Exhibit 8.2(g)
Utah Project
Purchase Agreement
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SUPPLY AND PURCHASE AGREEMENT
FOR THE SUPPLY OF COAL FINES
AND THE PURCHASE OF COAL PRODUCT
DATED MARCH 7, 1997
BY AND AMONG
COVOL TECHNOLOGIES, INC.
UTAH SYNFUEL #1, LTD.
AND
COALTECH NO. 1 L.P.
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* This Exhibit contains confidential material which has been omitted pursuant to
a Request for Confidential Treatment and replaced by asterisks. The omitted
information has been filed separately with the Commission.
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS........................................... 1
Section 1.01 Definitions................................... 1
ARTICLE II. MUTUAL OBLIGATIONS.................................... 2
Section 2.01 Purchase of Fines............................. 2
Section 2.02 Sale of Covol Coal Products................... 2
ARTICLE III. TERM OF AGREEMENT..................................... 3
Section 3.01 Term Of Agreement............................. 3
Section 3.02 Termination by Covol or Utah Synfuel for
Cause......................................... 3
Section 3.03 Termination by Plant Owner for Cause.......... 4
Section 3.04 Termination upon Agreement.................... 5
ARTICLE IV. PURCHASE OF COAL FINES................................ 6
Section 4.01 Purchase of Fines............................. 6
Section 4.02 Purchase Price................................ 6
Section 4.03 Covol's Covenants and Warranties.............. 6
Section 4.04 Plant Owner's Obligation to Operate the
Utah Project.................................. 6
Section 4.05 Order Procedure............................... 6
Section 4.06 Deliver and Acceptance........................ 7
Section 4.07 Payment Terms................................. 7
Section 4.08 Disposal Fees................................. 7
ARTICLE V. SALE OF COVOL COAL PRODUCT............................ 8
Section 5.01 Sale of Covol Coal Product.................... 8
Section 5.02 Notice to Take................................ 8
Section 5.03 Purchase Price................................ 8
Section 5.04 Governmental Impositions...................... 8
Section 5.05 Delivery; Billing and Payment................. 8
Section 5.06 Weighing...................................... 8
Section 5.07 Intentionally Omitted......................... 9
Section 5.08 Force Majeure................................. 9
ARTICLE VI. MISCELLANEOUS PROVISIONS.............................. 10
Section 6.01 Independent Contractor............................ 10
Section 6.02 Binding Effect.................................... 10
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Section 6.03 Assignments....................................... 10
Section 6.04 Accounting and Audit.............................. 10
Section 6.05 Site Visits....................................... 11
Section 6.06 Waiver............................................ 11
Section 6.07 Remedies Cumulative............................... 11
Section 6.08 Captions.......................................... 11
Section 6.09 Applicable Law.................................... 11
Section 6.10 Compliance with Laws and Regulations.............. 12
Section 6.11 Notices........................................... 12
Section 6.12 Integration; Amendment............................ 12
Section 6.13 Contract Terms Binding on Parties' Employees,
Suppliers and Sub-Contractors................ 12
ii
CONFIDENTIAL TREATMENT REQUESTED
SUPPLY AND PURCHASE AGREEMENT
FOR THE SUPPLY OF COAL FINES
AND THE PURCHASE OF COAL PRODUCT
This Supply and Purchase Agreement (the "Agreement") is made and
entered into this 7th day of March 1997 by and among COVOL TECHNOLOGIES, INC., a
Delaware corporation ("Covol"), UTAH SYNFUEL #1, L.P., a Delaware limited
partnership ("Utah Synfuel") and COALTECH NO. 1 L.P., a Delaware limited
partnership (the "Plant Owner").
WHEREAS, Reference is made to that certain Utah Project Purchase
Agreement, dated as of March 7, 1997 (the "Purchase Agreement") by and between
Covol and Utah Synfuel, as Sellers, on the one hand, and Plant Owner, as Buyer
on the other hand. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to such terms in the Purchase Agreement.
WHEREAS, the parties are mutually unwilling to close the transfer of
the Utah Project under the Purchase Agreement unless each of the parties hereto
executes and delivers, and agrees to be bound by the terms of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises and undertakings in this Agreement and the other Transaction Documents,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. All terms defined in the Purchase Agreement,
unless the context otherwise requires, shall have the same meaning in this
Agreement. In addition, unless the context otherwise requires, the terms defined
in this Article I shall, for all purposes of this Agreement, have the meaning
herein specified.
