TIRE
FEEDSTOCK AGREEMENT


 


THIS OUTPUT AGREEMENT is made and entered into as of this 11th day of April 2012, by and between:
Harmonic Energy Inc., (hereinafter referred to as "Harmonic"), a
United Kingdom corporation having its principal offices at 3rd Floor, 207
Regent Street, London, United Kingdom, W1B 3HH and Enertech
R.D. LLC., (hereinafter referred to as "Enertech")
an Indiana corporation having its principal
offices at Enertech R.D. LLC, 11844
Allisonville Rd.,Fishers IN. USA, 46038. Enertech and Harmonic
are  individually referred to as, a
"Party" and collectively referred to
as, the "Parties".


 


RECITALS


 


A. Harmonic develops and
operates recycling, resource recovery, remanufactures tires, energy
and power generation projects which recycle tires into usable energy
and industrial carbon-based end products;


 


B.  Enertech
generates and/or collects certain scrap tires and
other low-value rubber based materials that could be
utilized by Harmonic to produce such
end products; and


 


C.
 Harmonic desires to obtain,
and Enertech desires to dispose of
and supply an output of scrap tires
and other low-value rubber based
materials (hereinafter referred to as "Feedstock")
to Harmonic pursuant to the terms of
this Output Agreement.


 


NOW,
THEREFORE, in consideration of the mutual
promises and covenants contained herein and
other good and valuable consideration,
the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto agree
as follows:


 


1. SUPPLY OF
OUTPUT FOR TERM OF YEARS


 


Enertech agrees
to supply and deliver to
Harmonic, at Harmonic's facility, and Harmonic agrees to accept from Enertech,
all of the Feedstock produced during
the period of ten (10)
years commencing upon Harmonic's satisfaction of
the conditions precedent contained in this
agreement, subject to the following terms,
conditions, covenants, and agreements.


 


2. DEFINING FEEDSTOCK


 


Feedstock is
the product of Enertech and shall
be defined as;


 


i. tires of a grade
of which is no longer salvageable as a
repairable tire; and


ii.
tires that can no longer be retreaded;
or repaired for retreading; and


iii.
any type tire that can
no longer be used in the manner of
which it was originally intended.


 


This definition of
Feedstock includes but is not limited to, all commercial  truck and passenger
tires, off


road tires, industrial
and construction tires, and all other
types of tires
that are free from rims.


 


3. QUANTITY OUTPUT OF
FEEDSTOCK


 


The estimated daily output
of product (Feedstock)  of Enertech at its place of business is currently two hundred
(200)  tons  and Harmonic understands that
the  Feedstock is a  by-product of 
the normal operations of Enertech and that
changes in demand for Enertech's goods may result in changes in the output of
the product (feedstock).  In the event of
such a change, Harmonic shall take all of the output, provided  that the maximum
 limit of Harmonic's  obligation 
shall  not exceed  three hundred 
(300) tons unless otherwise  agreed to by the Parties, 
and  provided further  that if the
output of Enertech shall diminish  to less
than one hundred (100) tons during  each of five (5) successive 
days, Harmonic  shall have the right
to rescind and cancel this agreement  on not
less than twenty (20) days'
written notice to Enertech.



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4. PAYMENT AND FEE


 


Harmonic 
shall accept all of the Feedstock  from Enertech, 
to be measured  in numbers  of tons,
and Enertech shall pay for delivery of the Feedstock to
Harmonic's  facility. Harmonic shall pay Enertech the fee of thirty ($30.00)
dollars per ton of two inch minus chipped tires which are 90% to 95% steel free during
the term of this agreement. The fee will be adjusted annually on each anniversary of
the date on which this agreement
is executed and it is the obligation of
both Parties to this agreement to act in good faith when determining such
price. The adjusted price (hereinafter
referred to as the "Price") shall apply
to all Feedstock delivered to Harmonic during
the immediately following year.


 


All payments for the Feedstock
shall be paid to the other party on the
twentieth (20th) day of each month for the tons of Feedstock 
delivered to Harmonic during all of the days of the previous calendar month, unless said
day falls on a Sunday or holiday, in which event the required payment shall
become due on the day following such Sunday or
holiday.


 


5. DELIVERY OF
FEEDSTOCK


 


Tire delivery will be to
Harmonic's site which will be located directly across from Enertech's
Tire deposit. Enertech agrees to deliver
within 2 miles to Harmonic and if
Harmonic's facility is located
beyond 2 miles Harmonic will cover all costs beyond
the 2 miles delivery cost. Harmonic shall provide access and accept the trailer
loads  or conveyor  of Feedstock 
during business hours (8 a.m. - 5 p.m.), Monday 
through Saturdays.  Enertech will make its best efforts to
ensure  that the deliveries of Feedstock are free from rims. In
no event, however, shall Harmonic be required to accept Feedstock in
excess of three hundred (300) tons of daily
output of Enertech unless otherwise agreed
to by the Parties.


