EXHIBIT 10 (pp)


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                                   ----------

                             THE TIREX CORPORATION

                                   ----------

                               ROYALTY AGREEMENT

      Royalty Agreement, made this day of August 1998 between:

                     ENERCON America Distribution Limited
                     540 Tansy Lane
                     Westerville, Ohio 43081

                                          (the "Operator")

                                                and

                     The Tirex Corporation
                     740 St. Maurice, Suite 201
                     Montreal, Quebec
                     Canada H3C 1L5

                                          (the "Manufacturer")

      Whereas,  the  Manufacturer  and  the  Operator  are  parties  to  certain
equipment lease and purchase  agreements,  of even date herewith (the "Equipment
Lease and  Purchase  Agreements"),  between the  Manufacturer  and the  Operator
respecting the sale by the  Manufacturer and the Purchase by the Operator of the
"Purchased  Equipment" and the operating  lease,  between the  Manufacturer,  as
lessor, and the Operator, as lessee, respecting the "Leased Equipment", as those
terms are defined in the said Equipment Lease and Purchase Agreements.

      Whereas,  in  consideration  for the premises and the mutual promises made
therein,  the Operator has agreed,  pursuant to the Equipment Lease and Purchase
Agreements,  to enter into this Royalty Agreement with the Manufacturer  whereby
the Operator will pay to the Manufacturer  certain royalties calculated upon the
gross proceeds from all sales of rubber crumb,  fiber and steel from scrap tires
disintegrated by the TCS-1 System and the TCTS-1 System which are the respective
subjects of the said  Equipment  Lease and  Purchase  Agreements  (the  "Subject
Systems").

Now, Therefore, it is agreed as follows:

1.    Definitions

      1.2 "Manufacturer" shall mean The Tirex Corporation and its successors and
assigns.


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      1.3 "Operator"  shall mean ENERCON  America  Distribution  Limited and all
other  corporations,  partnerships,  or  other  entities,  now or in the  future
controlled  by, under common  control  with, or in control of,  ENERCON  America
Distribution Limited, jointly and severally.

      1.4 All other  Capitalized  terms used  herein and not  otherwise  defined
shall have the respective meanings attributed thereto in the Equipment Lease and
Purchase Agreement.

2.    Royalty Fee

      2.1 The Operator shall pay to the Manufacturer, not more than fifteen (15)
days after the end of each month,  a royalty fee equal to three  percent (3%) of
the net proceeds  from all sales of rubber  crumb,  fiber,  and steel from scrap
tires disintegrated by the Subject Systems (the "Royalty Fee").

      2.2 For purposes of this Royalty Agreement,  the term "net proceeds" shall
mean all revenues from the sale, other than to the Manufacturer  pursuant to the
Crumb Rubber Purchase Option  Agreement,  of rubber crumb,  fiber and steel from
scrap tires  disintegrated by the Subject Systems less any uncollected  accounts
actually written off as bad debts by the Operator.

3.    Payment Periods

      Royalty   Fees  shall  be  reported  and  paid  by  the  Operator  to  the
Manufacturer  every month from the  Acceptance  Date  throughout the life of the
Subject Systems.

4.    Royalty Reports

      The Operator shall prepare  royalty  reports  ("Royalty  Reports"),  to be
delivered by the Operator to the Manufacturer, together with the Royalty Fee due
thereunder,  covering the  immediately  preceding  "Reporting  Periods",  in the
following manner:

      (a)   The initial  Reporting Period shall be the Reporting Period in which
            the Acceptance  Date falls.  For example,  if the Acceptance Date is
            September  15, 1998,  the initial  Reporting  Period is the two-week
            period which  commenced on September 15, 1998 and ended on September
            30, 1998, and the Royalty Report and Royalty Fee for such "Reporting
            Period" is due on October 15, 1998.

      (b)   Each Royalty Report shall disclose the gross revenues from all sales
            of steel,  fiber,  and rubber crumb produced by the operation of the
            Subject  Systems and the amount of the Royalty Fee  calculated  upon
            the gross proceeds therefrom.

5.    Inspection of Books

      Upon written request, the Manufacturer or his designated agent may examine
the books and  records  of the  Operator  only  insofar  as they  relate to this
Royalty Agreement and are reasonably  required to verify the Operator's revenues
from sales of steel, fiber, and rubber crumb produced


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by the operation of the Subject Systems.  Such  examination  shall take place at
the offices of the Operator only during normal business office operating hours.

