SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of March 17,
1999, by and between COVOL TECHNOLOGIES, INC., a Delaware corporation (the
"Grantor") and OZ Master Fund, Ltd. ("OZ") (the "Lender"). The Grantor and OZ
are parties to a Convertible Secured Note, dated as of the date hereof (as the
same may be amended, modified, restated or supplemented from time to time, the
"Notes"). Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Notes.
The Lender has agreed to make certain loans to the Grantor.
The obligation of the Lender to lend under the Notes is conditioned on, among
other things, the execution and delivery by the Grantor of this Agreement.
Accordingly, the Grantor and the Lender, hereby agree as
follows:
1. DEFINITIONS.
As used herein, the following terms shall have the following
meanings:
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Code" means the Uniform Commercial Code as in effect in the
State of New York.
"Collateral" means (a) all of the Grantor's right, title and
interest in and to (i) that certain Amended and Restated License and Binder
Purchase Agreement, dated as of February 3, 1998, between the Borrower and PC
Virginia Synthetic Fuel #1, L.L.C., (ii) that certain Amended and Restated
License and Binder Purchase Agreement, dated as of February 3, 1998, between the
Borrower and PC West Virginia Synthetic Fuel #1, L.L.C., (iii) that certain
Amended and Restated License and Binder Purchase Agreement, dated as of February
3, 1998, between the Borrower and PC West Virginia Synthetic Fuel #2, L.L.C.,
(iv) that certain Amended and Restated License and Binder Purchase Agreement,
dated as of February 3, 1998, between the Borrower and PC West Virginia
Synthetic Fuel #3, L.L.C., and (v) all future license agreements or similar
agreements between the Grantor and the other parties listed in (i) through (iv)
above, or the Grantor and any other party which relate to the facilities that
are the subject of (i) through (iv) above (collectively, as such agreements may
be amended, restated or modified from time to time, the "License Agreements"),
and (b) all proceeds of any and all of the foregoing Collateral and, to the
extent not otherwise included, all payments under insurance (whether or not the
Lender is the loss payee thereof), or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral.
1.
"Obligations" means all indebtedness, obligations and other
liabilities of the Grantor to the Lender now or hereafter arising, including,
without limitation, the indebtedness evidenced by the Note.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization or other entity.
"Side Agreements" means each of the Agreements, dated as of
the Closing Date, by and between the Grantor and each of (i) PC Virginia
Synthetic Fuel #1, L.L.C., a Delaware limited liability company, (ii) PC West
Virginia Synthetic Fuel #1, L.L.C., a Delaware limited liability company, (iii)
PC West Virginia Synthetic Fuel #2, L.L.C., a Delaware limited liability
company, and (iv) the PC West Virginia Synthetic Fuel #3, L.L.C., a Delaware
limited liability company.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms. In addition, the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation."
2. GRANT OF SECURITY INTEREST.
The Grantor hereby pledges, and grants a continuing security
interest in, and a right of setoff against, all interests of the Grantor in and
to the Collateral to the Lender, to secure payment, performance and observance
of the Obligations.
3. REPRESENTATIONS AND WARRANTIES.
The Grantor makes the representations and warranties set forth
in this Section 3 to the Lender.
Section 3.1 Necessary Filings. All filings, registrations and
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by the Grantor to the Lender hereby in respect of the
Collateral will be accomplished within three (3) Business Days of the date
hereof.
Section 3.2 Principal Location. The Grantor's mailing address,
and the location of its chief executive office and each other place of business
is disclosed in Annex I hereto (as the same may be modified pursuant to Section
4.4); the Grantor has no other places of business except those set forth in
Annex I hereto (as the same may be modified pursuant to Section 4.4).
Section 3.3 No Other Names. The Grantor conducted business as
Enviro-Fuels Technology during 1993 and 1994, as Environmental Technologies
Group International during 1994 and 1995 and as Covol Technologies, Inc. since
1995. Except as discussed herein, the Grantor does
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not conduct and has not conducted any trade or business under any name except
the name in which it has executed this Agreement. In 1993 and 1994, the Grantor
acquired four construction companies. These businesses were sold effective
February 1, 1996. Except as discussed herein, the Grantor has not been a party
to any merger or consolidation in the last five years.
Section 3.4 No Financing Statements. No financing statement
describing all or any portion of the Collateral which has not lapsed or been
terminated has been filed in any jurisdiction except financing statements naming
the Lender as secured party.
Section 3.5 Patents. The Grantor owns and possesses all right,
title and interest in and to, or has a valid and enforceable license to use, all
patents described in the License Agreements.
