CONFIDENTIAL TREATMENT REQUESTED
Utah Project
Purchase Agreement
OPERATION AND MAINTENANCE AGREEMENT
By and Between
COALTECH NO. 1, LP,
a Delaware limited partnership
and
Covol Technologies, Inc.,
a Delaware corporation
Dated as of March 7, 1997
* 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 Commission.
TABLE OF CONTENTS
Page
ARTICLE I AGREEMENT; RELATIONSHIP OF THE PARTIES..................... 2
ARTICLE II DEFINITIONS................................................ 3
ARTICLE III SERVICES................................................... 12
3.1. Responsibilities of Operator............................... 12
3.2. Personnel Standards........................................ 14
3.3. Compliance with Transaction Documents...................... 16
3.4. Licenses and Permits....................................... 16
3.5. Operating Records And Reports.............................. 17
ARTICLE IV ITEMS TO BE FURNISHED BY COMPANY........................... 18
4.1. General.................................................... 18
4.2. Information................................................ 18
4.3. Utah Project............................................... 19
4.4. Licenses and Permits....................................... 19
4.5. Repairs, Maintenance and Capital Improvements.............. 19
ARTICLE V PROCEDURES, PLANS AND REPORTING; ACCOUNTS.................. 21
5.1. Representatives............................................ 21
5.2. Expenditures............................................... 22
5.3. Reports.................................................... 22
5.4. Officers' Certificate...................................... 25
5.5. Annual Operational Audit................................... 25
5.6. Other Information.......................................... 25
5.7. Utah Project Account....................................... 26
5.8. Operating Account.......................................... 26
5.9. Monthly Draw Procedures; Operator to Act as Paying Agent;
Payment of Costs........................................... 27
ARTICLE VI LIMITATIONS ON AUTHORITY................................... 28
6.1. General Limitations........................................ 28
6.2. Execution of Documents..................................... 30
ARTICLE VII COMPENSATION AND PAYMENT................................... 30
7.1. Quarterly Fees and Payments................................ 30
7.2. Adjustment to Quarterly Fee................................ 31
2
7.3. Payment of Fees............................................ 31
ARTICLE VIII TERM............................................ 32
8.1. Term....................................................... 32
8.2. Termination by Company for Cause........................... 32
8.3. Termination by Operator for Cause.......................... 36
8.4. Termination upon Agreement................................. 36
8.5. Utah Project Condition at End of Term...................... 37
8.6. Termination Payment........................................ 37
8.7. Continuation and Cooperation............................... 38
8.8. Force Majeure.............................................. 38
8.9. Damage or Destruction...................................... 40
ARTICLE IX INSURANCE.................................................. 41
9.1. Company Policies........................................... 41
9.2. Operator Policies.......................................... 41
9.3. Waiver of Subrogation...................................... 42
ARTICLE X INDEMNIFICATION............................................ 43
10.1. Company's Indemnity........................................ 43
10.2. Operator's Indemnity....................................... 44
10.3. Contribution............................................... 44
ARTICLE XI [Intentionally Omitted].................................... 46
ARTICLE XII DISPUTE RESOLUTION......................................... 46
ARTICLE XIII TITLE, DOCUMENTS AND DATA....................... 48
13.1. Materials and Equipment.................................... 48
13.2. Documents.................................................. 48
ARTICLE XIV MISCELLANEOUS PROVISIONS........................ 49
14.1. Assignment................................................. 49
14.2. Access..................................................... 49
14.3. Notices and Other Communications........................... 50
14.4. Rights, Duties And Obligations Complete.................... 50
14.5. Integration; Amendment..................................... 50
14.6. Severability............................................... 50
14.7. Governing Law.............................................. 51
14.8. Multiple Counterparts...................................... 51
14.9. No Third Party Beneficiary Rights.......................... 51
14.10. Representations and Warranties............................. 52
3
4
OPERATION AND MAINTENANCE AGREEMENT
This OPERATION AND MAINTENANCE AGREEMENT (hereinafter this "Agreement")
is made and entered into March 7, 1997 by and between COALTECH NO 1, LP, a
Delaware limited partnership (the "Company"), and COVOL TECHNOLOGIES, INC., a
Delaware corporation ("Operator"). Company and Operator may sometimes be
referred to in this Agreement individually as a "Party" or collectively as the
"Parties."
WHEREAS Operator and Utah Synfuel #1, Ltd. ("Utah Synfuel") have
assigned to the Company ownership of a coal briquetting facility located in
Price, Utah pursuant to the Utah Project Purchase Agreement, dated as of March
7, 1997 (as the same may be amended, supplemented or otherwise modified from
time to time, the "Purchase Agreement").
WHEREAS Company wishes to engage Operator for the purpose of operating,
managing and maintaining the Utah Project pursuant to the terms of this
Agreement.
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 is hereby acknowledged,
Company and Operator agree as follows:
ARTICLE I
1
AGREEMENT; RELATIONSHIP OF THE PARTIES
Company hereby engages Operator as an independent contractor to
maintain, manage and operate the Utah Project according to the terms of this
Agreement. This Agreement together with the other Transaction Documents (as
defined in the Purchase Agreement) contains the entire agreement between the
Parties with respect to the subject matter of this Agreement and supersedes all
prior agreements that governed the subject matter of this Agreement. Nothing in
this Agreement or the arrangement for which it is written shall constitute or
create a joint venture, partnership, or any other similar arrangement between
Company and Operator. Neither Party is authorized to act as agent for the other
Party, except as stated in this Agreement.
ARTICLE II
DEFINITIONS
Unless otherwise required by the context in which any defined term
appears, the following defined terms shall have the meanings specified in this
Article II. The singular will include the plural and the masculine will include
the feminine and neuter, as the context requires. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto in the
Purchase Agreement.
2
"Agreement" means this Operation and Maintenance Agreement, as it may
be amended, restated, supplemented or modified from time to time according to
the provisions of this Agreement.
"Annual Operational Audit" has the meaning stated in Section 5.5.
"Article" means an article of this Agreement, unless specifically
stated otherwise.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which banks are closed in Salt Lake City, Utah.
"Company" has the meaning stated in the Preamble.
"Company Representative" has the meaning stated in Section 5.1.