 


For purposes of determining
and measuring amounts of Feedstock, the
tonnage of feedstock will
be established by a measurement of cubic
feet per trailer delivered:


 


i. a forty-five foot trailer allows for two thousand, five hundred and
sixty (2560) cubic feet of space
of feedstock; and


ii. a forty-eight foot trailer allows for three thousand, seven hundred and seventy
four (3774) cubic feet of space
of feedstock; and


iii.
a fifty-three foot trailer allows for three thousand, eight hundred and twenty-nine point two-five (3829.25)
cubic feet of space of
feedstock.


 


6. INSTALLMENT DELIVERIES


 


A
breach or default in any installment (day's  delivery) 
for any four (4) day period (i.e. four successive business days) shall not be deemed a breach of the entire agreement, 
even though such breach or default may substantially impair the value of the
entire agreement. Enertech shall not be
responsible for delay in deliveries, or for  failure 
to make  deliveries, caused  by
fire,  strike,  or any other 
contingency beyond its control.


 


7. EFFECTIVE
DATE


 


This agreement shall
have an effective
date upon the subsequent receipt of executed agreement by Enertech by properly
addressed certified mail.


 


8. CONDITIONS PRECEDENT


 


The parties to this agreement
 acknowledge that Enertech  shall not have
any obligations to deliver any


Feedstock according to
the terms of this agreement unless certain
conditions precedent:


 


I.Harmonic establishes
and  begins operation of  a facility 
within the  above described mileage delivery 
limits that would allow Harmonic  to accept Enertech's estimated daily output
of Feedstock (two hundred (200) tons);
and



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II. Harmonic will
register  with the State of Michigan Environmental Protection Agency 
and  will comply with all
permit and license requirements  that
are necessary in order to accept
Enertech's Feedstock.


 


The Parties acknowledge 
and agree that if Harmonic has not established and began operations within one year time of the
effective date of this agreement,  then
Enertech shall have the right to rescind and cancel this agreement on
not less than twenty (20) days' written
notice to Harmonic.


 


9. RENEWAL
OF AGREEMENT


 


After the initial ten
(10) year term of this agreement the parties may choose to extend the terms of this agreement in periods of
five (5) year terms, by written notice to
each other. After the initial ten (10)
year term, either party may terminate this agreement or
at the end of any five (5) year term,
on not less than thirty (30) days
written notice to the other
party.


 


10. RECORDS


 


Each party shall
maintain at all times, accurate
books and records regarding the deliveries in
accordance with generally accepted accounting principles. The records 
each party maintains shall be deemed each party's confidential information; however,
each party shall have the right, at its own expense,
to audit the records of the other party by written notice to the other party at least thirty (30) days prior to the audit date.
The audit shall relate solely to
the transactions that fall under
this agreement and shall
be limited to the two (2)
calendar years immediately preceding
the written request.


 


11. NO
WARRANTY


 


All Feedstock delivered to
Harmonic shall be
deemed "as is" and
Enertech makes no warranty, express
or implied, as to merchantability or fitness for a particular purpose, or any other
representation with respect to the delivered
Feedstock.


 


12. AMENDMENT, MODIFICATION,
OR WAIVER


 


This document contains all
the terms of agreement between Enertech and Harmonic with respect to the subject
matter, and no amendment or modification or wavier of
any provision of this agreement shall
be effective unless in  writing, signed by  both
 parties  and specifically stating 
that it  is  an 
amendment, modification, or waiver
of this agreement.


 


Harmonic reserves
the right to amend or
modify this agreement in accordance with
the requirements of its lenders during the period prior to  commencement 
of operations. Any proposed amendment(s) or modification(s) shall be
submitted in writing to Enertech and
shall be subject to the written
approval of Enertech; however, said
approval may not be unreasonably withheld.


 


13. ARBITRATION AND GOVERNING
LAW


 


Any
dispute under this agreement shall
be settled by arbitration in the County of
Kalamazoo and State of Michigan, pursuant to
the rules of the American Arbitration Association. This agreement is
governed by the provisions of the
Uniform Commercial Code, in force in the State of Michigan at the effective date
of this agreement, and shall
be construed without reference to
conflict of laws principles.



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14. NOTICE


 


Any notice or
payment required by this agreement shall
be addressed as follows:


 


	
        Harmonic Energy, Inc.,

        3rd Floor, 207 Regent Street, London, United Kingdom,
        W18 3HH,

        +44-207-617-7300

         
		
        Enertech R.D. LLC,

        11844 Allisonville Rd., Fishers IN., USA,

        46038,

        317-849-7646

         



 


15. ASSIGNMENT.


 


This 
Agreement  may  only 
be assigned by a Party with the prior  written 
consent of the other Party; provided, however, Harmonic may
assign this Agreement without the
consent of Enertech to: 
(a) a lender or any trustee or agent
of a lender as
collateral security; (b) any affiliate of Harmonic or to
a third-party in connection  with
a merger, consolidation, reorganization, or sale of substantially all of the Harmonic's
assets; or (c)  any affiliate of Harmonic or buyer 
of a  substantial interest  in 
the Facilities; provided, however, Enertech may assign this Agreement without
the consent of Harmonic to: (a) a lender or any trustee or agent of a lender as 
collateral  security; (b) any affiliate 
of Enertech  or to a third-party in connection with a merger, consolidation,
 reorganization, or sale  of 
substantially  all of the Enertech's assets; or (c) any
affiliate of Enertech or buyer of a substantial
interest in the Facilities. This Agreement shall be binding and inure to the benefit
of any permitted  assignee. Assignments in violation of this Section shall
be void and without effect.


