Note: This Exhibit was executed in substantially the same form for PC West
Virginia Synthetic Fuel #1, L.L.C., PC West Virginia Fuel #2, L.L.C., and PC
▇▇▇▇ ▇▇▇▇▇▇▇▇ #▇, L.L.C., each a Delaware Limited Liability Company.
FORM OF AMENDED AND RESTATED
LICENSE AND BINDER PURCHASE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AND BINDER PURCHASE AGREEMENT (the
"Agreement"), is made and entered into as of February 3, 1998 by and between PC
Virginia Synthetic Fuel #1, L.L.C., a Delaware Limited Liability Company (the
"Licensee"), and Covol Technologies, Inc., a Delaware corporation (the
"Licensor").
WHEREAS Licensor has represented that it has developed a proprietary
process to produce synthetic coal fuel extrusions, pellets, and briquettes from
waste coal dust, coal fines and other coal derivatives, and that Licensor has
sufficient rights to such proprietary process pursuant to which Licensor is
entitled to license the coal extruding, pelletizing, and briquetting technology
to Licensee;
WHEREAS Licensee has entered into a form of agreement (referred to as a
"Facility Agreement") between itself as Owner and a Contractor for the
construction of one (1) agglomeration facility located near ▇▇▇▇▇▇ in ▇▇▇▇▇▇▇▇
County, West Virginia and having production design capacity of approximately
600,000 tons per year (referred to as the "Project" or "Facility"), the
reference to production design capacity not being intended to limit the actual
production capacity of each Project.
WHEREAS Licensor and Licensee entered into that Amended and Restated
License and Binder Purchase Agreement (the "January Agreement"), dated as of
January 21, 1998, pursuant to which Licensor granted to Licensee a license for
the coal extruding and briquetting technology in connection with the Project and
agreed to sell to Licensee the Proprietary Binder Material (as defined below)
manufactured by Licensor for use in the operation of the Project.
WHEREAS Licensor and Licensee now desire to amend and restate the
January Agreement.
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Licensor and Licensee each agree that from and after date hereof, the Original
License Agreement and the January Agreement are hereby amended and restated in
its entirety as follows:
Section 1. Definitions.
"Applicable Percentage" means the Licensor's Earned Royalty
rate per MM btu as set forth in Section 3.3 divided by the amount of Section 29
Tax Credit per MM btu.
"Coal Briquetting Technology" means all intellectual property,
patents (including but not limited to United States Patent Numbers *,
trademarks, inventor certificates and applications therefor, printed and
unprinted technical data, know-how, trade secrets, copyrights and other
intellectual property rights, inventions, discoveries, techniques, works,
processes, methods, plans, software, designs, drawings, schematics,
specifications, communications protocols, source and object code and
modifications, test procedures, program cards, tapes, disks, algorithms and all
other scientific or technical information in whatever form relating to, embodied
in or used in the proprietary process to produce synthetic coal fuel extrusions,
pellets and briquettes from waste coal dust, coal fines and other similar coal
derivatives, including all such information in existence as of December 31, 1996
as well as related information later developed by Licensor; provided, however,
that the defined term "Coal Briquetting Technology" shall not include the
proprietary process developed by Licensor to produce synthetic coke extrusions,
pellets and briquettes from coke breeze, iron revert materials, or any
technology for other than the processing and production of synthetic coal fuel
extrusions, pellets, and briquettes. Nothing in this Agreement is intended to
grant to Licensee the right to apply the Coal Briquetting Technology to produce
anything other than synthetic coal fuel extrusions, pellets, and briquettes
intended to qualify for Tax Credits under Section 29(c)1(C) of the Internal
Revenue Code, but the failure of the synthetic coal fuel extrusions, pellets,
and briquettes to so qualify (including without limitation as a result of the
repeal of Section 29) shall not affect the grant of the license hereby.
"▇▇▇▇▇" means ▇▇▇▇▇ Energy, L.L.C.