(a) "Covol Coal Product" is a coal briquette produced utilizing the
Coal Briquetting Technology at the Utah Project.
(b) "Coal Briquetting Technology" shall have the meaning assigned to
that term in the License and Binder Purchase Agreement entered into between
Covol, Utah Synfuel and Plant Owner and entered into in connection with the
Purchase Agreement.
(c) "Fines" shall have the meaning set forth in Section 2.01.
(d) "Governmental Imposition" shall mean any tax, assessment, fee or
other charge imposed on the production, sale or purchase of CCP by any
governmental body.
(e) "License and Binder Purchase Agreement" means the License and
Binder Purchase Agreement entered into between Covol, Utah Synfuel and Plant
Owner and entered into in connection with the Purchase Agreement.
(f) "Operation and Maintenance Agreement" means the Operation and
Maintenance Agreement entered into between Covol, Utah Synfuel and Plant Owner
and entered into in connection with the Purchase Agreement.
(g) "Ton" or "ton" shall mean two thousand pounds avoirdupois weight.
ARTICLE II.
MUTUAL OBLIGATIONS
Section 2.01 Purchase of Fines. Throughout the term of this Agreement,
Plant Owner shall purchase all of its requirements of coal fines (the "Fines")
for the operation of the Utah Project from Covol, and Covol shall sell to Plant
Owner on a continuous basis all the Fines required by Plant Owner for the
operation of the Utah Project, on the terms and conditions set forth herein;
provided however, that if the term of the Agreement shall be extended beyond
December 31, 2007, Covol shall only be required to utilize its best efforts to
supply Fines. During the initial term of this Agreement (ending December 31,
2007), in the event that Covol is unable from time to time to provide sufficient
Fines to satisfy Plant Owner's requirements in order to maintain desired levels
and quality of production, Plant Owner may purchase suitable Fines from other
sources and Covol shall reimburse Plant Owner for the amount the purchase price
of such other Fines exceeds the price to be charged by Covol under this
Agreement.
Section 2.02 Sale of Covol Coal Products. Throughout the term of this
Agreement, (i) Plant Owner shall use its best efforts to operate the Utah
Project at not less than targeted capacity as described in the Financial
Projections attached as Exhibit 2.02 and for the exclusive purpose of processing
Fines into Covol Coal Product and, except as otherwise expressly provided in
this Section 2.02 or in Section 5.02 below, shall sell all such Covol Coal
Product output from the Utah Project exclusively to Utah Synfuel, and (ii)
except as otherwise expressly provided in this Section 2.02 or in Section 5.02
below, Utah Synfuel shall purchase from Plant Owner all such Covol Coal Product
output from the Utah Project, on the terms and conditions set forth herein.
Notwithstanding the immediately preceding sentence, the Plant Owner shall have
the right to sell Covol Coal Product to any one or more third parties at any
time and from time to time at a price which is greater than the price which
would then be applicable for a sale of such Covol Coal Product to Utah Synfuel
hereunder, subject to Utah Synfuel's right of first refusal to purchase such
Covol Coal Products as follows:
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(a) If Plant Owner shall desire to sell any Covol Coal Product
to any third party, Plant Owner shall deliver to Utah Synfuel at least
four (4) calendar days advance written notice thereof, specifying the
price at which Plant Owner proposes to sell such Covol Coal Product to
such third party (the "Third Party Price"), which notice shall
constitute an offer by Plant Owner to sell such Covol Coal Product to
Utah Synfuel at the Third Party Price and, in all other respects, in
accordance with the terms and conditions hereof.
(b) If Utah Synfuel desires to accept an offer described in
Section 2.02(a) above, then Utah Synfuel shall deliver to Plant Owner a
written acceptance of such offer within three (3) calendar days
following Utah Synfuel's receipt of such offer.
(c) If Utah Synfuel shall not have accepted an offer described
in Section 2.02(a) above within the acceptance period described in
Section 2.02(b) above, then Plant Owner shall have the right to sell
such Covol Coal Product to such third party for the Third Party Price
specified in such offer.
ARTICLE III.
