FINANCING AGREEMENT
THIS AGREEMENT is made and entered into this 14th day of November 1997,
by and between Covol Technologies, Inc., a Delaware corporation, whose address
is 0000 Xx. Xxxxxxxx Xxxx, Xxxx, Xxxx 00000, ("Covol"), and XxXxx Energy,
L.L.C., a Utah limited liability company, whose address is 0000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxx, Xxxx 00000, hereinafter referred to as ("XxXxx"). Covol and
XxXxx are sometimes referred to herein as the "parties."
WITNESSETH:
Whereas, Covol and XxXxx are parties to that certain "License
Agreement" dated September 10, 1996, in which Covol agreed to grant to XxXxx the
rights to develop up to 1.5 million tons of annual production capacity using
Covol's patented Coal Technology, and are also parties to that certain "Project
Development Agreement" dated December 30, 1996, which modifies the License
Agreement (collectively the "XxXxx Agreements"), and
Whereas, pursuant to the License Agreement, XxXxx has identified a
potential project for the development of synthetic fuel manufacturing,
briquetting or extruding facilities and related product marketing operations
that will use Covol's patented Coal Technology, and
Whereas, XxXxx has entered into a construction agreement (the
"Construction Agreement"), pursuant to which, after due inquiry and research, it
has specified certain equipment for its projects, and
Whereas, Covol is willing and able to provide supplemental financing
for the equipment specified by XxXxx.
Now, therefore, in consideration of the mutual covenants and conditions
contained herein, and for other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
TERMS:
1. Covol or Covol's financier will issue purchase orders for the
pelletizer and dryer equipment in a total amount not to exceed $1,000,000, and
for such other mutually agreeable long lead time equipment required pursuant to
CoBon's Construction Agreement (the "Equipment"). Within the $1,000,000 limit,
Covol will accept full and primary responsibility for the purchase price of the
Equipment. XxXxx will pay any portion of the purchase price exceeding
$1,000,000. XxXxx will assist Covol or Covol's financier with the negotiation of
all remaining purchase order terms and with the placement of the purchase orders
for the Equipment. Except for the purchase price of the Equipment, all other
aspects of the purchase order, including but not limited to, negotiation of
terms, expediting the order and administration and execution of any claims
thereunder, shall be the full and primary responsibility and liability of XxXxx,
notwithstanding any participation or lack of participation in such other aspects
by Covol or its financier.
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*Confidential material has been omitted from this Exhibit and filed separately
with the Securities and Exchange Commission (the "Commission").
2. In addition to any other payments and royalties to which Covol is
entitled for CoBon's projects under the XxXxx Agreements, Covol will have the
right to receive payments in the amount of * of Section 29 tax credits generated
by the facility employing the Equipment (the "Facility"). XxXxx will cause such
payments to be made to Covol from CoBon's interest in the Section 29 tax
credits, as specified in paragraph 3 below, regardless of the amount of CoBon's
interest, and in accord with the same timetable as corresponding royalty
payments are made by the Tax Oriented Investor (TOI) who purchases the Facility.
3. Covol or Covol's financier will have the exclusive right through
January 27, 1998, to identify and negotiate a letter of intent, acceptable to
the parties, for the purchase of the Facility by a TOI on terms including
Section 29 tax credit royalty payments to XxXxx in an amount not less than * per
$1.00 of Section 29 tax credits generated by the Facility. CoBon's payment to
Covol as referenced in paragraph 2 will be made from the proceeds received by
XxXxx as a result of CoBon's interest in the Section 29 tax credits. The
exclusivity provision set forth in this paragraph notwithstanding, XxXxx has the
right to hold discussions and negotiate with other TOI's including *, prior to
January 27, 1998 as a contingent or back-up to TOI or Covol's efforts.
4. If Covol or Covol's financier succeeds in negotiating an acceptable
letter of intent with a TOI under paragraph 3 above, then in addition to the
payments specified in paragraph 2 above, Covol and Covol's financier, as the
case may be, shall be entitled to all Section 29 tax credit royalty payments *
$1.00 interest in the total Section 29 tax credits generated by the Facility.
5. If Covol fails to negotiate an acceptable letter of intent with a
TOI under paragraph 3 above, then XxXxx may proceed in its efforts to negotiate
with its prospective TOI. However, Covol will retain the right, without the
exclusivity set forth in paragraph 3, to identify and negotiate with a TOI on
terms set forth in paragraphs 3 and 4.
6. If the project for which the Equipment is ordered and purchased by
Covol fails for any reason, Covol will assume responsibility for payments due,
if any, by XxXxx relating to the Equipment and Covol shall, as its sole remedy
hereunder, take possession of and retain all rights, title and interest in and
to the Equipment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer and the Agreement shall be effective as of
the date first above written.
XXXXX ENERGY, L.L.C. COVOL TECHNOLOGIES, INC.
By:/s/ Xxxxxx Xxxx By: /s/ Xxxxx X. Xxxx
------------------ -------------------
Its: President Its: President
Date: 11/14/97 Date: 11/14/97
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* Confidential material omitted and filed separately with the Commission.