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
"Contractor" has the meaning set forth in the preamble.
"Developed Technology" means any inventions, or new technology
that Licensor or Licensee may make, invent, or suggest utilizing the Coal
Briquetting Technology. "Developed Technology" also means any "Improvement"
directly related to the Coal Briquetting Technology that Licensor or Licensee
may make, invent or suggest during the term of this Agreement.
"Earned Royalty" has the meaning set forth in Section 3.3.
"Effective Date" means the date of this Agreement set forth
above.
"Facility" has the meaning set forth in the preamble, and
includes any replacement facility so long as the facility being replaced no
longer produces the Product.
"Facility Agreement" has the meaning set forth in the
preamble.
"Improvement" means an alteration or addition to an invention
or discovery which enhances, to some extent, performance or economics without
changing or destroying a product's, device's, or method's basic identity and
essential character. An Improvement may comprise alterations or additions to
either patented or unpatented inventions, discoveries, technology, or devices,
and may or may not be patentable.
"Initial Royalty" has the meaning set forth in Section 3.2.
"IRS" means the Internal Revenue Service.
"Licensee" has the meaning set forth in the preamble. The term
"Licensee" shall also apply to any successor entity or permitted assign of
Licensee.
"Licensor" has the meaning set forth in the preamble. The term
"Licensor" shall also apply to any successor entity or permitted assign of
Licensor.
"Partnership" means Pace Carbon Synfuels Investors, L.P., a
Delaware limited partnership, which is the parent of Licensee and
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
is comprised of a general partner and multiple limited partners, individually
"Partner" or collectively the "Partners."
"Product" means coal-based synthetic fuel produced at the
Facility utilizing the Coal Briquetting Technology.
"Project" has the meaning set forth in the preamble.
"Proprietary Binder Material" means and refers to the binder
compound necessary for the production, by Licensee, of synthetic coal
extrusions, pellets and briquettes, which extrusions, pellets, and briquettes
are reasonably expected to constitute "qualified fuels" pursuant to the terms of
Section 29(c)(1)(C) of the Internal Revenue Code and with respect to which
Section 29 is applicable pursuant to Section 29(f) and 29(g) of the Internal
Revenue Code. The binder material shall conform in quality to the binder
described in Licensor's Section 29 Tax Credit Private Letter Ruling dated
September 6, 1995, subject to any improvement in the binder material that still
satisfies the Section 29 Tax Credit qualification requirements. The parties
acknowledge that the Proprietary Binder Material is not a staple article of
commerce suitable for substantial non-infringing uses, but rather is an integral
and inseparable part of the Coal Briquetting Technology.
"Royalty" means the Initial Royalty and the Earned Royalty.
"Tax Credit" means tax credit for federal income tax purposes
pursuant to Section 29 of the Internal Revenue Code, as amended.
"Yearly Period" means the twelve month period beginning on
October 15th of each calendar year.
Section 2. License Grant.
2.1. General. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Licensee, for the full and entire term
hereof, a non-exclusive license to use the Coal Briquetting Technology for
commercial exploitation (and not for research development purposes), including
the non-exclusive right to make, have made, or use at the Facility and to sell
or otherwise transfer products which have been manufactured with the Coal
Briquetting Technology. The license granted hereunder applies only to the
Facility, but Licensee may use, sell and otherwise transfer
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
products which have been manufactured at the Facility with the Coal Briquetting
Technology at any other facility. Licensee hereby agrees to make and have made
products using the Coal Briquetting Technology at the Facility only under this
License Agreement. Licensee shall not make or have made products using the Coal
Briquetting Technology except at the Facility. Licensee shall not have the right
to sublicense the Coal Briquetting Technology. Licensee may propose the general
location for additional facilities to use the Coal Briquetting Technology, and
Licensor will then have thirty (30) days to approve or disapprove of the general
area of each such additional facility, which approval shall not unreasonably be
withheld, taking into account other facilities in the area utilizing Licensor's
technology, any noncompetition agreements, and like factors; provided that the
following sites are approved and not subject to the 30-day review of this
Section 2.1; location near ▇▇▇▇▇▇ in ▇▇▇▇▇▇▇▇ County, West Virginia.
