, or any anticipated profitsfor any Services that have not been authorized or performed. Any payment oftermination charges shall occur within thirty (30) days

 

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ofreceipt of Contractor’s written submittal of charges and justification toCompany’s satisfaction. Company shall have the right to review and verify byindependent audit, any termination charges claimed by Contractor prior topayment.

 

**28.****                              ****LIENS**

 

Withoutlimiting the generality of Article 21, Contractor shall indemnify, defend,and hold Company, and its current and future, direct and indirect parentCompany(ies), subsidiaries, affiliates and their respective directors,officers, shareholders, employees, agents, representatives, successors andassigns harmless from and against any mechanics lien or stop notice claimagainst Company by Contractor, subcontractors, employees or agents pertainingto the Services specified in this Agreement.

 

**29.****                              ****ASSIGNMENT**

 

29.1.                        Contractor shall give personal attention tothe execution of the Services herein provided for, and shall not permit thisAgreement to be assigned voluntarily, involuntarily or by operation of law; noremploy any subcontractor for the execution of the same or any part thereof,without the express prior written authorization of Company. No such writtenauthorization, however, shall be construed as discharging or releasingContractor in the performance of the Services or the fulfillment of anyobligation specified in this Agreement. Contractor shall remain jointly and severally liable with any permittedassignee for any failure to comply with all applicable obligations hereunderthis Agreement.

 

29.2.                        Company may assign in whole or in part itsrights and obligations under this Agreement at any time without the consent ofContractor.

 

**30.****                              ****NONWAIVER**

 

Thefailure of Company to insist upon or enforce, in any instance, strictperformance by Contractor of any of the terms or conditions of this Agreement,or to exercise any rights herein conferred shall not be construed as a waiveror relinquishment to any extent of its right to assert, or rely upon any suchterms or rights on any future occasion. No waiver shall be valid unless statedin writing as set forth in Article 6.

 

**31.**                               **DISPUTES**

 

31.1                           Any dispute that cannot be resolved betweenContractor Representative and Company Representative shall be referred toCompany Manager - Service Contracting and an officer of Contractor forresolution. If Company and Contractor cannot reach an agreement within a reasonableperiod of time, Company and Contractor shall have the right to pursuelitigation as provided for herein.

 

31.2.                        In the event of any litigation to enforce orinterpret any terms of this Agreement, unless the parties agree in writingotherwise, such action shall be brought in any Superior Court of Californiahaving jurisdiction (or, if the federal courts have exclusive jurisdiction overthe subject matter of the dispute, in the U.S. District Court for the SouthernDistrict of California), and the parties hereby submit to the exclusivejurisdiction of said court.

 

31.3.                        In any action in litigation to enforce orinterpret any of the terms of this Agreement, the prevailing party shall beentitled to recover from the unsuccessful party all costs, expenses, (includingexpert testimony) and reasonable attorneys fees (including fees anddisbursements of in-house and outside counsel) incurred therein by theprevailing party.

 

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31.4.                        In no event shall the litigation of anycontroversy or the settlement thereof delay the performance of this Agreement.

 

**32.****                              ****CONFIDENTIALITY**

 

32.1.                        For purposes of this Agreement, the term“Confidential Information” means proprietary information concerning thebusiness, operations and assets of Company, its parent Company(ies),subsidiaries and/or affiliates, including, without limitation, the terms andconditions of this Agreement or any related agreement, information or materialsprepared in connection with the performance of Services under this Agreement,or any related subsequent agreement, designs, drawings, specifications,techniques, models, data, documentation, source code, object code, diagrams,flow charts, research, development, processes, procedures, know-how,manufacturing, development or marketing techniques and materials, developmentor marketing timetables, strategies and development plans, customer, supplieror personnel names and other information related to customers, suppliers orpersonnel, pricing policies and financial information, and other information ofa similar nature, whether or not reduced to writing or other tangible form, andany other trade secrets. Confidential Information shall not include (a)information known to Contractor prior to obtaining the same from Company; (b)information in the public domain at the time of disclosure by Contractor; (c)information obtained by Contractor from a third party who did not receive same,directly or indirectly, from Company; or (d) information approved for releaseby express prior written consent of an authorized officer of Company.

 

32.2.                        Contractor hereby agrees that it shall usethe Confidential Information solely for the purpose of performing Servicesunder this Agreement and not in any way detrimental to Company, its parentCompany(ies), subsidiaries and/or affiliates. Neither Contractor nor itsdirectors, officers, employees, agents or representatives shall use theConfidential Information for their own benefit. Contractor agrees to use thehigher of the same degree of care Contractor uses with respect to its ownproprietary or confidential information, which in any event shall result in areasonable standard of care to prevent unauthorized use or disclosure of theConfidential Information. Except as otherwise provided herein, Contractor shallkeep confidential and not disclose the Confidential Information. Contractorshall cause each of its directors, officers, employees, agents,representatives, subcontractors and suppliers to become familiar with, andabide by, the terms of this Agreement.

 

32.3.                        Notwithstanding the provisions of thisArticle 33, Contractor may disclose any of the Confidential Information inthe event, but only to the extent, that, based upon advice of counsel,Contractor is required to do so by the disclosure requirements of any law,rule, regulation or any order, decree, subpoena or ruling or other similarprocess of any court, governmental agency or regulatory authority. Prior tomaking or permitting any such disclosure, Contractor shall provide Company withprompt written notice of any such requirement so that Company (withContractor’s assistance if requested by Company) may seek a protective order orother appropriate remedy.

 

32.4.                        Subject to Article 33.3, Contractorshall not, without the prior written consent of Company, disclose to any thirdparty the fact that such Confidential Information has been made available toContractor.