Section 3.6 License Agreements. Each of the License Agreements
constitutes a legal, valid and binding obligation of the Grantor, enforceable
against the Grantor in accordance with its terms, except to the extent limited
by (a) applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws of general application related to the enforcement of creditor's rights
generally and (b) general principles of equity. The Grantor is not in default,
nor to the knowledge of the Grantor is there any basis for a valid claim of
default, and to the Grantor's knowledge no event has occurred which, with notice
or lapse of time, would constitute a default, under any License Agreement, and
to the knowledge of the Grantor no licensee is in default under any such License
Agreement.
4. COVENANTS.
From the date of this Agreement, and thereafter until this
Agreement is terminated:
Section 4.1 Inspection and Verification. The Lender and such
Persons as the Lender may designate shall have the right, at any reasonable time
or times upon prior notice and during each Grantor's usual business hours, to
inspect the Collateral, all records related thereto (and to make extracts and
copies from such records), and the premises upon which any of the Collateral is
located, to discuss each Grantor's affairs with the officers of each Grantor and
their independent auditors to verify under reasonable procedures the validity,
amount, quality, quantity, value and condition of, or any other matter relating
to, the Collateral.
Section 4.2 Records and Reports. The Grantor will maintain
complete and accurate books and records with respect to the Collateral, and
furnish to the Lender such reports relating to the Collateral as the Lender
shall from time to time reasonably request.
Section 4.3 Financing Statements and Other Actions. The
Grantor will execute and deliver to the Lender all financing statements and
amendments thereto and other documents, and take such other actions, as are from
time to time reasonably requested by the Lender in order to perfect and to
maintain and protect a first priority perfected security interest in the
Collateral or to
3.
enable the Lender to exercise and enforce its rights and remedies hereunder with
respect to the Collateral.
Section 4.4 Change in Location or Name. The Grantor will not
(a) maintain a place of business at a location other than a location specified
on Annex I hereto, (b) change its name, or (c) change its mailing address,
unless, in each case, the Grantor shall have given the Lender at least thirty
(30) days' prior written notice thereof and delivered to Lender a revised Annex
I, delivered any financing statements or other documents requested by the
Lender, including opinions of counsel, and the Lender shall have advised the
Grantor in writing of the Lender's determination that, after giving effect to
such change of name, address or location, and completion of any filings to be
made in connection therewith, the Lender shall have a continuing perfected
security interest in the Collateral, the priority of which shall not be
adversely affected by such change.
Section 4.5 Other Financing Statements. The Grantor will not
sign or authorize the signing on its behalf of any financing statement naming it
as debtor which covers all or any portion of the Collateral, except financing
statements naming the Lender as secured party.
Section 4.6. Intellectual Property Covenants. The Grantor
shall:
(a) consistent with commercially reasonable
practices, not perform or omit to perform any act whereby any patent rights of
the patents described in the License Agreements may become dedicated,
invalidated or unenforceable;
(b) consistent with commercially reasonable
practices, prosecute diligently any patent, trademark or copyright application
which is pending with respect to the License Agreements as of the date of this
Agreement or hereafter and otherwise maintain all rights in and to the patents
necessary under the License Agreements, including making all necessary filings
and recordings and pay all required fees and taxes to record and maintain its
registration and ownership of each such patent described in the License
Agreements;
(c) not impair any of the Lender's rights of
action described in Section 8.4.
Section 4.7 Grant of License to Use Patents. For the purpose
of enabling the Lender to exercise rights and remedies thereunder during the
continuation of an Event of Default, the Grantor hereby grants to the Lender an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to the Grantor) to use, license or sublicense any of the
patents described in the License Agreements to the extent not inconsistent with
the terms of the License Agreements or any preexisting licenses issued by or to
the Grantor, wherever the same may be located. Except as set forth in the
preceding sentence, the Lender shall have no obligations or liabilities
regarding any or all of the patents by reason of, or arising out of, this
Agreement.
4.
5. REMEDIES UPON DEFAULT.
Section 5.1 Remedies upon Default. If any Event of Default
shall occur and be continuing, whether or not all of the Obligations shall have
become due and payable, the Lender may, in addition to its rights under the
Notes, exercise any or all of the rights and remedies provided (i) in this
Agreement, (ii) to a secured party when a debtor is in default under a security
agreement governed by the Code or (iii) to a secured party when a debtor is in
default by any other applicable law including, without limitation, any law
governing the exercise of a bank's right of setoff or bankers' lien.