2.2. Know-How and Assistance. To enable Licensee to benefit
fully from the license of the Coal Briquetting Technology, Licensor shall
provide reasonable access to documentation, drawings, engineering
specifications, operating facilities under its control, and other know-how in
its possession that Licensee reasonably requires to carry out the purposes of
this Agreement; reasonable access to its employees or agents who are familiar
with the Coal Briquetting Technology and Improvements to the Coal Briquetting
Technology; technical advice with regard to the Coal Briquetting Technology as
is reasonably requested by Licensee; and assistance in accumulating the data,
technical descriptions, test results, etc., necessary to apply for a Private
Letter Ruling from the Internal Revenue Service regarding the production for the
Facility as qualifying for Section 29 Tax Credit. Licensor shall not be
obligated to provide Licensee with documentation and other forms of information
Licensor reasonably deems unnecessary to carry out the purposes of this
Agreement.
2.3. Developed Technology. Licensee shall have the right and
is hereby granted a non-exclusive license to use all Developed Technology
relating to the Coal Briquetting Technology without payment of any additional
compensation to Licensor, throughout the term of this Agreement, subject to the
restrictions and limitations in this Section 2. All Developed Technology shall
become Licensor's absolute property. Licensee shall at any time during the term
of this Agreement and thereafter, at Licensor's reasonable request, execute any
patent papers covering such Developed Technology as well as any other documents
that Licensor may consider necessary or helpful in the prosecution of
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
applications for a patent thereon or in connection with any litigation or
controversy related thereto; provided, however, that all expenses incident to
the filing of such applications and the prosecution thereof and the conduct of
such litigation shall be borne by Licensor.
2.4. Exclusive Technology. Licensee agrees to use only the
Coal Briquetting Technology at the Facility and not to use any other technology
for the production of solid synthetic fuel intended to qualify for Tax Credits
under Section 29(c)(1)(C) of the Internal Revenue Code at the Facility;
provided, however, that if notwithstanding Licensee's commercially reasonable
efforts to use the Coal Briquetting Technology or Developed Technology, the
Facility fails to produce qualifying synthetic fuel under Section 29(c)(1)(C) of
the Internal Revenue Code that can be sold to unrelated parties as set forth in
Licensor's Private Letter Ruling dated September 8, 1995 and Pace Carbon
Synfuels Investors, L.P. Private Letter Ruling dated November 7, 1997, then
Licensee may use an alternative technology at the Facility to produce qualifying
synthetic fuel under Section 29. In the event of any federal income tax audit of
the Licensee or its parent, or subsequent contest thereof, the Licensee's parent
will (i) keep the Licensor and, if requested in writing by Licensor, tax counsel
to Licensor (whose expense shall be borne solely by Licensor), reasonably
informed as to the progress of such audit or contest; (ii) give Licensor an
opportunity to review and comment in advance on all written submissions and
filings relevant to issues raised in such audit or contest; and (iii) consider
in good faith any suggestions made by Licensor or its counsel about the conduct
of such audit or contest; provided, however, that Licensee's parent shall retain
full control over the conduct of such audit including whether and in what form
to contest any proposed adjustment.
2.5. Non-licensed Technology. Licensor retains the absolute
right to fully exploit its proprietary technology and processes, including but
not limited to the application of such technology embodied in the Coal
Briquetting Technology together with any improvements thereto, to produce,
market and use synthetic coke extrusions, pellets, and briquettes from coke
breeze, iron revert materials, and any other materials to which Licensor's
technology can be applied.
