AMENDMENT TO CONVERTIBLE LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO CONVERTIBLE LOAN AND SECURITY AGREEMENT (this
"Amendment") is made as of December 12, 1997, by and between COVOL TECHNOLOGIES,
INC., a Delaware corporation ("Borrower"), and PACIFICORP FINANCIAL SERVICES,
INC., an Oregon corporation ("Lender").
RECITALS
A. The Borrower and Lender have entered into a Convertible Loan and
Security Agreement dated as of March 20, 1997 (as the same may be further
amended, modified, extended or restated, the "Loan Agreement"), pursuant to
which the Lender has made secured credit facilities available to the Borrower.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Loan Agreement.
B. The Borrower and the Lender desire to amend the Loan Agreement
pursuant to the terms set forth herein to increase the facility from $5,000,000
to $7,000,000.
AGREEMENTS
In consideration of the foregoing Recitals, and of the agreements made
herein, and of the Term Loans made or to be made by the Lender to the Borrower,
the Borrower and the Lender agree as follows:
1. Amendments. The Loan Agreement is hereby amended as follows:
(a) Amending and restating the definition of "Termination
Date" in Section 1.01 in its entirety as follows:
"Termination Date" means August 31, 1998.
(b) Deleting "September 30, 1997" in the second line of
Section 2.01.A and inserting "February 27, 1998" in its place.
(c) Deleting "$5,000,000" in the sixth line of Section 2.01.A
and inserting "$7,000,000" in its place.
(d) Amending and restating Section 2.01.B in its entirety as
follows:
The Term Loans shall be available in the following amounts and
for the following purposes: (i) up to $25,000 to repay the
Demand Promissory Note, dated as of February 24, 1997, of
Borrower in favor of Lender, (ii) up to $100,000 to be used as
a "good faith" deposit pursuant to the Amended and Restated
Supply Agreement, dated as of the date hereof, (iii) to
complete
construction by Borrower of the Alabama Project, (iv) up to
$2,030,000 to finance the acquisition by Borrower for the
benefit of the Alabama Project of up to 70,000 tons of coal
fines to be stored at 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxxx,
Xxxxxxx, and (v) up to an amount equal to $4,845,000 minus
such amounts as are borrowed or reasonably expected to be
borrowed by the Borrower pursuant to clause (iii) to fund the
net working capital needs of the plant operations of the
Alabama Project; provided, however, that the determination of
the amount of such net working capital needs shall be subject
to the approval of Lender in its sole discretion; provided,
further, that any amounts available to be drawn under any
letters of credit arranged by Lender or any of its Affiliates
for the purposes described in this Section 2.01.B shall not be
available to be drawn as Term Loans hereunder.
(e) Amending and restating the first sentence of Section
10.01.A in its entirety as follows:
Lender shall have the right, subject to the terms and
provisions of this ARTICLE X, at the option of the Lender, (i)
at any time, to convert, the unpaid principal amount of the
Term Loans or any portion thereof, and any accrued and unpaid
interest on such Term Loans, and (ii) at any time prior to the
Termination Date, to simultaneously advance and convert (a)
that portion of the remaining Commitment equal to the
remaining Commitment minus $1,000,000, if a positive number,
and (b) after the Commitment Period, an amount equal to that
portion of the Commitment which is not then outstanding as a
Term Loan minus $1,000,000 (it being acknowledged that this
does not extend the Commitment Period), if a positive number,
into fully paid and non-assessable shares of Borrower Common
Stock or any capital stock or other securities into which such
Borrower Common Stock shall have been changed or any capital
stock or other securities resulting from a reclassification
thereof ("Shares").
2. Conditions Precedent. The obligation of the Lender to make any Term
Loans that, together with Term Loans outstanding on the date hereof, exceed
$5,000,000 in the aggregate is subject to the fulfillment or waiver in writing
of each of the following conditions precedent.
(a) The Borrower shall have executed and delivered to the
Lender an amended and restated promissory note in the form attached hereto as
Exhibit A (the "Amended and Restated Note").
(b) The Lender shall have received an opinion of counsel to
the Borrower dated as of the date hereof and addressed to the Lender,
substantially in the form attached hereto as Exhibit B.
2
(c) The Borrower and Birmingham Syn Fuel, LLC shall have
entered into an agreement in the form attached hereto as Exhibit C (the "Coal
Fines Purchase Agreement") pursuant to which Borrower shall sell certain coal
fines to Birmingham Syn Fuel, LLC.
(d) The Borrower and PacifiCorp Syn Fuel, LLC shall have
entered into an Amended and Restated Additional Facilities Agreement in the form
attached hereto as Exhibit D.
(e) The Lender shall have received a letter from the Borrower
acknowledging its obligation to indemnify the Lender and its affiliates under
Section 8.13 of the Loan Agreement for costs incurred by them in connection with
the Xxxxxx Filtration Group x. Xxxxx Technologies litigation, which letter shall
be acceptable to the Lender in its sole discretion.
(f) Each of the parties thereto shall have entered into a
letter amendment substantially in the form attached hereto as Exhibit E amending
the Alabama Project Purchase Agreement.