6.    Assignment

      6.1 This Royalty  Agreement may not be assigned by the Operator  except as
part of the assignment of the Equipment Lease and Purchase Agreement,  which may
only be assigned  pursuant to the express written  consent of the  Manufacturer,
and any such  assignment  shall not  relieve  the  Operator  of its  liabilities
hereunder unless expressly waived in writing by the Manufacturer.

      6.2 This Royalty  Agreement  may be  transferred,  assigned,  pledged,  or
hypothecated  by the  Manufacture  as  part  of the  sale  of  its  business  or
otherwise.

7.    Notices

      All notices required or permitted to be given hereunder shall be mailed by
certified mail, or delivered by hand or by recognized  overnight  courier to the
party to whom such notice is required or permitted to be given  hereunder at the
address  set forth  above for such  party,  in all cases with  written  proof of
receipt  required.  Any such  notice  shall be deemed to have  been  given  when
received by the party to whom notice is given, as evidenced by written and dated
receipt of the  receiving  party.  Either  party may change the address to which
notice to it is to be  addressed,  by  written  notice to the  other  party,  as
provided herein.

8.    Binding Effect.

      8.1 This  Royalty  Agreement  shall  bind and inure to the  benefit of the
parties  hereto  and their  respective  legal  representatives,  successors  and
assigns,  provided,  however,  that this Royalty Agreement cannot be assigned by
the  Operator  except in  accordance  with  Section 6.1 hereof.  Nothing  herein
expressed or implied is intended or shall be construed to confer upon or to give
any  person,  firm or  corporation  other  than the  parties  hereto  and  their
respective legal representatives,  successors and assigns any rights or benefits
under or by reason of this Royalty Agreement.

      8.2 All the right,  title,  and  interest of the  Manufacturer  under this
Royalty  Agreement  may be enforced by the  Manufacturer,  its  successors,  and
assigns.  This  Royalty  Agreement  shall  continue  in full  force  and  effect
notwithstanding  the death,  incapacity,  or  dissolution of the Operator or the
increase,  decrease,  or change in the  personnel of or members of the Operator,
and  shall be  binding  upon  the  Operator  and the  Operator's  estate,  legal
representatives, heirs, and successors.

9.    Further Assurances

      At any time, and from time to time, after the execution of this Agreement,
each party will execute such additional  instruments and take such action as may
be reasonably requested by the


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other party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.

10.   Waiver

      Any  failure  on the part of any party  hereto  to comply  with any of its
obligations,  agreements or conditions hereunder may be waived in writing by the
party to whom such compliance is owed.

11.   Brokers

      Neither  party has  employed  any  brokers or finders  with regard to this
Agreement, unless otherwise described in writing to all parties hereto.

12.   Headings

      The section and  subsection  headings in this  Agreement  are inserted for
convenience  only and shall not affect in any way the meaning or  interpretation
of this Agreement.

13.   Governing Law

      This Agreement shall be governed by the laws of the State of Delaware.

14.   Entire Agreement

      This Agreement and the premises and mutual promises in the Equipment Lease
and Purchase Agreements  constitute the entire agreement of the parties covering
everything agreed upon or understood with respect to the Royalty Fees. There are
no oral promises, conditions, representations,  understandings,  interpretations
or terms of any kind as conditions or inducements to the execution hereof.

15.   Severability

      If any part of this Agreement is deemed to be unenforceable the balance of
this Agreement shall remain in full force and effect.

16.   Publicity

      All  notices  to third  parties  and all other  publicity  concerning  the
transactions  contemplated  by this  Agreement  shall be  subject  to the  prior
approval of counsel to the Manufacturer.


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17.   Counterparts

      This Agreement may be executed in any number of  counterparts  and by each
party on a separate  counterpart,  each of which when so executed and  delivered
shall be an original, but all of which together shall constitute one Agreement.

      In Witness Whereof,  the parties hereto have caused this Royalty Agreement
to be executed the day and year first above written whatsoever.

                                    ENERCON AMERICA DISTRIBUTION LIMITED

                                    By /s/ David L. Holmes
                                       -----------------------------------------
                                            David L. Holmes, President

                                    THE TIREX CORPORATION

                                    By/s/ Terence C. Byrne
                                       -----------------------------------------
                                       Terence C. Byrne, President


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