Section 5.2 Specific Performance. The Grantor agrees that, in
addition to all other rights and remedies granted to the Lender in this
Agreement and under the Notes, the Lender shall be entitled to specific
performance and injunctive and other equitable relief, and the Grantor further
agrees to waive any requirement for the securing or posting of any bond or other
security in connection with the obtaining of any such specific performance and
injunctive or other equitable relief.
Section 5.3 Grantor's Secured Liabilities Upon Event of
Default. Upon the request of the Lender after the occurrence and during the
continuance of an Event of Default, the Grantor will promptly:
(a) Assemble and make available to the Lender
the Collateral and all records relating thereto at any place or places specified
by the Lender within the continental United States of America.
(b) Permit the Lender, or the Lender's
representatives and Lenders, to enter any premises where all or any part of the
Collateral, or the books and records relating thereto, or both, are located, to
take possession of all or any part of the Collateral and to remove all or any
part of the Collateral.
Section 5.4 Remedies Cumulative. All rights, powers and
remedies contained in this Agreement or afforded by law shall be cumulative and
all shall be available to the Lender until the Obligations have been paid in
full.
6. WAIVERS, AMENDMENTS AND REMEDIES.
No delay or omission of the Lender to exercise any right,
power or remedy granted under this Agreement shall impair such right, power or
remedy or be construed to be a waiver of any Event of Default or an acquiescence
therein, and any single or partial exercise of any such right, power or remedy
shall not preclude other or further exercise thereof or the exercise of any
other right, power or remedy, and no waiver, amendment or other variation of the
terms, conditions or
5.
provisions of this Agreement whatsoever shall be valid unless signed by each of
the parties hereto, and then only to the extent specifically set forth in such
writing.
7. PROCEEDS; COLLECTION OF RECEIVABLES.
Section 7.1 Collection of Receivables. The Lender may at any
time after the occurrence and during the continuance of an Event of Default, by
giving the Grantor written notice, elect to enforce collection of any proceeds
of any and all of the Collateral, including any Earned Royalty and any payment
of profits from sales of Proprietary Binder Material (each as defined in the
License Agreements) and to require that such proceeds be paid directly to the
Blocked Account. In such event, the Grantor shall, and shall permit the Lender
to, promptly notify the account debtors or obligors under the License Agreements
of the Lender's interest therein and direct such account debtors or obligors to
make payment of all amounts then or thereafter due under the License Agreements
directly to the Blocked Account pursuant to the Side Agreements. Upon receipt of
any such notice from the Lender, the Grantor shall thereafter hold in trust for
the Lender all amounts and proceeds received by it with respect to the License
Agreements or any other Collateral, shall segregate all such amounts and
proceeds from other funds of the Grantor, and shall at all times thereafter
promptly deliver to the Blocked Account all such amounts and proceeds in the
same form as so received, whether by cash, check, draft or otherwise, with any
necessary endorsements.
Section 7.2 Application of Proceeds. (a) During the
continuance of an Event of Default, the Lender shall have the continuing and
exclusive right to apply or reverse and re-apply any and all payments to any
portion of the Obligations. To the extent that the Grantor makes a payment or
payments to the Lender or the Lender receives any payment or proceeds of the
Collateral, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds, the Obligations or part thereof intended to be satisfied
and this Agreement shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by such party.
(b) Should the Lender withdraw money from the
Blocked Account or otherwise receive proceeds of the Collateral, the Lender
shall apply the proceeds of such amounts withdrawn as follows:
FIRST, to the payment of all costs and expenses incurred by
the Lender in connection with such collection or sale or otherwise in
connection with this Agreement or any of the Obligations, including but
not limited to all court costs and the reasonable fees and expenses of
its Lenders and legal counsel, the repayment of all advances made by
the Lender hereunder on behalf of the Grantor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder.
6.
SECOND, to the payment in full of all unpaid interest on the
Notes.
THIRD, to the payment in full of the unpaid principal amount
of the Notes, to be applied on a pro rata basis.
FOURTH, to the payment and discharge in full of the
Obligations (other than those referred to above).
FIFTH, to the Grantor, its successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Lender shall have absolute discretion as to the time of application of any
such proceeds, moneys or balances in accordance with this Agreement.