"Costs" means the following costs and expenses incurred by Operator, as
agent for the Company, or by Company after the date of this Agreement in the
start up, operation, management and maintenance of the Utah Project:
(a) the reasonable cost of purchasing or leasing all parts,
tools, and equipment, necessary or useful in the performance of the
Services;
3
(b) the reasonable cost of maintaining, repairing and
replacing all parts, tools, and equipment, necessary or useful in the
performance of the Services;
(c) all reasonable costs associated with consultants,
subcontractors, auditors and other outside services reasonably
necessary for the performance of the Services and the operation of the
Utah Project;
(d) the reasonable cost of purchasing all materials,
consumables, and supplies used or consumed in the performance of the
Services;
(e) all reasonable costs of modifications, improvements or
non-routine repairs;
(f) all reasonable costs of utilities provided to the Utah
Project or used in connection with the performance of the Services;
(g) the reasonable cost of all insurance maintained by the
Company and Operator with respect to the Utah Project;
(h) the reasonable cost, including an allocable portion of
Operator's overhead, of maintaining accounting books, records and data
with respect to the Utah Project;
4
(i) the reasonable wages of employees and costs of training
and benefits, if any, of the Operator directly engaged in the operation
of the Utah Project, allocated on the basis of the time such employees
performed Services hereunder as reflected in the timekeeping records of
the Operator;
(j) all ad valorem taxes imposed by any political or taxing
subdivision thereof with respect to the Utah Project or any equipment
owned or leased by Company and used in connection therewith;
(k) rents for real estate or equipment payable under the
Sublease or otherwise;
(l) Expenditures which are in replacement of equipment or
leasehold improvements originally a part of the Utah Project or
additions to the Utah project shall be included in Costs hereunder if
such expenditure is less than Ten Thousand Dollars ($10,000) for each
single item it being understood and agreed that each single item in
excess of Ten Thousand Dollars ($10,000) which is not in replacement
shall be treated as a capital item. Further, the sum of Eighty Five
Thousand Dollars ($85,000) per annum shall be set aside in a separate
fund (the "Fund") from the cash flow of the operations (or contributed
by the Company if such cash flow is inadequate) and shall, irrespective
of customary accounting treatment, be included as Costs hereunder;
provided however at no time shall the aggregate in the Fund be more
5
than Three Hundred Forty Thousand Dollars ($340,000) and the annual
payments into the Fund shall not exceed the lesser of Eighty Five
Thousand Dollars ($85,000) or the amount necessary to bring the Fund
to Three Hundred orty Thousand Dollars ($340,000). The Fund shall be
utilized to pay for replacements consisting of single items in excess
of Ten Thousand Dollars ($10,000) of equipment or leasehold
improvements originally a part of the Utah Project. Any balance in the
Fund at the termination or expiration of the Agreement shall be paid to
the Company;
(m) the reasonable costs of obtaining and/or maintaining
any necessary permits, approval, or consents in connection with the
Services; and
(n) the reasonable costs incurred in connection with the
testing required under Section 3.1(i).
All Services performed by Affiliates or Related Persons of the Operator
on behalf of the Operator shall be invoiced at rates and total charges no higher
than those charged in arms length bargaining between unaffiliated parties, and
the Company reserves the right to cause the Operator to discontinue on the
demand of the Company the subcontracting of Services to Affiliates or Related
Persons of the Operator. Any items specifically agreed to by the parties shall
be presumed to be reasonable.
6
It is the intention of the Parties that all costs incurred by Operator
or any of its Affiliates or Related Persons in providing services under this
Agreement are not, except as expressly set forth herein and those reasonable
expenses incurred directly for operation and maintenance of the Utah Project in
accordance with this Agreement, intended to be Costs hereunder.
"CPI" means the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) south urban size class C, not seasonally adjusted, as
published by the United States Department of Labor, Bureau of Labor Statistics
(or if such index is no longer published, an equivalent index mutually agreed to
by the Parties).
"Day" or "days" shall mean a calendar day or days.
"Disposal Fee" has the meaning described in Article VII.
"General Contractor" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or one of its subsidiaries.
"Housekeeping Standards" means normal and customary industry standards
for industrial facilities similar to the Utah Project for cleanliness, neatness
and the like.
"1986 Code" means the Internal Revenue Code of 1986, as amended.
7
"Non-Recourse Persons" has the meaning stated in Article XI.
"Operating Account" has the meaning stated in Section 5.8.
"Operating Year" means each calendar year commencing on January 1, 1997
through the end of the term of this Agreement.
"Operations and Maintenance Procedures Manual" means the manual
prepared by Operator providing operations and maintenance procedures (which are
in all respects consistent with manufacturer and General Contractor operation
and maintenance procedures), a copy of which is attached hereto as Schedule B.
These procedures include information regarding:
(a) equipment operating procedures;
(b) maintenance programs;
(c) safety and OSHA programs;
(d) environmental compliance and mitigation programs;
8
(e) programs for complying with reporting requirements
contained in this Agreement;
(f) license and permit operating and reporting requirements;
(g) standards applied to determine the caloric content of coal
product produced by the Utah Project satisfies the chemical conditions
of IRS Private Letter Rulings No. 9549025 and No. 9701041 dated
September 8, 1995 and October 4, 1996, respectively in order to
constitute "qualified fuels" pursuant to the terms of Section
29(c)(1)(C) of the 1986 Internal Revenue Code; and
(h) other regulatory reporting requirements.
"Operator" has the meaning stated in the Preamble.
"Operator Representative" has the meaning stated in Section 5.1.
"Parties" means the Company and the Operator.
"Party" means the Company or the Operator.
9
"Quarterly Fee" has the meaning described in Article VII.
"Regulatory Fines" means any final, nonappealable environmental or
regulatory fine imposed by any Governmental Entity which (i) either (A) relates
to Operator's operation of the Utah Project or (B) arises by reason of
Operator's conduct and (ii) is levied against Company or Operator.
"Revenues" means, for any designated period, the gross revenues
received by Company for that designated period from all sales of coal briquettes
produced by the Utah Project.
"Section" means a section of this Agreement, unless specifically stated
otherwise.
"Services" means the services to be rendered by the Operator under this
Agreement.
"Supply and Purchase Contract" means the Supply and Purchase Agreement
for the Supply of Coal Fines and the Purchase of Coal Products by and among the
Company, Operator and Utah Synfuel.
"Utah Project" has the meaning stated in the Preamble.
"Utah Project Account" has the meaning stated in Section 5.7.