(g) The Lender, Borrower, Alabama Synfuel #1 Ltd and TIC The
Industrial Company shall have executed and delivered a letter agreement
substantially in the form attached hereto as Exhibit F.
(h) The Borrower, Alabama Synfuel #1 Ltd and Birmingham Syn
Fuel, LLC shall have entered into an Amended and Restated License and Binder
Purchase Agreement substantially in the form attached hereto as Exhibit G.
3. Representations and Warranties. (a) Except as modified by the
attached schedules, each and every representation and warranty of the Borrower
set forth in the Loan Agreement is hereby confirmed and ratified in all material
respects and such representations and warranties shall be deemed to have been
made and undertaken as of the date of this Amendment as well as at the time they
were made and undertaken.
(b) The Borrower represents and warrants that:
(i) No Event of Default now exists or will
exist immediately following the execution hereof or after giving effect to the
transactions contemplated hereby.
(ii) All necessary actions on the part of the
Borrower to authorize the execution, delivery and performance of this Amendment,
the Amended and Restated Note and all other documents or instruments required
pursuant hereto or thereto have been taken; this Amendment, the Amended and
Restated Note and each such other document or instrument have been duly and
validly executed and delivered and are legally valid and binding upon the
parties thereto and enforceable in accordance with their respective terms,
3
except to the extent that the enforceability thereof may be limited by
bankruptcy, insolvency or like laws or by general equitable principles.
(iii) The execution, delivery and performance of
this Amendment, the Amended and Restated Note and all other documents and
instruments required pursuant hereto or thereto, and all actions and
transactions contemplated hereby and thereby will not (A) violate, be in
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under (I) any provision of the articles of incorporation
or bylaws of the Borrower, (II) any arbitration award or any order of any court
or of any other governmental agency or authority, (III) any license, permit or
authorization granted to the Borrower or under which the Borrower operates, or
(IV) any applicable law, rule, order or regulation, indenture, agreement or
other instrument to which the Borrower is a party or by which the Borrower or
any of its properties is bound and which has not been waived or consented to, or
(B) result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever, except as expressly permitted in the Loan Agreement, upon
any of the properties of the Borrower.
(iv) No consent, approval or authorization of,
or filing, registration or qualification with, any governmental authority or any
other Person is required to be obtained by the Borrower in connection with the
execution, delivery or performance of this Amendment, the Amended and Restated
Note or any document or instrument required in connection herewith or therewith
which has not already been obtained or completed.
4. Affirmation of the Borrower. The Borrower acknowledges that the
security interests and liens granted by the Borrower to the Lender pursuant to
the Loan Agreement and the other Security Documents shall continue to secure all
Obligations, as increased pursuant hereto.
5. Counterparts. This Amendment may be executed in as many counterparts
as may be convenient and shall become binding when the Borrower and the Lender
have executed at least one counterpart.
6. Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of Utah, without regard to the conflicts of
law provisions thereof.
7. Binding Effect. This Amendment shall be binding upon and shall inure
to the benefit of the Borrower, the Lender and their respective successors and
assigns, and in particular, any holder of the Note.
8. Reference to Loan Agreement. Except as amended hereby, the Loan
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. On and after the effectiveness of the amendment to
the Loan Agreement accomplished hereby, each reference in the Loan Agreement to
"this Agreement",
4
"hereunder", "hereof", "herein" or words of like import, and each reference to
the Loan Agreement in any of the Collateral Assignment of Lease, the
Construction Assignment Agreement, the Construction Assignment Agreement, the
Registration Rights Agreement, and the Security Agreement, dated as of April 15,
1997, by and between Lender and Alabama Synfuel #1 Ltd, and any of the other
Transaction Documents or any other agreement, document or instrument executed
and delivered pursuant to the Transaction Documents, shall be deemed a reference
to the Loan Agreement, as amended hereby.
9. No Other Modifications. Except as expressly provided in this
Amendment, all of the terms and conditions of the Loan Agreement shall remain
unchanged and in full force and effect.
10. Same Indebtedness. The modifications effected by this Amendment,
the Amended and Restated Note and by the other documents and instruments
contemplated hereby shall not be deemed to provide for or effect a repayment and
re-advance of any of the Obligations to the Lender now outstanding, it being the
intention of the Borrower and the Lender that the Obligation owing under the
Loan Agreement, as amended by this Amendment, be and is the same Obligation as
that owing under the Loan Agreement immediately prior to the effectiveness
hereof.
5
IN WITNESS WHEREOF, the parties have executed this Amendment to
Convertible Loan and Security Agreement as of the date first above written.
COVOL TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxx
--------------------
Name: Xxxxx X. Xxxx
Title: President
PACIFICORP FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
AGREED AND ACCEPTED
WITH RESPECT TO SECTION 8
ALABAMA SYNFUEL #1 LTD.
By: /s/ Xxxxx X. Xxxx
---------------------------------------
Name: Xxxxx X. Xxxx
Title: Pres., Covol Technologies, Inc., G.P.
6