TERM OF AGREEMENT
Section 3.01 Term Of Agreement. The term of this Agreement shall
commence on the date of this Agreement and shall expire on the Expiration Date
(as defined below), unless earlier terminated or extended according to the
provisions of this Agreement. As used herein, the term "Expiration Date" shall
mean the later of (i) December 31, 2007, or (ii) the date on which, as a result
of one or more amendments to the Internal Revenue Code of 1986 (the "1986
Code"), Covol Coal Product produced at the Utah Project shall cease to
constitute "qualified fuels" with respect to which Plant Owner shall be entitled
to claim federal income tax credits pursuant to Section 29 of the 1986 Code.
Section 3.02 Termination by Covol or Utah Synfuel for Cause. The term
of this Agreement may be terminated by Covol or Utah Synfuel upon the occurrence
of any of the following events:
(a) If Plant Owner fails to perform any of its material
obligations under this Agreement, and if Plant Owner does not cure such
failure within thirty (30) days from the date of its receipt of a
written notice from Covol or Utah Synfuel clearly describing such
failure and demanding cure, then this Agreement shall terminate without
further notice upon the expiration of such thirty (30) day period.
(b) Plant Owner shall:
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(i) Become insolvent or generally unable to pay its
debts as they become due;
(ii) Apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for it or any of its property, or make a general
assignment for the benefit of its creditors;
(iii) In the absence of any such application, consent
or acquiescence, permit or suffer to exist the appointment of
a trustee, receiver, sequestrator or other custodian for it or
a substantial portion of its property, and such trustee,
receiver, sequestrator or other custodian shall not be
discharged within sixty (60) days;
(iv) Permit or suffer to exist the commencement of
any bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect
of it, and, if any such case or proceeding is not commenced by
it, such case or proceeding shall be consented to or
acquiesced in by it or shall result in the entry of an order
for relief or shall remain for sixty (60) days undismissed;
(v) Take any formal action authorizing, or in
furtherance of, any of the foregoing; or
(vi) Permit or suffer to exist a violation, default
or breach by Plant Owner under any material agreement,
document or instrument, including the Transaction Documents,
to which Plant Owner or its affiliates is a party, the
consequences of which could reasonably be expected to have a
material adverse effect on Covol or Utah Synfuel and does not
cure, or commence to cure, such violation, default or breach
within (A) thirty (30) days of written notice of such
violation, default or breach or (B) within the period allowed
by the Transaction Document.
Section 3.03 Termination by Plant Owner for Cause. The term of
this Agreement may be terminated by Plant Owner upon the occurrence of any of
the following events:
(a) If either Utah Synfuel or Covol fails to perform in a
timely manner any material obligation required to be performed by it
under this Agreement, and if it does not cure such failure within
thirty (30) days of the date of its receipt of a written notice from
Plant Owner clearly describing such failure and demanding cure, then
this Agreement shall terminate without further notice upon the
expiration of such thirty (30) day period; or.
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(b) Either Covol or Utah Synfuel shall:
(i) Become insolvent or generally unable to pay its
debts as they become due;
(ii) Apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for it or any of its property, or make a general
assignment for the benefit of its creditors;
(iii) In the absence of any such application, consent
or acquiescence, permit or suffer to exist the appointment of
a trustee, receiver, sequestrator or other custodian for it or
a substantial portion of its property, and such trustee,
receiver, sequestrator or other custodian shall not be
discharged within sixty (60) days;
(iv) Permit or suffer to exist the commencement of
any bankruptcy, reorganization, debt arrangement or other case
or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect
of it, and, if any such case or proceeding is not commenced by
it, such case or proceeding shall be consented to or
acquiesced in by it or shall result in the entry of an order
for relief or shall remain for sixty (60) days undismissed; or
(v) Permit or suffer to exist a violation, default or
breach by Utah Synfuel or Covol under any material agreement,
document or instrument, including the Transaction Documents,
to which Utah Synfuel or Covol or their affiliates is a party,
the consequences of which could reasonably be expected to have
a material adverse effect on Plant Owner, and Covol or Utah
Synfuel, as the case may be, does not cure, or commence to
cure, such violation, default or breach within (A) thirty (30)
days of written notice of such violation, default or breach or
(B) within the period allowed by the Transaction Document.
(vi) Take any formal action authorizing, or in
furtherance of, any of the foregoing.
Section 3.04 Termination upon Agreement. This Agreement may be
terminated at any time, without cause, upon mutual written agreement of all of
the parties hereto.
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ARTICLE IV.
PURCHASE OF COAL FINES
Section 4.01 Purchase of Fines. The Fines purchased by Plant Owner from
Covol pursuant to the terms of Section 2.01 above shall be purchased and sold in
accordance with the terms of this Article IV.