2.6. Confidentiality. Each of the parties hereby agree to
maintain the Coal Briquetting Technology confidential and not to disclose,
publish, or disseminate in any manner the Coal Briquetting Technology, or any
aspect thereof, or the Improvements, or any aspect thereof (collectively, the
"Confidential
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
Information"). Notwithstanding the foregoing, information which (i) is or
becomes generally available to the public other than as a result of an
unauthorized disclosure by the parties or their respective agents, employees,
directors or representatives, (ii) was available to the party receiving
disclosure on a non-confidential basis prior to its receiving disclosure
hereunder, (iii) lawfully becomes available to the party receiving disclosure on
a non-confidential basis from a third party source (provided that such source is
not known by the party receiving disclosure or its agents, employees, directors
or representatives to be prohibited from transmitting the information), or (iv)
is disclosed under requirement of law, provided that all reasonable legal
remedies are pursued to maintain the confidentiality of the Confidential
Information, shall not be subject to the terms of this Section 2.6. Any breach
of this Section 2.6 will be subject to all legal remedies, and in addition, this
Section 2.6 is specifically enforceable by temporary restraining order or other
injunctive relief. At the termination of this Agreement, all copies of any
Confidential Information (including without limitation any reports or memoranda)
shall be returned by the party receiving disclosure. Nothing in this Agreement
shall prohibit Licensee from disclosing the Confidential Information to others
as may be reasonably necessary for Licensee to exploit Licensee's rights under
this Agreement, provided that the recipient of any such Confidential Information
executes a Confidentiality Agreement restricting further disclosure of the
Confidential Information.
Section 3. License Fee and Royalty.
3.1. License Fee. Licensee shall pay the Initial Royalty and
Earned Royalty as a license fee to Licensor.
3.2. Initial Royalty. Licensee shall pay a one-time advance
license fee equal to $ * per ton for each ton of annual production capacity or $
* . Payment of the advance license fee described in this Section 3.2 shall be
due and payable on or before December 31, 1997. If the equity investor funding
contemplated by Licensee occurs after that date, the monies due will be paid at
financial closing for such funding, but not later than February 6, 1998.
3.3. Earned Royalty. Licensee shall pay to Licensor quarterly
earned royalty payments ("Earned Royalty") in an amount equal to the product of
(a)(i) $ * , for each ton of Product qualifying for the Section 29 Tax Credit
that was sold by Licensee during the immediately preceding quarter up to a total
of * tons
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
in the then current Yearly Period, and (ii) after * tons of Product qualifying
for the Section 29 Tax Credit have been sold in the then-current Yearly Period,
$ * for each ton of such Product qualifying for the Section 29 Tax Credit that
was sold by Licensee during the immediately preceding quarter, multiplied by (b)
the MM btu content per ton of such Product. Beginning on January 1, 1997, and
each year thereafter, the amounts in clause (a) above shall be adjusted by the
percentage increase or decrease in the dollar amount of the inflation adjustment
as provided in Section 29 of the Internal Revenue Code.
3.4. Payment Terms. Earned Royalty payments shall be due
within * days after Licensee (or its parent) receives its payment for the
corresponding period, but no later than * days after the end of the quarter to
which payment relates; provided, however, that such payment shall not be due
until any disputes among the partners of Licensee's parent (or of Licensee's
parent and Pace Carbon Synfuels L.L.C.) have been resolved as provided in the
agreements among such parties. Payments shall be made by Licensee to Licensor
and shall be deemed to be paid upon receipt by Licensor. Payments after the due
date shall accrue interest at the rate of one percent per month.
3.5 *
Section 4. Sales of Binder.
4.1. Sale and Purchase. Licensor shall sell to Licensee, and
Licensee shall purchase from Licensor, Licensee's requirements of Proprietary
Binder Material required to operate the Project. Licensor shall deliver the
Proprietary Binder Material at such times and in such amounts as requested by
Licensee. Payments for Proprietary Binder Material delivered by Licensor during
any calendar month shall be due and payable to Licensor on the fifteenth
Business Day of the immediately succeeding month. Payments after the applicable
due dates shall accrue interest at the rate of one percent per month.