10
ARTICLE III
SERVICES
3.1. Responsibilities of Operator. Operator shall:
(a) operate and maintain the Utah Project in a clean, safe and
efficient manner, consistent with Housekeeping Standards, the operating
and maintenance manuals for the Utah Project, all manufacturer's
warranties, the Operation and Maintenance Procedures Manual and all
applicable laws, regulations, codes, permits, licenses, and standards
and in compliance with loss prevention recommendations of the Utah
Project's property insurer;
(b) perform the Services in all material respects in an
efficient manner and in accordance with the Transaction Documents and
this Agreement;
(c) perform the Services in a manner seeking to maximize
Revenues and minimize expenditures and notify the Company at any time
that Operator reasonably anticipates that annual expenses could
reasonably be expected to have a material adverse effect on the
operating cash flows of the Utah Project;
11
(d) except as otherwise specified in this Agreement, obtain
all licenses, permits and approvals required to allow Operator to do
business in the jurisdictions where the Services are to be performed;
(e) use generally accepted practices (including accepted
practices regarding the safety of personnel and equipment) and
technology with the objective of protecting workers, maximizing
Company's economic returns and preserving the useful life of the Utah
Project, while satisfying the chemical change conditions of IRS Private
Letter Rulings No. 9549025 and No. 9701041 dated September 8, 1995 and
October 4, 1996, respectively in order to constitute "qualified fuels"
pursuant to the terms of Section 29(c)(1)(C) of the 1986 Internal
Revenue Code;
(f) furnish to Company information relating to the Utah
Project requested by Company;
(g) operate the Utah Project in material compliance with its
permits and Hazardous Materials Laws and report to the Company
immediately any violations of Hazardous Materials Laws or the existence
of any conditions known to it that may lead to such violation;
12
(h) minimize the occurrence of lost time events; provided,
however, that Operator shall make a diligent effort to have no down
time events; and
(i) cause monthly testing of the Briquettes by a reputable
independent third party to determine the occurrence of a chemical
change satisfying the chemical change conditions of IRS Private Letter
Rulings No. 9549025 and No. 9701041 dated September 8, 1995 and October
4, 1996, respectively in order to constitute "qualified fuels" pursuant
to the terms of Section 29(c)(1)(C) of the 1986 Internal Revenue Code.
3.2. Personnel Standards. Operator shall employ and train, as required,
all labor and professional, supervisory, and managerial personnel necessary to
perform the Services. Such personnel shall be qualified to perform the duties to
which they are assigned. All individuals employed by Operator to assist in the
performance of the Services shall, to the extent reasonably practicable, be
employees of Operator or its Affiliates. Operator may, in its discretion,
appoint subcontractors to perform Services. No appointment of subcontractors
pursuant to the immediately preceding sentence will relieve Operator of any of
its duties, liabilities or obligations under this Agreement. Operator shall
comply with all applicable federal, state and local labor and employment laws
including, without limitation, federal OSHA and similar state and local laws,
rules, ordinances and regulations, and shall exercise control over labor
relations in a reasonable manner consistent with the intent and purpose of this
Agreement. Operator will have sole authority, control, and responsibility with
respect to labor matters in connection with the performance of the Services and
shall seek to maintain good relations with employees.
13
Notwithstanding the foregoing, Operator acknowledges and agrees that it does not
have the authority to enter into any contracts or collective bargaining
agreements with respect to labor matters which purport to obligate Company as
owner or successor, and Operator shall seek the advice of Company in the event
it is notified of any effort to establish collective bargaining or labor
representation at the Utah Project. The Company shall not be required to employ
any personnel to assist in performing the Services.
3.3. Compliance with Transaction Documents. Operator acknowledges
that it has reviewed the Transaction Documents and in addition to its other
obligations hereunder shall abide by all terms of the Transaction Documents
applicable to the operation and maintenance of the Utah Project while performing
the Services.
3.4. Licenses and Permits. In connection with the operation and
maintenance of the Utah Project, Operator shall:
(a) comply with all federal, state and local laws and
regulations containing or establishing compliance requirements for the
Utah Project;
(b) secure and comply with, and thereafter maintain, as
appropriate, all permits, licenses and approvals (and renewals of the
same) necessary to perform the Services,
14
including those relating to water and sewer use, chemicals and waste
(including Hazardous Materials) storage and disposal, and emissions
testing and safety;
(c) initiate and maintain procedures necessary to comply with
applicable provisions of all federal, state and local laws, codes,
permits, licenses, regulations, ordinances or other requirements,
including Hazardous Materials Laws; and
(d) prepare and deliver to the applicable Governmental Entity
all reports required by the permits for the Utah Project; provided,
however, that Operator shall not be deemed in violation of Section
3.4(a) or (b) above unless an event of noncompliance is not remedied or
a plan for remediation has not been accepted by the relevant government
agency within thirty (30) days of the occurrence of such event.
3.5. Operating Records And Reports. Operator shall maintain operating
logs, records, reports (documenting the operation and maintenance of the Utah
Project), consistent with industry standards and as required to operate and
maintain the Utah Project and sufficient to comply in all material respects with
any recordkeeping requirements of Section 29 of the Code including but not
limited to results of independent third party testing evidencing the chemical
change satisfying the chemical change conditions of IRS Private Letter Rulings
No. 9549025 and No. 9701041 dated September 8, 1995 and October 4, 1996,
respectively in order to constitute "qualified fuels" pursuant to the terms of
15
Section 29(c)(1)(C) of the 1986 Internal Revenue Code. Company shall have title
to the originals of such operating logs, records and reports, as provided in
Section 13.2 and shall have the right at any time to obtain the originals, or if
acceptable to Company, a photocopy of all of same.
ARTICLE IV
ITEMS TO BE FURNISHED BY COMPANY
4.1. General. Company shall furnish to Operator, at Company's
expense, the information, services, materials and other items described below in
this Article IV. All such items shall be made available at the times and in the
manner reasonably required for the expeditious and orderly performance of the
Services by Operator.
4.2. Information. Company shall provide in a timely manner any
technical, operational, and other information relating to the Utah Project
reasonably available to Company and necessary for the performance of the
Services, if any. Operator will maintain the confidentiality of all information
prepared by the Company and, with respect to information prepared by Operator
relating to the Utah Project, all financial, sales and production information,
which in each case is marked or is indicated to be confidential; provided,
however, that such agreement to maintain the confidentiality of information
shall be inoperative as to particular information if such information (i)
16
becomes generally available to the public other than as a result of any
unauthorized disclosure by Operator or an Affiliate thereof or their respective
agents, advisors or representatives, (ii) was available to Operator on a
non-confidential basis prior to its disclosure to Operator by Company or its
agents, advisors or representatives, or (iii) was or becomes available to
Operator on a non-confidential basis from a source other than Company or its
agents, advisors or representatives when such source was or is entitled to make
the disclosure to Operator. The Company acknowledges that the Operator and its
affiliates may use any such information in its planning, construction and
operation of other iron and coal briquetting facilities, including but not
limited to coal, iron and coke briquetting facilities.