8. GENERAL PROVISIONS.
Section 8.1 Compromises and Collection of Collateral. The
Grantor recognizes that setoffs, counterclaims, defenses and other claims may be
asserted by obligors with respect to certain of the proceeds of any and all of
the Collateral, including any Earned Royalty and any payment of profits from
sales of Proprietary Binder Material, that certain of such proceeds may be or
become uncollectible in whole or in part and that the expense and probability of
success in litigating disputed Collateral proceeds may exceed the amount that
reasonably may be expected to be recovered with respect to such Collateral
proceeds. In view of the foregoing, the Grantor agrees that the Lender may at
any time and from time to time compromise with the obligor on any Collateral
proceeds, accept in full payment of any Collateral proceeds such amount as the
Lender in its sole discretion shall determine, or abandon any Collateral
proceeds, and any such action by the Lender shall be commercially reasonable so
long as the Lender acts in good faith based on infor mation known to it at the
time it takes any such action.
Section 8.2 Secured Party Performance of Grantor Secured
Liabilities. Without having any obligation to do so, the Lender may, upon notice
to the Grantor, perform or pay any obligation which the Grantor has agreed to
perform or pay in this Agreement but has not performed or paid and the Grantor
shall reimburse the Lender for any amounts paid or incurred pursuant to this
Section 8.2. The Grantor's obligation to reimburse the Lender pursuant to the
preceding sentence shall be an Obligation payable on demand.
Section 8.3 Authorization for Secured Party To Take Certain
Action. The Grantor irrevocably authorizes the Lender at any time and from time
to time in the sole discretion of the Lender, and appoints the Lender as its
attorney-in-fact to act on behalf of the Grantor, in the name of the Grantor or
otherwise, from time to time in the Lender's discretion, to take any action and
to execute any instrument which the Lender may deem necessary or advisable to
accomplish the purposes of this Agreement, including without limitation (a) to
execute on behalf of the Grantor as debtor and to file financing statements
necessary or desirable in the Lender's sole discretion to
7.
perfect and to maintain the perfection and priority of the Lender's security
interest in the Collateral; (b) during the continuance of an Event of Default,
to endorse, deposit and collect any cash and other proceeds of the Collateral;
(c) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Collateral as a financing statement
in such offices as the Lender in its sole discretion deems necessary or
desirable to perfect and to maintain the perfection and priority of the Lender's
security interest in the Collateral; (d) during the continuance of an Event of
Default, to enforce payment of the Earned Royalty and the payments from sales of
Proprietary Binder Material in the name of the Lender or the Grantor; (e) to
cause the proceeds of any Collateral received by the Lender to be applied to the
Obligations; (f) during the continuance of an Event of Default, to sign the
Grantor's name on any invoice or ▇▇▇▇ of lading relating to any Collateral,
including any Earned Royalty and Proprietary Binder Material profits, on drafts
against customers, on schedules and assignments of such Collateral, on notices
of assignment, financing statements and other public records, on verifications
of accounts and on notices to licensees; (g) during the continuance of an Event
of Default, to send requests for verification of any Collateral or any proceeds
therefrom, including Earned Royalty and Proprietary Binder Material profits to
licensees or account debtors (provided that this clause (g) shall not limit the
Lender's rights under Section 4.01); (h) to do all things necessary to carry out
this Agreement; (i) during the continuance of an Event of Default, to grant or
issue any exclusive or nonexclusive license under the Collateral to any Person,
to the extent consistent with the terms of any pre-existing licenses granted by
the Grantor, and (j) during the continuance of an Event of Default, to assign,
pledge, convey or otherwise transfer title in or to or dispose of the Collateral
to anyone, including without limitation, to make assignments, recordings,
registrations and applications therefor in the United States Patent and
Trademark Office, the United States Copyright Office or any similar office or
agency of the United States, any State thereof or any other country or political
subdivision thereof, and to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or advisable to
effect any of the foregoing or the recordation, registration, filing or
perfection thereof. The Grantor ratifies and approves all acts of such
attorney-in-fact. The Lender will not be liable for any acts or omissions except
those determined pursuant to a final, non-appealable order of a court of
competent jurisdiction to have resulted solely from the Lender's gross
negligence or willful misconduct. The power conferred on the Lender hereunder is
solely to protect its interests in the Collateral and shall not impose any duty
upon the Lender to exercise such power. This power, being coupled with an
interest, is irrevocable.