 

32.5.                        At any time upon the request of Company,Contractor shall promptly deliver to Company or destroy if so directed byCompany (with such destruction to be certified to Company) all documents (andall copies thereof, however stored) furnished to or prepared by Contractor thatcontain Confidential Information and all other documents in Contractor’spossession that contain or that are based on or derived from ConfidentialInformation.

 

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32.6.                        Notwithstanding the return or destruction ofall or any part of the Confidential Information, the confidentiality provisionsset forth in this Agreement shall nevertheless remain in full force and effectwith respect to specific Confidential Information until the date that is five(5) years after the date of disclosure of such Confidential Information.

 

32.7.                        The parties acknowledge that the ConfidentialInformation is valuable and unique, and that damages would be an inadequateremedy for breach of this Agreement and the obligations of Contractor arespecifically enforceable. Accordingly, the parties agree that in the event of abreach or threatened breach of this Agreement by Contractor, Company, itsparent Company(ies), subsidiaries and/or affiliates, who shall be third partybeneficiaries of this Agreement, shall be entitled to seek an injunctionpreventing such breach, without the necessity of proving damages or posting anybond. Any such relief shall be in addition to, and not in lieu of, monetarydamages or any other legal or equitable remedy available to Company, its directand indirect parent Company(ies), subsidiaries or affiliates.

 

**33.**                               **GOVERNMENT****CONTRACT CLAUSES INCORPORATED BY REFERENCE**

 

Withoutlimiting the generality of any other Article of this Agreement, Contractorshall comply with all applicable requirements set forth in the FederalAcquisition Regulations (or any successor thereto) in effect on the date ofthis Agreement, which are incorporated herein reference, with the same forceand effect as if they were given in full text. The terms and conditions thereofshall be controlling over any conflicting terms and conditions set forth inthis Agreement or any written Amendment hereto.

 

**34.**                               **TIME OF ESSENCE**

 

Timeis expressly agreed to be of the essence of this Agreement and each, every andall of the terms, conditions and provisions herein.

 

**35.**                               **VALIDITY**

 

Theinvalidity, in whole or in part, of any provisions hereof shall not affect thevalidity of any other provisions hereof.

 

**36.**                               **SURVIVAL**

 

Theobligations imposed on Contractor and Contractor’s employees by and pursuant toeach Article which, by its terms contains subject matter which relates totime periods subsequent to the term of this Agreement (including withoutlimitation Articles 16, 17, 19, 20, 21 22, 23, 24, 25, 28, 31 and 33), shallsurvive termination of this Agreement.

 

**37.**                               **NO ORAL MODIFICATIONS**

 

Nomodification of any provisions of this Agreement shall be valid unless inwriting and signed by duly authorized representatives of both parties. CompanyRepresentative is not the duly authorized representative for Amendments to thisAgreement. Representatives of both parties internally authorized to executesuch documents pursuant to its corporate policies shall sign any Amendments tothis Agreement.

 

**38.**                               **CAPTIONS**

 

Thecaptions in this Agreement are for convenience and reference only and the wordscontained therein shall in no way be held to explain, modify, amplify or aid inthe interpretation, construction or meaning of the provisions of thisAgreement.

 

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**39.**                               **COUNTERPARTS**

 

ThisAgreement may be executed in counterparts which, taken together, constitute asingle instrument.

 

**40.**                               **AUTHORITY**

 

Eachindividual executing this Agreement on behalf of Company and Contractorrepresents and warrants that he or she is duly authorized to execute anddeliver this Agreement on behalf of said party, and that this Agreement isbinding upon said party in accordance with its terms and conditions.

 

**41.**                               **CONSTRUCTION OF AGREEMENT**

 

Bothparties have participated in the negotiating and drafting of this Agreement.Therefore, the terms and conditions of this Agreement shall not be construedagainst either party as the drafting party.

 

**42.****                              ****ORDER OF PRECEDENCE**

 

Inthe event of conflicting provisions between any of the documents comprisingthis Agreement, the provisions shall govern in the following priority order:

 

(1)                                  Duly Executed Amendments (most recent haspriority)

(2)                                  The General Conditions of this Agreement

(3)                                  The Special Conditions of this Agreement

 

**43.**                               **COMPLETE AGREEMENT**

 

This Agreement constitutes the complete and entire Agreement betweenthe parties and supersedes any previous communications, representations oragreements, whether oral or written, with respect to the subject matter hereof.There are no additions to, or deletions from, or changes in, any of theprovisions hereof, and no understandings, representations or agreementsconcerning any of the same, which are not expressed herein, unlessstated below. THE PARTIES HEREBY AGREE THAT NO TRADE USAGE, PRIOR COURSE OFDEALING OR COURSE OF PERFORMANCE UNDER THIS AGREEMENT SHALL BE A PART OF THISAGREEMENT OR SHALL BE USED IN THE INTERPRETATION OR CONSTRUCTION OF THISAGREEMENT.

 

INWITNESS WHEREOF, the parties have executed this Agreement as of the date firstwritten above:

 
| **SAN DIEGO GAS & ELECTRIC** |                    | **APPLIANCE RECYCLING CENTERS OF** |
|----------------------------------|-------------------------|------------------------------------|
| **COMPANY**                      |                    | **AMERICA -  CALIFORNIA, INC.**    |
|                             |                    |                               |
| By:                              | /s/Margot  Kyd          |                               | By: | /s/Edward  R. Cameron |
| Name:                            | MARGOT  KYD             |                               | Name: | Edward  R. (Jack) Cameron |   |
| Title:                           | SVP  Business Solutions |                               | Title: | Pres.  & CEO |   |
| Date:                            | 3/12/2004               |                               | Date: | 4/10/04 |   |
|                                  |                         |                                    |  |  |  |  |  |  |  |  |

 

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