4.3. Utah Project. On the date of this Agreement, Company shall
transfer complete operating control of the Utah Project to Operator.
4.4. Licenses and Permits. Company shall cooperate with Operator
in securing all licenses, permits and approvals necessary for the operation of
the Utah Project.
4.5. Repairs, Maintenance and Capital Improvements. The cost of all
necessary modification or improvement of the Utah Project and all non-routine
repairs, maintenance and capital improvements for the Utah Project shall be paid
by the Company in accordance with this Agreement. Company shall cause to be
installed those items set forth in Schedule 4.5A and Operator shall cooperate
with Company in coordinating its Services to facilitate the expeditious
completion thereof. If Operator determines that non-routine repairs or capital
17
improvements are necessary, Operator shall notify Company in writing of the need
for any such repairs, maintenance or the need for additions or replacement or
overhaul of capital improvements, make written recommendations and assist
Company in effectuating the required work. Operator shall cause the Company to
at all times maintain a reasonable spare parts inventory as described on
Schedule 4.5B attached hereto. The initial spare parts inventory the cost of
which shall not exceed $135,000.00 shall be paid for by the Company by
depositing of such amount in the Operating Account on which Operator shall draw
checks in payment of vendor invoices therefor.
ARTICLE V
PROCEDURES, PLANS AND REPORTING; ACCOUNTS
5.1. Representatives.
(a) Operator Representative. Operator shall appoint an
individual representative ("Operator Representative") coincident with
the execution of this Agreement, who shall be authorized to act for
Operator on all matters concerning this Agreement and the Services.
Operator shall be bound by the written communications, directions,
requests, and decisions made by the Operator Representative. Operator
shall notify Company in writing in advance of employment of the
Operator Representative, informing the Company of his identity and his
qualifications to operate the Utah Project. Until
18
Company receives notice of removal of Operator Representative and
appointment of a new Operator Representative, Company may treat the
appointed Operator Representative as the authorized Operator
Representative.
(b) Company Representative. Company shall appoint an
individual representative ("Company Representative") coincident with
the execution of this Agreement, who shall be authorized to act for
Company on all matters concerning this Agreement and the Services.
Company shall be bound by the written communications, directions,
requests, and decisions made by the Company Representative. Company
shall notify Operator in writing in advance of employment of the
Company Representative, informing the Operator of his identity. Until
Operator receives notice of removal of Company Representative and
appointment of a new Company Representative, Operator may treat the
appointed Company Representative as the authorized Company
Representative.
5.2. Expenditures. Expenditures not in the ordinary course of
business and which exceed Eighty Five Thousand Dollars ($85,000.00) shall not be
incurred by Operator except after consultation with the Company.
5.3. Reports. Operator shall furnish or cause to be furnished to
Company the following reports, in form and substance reasonably acceptable to
Company, concerning the operations of the Utah Project.
19
(a) Monthly and Quarterly Reports. Within fifteen (15) and
thirty (30) days after the end of each calendar month and each calendar
quarter, respectively, Operator shall submit to Company an operations
and financial report, in reasonable detail, covering operations and
maintenance conducted during such calendar month and calendar quarter,
respectively, as well as the results of the testimony provided for in
Section 3.1(i) hereof.
(b) Interim Reporting. Promptly following an executive officer
of Operator obtaining knowledge thereof, Operator will notify Company,
in writing, of:
(i) any litigation or any material claims,
disputes or actions, threatened or filed, concerning the Utah
Project or the Services;
(ii) any refusal of any Governmental Entity or
third party to grant, renew, or extend any license, permit,
approval, authorization or consent;
(iii)any significant dispute with any
Governmental Entity;
(iv) any material damage to or destruction of the
Utah Project;
20
(v) death or serious injury to any employee or
other person at the Utah Project;
(vi) any material production disruptions at the
Utah Project;
(vii) any material equipment failure at the Utah
Project;
(viii) three (3) successive days of production
which is fifty percent (50%) or less than targeted levels;
(ix) any release or threatened release of any
Hazardous Materials the release or threatened release of which
would violate applicable law (including Hazardous Materials
Laws) or any permit maintained by Company or Operator in
connection with the Utah Project or subject the Company or
Operator to any Hazardous Materials Claims;
(x) knowledge of events leading to failure to
comply with Section 29 of the 1986 Code; and
(xi) any decrease in BTU content below 9600
BTU's per pound or any material diminution in product quality.
21
(c) Annual financial statements of Coaltech accompanied by
the unqualified opinion of a certified public accountant.
5.4. Officers' Certificate. In connection with the delivery of the
annual and quarterly reports by Operator as provided in Sections 5.2 and 5.3,
Operator shall deliver a letter addressed to Company signed by the chief
financial officer of Operator, certifying as to whether any condition, act or
event has occurred and is continuing which constitutes a violation, breach or
default under this Agreement or any other Transaction Document, to his or her
best knowledge and belief after due inquiry.
5.5. Annual Operational Audit. At the Company's option, Company at its
expense may annually conduct an operational audit of the operations of the Utah
Project and of the Operator's performance under this Agreement (the "Annual
Operational Audit"). Generally, such audit shall review operating, accounting,
safety, and personnel matters related to the Utah Project and Operator's
compliance with, and level of performance under this Agreement.
5.6. Other Information. Operator shall promptly submit to Company any
material information concerning new or significant aspects of the operations of
the Utah Project and, upon Company's reasonable request, shall promptly submit
any other information concerning the Utah Project or the Services. Operator
shall permit representatives of the Company to have full access to the records
22
relating to the Utah Project during normal business hours and after reasonable
notice. Any review of such records shall be conducted in such a manner as to
cause minimum interference with Operator's activities.
5.7. Utah Project Account. Company has established and will maintain
separate records with respect to all Revenues received by Company or Operator
with respect to the Utah Project. All Revenues received by the Company or
Operator with respect to the Utah Project will be deposited in a bank account
designated by the Company (the "Utah Project Account").