4.2. Price. The price which Licensee shall pay for the
Proprietary Binder Material delivered by Licensor during any calendar year shall
be an amount equal to (i) Licensor's direct and actual costs (direct material,
labor, and transportation costs) and a percentage of the total overhead costs of
Licensor reasonably
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
reflecting the ratio of the administrative costs incurred in connection with the
manufacture and sale of the Proprietary Binder Material plus (ii) $ * per ton of
synthetic fuel product (assuming a 2% Proprietary Binder Material) or $ * per
ton of synthetic fuel product (assuming a 4% Proprietary Binder Material).
Exclusive of transportation costs which may vary because of distances and
available rates, in no event shall the amount in clause (i) above exceed the
costs charged to third parties by Licensor for the Proprietary Binder Material,
except Savage Industries. As of the date first above written, the total price
based upon the information known to Licensor is estimated to be $ * per ton for
the 2% Proprietary Binder Material and $ * per ton for 4% Proprietary Binder
Material produced at the Facility.
4.3. Representations and Warranties, Certain Covenants of
Licensor. Licensor represents, warrants and covenants to Licensee as follows:
(a) Licensor shall convey to Licensee good title to all
Proprietary Binder Material purchased by Licensee from Licensor
hereunder, free and clear of any and all liens, claims and encumbrances
of any type whatsoever.
(b) No Proprietary Binder Material shall contain any hazardous
material in violation of currently applicable laws and governmental
regulations.
(c) At Licensee's option, Licensor shall replace, or refund
the purchase of, all non-conforming Proprietary Binder Material.
(d) There will be available at the Facility from time to time
as reasonably requested by Licensee sufficient quantities of the
Proprietary Binder Material to supply the requirements of the Licensee
for the production of up to * tons of Product per year from the date
hereof until at least December 31, 2007.
(e) The Proprietary Binder Material may be produced from
acrylonitrile and polyvinyl alcohol; other monomers, including, but not
limited to, the ETG-400 mix of monomers, may be substituted for
acrylonitrile and polyvinyl alcohol, to produce Proprietary Binder
Material that will achieve the same reaction and resulting
polymerization pursuant to Licensor's patented Coal Briquetting
Technology, that will achieve the same significant chemical change, and
that will result in an
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
end product chemically indistinguishable other than for trace
substances that have an immaterial effect on the net change, in each
case compared to an end product that is produced using the Proprietary
Binder Material incorporating acrylonitrile and polyvinyl alcohol.
Prior to and as a condition to substituting other monomers (except for
ETG 400) for acrylonitrile and polyvinyl alcohol, the Licensor will
provide to the Licensee a written report of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Ph.D., or
another third party fuels expert reasonably acceptable to the Licensor
and Licensee to the effect that (in such third party's professional
judgment) the monomers so to be substituted will achieve the results
set forth in the first sentence of this Section 4.3(e).
4.4. Order Procedure. Licensee shall deliver all purchase
orders for Proprietary Binder Materials at least thirty (30) days in advance of
the first day of the month in which delivery of such Proprietary Binder Material
is required under such purchase order, and all such purchase orders received by
Licensor during the term of this Agreement shall be deemed to have been accepted
by Licensor. (For example, Licensee 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 Licensee (subject to the condition that it is followed by a written
purchase order within 24 hours). Such purchase orders shall be sent to Licensor
at such address as Licensor shall direct.
4.5. Delivery and Acceptance. All Proprietary Binder Material
purchased hereunder shall be delivered F.O.B. the Facility. Licensor shall
arrange for transportation of the Proprietary Binder Material to the Facility.