Section 4.02 Purchase Price. The purchase price for each Ton of Fines
purchased by Plant Owner from Covol hereunder shall be equal to the sum of (a) a
reasonable fee for the washing of the Fines determined by reference to fees
customarily paid in the coal industry for such services received from an
independent party, (b) the cost to Covol of such Fines and (c) the reasonable
costs of transportation of the Fines to the Plant.
Section 4.03 Covol's Covenants and Warranties. Covol covenants,
represents and warrants to Plant Owner as follows:
(a) Covol shall convey to Plant Owner good title to all Fines
purchased by Plant Owner from Covol hereunder, free and clear of any
and all liens, claims and encumbrances of any type whatsoever.
(b) To the extent necessary, Covol shall wash all Fines
purchased by Plant Owner hereunder. Such services shall be performed by
Covol at the Utah Project in a commercially reasonable manner.
(c) All Fines purchased by Plant Owner from Covol hereunder
shall be of such quality and nature (including without limitation
moisture content and the types and levels of ash and other impurities
therein) as to be suitable for processing at the Utah Project using the
Coal Briquetting Technology so as to produce Covol Coal Product which
satisfies the chemical change conditions of the IRS Private Letter
Rulings No. 9549025 and No. 9701041, dated September 8, 1995 and
October 4, 1996, respectively in order for the Covol Coal Product to
constitute "qualified fuel" for purposes of Section 29 of the Internal
Revenue Code of 1986.
Section 4.04 Plant Owner's Obligation to Operate the Utah Project. The
Plant Owner shall in good faith use its best efforts to keep the Utah Project in
operation and to operate the Utah Project such that it can consistently and
substantially use Fines and produce the Covol Coal Product using the Coal
Briquetting Technology and improvements on the terms and conditions set forth in
the License and Binder Purchase Agreement.
Section 4.05 Order Procedure. Plant Owner shall deliver all purchase
orders for Fines to Covol at least thirty (30) days in advance of the first day
of the month in which delivery of such Fines is required under such purchase
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order, and all such purchase orders received by Covol during the term of this
Agreement shall be deemed to have been accepted by Covol. (For example, Plant
Owner shall deliver a purchase order for December delivery by no later than
November 1st). Each such purchase order shall be delivered either (i) in
writing, or (ii) orally by telephone by an authorized agent of Plant Owner
(subject to the condition that it is followed by a written purchase order within
24 hours). Such purchase orders shall be sent to Covol at such address as Covol
shall direct.
Section 4.06 Deliver and Acceptance. All Fines purchased hereunder
shall be delivered F.O.B. the Utah Project at which time and upon acceptance
thereof title to the Fines shall pass to Plant Owner. Covol shall provide trucks
or otherwise arrange for transportation of the Fines to the Utah Project. Covol
shall bear the expenses of loading and tarping such trucks, and all such
shipments of Fines shall be subject to Covol guidelines for transportation.
Plant Owner shall bear the expense of unloading the trucks. The weight of Fines
in each delivery shall be determined by a comparison of the weight, on Covol's
scales, of the delivery truck immediately prior to unloading and its weight, on
Covol's scales, immediately following unloading, as reflected in customary
weighing certificates. At Plant Owner's request and expense from time to time,
Plant Owner shall have the right to inspect Covol's scales for accuracy, and any
necessary adjustments to the quantities of Fines sold hereunder shall be made to
reflect any inaccuracies in such scales which may be identified. Plant Owner
shall have a reasonable opportunity to sample Fines delivered to it hereunder to
confirm that such Fines conform to the terms and requirements hereof, and Plant
Owner shall not be deemed or required to accept any such Fines prior to the
completion of such sampling. Covol shall have no risk of loss after title to the
Fines has passed to Plant Owner.
Section 4.07 Payment Terms. Payment of the purchase price for Fines
hereunder is due on or before the fourteenth (14th) day following receipt by
Plant Owner of an invoice that conforms to the terms of this Agreement. Invoices
shall be submitted no more than weekly and may be submitted at any time at or
following delivery of the Fines to which they relate. All invoices submitted by
Covol to Plant Owner shall state the date, tonnage weight and BTU content of
each shipment of Fines covered by the invoice. Plant Owner will pay a late fee
of 1.5% per month for invoices delinquent thirty (30) days or longer. Payment
shall be sent to Covol at such address as Covol shall direct in the invoices.