5.8. Operating Account. Company has established and will maintain a
bank account (the "Operating Account") from which the payment of Costs and the
Quarterly Fee will be made. Subject to such reasonable controls as Company and
Operator mutually agree, the Operator Representative and any other party
designated by the Operator Representative shall have the authority to sign
checks and make payments from the Operating Account, so long as such payments
are made in accordance with Section 5.9. The Operating Account shall be funded
and maintained in accordance with Section 5.9.
5.9. Monthly Draw Procedures; Operator to Act as Paying Agent; Payment
of Costs. On or before the twentieth day of each month after the execution of
this Agreement, Operator shall submit to the Company a monthly draw request to
pay (i) Costs expended and not previously reimbursed, (ii) invoiced amounts due
23
and payable and (iii) budgeted and other Costs anticipated to become payable
prior to the next following monthly draw, including the payment of any Quarterly
Fee then payable to Operator. Operator shall act as the paying agent of Company.
As paying agent, Operator shall receive, examine, and approve of all invoices
for costs relating to the operation and maintenance of the Utah Project. If
Operator determines that amounts shown on these invoices are Costs and that
these amounts are then due and payable (or will become due and payable prior to
the next payment of funds by Company to Operator), Operator will submit such
invoices in the next monthly draw request and prepare checks for and make
payment of these amounts from the Operating Account.
Each draw request shall provide a reconciliation of the estimated
expenditures set forth in the previous month's draw request with actual
expenditures, and any unexpended funds shall be a credit against the current
draw request. With each monthly draw request, Operator shall certify to Company
that all Costs for which Company has previously furnished funds for payment
pursuant to this Section 5.9 have been paid to the appropriate parties or, if
any such costs are not then due, a statement to that effect.
Company shall deposit current funds into the Operating Account from the
Utah Project Account in the amount of the draw request (less any items
improperly billed or requested) on or before the first Business Day of the next
following month. Upon deposit of funds into the Operating Account from the Utah
Project Account, Operator shall forward the appropriate checks to the
appropriate parties.
24
ARTICLE VI
LIMITATIONS ON AUTHORITY
6.1. General Limitations. Operator is not empowered to take the
following actions unless it has received the prior written approval of Company
or except in the ordinary and normal course of business:
(a) Disposition of Assets. The sale, lease, pledge, mortgage,
conveyance, license, exchange or other transfer or disposition of any
property or assets of Company, including any tangible personal property
acquired by Operator under this Agreement, except for cash expenditures
under Section 5.9, and the consumption of supplies or the sale of
product in the ordinary course of business.
(b) Contracting. Making, entering into, executing, amending,
waiving any rights under, modifying or supplementing any contract or
agreement on behalf of, binding upon, or in the name of Company, except
for contracts relating to Costs to be incurred or expenditures provided
for herein.
(c) Lawsuits and Settlements. The settling, compromising,
assigning, pledging, transferring, releasing, or consenting to the
25
same, of any claim, suit, debt, demand or judgment against or due by,
Company or Operator on behalf of Company, or submitting any such
material claim, dispute or controversy to arbitration or judicial
process, or stipulating to a judgement, or consent to do the same,
to the extent that such action by Operator could reasonably be
expected to have a material adverse effect on the operation and
maintenance of the Utah Project. Operator agrees that Company shall
retain control of any such claim, suit, debt, or demand
and any other litigation regarding the Utah Project, except as to
Operator's individual liability.
(d) Transactions on Behalf of Company. Engaging in any other
transaction on behalf of Company other than as specifically set forth
in this Agreement.
(e) Governmental Licenses or Permits. Agreeing to waive
compliance with any governmental license or permit or agreeing to any
penalty for violation of any governmental license or permit which
waiver or penalty has or could reasonably be expected to have a
material adverse effect on the operations or maintenance of the Utah
Project.
6.2. Execution of Documents. Any agreement, contract, notice,
approval, or other document which is permitted under this Agreement to be
executed by Operator for Company shall be executed by the Operator
Representative, or by an individual or individuals appointed in writing by the
Operator Representative, which appointment shall be approved in writing by
26
**** Confidential Treatment Requested
Company, not to be unreasonably withheld or delayed. No other employee,
representative or agent of Operator shall have signature authority for purposes
of binding Company pursuant to this Agreement.
ARTICLE VII
COMPENSATION AND PAYMENT
7.1. Quarterly Fees and Payments. As set forth below, as compensation
to Operator for performance of the Services, Company is required to pay Operator
a Quarterly Fee equal to **** for each calendar quarter during the term of this
Agreement (the "Quarterly Fee"). On each anniversary date, commencing with the
first anniversary of this Agreement, the amount of the Quarterly Fee shall be
adjusted proportionately with the relative change between (y) the "inflation
adjustment factor" (as set forth in Section 29(d)(2) of the 1986 Code)
calculated for the immediately preceding year and (z) the "inflation adjustment
factor" calculated for the penultimate year.
7.2. Adjustment to Quarterly Fee. The Quarterly Fee is based on the
sale of 360,000 tons of coal briquettes per year (the "Estimated Output"). To
the extent that more or less than one-quarter of Estimated Output is sold in any
calendar quarter, the Quarterly Fee payable with respect to that calendar
quarter, will be increased or decreased by the product of (a) **** (to
27
**** Confidential Treatment Requested
be adjusted annually as described in Section 7.1 above) multiplied by (b) the
difference between the number of tons of coal briquettes sold in that calendar
quarter and ****.
7.3. Payment of Fees. The Company shall deposit current funds into the
Operating Account from the Utah Project Account in the amount of the Quarterly
Fee for the immediately preceding quarter on or before each January 31, April
30, July 31, and October 31. The initial payment will be prorated so that it is
payment for only the days from the date of this Agreement to the end of the
quarter in which this Agreement is executed.
ARTICLE VIII
TERM
8.1. Term. The Term of this Agreement begins on the date of execution
and delivery of this Agreement and will continue (unless terminated according to
the terms and conditions of this Agreement) until January 1, 2008 and may
thereafter be extended upon six (6) months prior written notice by Company on
the same terms and conditions for such additional periods of time during which
credits are available under Section 29 of the Code.
