-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JGVCUTZVrwJ4kBh4iCrMftS3P1LHpdtQcaHrP0UJtE+3SGIJ69HbbB2ZvTBecnas 95Vb9dqPefxeW2Mnwxo3jQ== 0001038838-00-000025.txt : 20000203 0001038838-00-000025.hdr.sgml : 20000203 ACCESSION NUMBER: 0001038838-00-000025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000124 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COVOL TECHNOLOGIES INC CENTRAL INDEX KEY: 0001003344 STANDARD INDUSTRIAL CLASSIFICATION: BITUMINOUS COAL & LIGNITE MINING [1220] IRS NUMBER: 870547337 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-27808 FILM NUMBER: 511394 BUSINESS ADDRESS: STREET 1: 3280 N FRONTAGE RD CITY: LEHI STATE: UT ZIP: 84043 BUSINESS PHONE: 8017684481 8-K 1 FORM 8-K DATED 12/31/99 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 December 31, 1999 Date of Report (Date of earliest event reported) COVOL TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 0-27808 87-0547337 - ------------------------------- ------------------------- --------------------- (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.) 3280 N. Frontage Road Lehi, UT 84043 ---------------------------------------- (Address of principal executive offices) (Zip Code) (801) 768-4481 -------------- (Registrant's telephone number, including area code) Not Applicable -------------- (Former name or former address, if changed since last report.) Certain statements in this Report constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. As such, actual results may vary materially from current expectations. For a discussion of certain of the factors that could cause actual results to differ from expectations, please see the information set forth under the caption entitled "Forward Looking Statements" in PART I, ITEM 1 of Covol's Annual Report on Form 10-K for the year ended September 30, 1999. There can be no assurance that Covol's results of operations will not be adversely affected by such factors. Covol undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management's opinion only as of the date hereof. Item 5. Other Events - Announcements of Sales of Synthetic Fuel Facilities Covol announced on December 31, 1999 that it sold the Carbon Synfuel synthetic fuel facility and announced on January 18, 1999 that it sold the Algoma synthetic fuel facility. The sale of the four Covol-owned facilities has been the primary focus of Covol's activities and the sale of the first of these occurred on August 27, 1999. Covol is actively continuing its efforts to sell its only remaining owned facility. The complete text of the December 31, 1999 and January 18, 2000 announcements follow. Sale of Carbon Synfuel Facility Covol Technologies, Inc. announced today that it has sold its synthetic fuel facility located in Price, Utah. The facility is commonly known as Carbon Synfuel, or Utah #2. The purchaser is a wholly owned subsidiary of a major U.S. electric utility company. The cash proceeds will be used for payment of certain obligations and operating capital. Covol is continuing negotiations with multiple parties for the sale of its remaining Company owned facilities. "We are pleased that there is a continued high interest in the synthetic fuel facilities owned by Covol. We believe that the sale of the Utah #2 facility and a subsequent sale of the remaining facilities, will allow Covol to retire all of the debt incurred in connection with the construction of these plants." said Kirk A. Benson, Chairman and Chief Executive Officer. Sale of Algoma Facility Covol Technologies, Inc. today announced the sale of another synthetic fuel facility. The plant, Pocahontas Synfuel, also referred to as the Algoma facility, is located in North Fork, West Virginia. The facility was purchased by a subsidiary of a major U.S. electric utility company. Proceeds from the sale consist of cash at closing and an additional payment upon being placed in commerical operations. Covol will also receive an ongoing royalty based upon production and sales of synthetic fuel from this facility. Kirk A. Benson, Chairman and Chief Executive Officer, comments, "We are pleased that Covol's continuing efforts to sell its facilities is resulting in successful transactions. We are rapidly reducing Covol's debt and increasing future potential royalties." 2 Item 7. Financial Statements and Exhibits (c) The following exhibits are included herein: 10.64 Utah #2 Asset Purchase Agreement dated as of December 23, 1999* 10.65 Asset Purchase Agreement dated as of January 18, 2000 relating to the sale of the Algoma synthetic fuel facility* * This exhibit contains confidential material which has been omitted pursuant to a Confidential Treatment Request. The omitted information has been filed separately with the Securities and Exchange Commission. