TIREFEEDSTOCKAGREEMENT
THISOUTPUTAGREEMENTismadeandenteredintoasofthis11thdayofApril2012,byandbetween: Harmonic Energy Inc., (hereinafter referred toas "Harmonic"), a United Kingdom corporation having its principal officesat 3rd Floor,207 Regent Street, London, United Kingdom,W1B 3HHandEnertech R.D. LLC., (hereinafter referred toas"Enertech") anIndiana corporation having itsprincipal officesat Enertech R.D.LLC,11844 Allisonville Rd.,Fishers IN. USA, 46038. Enertech andHarmonic areindividually referred to as,a "Party"andcollectivelyreferredto as, the "Parties".
RECITALS
A. Harmonic develops andoperates recycling, resource recovery, remanufactures tires,energyand powergeneration projects which recycle tires into usable energyand industrialcarbon-based end products;
B.Enertech generates and/orcollects certain scrap tiresandotherlow-value rubber based materials that could beutilizedbyHarmonic to produce suchendproducts;and
C.Harmonic desires toobtain,andEnertech desires todispose of andsupply an outputof scrap tiresandotherlow-value rubber basedmaterials (hereinafter referred to as"Feedstock") to Harmonic pursuant totheterms ofthis Output Agreement.
NOW, THEREFORE, in consideration ofthemutualpromises andcovenants contained hereinandother good andvaluableconsideration, thereceipt andsufficiency of which arehereby acknowledged, the Partieshereto agreeasfollows:
1. SUPPLY OFOUTPUT FOR TERM OFYEARS
Enertech agreestosupply anddeliver toHarmonic, at Harmonic's facility, andHarmonic agrees to accept from Enertech,allof theFeedstock produced during theperiodof ten (10) yearscommencing upon Harmonic's satisfaction oftheconditions precedent contained in thisagreement, subject tothe following terms,conditions, covenants, andagreements.
2. DEFINING FEEDSTOCK
Feedstock istheproduct of Enertechand shallbe defined as;
i. tiresofagrade ofwhich isno longer salvageable as a repairable tire;and
ii. tiresthat can no longer beretreaded;orrepaired for retreading; and
iii. any typetirethat cannolonger beused in the manner of which it wasoriginally intended.
This definition ofFeedstock includes but is not limited to, all commercialtruck and passenger tires, off
road tires, industrial and construction tires,andall othertypesoftiresthat arefree fromrims.
3. QUANTITY OUTPUT OFFEEDSTOCK
The estimated daily output of product (Feedstock)of Enertech at its place of business is currently two hundred (200)tonsand Harmonic understands that theFeedstock is aby-product ofthe normal operations ofEnertech and thatchanges in demand for Enertech's goods may result inchanges in the output of the product (feedstock).Inthe event ofsuch a change, Harmonic shall take all of the output, providedthat the maximumlimit of Harmonic'sobligationshallnot exceedthree hundred(300) tons unless otherwiseagreed to by the Parties,andprovided furtherthat if the output of Enertech shall diminishto less than one hundred (100) tons duringeach of five (5) successivedays, Harmonicshall have theright to rescind and cancel this agreementonnot less than twenty(20) days' written notice to Enertech.
4. PAYMENT AND FEE
Harmonicshall accept all of the Feedstockfrom Enertech,to be measuredin numbersof tons, and Enertech shall pay for delivery of theFeedstock toHarmonic'sfacility. 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 ofthis agreement. The fee will be adjusted annually on each anniversary ofthedate on whichthis agreement is executed andit is theobligation ofboth Parties to this agreement to act in good faithwhen determining suchprice. Theadjusted price(hereinafter referred to as the "Price")shallapplyto all Feedstock delivered toHarmonic duringtheimmediately following year.
All payments for the Feedstock shallbe paid to theother party on thetwentieth(20th) day of each month for the tons of Feedstockdelivered to Harmonic during all of the days of the previous calendar month, unless saidday falls on a Sunday or holiday, in which event therequired payment shallbecome due on the dayfollowing such Sunday orholiday.
5. DELIVERY OFFEEDSTOCK
Tire delivery will be toHarmonic's site which will belocated directly across from Enertech's Tire deposit. Enertech agreestodeliver within 2miles toHarmonic and ifHarmonic's facility is locatedbeyond 2 miles Harmonic willcover all costs beyondthe 2 miles delivery cost. Harmonic shall provide access andaccept the trailer loadsor conveyorof Feedstockduring business hours (8 a.m. - 5 p.m.), Mondaythrough Saturdays.Enertech will make its best efforts toensurethat the deliveries of Feedstock are free from rims. Inno event, however, shallHarmonic be required to accept Feedstock inexcess of three hundred (300) tonsofdaily outputofEnertech unless otherwise agreed to bythe Parties.