8.2. Termination by Company for Cause. Company may terminate this
Agreement for cause upon ninety (90) days prior written notice to Operator:
28
(a) if Operator violates or allows a violation of any law,
statute, regulation, rule, ordinance, permit, license or regulatory
order of any governmental agency, applicable to the Services or the
Utah Project, which violation is continuing and has or could reasonably
be expected to have a material adverse effect on the operations or
maintenance of the Utah Project, and Operator does not cure such
violation within thirty (30) days of an executive officer of the
Operator acquiring knowledge of such violation (or, in the event such
violation is curable and the delay does not, and could not reasonably
be expected to, have a material adverse effect on the operations or
maintenance of the Utah Project, within such period of time as is
reasonably necessary to accomplish such cure, if it cannot be
reasonably accomplished in the thirty (30) day period and Operator
diligently commences and continues such cure in such period);
(b) if Operator fails to perform the Services according to the
requirements of this Agreement, and Operator does not cure such failure
within thirty (30) days from the date of receipt of a notice from
Company to Operator demanding cure (or, in the event such failure is
curable and the delay does not, and could not reasonably be expected
to, have a material adverse effect on the operations or maintenance of
the Utah Project, within such period of time as is reasonably necessary
to cure such failure, if it cannot be reasonably cured in said thirty
(30) day period and Operator diligently commences and continues such
cure in such period);
29
(c) if Operator shall:
(i) become insolvent or generally fail to pay, or
admit in writing its inability or unwillingness to pay, debts
as they become due;
(ii) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for it or any of its property, or make a general
assignment for the benefit of creditors;
(iii) in the absence of such application, consent
or acquiescence, permit or suffer to exist the appointment of
a trustee, receiver, sequestrator or other custodian for it or
a substantial portion of its property, and such trustee,
receiver, sequestrator or other custodian shall not be
discharged within sixty (60) days;
(iv) permit or suffer to exist the commencement
of any bankruptcy, reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or
any dissolution, winding up or liquidation proceeding, in
respect of it, and, if any such case or proceeding is not-
commenced by it, such case or proceeding shall be consented to
or acquiesced in
30
by it or shall result in the entry of an order for relief
or shall remain for sixty (60) days undismissed;
(v) take any corporate action authorizing, or in
furtherance of, any of the foregoing; or
(vi) permit or suffer to exist a violation,
default or breach under any agreement, document or instrument,
including the Transaction Documents, to which Operator or its
affiliates is a party, the consequences of which could
reasonably be expected to have a material adverse effect on
the operations or maintenance of the Utah Project, and
Operator does not cure such violation, default or breach
within (A) thirty (30) days of notice of such violation,
default or breach.
(d) if either the Repurchase Option Agreement or the
Abandonment Option Agreement is exercised or if the Supply and Purchase
Contract is terminated for any reason.
8.3. Termination by Operator for Cause. Operator may terminate this
Agreement for cause upon ninety (90) days prior written notice to Company:
31
(a) if Company fails to perform in a timely manner any
material obligation required to be performed by Company by this
Agreement and does not cure or cause to be cured the failure within
thirty (30) days of the date of receipt of a notice from Operator to
Company demanding such cure (or, in the event such failure is curable
and the delay does not, and could not reasonably be expected to, have a
material adverse effect on the operations or maintenance of the Utah
Project, within such period of time as is reasonably necessary to
accomplish such cure, if it cannot be reasonably accomplished in the
thirty (30) day period and Company diligently commences and continues
such cure in such period); or
(b) if the Supply and Purchase Contract is terminated for any
reason.
8.4. Termination upon Agreement. This Agreement may be terminated
at any time, without cause, upon mutual written agreement of the Parties.
8.5. Utah Project Condition at End of Term. Upon expiration or
termination of this Agreement, Operator shall remove its personnel from the Utah
Project and leave the Utah Project in a broom-clean condition. Operator shall
not be responsible for normal wear and tear. All special tools, improvements,
inventory of supplies, spare parts, safety equipment, operating and maintenance
manuals, including the original copies of the records and documents of the Utah
Project pursuant to Section 13.2, and the Operations and Maintenance Procedures
32
Manual and any other items for which Company paid Operator pursuant to Section
5.9 will become or remain the property of Company without additional charge.
Company will also have the right, in its sole discretion, to directly assume and
become liable for any contracts or obligations that Operator may have undertaken
with third parties in connection with the Services, and Operator, shall execute
all documents and take all other reasonable steps requested by Company which may
be required to assign to and vest in Company all rights, benefits, interests and
title in connection with such contracts or obligations.
8.6. Termination Payment. Subject to Article XI, in the event of a
termination of this Agreement by either party for cause, such terminating party
shall be entitled to recover any damages, fines or penalties it suffers or
incurs as a result of such breach or violation. The Quarterly Fee shall be
prorated to the date of Termination of this Agreement on the basis of tons of
product produced in any partial final calendar quarter in the event that this
Agreement is terminated for any reason.
8.7. Continuation and Cooperation. Operator shall cooperate fully with
Company and any new Operator appointed by Company during the transition period
from a termination notice given hereunder and the termination of this Agreement,
including training any new Operator appointed by the Company. All reasonable
out-of-pocket expenses incurred in this regard will be reimbursed to Operator
upon the final termination date. Operator shall also continue performing its
duties hereunder after the termination date and until a new Operator assumes its
33
duties to operate the Utah Project; provided, however, that Operator first
receives adequate assurances of payment from the Company that its fees will be
paid through such period.
8.8. Force Majeure. "Force Majeure" as used herein shall mean a cause
reasonably beyond the control of Operator which, wholly or in substantial part,
prevents the performance of the Services. Examples (without limitation) of force
majeure are the following: acts of God; acts of the public enemy; insurrections;
riots, strikes; labor disputes; work stoppages; fires; explosions; floods;
electric power failures, breakdowns of or damage to generating or preparation
plants; interruptions to or contingencies of transportation, including (but not
limited to) force majeure as defined in the applicable tariff rail contract;
embargoes; and orders or acts of civil or military authority (including, without
limitation, a city or county ordinance, an act of a state legislature, or an act
of the United States Congress); provided, however, for the purposes of this
Agreement, force majeure shall not include, and neither party hereto shall be
excused from performance because of, the development or existence of economic
conditions which may adversely affect the anticipated profitability of such
party's activities hereunder, acts or omissions of such party which constitute
mismanagement or fraud on the part of such party, or reduced productivity of
labor employed by such party in its activity hereunder.
If, because of a Force Majeure, Operator is unable to carry out its
obligations under this Agreement, and if Operator gives the Company notice of
such force majeure, the obligations and liabilities of Operator and the
34
corresponding obligations of the Company shall be suspended to the extent made
necessary by and during the continuance of such force majeure; provided,
however, that the disabling effects of such force majeure shall be eliminated as
soon as and to the extent possible (except that either party may settle any of
its own labor disputes, strikes, or terminate any of its own lockouts in its
sole discretion).