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COVOL TECHNOLOGIES, INC. Registrant Date: January 21, 2000 /s/ Kirk A. Benson ------------------------------ Kirk A. Benson Chief Executive Officer and Principal Executive Officer 4 EX-10.64 2 UTAH #2 ASSET PURCHASE AGREEMENT UTAH #2 ASSET PURCHASE AGREEMENT by and between ** and COVOL TECHNOLOGIES, INC. CARBON SYNFUEL, L.L.C. SYNFUEL INVESTMENTS, INC. December 23, 1999 ** This Exhibit contains confidential material which has been omitted pursuant to a Confidential Treatment Request. The omitted information has been filed separately with the Securities and Exchange Commission. i TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.........................................................1 1.1. Affiliate.......................................................1 1.2. Agreement.......................................................1 1.3. As-Built Drawing................................................1 1.4. Assets..........................................................1 1.5. Assignment Agreement............................................1 1.6. Bill of Sale....................................................2 1.7. Books and Records...............................................2 1.8. Buyer's Closing Certificate.....................................2 1.9. Closing.........................................................2 1.10. Closing Date...................................................2 1.11. Code...........................................................2 1.12. Confidentiality Agreement......................................2 1.13. Contracts......................................................2 1.14. Covol Process..................................................2 1.15. Effective Time.................................................2 1.16. Excluded Assets................................................2 1.17. Facility.......................................................2 1.18. Facility Site..................................................2 1.19. Fixed Assets...................................................3 1.20. GAAP...........................................................3 1.21. Improvements...................................................3 1.22. IRS............................................................3 1.23. Knowledge of Buyer.............................................3 1.24. Knowledge of Seller............................................3 1.25. Law............................................................3 1.26. Lease..........................................................3 1.27. License and Binder Purchase Agreement..........................3 1.28. Lien...........................................................3 1.29. Loss...........................................................4 1.30. Material Adverse Effect........................................4 1.31. Opinion of Sellers' Counsel....................................4 1.32. Permitted Liens................................................4 1.33. Plans and Specifications.......................................4 1.34. Product........................................................4 1.35. Purchase Consideration.........................................4 1.36. Required Consents..............................................4 1.37. Section 29 Product.............................................4 1.38. Sellers' Closing Certificate...................................4 1.39. Sublease and License...........................................4 1.40. Transaction Documents..........................................4 ii ARTICLE II PURCHASE AND SALE..................................................5 2.1. Purchase and Sale...............................................5 2.2. Payment of the Purchase Consideration...........................5 2.3. Deliveries at Closing...........................................5 2.4. Allocation of Purchase Price....................................5 2.5. No Assumption of Liabilities....................................6 2.6. Sales Tax Exemption.............................................6 ARTICLE III REPRESENTATION AND WARRANTIES OF SELLERS..........................6 3.1. Corporate Standing..............................................6 3.2. Authorizations; Binding Agreements..............................6 3.3. No Actions Affecting Enforcement of the Agreement and the other Transaction Documents...............................7 3.4. Taxes...........................................................7 3.5. Brokers or Finders Fees.........................................7 3.6. No Imposition of Liens..........................................8 3.7. Title to Assets.................................................8 3.8. Condition of Assets.............................................8 3.9. Pending Litigation..............................................8 3.10. Compliance With Laws...........................................8 3.11. Status of Contracts............................................8 3.12. Consents.......................................................9 3.13. Books and Records..............................................9 3.14. Environmental Conditions.......................................9 3.15. Liabilities...................................................10 3.16. Agreements with Related Persons...............................10 3.17. Adequacy of the Purchased Assets..............................10 3.18. Production Capacity...........................................11 3.19. Section 29 Issues.............................................11 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................11 4.1. Organization and Standing......................................11 4.2. Authorizations; Binding Agreements.............................11 4.3. Brokers or Finders Fees........................................12 4.4. No Action Affecting Enforcement of the Agreement and the other Transaction Documents..................................12 ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS..............................12 5.1. Best Efforts...................................................12 5.2. Public Announcements...........................................12 5.3. Confidentiality................................................12 5.4. Taxes..........................................................13 5.5. Private Letter Ruling