 


16. MISCELLANEOUS.


 


No failure of either
Party hereto to exercise any right or power given
it hereunder, or to insist upon
strict compliance by the other Party of any obligation hereunder  shall constitute
a subsequent waiver of the Party's  right
to demand exact compliance with the terms  hereof.
This Agreement:  (a)  may 
not  be modified or amended or
in any manner modified except in writing duly
executed by both Parties; (b) may
be executed in counterparts, each of
which shall have the effect of and
be considered as an
original; and (c)  contains the  entire
understanding of  the Parties with respect to the subject matter hereof and supersedes
any and all prior agreements and commitments with respect thereto.


 


17. INDEMNIFICATION.


 


Each
Party (hereinafter referred to as
"Indemnitor") will agree to
indemnify, defend, and hold harmless
the other Party and its directors, officers, employees and agents and the successors and assigns of any of the foregoing 
(hereinafter referred to as "Indemnitee") from and against 
any and all demands, liens, claims, losses,
liabilities, costs, damages, causes of
action, expenses, fines, penalties,
settlements and judgments  (including,
court costs  and  attorney's fees, and 
other  reasonable costs  of suit
 or dispute resolution), resulting from a claim,
suit, or proceeding made
or brought by any third party or
Governmental Authority against an
Indemnitee, whether based on equity, common law, or
statute, and under any legal theory, arising out of: (i) any acts or omissions
of  Indemnitor or its employees and agents; (ii) 
the negligence or willful misconduct
of Indemnitor or its
employees and agents; (iii) the
bodily injury (including death) or
property damage to such
third party to the
extent caused by the
negligence or willful misconduct
of, or violation of laws
by, the Indemnitor; (iv) a failure by Indemnitor to
comply with applicable Law; (v) a failure by Indemnitor to pay a  third 
party resulting in demands, liens or other encumbrances on Indemnitee's property; and (vi) for any violation of, or remedial
 obligation and response  cost required
pursuant to any environmental law due
to hazardous substances being introduced or released
into the environment  by the Indemnitor
 regardless  of the care taken by Indemnitor.
The Parties  will agree to provisions regarding
notice and control of claims and
consent to settlements.



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18. REQUIRED INSURANCE.


 


Harmonic shall obtain and
maintain with respect to Harmonic's
facility and property, an insurance policy providing for
coverage against any claim(s) by any
third party
and /or any government agency or
authority for damages  or loss occurring as a result of fire and other casualties
and hazards, regardless  of the nature or
cause of such
thereof.


 


Harmonic shall
maintain insurance against loss or damage by fire and other casualties and hazards
in an amount with  minimum limits 
of  two  million 
dollars ($ 2,000,000.00) per occurrence,
and  extending coverage for attorney's fees and other related
expenses if applicable (all
of which are individually and collectively
referred to as a loss), and naming
Enertech as an additional insured.


 


The insurance
policy shall contain
an endorsement or agreement by the insurer
in form satisfactory to Enertech that any loss shall
be payable in accordance with the terms of such policy notwithstanding any act
or negligence of Harmonic or Enertech and
the further agreement
of the insurer waiving rights of
subrogation against Enertech, and
rights or set-off, or
counterclaim(s) against Harmonic.


 


The
insurance policy shall be
in a form,
provide coverage, be issued by a
company and be in an amount satisfactory
to Enertech. At least thirty (30) days prior to the expiration of such policy, Harmonic
shall furnish Enertech with evidence satisfactory to Enertech that
such policy has been renewed or replaced. Any such policy shall provide that
the policy will not be canceled or materially amended without at
least thirty (30) days prior written
notice to Enertech. In the event Harmonic
fails to provide, maintain, keep in force, and
furnish to Enertech the policies of insurance  required by
this paragraph,  then Enertech shall have the right to rescind and terminate
this agreement on not less than twenty (20)
days' written notice to Harmonic.


 


19. NO ENCUMBRANCES.


 


The Feedstock shall
be free and clear of all
liens, security interests and encumbrances 
whatsoever and


Enertech
shall warrant good title.


 


20. TAXES.


 


Any sales tax 
due  with regards to the  exchange
of  Feedstock shall be born  be the 
party  currently responsible for paying
the other party
the Price.


 


21. REPRESENATATIONS


 


Each party
hereby represents and warrants that it
has the corporate power and
authority to enter
into this agreement.


 


IN
WITNESS WHEREOF the parties have
executed this agreement on this 11th
day of April, 2012.


 


	/s/ Tim Powell		Date: 4-12-12
	Tim Powell – Enertech R.D. LLC.		
	 		
	/s/ Hiroyasu Tanaka		Date: 4-11-12
	Hiroyasu Tanaka- Harmonic Energy		


 



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