It is agreed that in the event that any valid act, law, ordinance, rule
or regulation of a municipality, county, state or the United States government,
or final judicial decision, judgment or order, is adopted or passed after
January 1, 1997, which prohibits performance of the Services, then the existence
and implementation of such act, law, ordinance, rule, regulation, decision,
judgment or order shall constitute an event of permanent force majeure whereupon
this Agreement may be terminated by the party so affected upon notice to the
other party.
Section 8.9. Damage or Destruction. In the event that any part of the
Utah Project is damaged or destroyed, outside the scope of ordinary wear and
tear, the Company shall cause such damage or destruction to be repaired or
rebuilt within a reasonable period. In the event that such damage or destruction
makes the Utah Project inoperable or reduces the production capacity of the Utah
Project to a level that Operator reasonably deems to be inefficient for further
production, then Operator shall be released from its obligations to perform the
Services and the Company shall be released from its obligation to pay the
Quarterly Fee until such time as the damage is repaired or the Utah Project is
35
rebuilt. Operator shall cooperate with and assist the Company to effect the
repair or rebuilding of the Utah Project, provided that Operator is reimbursed
by the Company for its reasonable costs in providing that cooperation and
assistance.
ARTICLE IX
INSURANCE
9.1. Company Policies. Company shall obtain, maintain and keep in force
insurance of the types and in amounts customarily carried in lines of business
similar to the Utah Project with respect to the Utah Project. All policies of
insurance shall be in form and with insurers recognized as adequate by prudent
business persons.
9.2. Operator Policies. Operator shall obtain, on its own behalf,
and keep in force during the term of this Agreement, at least the following
types and amounts of insurance:
(a) Comprehensive General Liability Insurance policy including per
occurrence blanket Contractual Liability Insurance with limits
of at least $1,000,000.00
(b) Auto Liability Insurance for any autos owned, leased or hired
and used in the performance of this agreement with limits of
at least $1,000,000.00 per occurrence
(c) Worker's Compensation Insurance in compliance with Utah law
with respect to Operator's employees employed at the Utah
36
Project and naming Coaltech No.l 1 L.P. and its partners as
alternate employers under Operator's Worker's Compensation
policy.
(d) Employers' Liability Insurance with limits of at least
$100,000 per occurrence. Operator shall insure that each
subcontractor also meets these minimum insurance requirements.
Operator has delivered to the Company a certificate of
insurance evidencing the existence of such insurance and, upon
request, the original or certified copy of each policy of
insurance, an evidence of payment of all premiums therefor.
The certificate of insurance shall provide that the insurance
may not be canceled without thirty (30) days prior written
notice to the Company.
9.3. Waiver of Subrogation. All insurance policies maintained by the
Parties, pursuant to Article IX, shall expressly waive any right on the part of
any insurer to assert any claims against the other Party. The Parties agree that
all policies will include such waiver clause or endorsement, and each Party
waives any claims against the other Party for perils to be insured against by
such insurance policies, including any deductible amounts.
ARTICLE X
INDEMNIFICATION
10.1. Company's Indemnity. Company shall defend, indemnify and hold
harmless Operator (including its officers, directors, employees, agents,
37
contractors, and partners, and the respective officers, directors, employees,
agents, or contractors of said partners) from and against any and all liability
(including third party liabilities), claims, injuries (including death resulting
from injuries), property damage, fine, penalty or assessment by any public
agency (insofar as not prohibited by law), cost or expense (including costs of
defense, settlement and reasonable attorneys' fees), which (i) are directly or
indirectly caused solely by an act or omission (if it is required to act) of
Company, its agents, employees or contractors (other than Operator) associated
with, or arising from Company's performance or nonperformance of its obligations
under this Agreement, or (ii) are caused jointly by any such act or omission (if
it is required to act) by Company, its agents, employees or contractors (other
than Operator) and any such act or omission (if it is required to act) by any
third party or parties (other than the agents, employees or contractors (other
than Operator) of Company), but only to the extent of the fault of Company, its
agents, employees or contractors (other than Operator) relative to the fault of
the Operator or such third party or parties.
10.2. Operator's Indemnity. Operator shall defend, indemnify and hold
harmless Company (including its officers, directors, employees, agents,
contractors, and partners, and the respective officers, directors, employees,
agents, or contractors of said partners) from and against any and all
liabilities (including third party liabilities relating to the Utah Project),
claims, injuries (including death resulting from injuries), property damage,
fine, penalty or assessment by any public agency (insofar as not prohibited by
law), cost or expense (including costs of defense, settlement and reasonable
38
attorneys' fees), which (i) are directly or indirectly caused solely by any act
or omission (if it is required to act) of Operator, its officers, directors,
employees, agents, contractors, or partners or the respective officers,
directors, employees, agents, or contractors of said partners associated with,
or arising from Operator's performance or nonperformance of its obligations
under, this Agreement, or (ii) are caused jointly by any such act or omission
(if it is required to act) by Operator, its officers, directors, employees,
agents, or contractors and any such act or omission by any third party or
parties (other than the officers, directors, employees, agents or contractors of
Operator), but only to the extent of the fault of Operator, its agents,
employees or contractors relative to the fault of such third party or parties.
10.3. Contribution. Where acts or omissions of the nature referred to
in Sections 10.1 and 10.2 by both Company and Operator (including their
respective officers, directors, employees, agents, contractors or partners or
the respective officers, directors, employees, agents, or contractors of said
partners) have caused any liabilities, damages, fines, penalties, costs, claims,
demands and expenses, whether or not a third party's acts or omissions also were
causal, Company and Operator shall contribute to their common liability
(including attorneys' fees and defense costs) a pro rata share based upon the
relative degree of fault of each. In such a case, the Parties shall share all
costs equally (including attorneys' fees and other costs of defense, if the
Parties choose common counsel; but if either Party selects its own counsel, that
Party shall bear its own attorneys' fees and cost of defense, subject to
reimbursement by the other Party pursuant to the last sentence of this Section)
39
until (i) there is a final court judgment allocating fault between the Parties,
or (ii) the Parties agree to such an allocation. If neither of the circumstances
specified in clauses (i) or (ii) of the immediately preceding sentence occurs
within one (1) year of the date on which Company or Operator first incurs such
costs (or within such other period to which the Parties agree in writing), then
either Party may require submission of the issue of allocation to arbitration
pursuant to Article XII. If it is determined that one Party (the "Receiving
Party") has paid a disproportionate amount of costs, the other Party shall
reimburse the Receiving Party for the amount of costs (including costs of
defense and attorneys' fees for either common counsel or individual counsel)
paid by the Receiving Party which exceeds the Receiving Party's allocation. The
Parties shall share the cost of any arbitration and any future costs according
to the allocation.