Licensee shall bear the expense of unloading the trucks. The weight of
Proprietary Binder Material in each delivery shall be determined by a comparison
of the weight, on Licensee's scales, of the delivery truck immediately prior to
unloading and its weight, on Licensee's scales, immediately following unloading,
as reflected in customary weighing certificates. At Licensor's request and
expense from time to time, Licensor shall have the right to inspect Licensee's
scales for accuracy. Licensee shall have a reasonable opportunity to sample
Proprietary Binder Material delivered to it hereunder to confirm that such
Proprietary Binder Material conforms to the terms and requirements hereof, and
Licensee shall not be deemed or required to accept any such Proprietary Binder
Material prior to the completion of such sampling.
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
4.6. Binder Technology License. If Licensor's ability to
deliver the Proprietary Binder Material to Licensee will or is reasonably
expected by Licensor to be interrupted or terminated for any reason, Licensor
shall give not less than ninety (90) days notice to Licensee. Subject to giving
notice of its inability to deliver the Proprietary Binder Material to Licensee
(or, in the absence of such notice, the actual failure to deliver the
Proprietary Binder Material for at least ten days after Licensee gives written
notice of non-delivery to Licensor), Licensor hereby grants to Licensee a
nonexclusive license for the term of this Agreement (or such shorter period as
provided in the proviso hereto) to use the technology used to manufacture the
Proprietary Binder Material to manufacture the Proprietary Binder Material in
sufficient quantities to operate the Project up to full capacity, and such
technology shall be deemed "Coal Briquetting Technology" for the purposes of
this Agreement; provided, however, that the license granted to Licensee under
this Section shall cease (subject to reinstatement upon the reoccurrence of the
events contemplated above) and sales of Proprietary Binder Material under the
terms of this Agreement shall be reinstated, in each case, on a date not less
than ninety (90) days after Licensor gives notice to Licensee, together with
reasonably satisfactory evidence that Licensor is able to deliver the
Proprietary Binder Material in accordance with this Agreement. No additional fee
or royalty shall be payable to Licensor in connection with the license granted
pursuant to this Section and Licensee shall be responsible for its own direct
out-of-pocket operating costs incurred in connection with the production of
Proprietary Binder Material pursuant to this Section.
*. Such trustee shall agree to provide the formula to Licensee upon Licensee's
certifying to the trustee that Licensee has a right of access to such formula
pursuant to this Section 4. Licensor and Licensee shall cooperate to put in
place any necessary agreement (including without limitation a trust agreement)
to effect the foregoing safety deposit and trustee arrangement. Except to the
extent required by law, Licensee covenants to hold the formula delivered to it
by the trustee pursuant to the preceding sentence strictly confidential, and not
to study, utilize, remove, or to access the formula except in accordance with
the license granted to Licensee pursuant to this Agreement.
Section 5. Records; Inspection; Confidentiality. Each party hereto
shall keep accurate records containing all data reasonably required for the
computation and verification of the amounts to be paid by the respective parties
under this Agreement, and shall permit each other party or an independent
accounting firm designated by such other party to inspect and/or audit such
records
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
during normal business hours upon reasonable advance notice. All costs and
expenses incurred by a party in connection with such inspection shall be borne
by it. Each party agrees to hold confidential from all third parties all
information contained in records examined by or on behalf of it pursuant to this
Section 5.
Section 6. Development and Construction of Facilities.
6.1. Assistance from Licensor. Upon the reasonable request of
Licensee, Licensor agrees to provide assistance from time to time in the
development and construction of the Facility.
6.2. Reimbursement of Expenses. Licensee shall reimburse the
travel and other similar out-of-pocket expenses of Licensor in performing
services requested under Section 6.1 hereof; provided, however, that Licensor
shall obtain the prior written approval of Licensee for any expenditures in
excess of $5,000.