For purposes of determiningandmeasuring amounts of Feedstock,the tonnageof feedstockwillbe established bya measurement ofcubicfeetpertrailer delivered:
i. aforty-five foot trailer allows for two thousand, five hundred andsixty(2560) cubic feet ofspace of feedstock; and
ii. a forty-eight foot trailer allows forthree thousand, seven hundred and seventy four (3774) cubic feetofspaceoffeedstock;and
iii. a fifty-three foot trailer allows for three thousand, eight hundred and twenty-nine point two-five (3829.25)cubicfeet ofspace offeedstock.
6. INSTALLMENT DELIVERIES
Abreach or default in any installment (day'sdelivery)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 defaultmay substantially impair the value of theentire agreement. Enertech shallnot beresponsible for delay in deliveries, or forfailureto makedeliveries, causedby fire,strike,or any othercontingency beyond itscontrol.
7. EFFECTIVEDATE
This agreement shallhaveaneffectivedate upon the subsequent receipt of executed agreement byEnertech by properly addressed certified mail.
8. CONDITIONS PRECEDENT
The parties to this agreementacknowledge that Enertechshall not have any obligations to deliver any
Feedstock according to theterms of thisagreement unless certain conditionsprecedent:
I. Harmonic establishes andbegins operation ofa facilitywithin theabove described mileage deliverylimits that would allow Harmonicto accept Enertech's estimated daily output of Feedstock (twohundred(200) tons);and
II. Harmonic will registerwith the State of Michigan Environmental Protection Agencyandwill comply withallpermit andlicense requirementsthatarenecessary in order toaccept Enertech's Feedstock.
The Parties acknowledgeand agree that if Harmonic has not established and began operations within one year time of theeffective date of thisagreement,then Enertech shall have the right to rescind and cancel thisagreement onnotless than twenty(20) days' writtennoticetoHarmonic.
9. RENEWALOF AGREEMENT
After the initial ten(10) year term of this agreement the parties may choose to extend the terms of this agreement in periods offive(5) year terms, by written notice toeach other. After theinitial ten(10)year term, either partymay terminate this agreement orat the endof any five(5) year term,onnot lessthan thirty (30) days writtennotice to theotherparty.
10. RECORDS
Each party shallmaintain at alltimes,accuratebooks andrecords regarding the deliveries inaccordance with generally accepted accounting principles. Therecordseach party maintains shallbe deemed each party's confidential information; however, each party shall have theright, at its ownexpense, 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 auditshallrelate solely tothetransactions that fallunder thisagreement andshallbe limited to thetwo(2)calendar yearsimmediatelypreceding the written request.
11. NOWARRANTY
All Feedstock delivered toHarmonicshallbedeemed"as is" andEnertech makes nowarranty,expressor implied, as to merchantability or fitness for a particular purpose, or any otherrepresentation with respect to thedeliveredFeedstock.
12. AMENDMENT, MODIFICATION, ORWAIVER
This document contains allthe terms of agreement between Enertech andHarmonic with respect to the subject matter, and no amendment ormodification or wavier ofanyprovision of thisagreement shall be effective unless inwriting, signed bybothpartiesand specifically statingthat itisanamendment, modification,orwaiver ofthis agreement.
Harmonic reservesthe righttoamend ormodify this agreement inaccordance withthe requirements of its lenders during the period prior tocommencementof operations. Any proposed amendment(s) or modification(s) shall besubmitted in writingto Enertechandshall besubject tothe writtenapprovalof Enertech;however, saidapproval may notbeunreasonably withheld.
13. ARBITRATION AND GOVERNINGLAW
Anydisputeunder thisagreement shall be settled by arbitration inthe CountyofKalamazoo and Stateof Michigan, pursuant tothe rules of the American ArbitrationAssociation. This agreement isgoverned by theprovisions ofthe Uniform Commercial Code, inforce in the State of Michigan at the effective dateof thisagreement,and shallbeconstrued withoutreference to conflict of lawsprinciples.
14. NOTICE
Anynotice or payment required bythisagreement shall beaddressed asfollows:
Harmonic Energy, Inc., 3rdFloor, 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.
ThisAgreementmayonlybe assigned by a Party with the priorwrittenconsent of the other Party; provided, however,Harmonic mayassignthisAgreement without theconsentofEnertech to:(a)a lender orany trustee or agent of alenderascollateral security; (b) any affiliate ofHarmonic or toathird-party in connectionwith a merger, consolidation, reorganization, or sale of substantially all of the Harmonic's assets; or (c)any affiliate of Harmonic or buyerof asubstantial interestinthe Facilities; provided, however, Enertech mayassign this Agreement without theconsent of Harmonic to: (a) a lender or any trustee or agent of a lender ascollateralsecurity; (b) any affiliateof Enertechor to a third-party in connection with a merger, consolidation,reorganization, or saleofsubstantiallyall of the Enertech's assets; or (c) anyaffiliate ofEnertech or buyer of asubstantial interest in the Facilities. This Agreement shall be binding and inure to the benefit of any permittedassignee. Assignments in violation of this Section shallbevoid and without effect.