ARTICLE XI
[Intentionally Omitted]
ARTICLE XII
DISPUTE RESOLUTION
If a controversy, claim or dispute arising out of or relating to this
Agreement or the breach of this Agreement occurs, the Parties shall meet and
exert reasonable efforts to reach an amicable settlement. Failing agreement,
Operator and Company agree to submit the matter
40
under dispute to arbitration under the Rules and Procedures of the American
Arbitration Association by a panel of three arbitrators. A Party desiring
arbitration may select one arbitrator and shall then notify the other Party in
writing of the identity of the arbitrator. The second Party shall then, within
ten (10) days, notify the first Party of the identity of the second Party's
arbitrator. The two arbitrators shall pick the third arbitrator. All arbitrators
selected under this Article XII shall have experience in the operation of coal
production facilities. The decision of the arbitrators shall be final and
binding upon the Parties. The expenses of such arbitration, excluding attorneys'
fees, shall be equally divided among the Parties, and may be enforced in any
court having jurisdiction over the Party against which enforcement is sought.
The arbitration shall be held in Salt Lake City, Utah, or any other place as the
Parties may mutually agree upon. The arbitrators shall initiate the hearings as
promptly and expeditiously as possible after their selections (and the Parties
shall cooperate to this end) and shall conclude the hearings within thirty (30)
days of their commencement unless the arbitrators expressly find that additional
time is necessary for completion of the hearings for reasons in the best
interest of the Parties.
The award of the arbitrators shall be made no later than thirty (30)
days from the date of the closing of the hearings. Arbitration under this
Agreement shall be governed by the provisions of the Federal Arbitration Act
and, if applicable, the laws of the State of Utah relating to arbitration, as
the same are in effect at the time that such arbitration is initiated.
41
ARTICLE XIII
TITLE, DOCUMENTS AND DATA
13.1. Materials and Equipment. Title to all materials, equipment,
supplies, consumables, spare parts and other items purchased or obtained by
Operator for which Company is obligated to pay Operator pursuant to Section 5.9
shall pass immediately to and vest in Company upon the passage of title from the
vendor or supplier thereof; provided, however, that such transfer of title shall
in no way affect Operator's obligations as set forth in the other provisions of
this Agreement.
13.2. Documents. All materials and documents prepared or developed by
Operator or its employees, representatives or contractors in connection with the
Utah Project or the performance of the Services, including all manuals, data,
designs, drawings, plans, specifications, reports, and accounts, will
automatically become the property of Company when prepared. All these materials
and documents, together with any materials and documents furnished to Operator
or to its contractors by Company, shall be delivered to Company upon expiration
or termination of this Agreement and before final payment is made to Operator;
provided that Operator may retain copies of all such materials and documents.
42
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1. Assignment. Neither party may assign its interest in this
Agreement without the prior written consent of the other party; provided,
however, Operator may assign its interest in this Agreement to an entity which
is at least eighty percent (80%) owned, directly or indirectly, by Operator;
provided that no such assignment shall release Operator from its obligations
hereunder.
14.2. Access. Company and its representatives shall have access to the
Utah Project, at all reasonable times and with reasonable notice, and any
documents, materials, records and accounts relating to the Utah Project
operations for purposes of inspection and review. During any such inspection or
review of the Utah Project, Company and its representatives shall comply with
all of Operator's safety and security procedures, and Company and its
representatives shall conduct such inspections and reviews in such a manner as
to cause minimum interference with Operator's activities. Operator shall
cooperate with Company in allowing other visitors access to the Utah Project
under conditions mutually agreeable to the parties.
14.3. Notices and Other Communications. All notices and other
communications required or authorized by this Agreement shall be given to the
parties hereto at the addresses, and in accordance with the procedures set for,
in Section 12.3 of the Purchase Agreement.
43
14.4. Rights, Duties And Obligations Complete. The Parties agree that
the rights, duties, and obligations expressed in this Agreement (including its
attachments) are complete, comprehensive and exclusive with respect to the
obligations of the Parties under this Agreement.
14.5. Integration; Amendment. This Agreement, together with the other
Transaction Documents, 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 and/or in the
Transaction Documents. The Transaction Documents supersede all prior
communications, representations, or agreements, verbal or written, among the
parties relating to the subject matter hereof. This Agreement may not be amended
except in writing signed by the parties hereto.
14.6. Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
14.7. Governing Law. This Agreement shall in all respects be governed
and construed in accordance with the laws of the State of Utah, including all
matters of construction, validity and performance.
44
14.8. Multiple Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and it will not be
necessary in making proof of this Agreement or the terms of this Agreement to
produce or account for more than one of these counterparts, provided that the
counterpart produced bears the signature of the party sought to be bound.
14.9. No Third Party Beneficiary Rights. Nothing in this Agreement
shall be deemed to grant any third party beneficiary or similar rights to any
person or entity not a signatory to or contemplated by this Agreement.
14.10. Representations and Warranties.
(a) Operator represents that it is a corporation organized and
validly existing in good standing under the laws of Delaware with full
power and authority to enter into this Agreement.
(b) Operator represents that the person executing and
delivering this Agreement on Operator's behalf is acting pursuant to
proper authorization and that this Agreement is the valid and binding
obligation of Operator and is enforceable in accordance with its terms.
45
(c) Company represents that it is a limited partnership
organized and validly existing in good standing under the laws of
Delaware with full power and authority to enter into this Agreement.
(d) Company represents that the person executing and
delivering this Agreement on Company's behalf is acting pursuant to
proper authorization and that this Agreement is the valid and binding
obligation of Company and is enforceable in accordance with its terms.
46
Executed by the duly authorized representative of the Parties on the
date and year first above written.
COVOL TECHNOLOGIES, INC.
a Delaware corporation
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: CEO/President
COALTECH NO 1 LP, a Delaware limited
partnership
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: C.O.O. Covol Technologies, Inc.
Its: General Partner
47
Schedule B
Operation and
Maintenance Agreement
OPERATIONS AND MAINTENANCE
PROCEDURES MANUALS
To be delivered separately to Company
48