Section 7. Infringement. If during the term of this Agreement a third
party has infringed any intellectual property rights associated with the Coal
Briquetting Technology or otherwise misappropriated any Coal Briquetting
Technology, Licensor may, at Licensor's expense, institute and conduct legal
actions against such third party or to enter into such agreements or accord in
settlement as are deemed appropriate by Licensor, in which case Licensor shall
be entitled to any sums recovered from third parties.
Section 8. Representations and Warranties.
8.1. Authority. Each of Licensee and Licensor represents and
warrants that (i) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized on its behalf by all requisite action, corporate or otherwise, (ii)
it has the full right, power and authority to enter into this Agreement and to
carry out the terms of this Agreement, (iii) it has duly executed and delivered
this Agreement, and (iv) this Agreement is a valid and binding obligation of it
enforceable in accordance with its terms.
8.2. No Consent. Each of Licensee and Licensor represents and
warrants that no approval, consent, authorization, order, designation or
declaration of any court or regulatory authority or governmental body or any
third-party is required to be obtained by it, nor is any filing or registration
required to be
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
made therewith by it for the consummation by it of the transactions contemplated
under this Agreement.
8.3. Intellectual Property Matters. Licensor warrants to its
best knowledge and good faith belief that (i) Licensor owns, free and clear of
all liens and encumbrances, intellectual property, patents (including but not
limited to United States Patent Numbers * ), trademarks, inventor's
certificates, and applications therefor, printed and unprinted technical data,
know-how, trade secrets, copyrights and other intellectual property rights
inventions, discoveries, techniques, works, processes, methods, plans, software,
designs, drawings, schematics, specifications, communications protocols, source
and object code and modifications, test procedures, program cards, tapes, disks,
algorithms and all other scientific or technical information in whatever form
relating to, embodied in or used in the proprietary process to produce synthetic
coal fuel extrusions, pellets, and briquettes from waste coal dust, coal fines
and other similar coal derivatives, and, the right to freely use, sell and
exploit Proprietary Binder Material used in manufacturing synthetic coal fuel
extrusions, pellets, and briquettes from waste coal dust, coal fines and other
similar coal derivatives, (ii) Licensor has the right and power to grant to
Licensee the licenses granted herein, (iii) Licensor has not made and will not
make any agreement with another in conflict with the rights granted herein, and
(iv) the grant or sale to Licensee, and the use by Licensee of the rights,
Proprietary Binder Material and/or licenses granted herein as contemplated by
this Agreement will not infringe any third-party's intellectual property rights.
Licensor represents and warrants that valid technical information exists
establishing that the 2% Proprietary Binder Material works successfully with the
Coal Briquetting Technology using Eastern sub-bituminous coal fines producing a
commercially acceptable synthetic coal extrusion, pellet or briquette and that
use of the 2% Proprietary Binder Material with the Coal Briquetting Technology
is consistent with the Private Letter Ruling, dated September 6, 1995, received
by Licensor from the Internal Revenue Service that the production using the Coal
Briquetting Technology qualifies for the Section 29 Tax Credit.
8.4. Indemnification. Each party shall indemnify, defend and
hold harmless the other and its partners, members, directors, officers, agents,
representatives, subsidiaries and affiliates from and against any and all
claims, demands or suits (by any party, including any governmental entity),
losses, liabilities, damages, obligations, payments, costs and expenses
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
(including the costs and expenses of defending any and all actions, suits,
proceedings, demands and assessments which shall include reasonable attorneys'
fees and court costs) resulting from, relating to, arising out of, or incurred
in connection with any breach by the indemnifying party of any of the
representations, warranties and/or covenants contained in this Agreement.
Licensor shall take all reasonable action necessary to defend the Coal
Briquetting Technology against claims from third parties.
Section 9. Term. This Agreement and the license granted hereunder shall
be for the primary term from December 31, 1996 to and including January 1, 2008,
or the corresponding date under Section 29 of the Internal Revenue Code, as
amended, in the event of an extension of the Tax Credit available under Section
29 of the Internal Revenue Code, as amended, whichever is later. Licensee shall
have the right to renew this Agreement upon terms that the Parties may later
agree.