Section 8.4 Grantor Remains Liable. Anything contained in this
Agreement to the contrary notwithstanding, (a) the Grantor shall remain solely
liable to perform its duties and obligations under the License Agreements
included in the Collateral to the extent set forth therein to the same extent as
if this Agreement had not been executed, (b) the exercise by the Lender of any
of its rights and remedies hereunder shall not release any Grantor from any of
its duties or obligations under the License Agreements included in the
Collateral except to the extent the exercise of such rights renders the
performance of such duties or obligations by the Grantor impracticable under any
such agreement or contract, and (c) the Lender shall not have any obligation or
liability under any License Agreement included in the Collateral by reason of
this Agreement, and the Lender
8.
shall not be obligated in any manner to perform any of the obligations or duties
of the Grantor thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
9. MISCELLANEOUS
Section 9.1 Security Interest Absolute. All rights of the
Lender hereunder, the security interest granted hereby, and all obligations of
the Grantor hereunder, shall be absolute and unconditional irrespective of (a)
any lack of validity or enforceability of the Note, any agreement with respect
to any of the Obligations or any other agreement or instrument relating to any
of the foregoing, (b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Notes or any other agreement
or instrument, (c) any exchange, release or non-perfection of any other
Collateral, or any release, amendment or waiver of, or consent to or departure
from, any guaranty for all or any of the Obligations, or (d) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Grantor in respect of the Obligations or in respect of this
Agreement.
Section 9.2 Lender's Fees and Expenses; Indemnification. (a)
The Grantor agrees to pay upon demand to the Lender the amount of any and all
expenses, including the fees and expenses of its counsel and of any experts of
the Lender, which the Lender may incur in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Lender hereunder, or (iv)
the failure by the Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the Purchase Agreement or any Related Documents (as defined in the
Purchase Agreement) the Grantor agrees to indemnify the Lender against, and hold
it harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel,
incurred by or asserted against it arising out of, in any way connected with, or
as a result of, the execution, delivery or performance of this Agreement or any
claim, litigation, investigation or proceeding relating hereto or to the
Collateral, whether or not the Lender is a party thereto; provided that such
indemnity shall not, as to the Lender, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of the Lender.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured by this Agreement. The provisions of this Section
9.2 shall remain operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the transactions contemplated
hereby, the repayment of any of the Notes, the invalidity or unenforceability of
any term or provision of this Agreement, or any investigation made by or on
9.
behalf of the Lender. All amounts due under this Section 9.2 shall be payable on
written demand therefor.
Section 9.3 No Amendment of License Agreement. The Grantor
hereby agrees not to amend or waive any provision of any License Agreement
without the written consent (which shall not be unreasonably withheld) of the
Lender.
Section 9.4 Binding Agreement; Assignments. This Agreement,
and the terms, covenants and conditions hereof, shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, except that the Grantor shall not be permitted to assign this
Agreement or any interest herein or in the Collateral or any part thereof, or
otherwise pledge, encumber or grant any option with respect to the Collateral or
any part thereof, or any cash or property held by the Lender as Collateral under
this Agreement, except as contemplated by this Agreement or the Notes.
Section 9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN THOUGH
UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE
SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
Section 9.6 Consent to Jurisdiction and Service of Process.
With respect to jurisdiction, service of process, jury trial and all other
procedural matters the Grantor agrees that the provisions of Section 11.11 and
11.12 of the Securities Purchase Agreement, dated the date hereof, by and among
the Borrower and the Lender apply to this Agreement mutatis mutandis.
Section 9.7 Notices. All communications and notices hereunder
shall be in writing and given as provided in paragraph 14 of the Notes.
Section 9.8 Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect, no party hereto shall be required to comply with
such provision for so long as such provision is held to be invalid, illegal or
unenforceable and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal and unenforceable provisions with valid provisions, the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
10.
Section 9.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
Section 9.10 Termination. (a) This Agreement and the security
interest granted hereby shall terminate when all the Obligations have been
indefeasibly paid in full and the Lender has no further commitment to lend under
the Notes, at which time the Lender shall execute and deliver to the Grantor all
Uniform Commercial Code termination statements and similar documents prepared by
the Grantor which the Grantor shall reasonably request to evidence such
termination.
(b) Notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
the Grantor for liquidation or reorganization, should the Grantor become
insolvent or make an assignment for any benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the obligations,
whether as a "voidable preference", "fraudulent conveyance" or otherwise, all as
though such payment, or any part thereof, is rescinded, reduced, restored or
returned.
* * * * *
11.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
COVOL TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CFO
OZ MASTER FUND, LTD.
By: ▇▇▇▇▇▇ ▇. Och
-------------------------
Name: ▇▇▇▇▇▇ ▇. Och
Title: Managing Member
12.
Annex I
The Grantor's places of business are as follows:
Principal place of business and headquarters:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Other places of business:
Coaltech No. 1 L.P.
Carbon Synfuel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Covol Wash Plant
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Pocahontas Synfuel
▇▇▇▇▇ ▇▇
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Mountaineer Synfuel
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Eastern Region Office
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Commonwealth Synfuel
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Annex A, Page 1