16. MISCELLANEOUS.
No failure of eitherParty hereto to exercise any right orpower givenithereunder, orto insist upon strict compliance by the other Party of any obligation hereundershall constitute a subsequent waiver of the Party'sright to demand exact compliance with the termshereof. This Agreement:(a)maynotbe modified oramended orinany manner modified except in writing dulyexecuted by bothParties; (b)may be executed incounterparts, eachofwhichshall have theeffect of and beconsidered asanoriginal; and (c)contains theentire understanding ofthe Parties with respect to the subject matter hereof and supersedes any and all prior agreements and commitments with respect thereto.
17. INDEMNIFICATION.
EachParty(hereinafter referred toas"Indemnitor") will agreetoindemnify,defend, andhold 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 againstany and all demands, liens, claims,losses,liabilities, costs,damages, causesof action,expenses,fines, penalties,settlementsand judgments(including, court costsandattorney's fees, andotherreasonable costsof suitor dispute resolution), resulting from a claim,suit,orproceeding madeor brought byany thirdparty orGovernmental Authorityagainst anIndemnitee, whether based onequity, common law, orstatute, andunder any legal theory, arising out of: (i) any acts or omissions ofIndemnitor or its employees and agents; (ii)the negligence orwillfulmisconduct ofIndemnitor oritsemployees andagents;(iii) thebodily injury(including death)orpropertydamage tosuchthirdpartyto theextentcaused bythenegligence orwillfulmisconduct of,or violation of lawsby, the Indemnitor; (iv) afailure by Indemnitor tocomply with applicable Law; (v) a failure by Indemnitor to pay athirdparty resulting in demands, liens or other encumbrances on Indemnitee's property; and (vi) for any violation of, or remedialobligation and responsecost required pursuant to anyenvironmental lawdueto hazardous substances beingintroduced or releasedintothe environmentby the Indemnitorregardlessof the care taken by Indemnitor. The Partieswill agree to provisionsregarding noticeand controlof claims andconsent tosettlements.
18. REQUIRED INSURANCE.
Harmonic shall obtain andmaintain with respect toHarmonic's facility and property, aninsurance policy providing forcoverage against anyclaim(s) byany thirdpartyand/orany government agency orauthority for damagesor loss occurring as a result of fire and other casualties and hazards, regardlessof the natureor causeofsuchthereof.
Harmonic shallmaintain insurance against loss or damage byfire and other casualties and hazards inan amount withminimum limitsoftwomilliondollars ($2,000,000.00) per occurrence, andextending coverage for attorney's fees and other relatedexpensesif applicable(allof whichareindividually and collectively referred toas a loss),and namingEnertech as anadditional insured.
The insurancepolicyshallcontainan endorsement or agreement bytheinsurerin form satisfactory to Enertech that anyloss shallbepayable in accordance with the terms of such policy notwithstanding any act or negligence of Harmonic orEnertechand thefurtheragreementof the insurerwaivingrights of subrogation againstEnertech,andrights orset-off,orcounterclaim(s) againstHarmonic.
Theinsurance policyshallbeinaform,provide coverage, beissued bya company andbein an amount satisfactory to Enertech. Atleast thirty (30) days prior to the expiration of such policy, Harmonic shall furnish Enertech withevidence satisfactory to Enertech thatsuch policy has been renewed orreplaced. Any such policy shall provide thatthepolicy will not be canceled or materially amended without atleast thirty (30)daysprior writtennotice toEnertech. In the eventHarmonic fails to provide, maintain, keep in force, andfurnish to Enertech the policies of insurancerequired bythis paragraph,then Enertech shall have the right to rescind and terminatethis agreement onnot less than twenty(20) days' writtennotice to Harmonic.
19. NO ENCUMBRANCES.
The Feedstock shallbe free andclear of allliens, security interests andencumbranceswhatsoever and
Enertechshallwarrantgood title.
20. TAXES.
Any sales taxduewith regards to theexchange ofFeedstock shall be bornbe thepartycurrently responsible forpaying theotherpartythePrice.
21. REPRESENATATIONS
Each partyhereby represents andwarrants thatithas thecorporate powerandauthorityto enterinto this agreement.
INWITNESS WHEREOFtheparties have executedthis agreement onthis 11thday 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 | | |