Section 4.08 Disposal Fees. Throughout the term of this Agreement,
Covol shall arrange for and shall effect the prompt and efficient disposal of
all ash materials resulting from the washing of the Fines (the "Ash Materials")
in strict compliance with all applicable Hazardous Materials Laws. In
consideration of the services provided by Covol pursuant to this Section 4.08,
Plant Owner shall pay to Covol a fee (the "Disposal Fee") equal to a reasonable
amount determined by reference to fees customarily paid in the coal industry for
such services received from an independent party. Such Disposal Fee shall be
paid monthly, within thirty (30) days of receipt of an invoice from Covol.
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**** Confidential Treatment Requested
ARTICLE V.
SALE OF COVOL COAL PRODUCT
Section 5.01 Sale of Covol Coal Product. The Covol Coal Product sold by
Plant Owner to Utah Synfuel pursuant to the terms of Section 2.02 above shall be
sold in accordance with the terms of this Article V.
Section 5.02 Notice to Take. Plant Owner shall deliver to Utah Synfuel
no less than fourteen (14) days advance notice of each delivery of Covol Coal
Product which Plant Owner proposes to make to Utah Synfuel in accordance with
the terms hereof, designating the proposed quantity of such Covol Coal Product
and the proposed delivery date (a "Take Notice"). Utah Synfuel shall be
obligated to accept the quantity of Covol Coal Product specified in such Take
Notice on the proposed delivery date.
Section 5.03 Purchase Price. The purchase price for Covol Coal Product
sold by Plant Owner to Utah Synfuel hereunder shall be the sum of (i) the cost
to Plant Owner of the Fines used to manufacture such Covol Coal Product, (ii)
the cost to Plant Owner of the Proprietary Binder Material used pursuant to the
License and Binder Purchase Agreement to produce such Covol Coal Product, (iii)
the Disposal Fee relating to such Covol Coal Product, (iv) the Costs incurred by
Plant Owner under the Operation and Maintenance Agreement relating to such Covol
Coal Product, and (v) **** per ton of such Covol Coal Product (the "Coal Product
Price").
Section 5.04 Governmental Impositions. Subject to the terms of Section
5.03 above, the cost of any and all Government Impositions relating to Covol
Coal Product sold by Plant Owner to Utah Synfuel hereunder shall be the sole
responsibility of Plant Owner.
Section 5.05 Delivery; Billing and Payment. All deliveries of Covol
Coal Product hereunder shall be made to Utah Synfuel F.O.B. the Utah Project at
which time title to the Covol Coal Product shall pass to Utah Synfuel, and Utah
Synfuel shall make all necessary arrangements for the shipment of such Covol
Coal Product from the Utah Project. Plant Owner shall provide Utah Synfuel with
a multiple copy delivery notice that accurately describes each such shipment of
Covol Coal Product, reflecting Plant Owner's name, delivery date, weight and any
other applicable data which may be requested including BTU content. One copy of
such notice shall be retained by Plant Owner and the remaining copies shall be
delivered to Utah Synfuel. Payment of the purchase price for Covol Coal Product
sold to Utah Synfuel hereunder shall be due within fourteen (14) days of the
receipt of an invoice from such Covol Coal Product delivered to Utah Synfuel.
Any amounts not paid by Utah Synfuel when due hereunder shall bear interest from
such due date at the rate of 1.5% per month until paid.
Section 5.06 Weighing. The weight of Covol Coal Product sold by Plant
Owner to Utah Synfuel hereunder shall be determined by a comparison of the
weight, on Covol's scales, of the transporting vehicle immediately prior to
8
loading and its weight, on Covol's scales, immediately following loading, as
reflected in customary weighing certificates. At Plant Owner's request and
expense from time to time, Plant Owner shall have the right to inspect Covol's
scales for accuracy, and any necessary adjustments to the quantities of Covol
Coal Product sold hereunder will be made to reflect any inaccuracies in such
scales that may be identified.
Section 5.07 Intentionally Omitted.
Section 5.08 Force Majeure. "Plant Owner's Force Majeure" as used
herein shall mean a cause reasonably beyond the control of Plant Owner which,
wholly or in substantial part, prevents the processing, loading or delivery of
Covol Coal Product. "Covol Force Majeure" or "Utah Synfuel's Force Majeure" as
used herein shall mean a cause reasonably beyond the control of Covol or Utah
Synfuel which, wholly or in substantial part, directly or indirectly prevents or
restricts the delivery of Fines by Covol or the unloading, storing or burning of
Covol Coal Product by Utah Synfuel's third-party purchasers at their facilities.
