XxXxx Energy, L.L.C.
0000 X. Xxxxx Xxxxx Xxx.
Midvale, UT 84047
December 31, 1996
Via Telecopy (000) 000-0000
(000) 000-0000
Covol Technologies, Inc.
Attn: Xxxxx X. Xxxx
3280 No. Frontage Rd.
Lehi, Utah 84043
Re: Modification to Project Development Agreement and License Agreement
Dear Xxxxx:
This letter confirms our discussions and further agreements this
morning regarding Covol's licensure of Coal Technology to Pace Carbon as
described in our December 30, 1996 Project Development Agreement ("Agreement")
and shall constitute a further amendment to the parties' License Agreement. Xxxx
has proposed a licensing arrangement to Covol that involves XxXxx'x right to the
development of the Pace projects, a copy of which is attached hereto as Exhibit
"A".
XxXxx has agreed and will agree to accept in lieu of the payment of the
Sub-License, Royalty and Tax Credit fees described in the Agreement as follows:
License Royalty Fees (see Section 4.2 of License Agreement) to be paid
to Covol by XxXxx for purposes of the Pace projects only shall be modified as
follows: Covol agrees to grant the License for the first 500,000 tons of annual
production capacity for XxXxx developed facility(ies) free of any License
Royalty Fee payment. XxXxx shall nevertheless pay Covol a one time License
Royalty Fee of * in U.S. dollars per ton for all annual production capacity in
the range of 500,001 to 1,500,000 tons. In other words, XxXxx shall retain the
entire * per ton license fee proposed and to be paid by Pace to Covol to the
extent the Pace projects are determined by XxXxx to fall within the initial
500,000 ton development block and shall retain * of the * per ton license fee
proposed and to be paid by Pace to Covol to the extent the Pace projects are
determined by XxXxx to fall within the 500,001 to 1,500,000 ton development
block.
In addition, with regard to the Pace projects, XxXxx shall accept a
royalty fee of * multiplied by the total MMBtu content of the extrusions and
briquettes produced and sold by that project that qualifies for Section 29 tax
credits under the agreement between Covol and Pace which is expected to be
executed later today.
* Confidential material has been omitted from this Exhibit and filed separately
with the Commission.
For purposes hereof, XxXxx shall treat the Pace developed capacity (i)
as within the first block of the License Agreement if XxXxx develops and/or
licenses no other facilities; (ii) as within the second block of the License
Agreement if XxXxx develops and/or licenses facilities in a capacity range up to
500,000 tons; and (iii) as within the third block of the License Agreement if
XxXxx develops and/or licenses facilities in a capacity range up to 1,000,000.
The other terms of the Agreement shall still apply.
All payments of the aforesaid consideration shall come from the first
500,000 of production capacity available from the Pace projects and shall be
paid directly to XxXxx by Xxxx and shall not be subject to any claims or liens
of Covol or its existing or future creditors. Covol shall execute such documents
and make such legal arrangements as may be necessary to effectuate the parties'
intent to insure CoBon's right to payment shall not be subject to such claims or
liens and that the same shall be free and clear thereof. Payments to XxXxx shall
be timely made as required under the Covol/Pace agreement to be executed
hereafter and as referenced in Exhibit "A".
XxXxx shall waive any right it may have to the aforesaid Sub-License,
Royalty and Tax Credit Fees under the Agreement in lieu of receiving the
consideration referenced herein.
Please acknowledge your receipt and agreement to the foregoing terms in
the space provided below and return a signed copy to me immediately.
Cordially,
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
Acknowledgement and Consent
/s/ Xxxxx Xxxx
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Xxxxx X. Xxxx, President
CoVol Technologies, Inc.
Dated