Section 10. Waiver. The failure of any party to enforce at any time any
provision of this Agreement shall not be construed as a waiver of such provision
or the right thereafter to enforce each and every provision. No waiver by any
party, either express or implied, of any breach of any of the provisions of this
Agreement shall be construed as a waiver of any other breach of such term or
condition.
Section 11. Severability. If any provision of this Agreement shall be
held by a court of competent jurisdiction to be invalid or unenforceable in any
respect for any reason, the validity and enforceability of any such provision in
any other respect and of the remaining provisions of this Agreement shall not be
in any way impaired.
Section 12. Notices. All notices required or permitted to be given
under this Agreement shall be in writing. Notices may be served by certified or
registered mail, postage paid with return receipt requested; by private courier,
prepaid; by telex, facsimile, or other telecommunication device capable of
transmitting or creating a written record; or personally. Mailed notices shall
be deemed delivered five days after mailing, property addressed. Couriered
notices shall be deemed delivered when delivered as addressed, or if the
addressee refuses delivery, when presented for delivery notwithstanding such
refusal. Telex or telecommunicated notices shall be deemed delivered when
receipt is either confirmed by confirming transmission equipment or acknowledged
by the addressee or its office. Personal delivery
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
shall be effective when accomplished. Unless a party changes its address by
giving notice to the other party as provided herein, notices shall be delivered
to the parties at the following address:
Licensor: Covol Technologies, Inc.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
With a copy to: Ballard, Spahr, ▇▇▇▇▇▇▇ & Ingersoll
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇▇
Licensee: PC West Virginia Synthetic Fuel #3, L.L.C.
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn.: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Section 13. Remedies Cumulative. Remedies provided under this Agreement
shall be cumulative and in addition to other remedies provided by law or in
equity.
Section 14. Further Assurances. Each party agrees, at the request of
the other party, at any time and from time to time, to execute and deliver all
such further documents, and to take and to forbear from all such action, as may
be reasonably necessary or appropriate in order to more effectively carry out
the provisions of this Agreement.
Section 15. Entire Agreement. This Agreement 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. This Agreement supersedes all prior communications,
representations, or agreements, verbal or written, among the parties relating to
the subject matter hereof, including the January Agreement. This
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
Agreement may not be amended except in writing signed by the parties.
Section 16. Governing Law. This Agreement shall be governed in
accordance with the laws of the State of Utah, exclusive of its conflict of laws
rules.
Section 17. Assignment. This Agreement may not be assigned, in whole or
in part, by any party without the written consent of each of the other parties,
which consent will not be unreasonably withheld except that (i) Licensor and/or
Licensee shall have the right to assign its rights and obligations under this
Agreement to any entity which is controlled by Licensor or Licensee, as the case
may be, and of which Licensor or Licensee, as the case may be, owns, directly or
indirectly, at least fifty percent (50%) of each class of its outstanding
securities, provided that no such assignment shall release Licensor and/or
Licensee from its obligations hereunder, and (ii) Licensee shall have the right
to assign its rights and obligations to Licensor in connection with any sale by
Licensee of substantially all of the assets of the Project.
Section 18. Counterparts. This Agreement may be executed in two or more
counterparts, each which shall be deemed an original, but all of which together
shall constitute one and the same agreement.
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.
Executed by the duly authorized representative of the parties on the
date and year first above written.
LICENSOR WEST VIRGINIA SYNTHETIC FUEL
#3, L.L.C.
by PACE CARBON SYNFUELS, L.L.C.,
a member
by PACE CARBON FUELS, L.L.C.,
its majority member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer Title: President
* This Exhibit contains confidential material which has been omitted pursuant to
a Confidential Treatment Request and replaced by asterisks. The omitted
information has been filed separately with the Securities and Exchange
Commission.