Examples (without limitation) of force majeure are the following: acts of God;
acts of the public enemy; insurrections; riots; strikes; labor disputes; work
stoppages; fires; explosions; floods; electric power failures, breakdowns of or
damage to generating or preparation plants; interruptions to or contingencies of
transportation, including (but not limited to) force majeure as defined in the
applicable tariff rail contract; embargoes; and orders or acts of civil or
military authority (including, without limitation, a city or county ordinance,
an act of a state legislature, or an act of the United States Congress);
provided, however, for the purposes of this Agreement, force majeure shall not
include, and neither party hereto shall be excused from performance because of,
the development or existence of economic conditions which may adversely affect
the anticipated profitability of such party's activities hereunder, acts or
omissions of such party which constitute mismanagement or fraud on the part of
such party, or reduced productivity of labor employed by such party in its
activity hereunder.
If, because of a Covol Force Majeure or Utah Synfuel's Force Majeure,
Covol or Utah Synfuel is unable to carry out its obligations under this
Agreement, and if Covol or Utah Synfuel gives Plant Owner notice of such force
majeure, the obligations and liabilities of Covol or Utah Synfuel and the
corresponding obligations of Plant Owner shall be suspended to the extent made
necessary by and during the continuance of such force majeure; provided,
however, that the disabling effects of such force majeure shall be eliminated as
soon as and to the extent possible (except that either party may settle any of
its own labor disputes, strikes, or terminate any of its own lockouts in its
sole discretion).
If, because of Plant Owner's Force Majeure, Plant Owner is unable to
carry out its obligations under this Agreement, and if Plant Owner gives Covol
and Utah Synfuel notice of such force majeure, the obligations and liabilities
of Plant Owner and the corresponding obligations of Covol and Utah Synfuel shall
be suspended to the extent made necessary by and during the continuance of such
9
force majeure; provided, however, that the disabling effects of such force
majeure shall be eliminated as soon as and to the extent possible (except that
either party may settle any of its own labor disputes, strikes, or terminate any
of its own lockouts in its own sole discretion).
It is agreed that (i) no force majeure hereunder shall restrict the
exercise of Plant Owner's rights under that certain Abandonment Option Agreement
executed by and between Plant Owner and Covol in connection with the Purchase
Agreement, and (ii) in the event that any valid act, law, ordinance, rule or
regulation of a municipality, county, state or the United States government, or
final judicial decision, judgment or order, is adopted or passed after January
1, 1997, which either (a) directly prohibits the processing contemplated
hereunder or (b) directly or indirectly imposes significant burdens or
restrictions upon the delivery of Fines by Covol or the unloading, storage or
burning of such Covol Coal Product by Utah Synfuel or its third-party
purchasers, then the existence and implementation of such act, law, ordinance,
rule, regulation, decision, judgment or order shall constitute an event of
permanent force majeure whereupon this Agreement may be terminated by the party
so affected upon notice to the other party.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
Section 6.01 Independent Contractor. This Agreement is a contract for
the (i) sale of Fines by Covol to Plant Owner, and (ii) the sale of Covol Coal
Product by Plant Owner to Utah Synfuel. The parties recognize and agree that
Plant Owner is neither an agent or employee of Covol or Utah Synfuel nor an
affiliate of Covol or Utah Synfuel, and that Plant Owner is free to perform, by
such means and in such manner as Plant Owner may choose, all work in pursuance
of commitments hereunder.
Section 6.02 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties and their successors and assigns, as permitted under
Section 6.03.
Section 6.03 Assignments. No party hereto may assign its rights under
this Agreement without the prior written approval of each other party hereto,
which approval may be withheld by any party for any reason or for no reason in
its sole discretion, except that (i) Covol shall have the right to assign its
rights and obligations under this Agreement to any entity which is controlled by
Covol and of which Covol owns, directly or indirectly, at least eighty percent
(80%) of each class of its outstanding securities (a "Covol Subsidiary"),
provided that no such assignment shall release Covol from its obligations
hereunder, and (ii) Plant Owner shall have the right to assign its rights and
obligations under this Agreement to Covol in connection with any sale by Plant
Owner to Covol of substantially all of the assets of the Utah Project.
Section 6.04 Accounting and Audit. Plant Owner shall keep full and
complete books and records relating to its purchase and receipt of Fines and its
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sale and delivery of Covol Coal Product under this Agreement. Such books and
records shall be kept in accordance with generally accepted accounting
principles consistently applied, and Plant Owner shall retain such books and
records for at least seven (7) years after this Agreement is terminated or
expires. Plant Owner shall make such records available to Covol and Utah
Synfuel, their accountants, auditors or other authorized representatives, who
shall, at their own expense and after giving adequate notice, be afforded access
to and be permitted to examine such records at all reasonable times during
normal business hours. Covol (and its Affiliates) shall retain for a period of
seven (7) years and make available for inspection or copying to Plant Operator,
its accountants, auditors or other representatives, all invoices and other
documentation whereby Utah Synfuel shall resell the Covol Coal Product which
specifies the Btu content of such Covol Coal Product. It is expressly understood
and agreed that the provisions of this Section shall survive the termination or
expiration of this Agreement.
Section 6.05 Site Visits. Utah Synfuel or its designated agent shall
have the right at all reasonable times and during normal business hours, at its
sole risk and expense, to enter upon the Plant Owner's property and/or other
appropriate locations, whether such entry is announced or unannounced, for any
of the following purposes: (a) to observe and examine the method, equipment and
manner of mining, producing, storing, washing, blending, crushing, loading,
unloading, transporting, sampling, weighing, analyzing, and other handling of
Covol Coal Product to be sold and delivered under this Agreement; (b) to take
samples of Covol Coal Product for Utah Synfuel's analyses; or (c) in connection
with any accounting, audit, or examination of Plant Owner's records. Utah
Synfuel's representative shall check in with the appropriate personnel at the
entrance to Plant Owner's facility prior to entering onto Plant Owner's
property. No observation or examination by Utah Synfuel shall be deemed as a
waiver of any of Utah Synfuel's rights or relieve Plant Owner of any obligation
of this Agreement.
Section 6.06 Waiver. The failure of either party to insist on strict
performance of any provision of this Agreement, or to take advantage of any
right hereunder, shall not be construed as a waiver of such provision or right.
Time is of the essence of this Agreement.
Section 6.07 Remedies Cumulative. Except as otherwise provided herein,
remedies provided under this Agreement shall be cumulative and in addition to
other remedies provided at law or in equity. All such remedies shall survive the
termination or expiration of this Agreement.
Section 6.08 Captions. The captions to sections hereof are for
convenience only and shall not be considered in construing the intent of the
parties.
Section 6.09 Applicable Law. All questions concerning the execution,
construction, performance, breach or enforcement of this Agreement shall be
construed under the substantive laws of the State of Utah and not just the Utah
laws regarding conflicts of laws.
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Section 6.10 Compliance with Laws and Regulations. In connection with
the performance of this Agreement, each party hereto agrees to comply in all
material respects with applicable governmental laws and regulations. Each party
hereto agrees and warrants that it or its agent will acquire and maintain, in a
timely manner, all licenses and permits required by governmental authorities to
perform its obligations under this Agreement.
Section 6.11 Notices. All notices to or demands or requests of the
parties hereto shall be given pursuant to the terms of the Purchase Agreement.
Section 6.12 Integration; Amendment. This Agreement, together with the
other Transaction Documents, constitutes the entire agreement of the parties
relating to the subject matter hereof. There are no promises, terms, conditions,
obligations, or warranties other than those contained herein and/or in the
Transaction Documents. The Transaction Documents supersede all prior
communications, representations, or agreements, verbal or written, among the
parties relating to the subject matter hereof.
Section 6.13 Contract Terms Binding on Parties' Employees, Suppliers
and SubContractors. Each party shall require each of its employees, suppliers,
and sub-contractors performing obligations under the Agreement or having access
to the Agreement in the performance of duties for such party to be bound by the
terms and conditions of the Agreement, including without limitation the terms
containing obligations and responsibilities respecting the Coal Briquetting
Technology and confidentiality of information.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers duly authorized thereunto.
UTAH SYNFUEL #1, LTD.:
By: Covol Technologies, Inc.
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President of Covol Technologies, Inc.
Its: General Partner
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COALTECH NO. 1 L.P.:
By: Covol Technologies, Inc.
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: C.O.O. of Covol Technologies
COVOL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: CEO/President
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