Repurchase Option........................13 5.6. Solvency Representations and Covenants.........................13 5.7. Sublease and License...........................................14 iii ARTICLE VI CONDITIONS PRECEDENT TO THE PAYMENT OBLIGATIONS OF BUYER..........14 6.1. Compliance with Agreement......................................14 6.2. Proceedings and Instruments Satisfactory.......................14 6.3. No Litigation..................................................14 6.4. Representations and Warranties.................................14 6.5. Consents.......................................................15 6.6. Tax Opinion....................................................15 ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS...............15 7.1. Compliance with Agreement......................................15 7.2. Proceedings and Instruments Satisfactory.......................15 7.3. No Litigation..................................................15 7.4. Representations and Warranties.................................15 7.5. Required Consents..............................................16 ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS............................16 8.1. Sellers' Indemnity.............................................16 8.2. Buyer's Indemnity..............................................17 8.3. Bulk Sales Compliance..........................................18 8.4. Additional Instruments.........................................18 8.5. Access to Books, Records and Employees.........................19 ARTICLE IX TERMINATION.......................................................19 9.1. Termination....................................................19 9.2. Rights on Termination; Waiver..................................19 ARTICLE X MISCELLANEOUS......................................................20 10.1. Entire Agreement; Amendment...................................20 10.2. Expenses......................................................20 10.3. Governing Law; Consent to Jurisdiction........................20 10.4. Assignment....................................................21 10.5. Notices.......................................................21 10.6. Counterparts; Headings........................................22 10.7. Interpretation................................................22 10.8. Severability..................................................22 10.9. No Reliance...................................................22 10.10. Parties in Interest..........................................22 10.11. Specific Performance.........................................23 iv EXHIBITS AND SCHEDULES SCHEDULE 1.13 Contracts SCHEDULE 1.16 Excluded Assets SCHEDULE 1.19 Fixed Assets SCHEDULE 1.23 Knowledge of Buyer SCHEDULE 1.24 Knowledge of Sellers SCHEDULE 1.31 Opinion of Sellers' Counsel SCHEDULE 1.32 Permitted Liens SCHEDULE 1.36 Required Consents SCHEDULE 3.3 Pending Actions SCHEDULE 3.5 Brokers or Finders Fees of Sellers SCHEDULE 3.7 Title SCHEDULE 3.8 Condition of Assets SCHEDULE 3.9 Pending Litigation SCHEDULE 3.11 Status of Contracts SCHEDULE 3.16 Agreements with Related Persons EXHIBIT A Assignment Agreement EXHIBIT B Bill of Sale EXHIBIT C Buyer's Closing Certificate EXHIBIT D Sellers' Closing Certificate EXHIBIT E License and Binder Purchase Agreement EXHIBIT F Allocation of Purchase Price v ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT, made as of December 23, 1999, by and between **., a Delaware limited liability company ("Buyer"), and COVOL TECHNOLOGIES, INC., a Delaware corporation; CARBON SYNFUEL, L.L.C., a Utah limited liability company; and SYNFUEL INVESTMENTS, INC., a Utah corporation ("Sellers"). RECITALS WHEREAS, Carbon Synfuel, L.L.C. owns the Assets comprised of a processing Facility to produce solid synthetic fuel pellets from coal fines located near Price, Utah and Carbon Synfuel, L.L.C. is controlled by the other Sellers; and WHEREAS, Sellers desire to sell the Assets and the Contracts to Buyer and Buyer desires to purchase the Assets from Sellers, all on the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the Recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed that: ARTICLE I DEFINITIONS When used in this Agreement, the following terms shall have the meanings specified: 1.1. Affiliate shall mean, as to any person, any other person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such person. 1.2. Agreement shall mean this Purchase Agreement, together with the Exhibits and Schedules attached hereto, as the same may be amended from time to time in accordance with the terms hereof. 1.3. As-Built Drawing shall mean as-built drawings reflecting necessary revisions on the original tracings of the Plans and Specifications and related drawings relating to the Facility necessary to indicate such field changes as may have been found necessary to suit conditions at the Facility Site and any other revisions made in the course of construction of the Facility. 1.4. Assets shall mean, collectively, the Improvements, the Books and Records, and the Fixed Assets, together with all goodwill associated with the Facility. 1.5. Assignment Agreement shall mean the Assignment Agreement between Sellers and Buyer relating to the Contracts in the form of Exhibit A attached hereto. 1 1.6. Bill of Sale shall mean the Bill of Sale from Sellers to Buyer relating to the Assets, in the form of Exhibit B attached hereto. 1.7. Books and Records shall mean original or true and complete copies of all of the books, records, files, data and information of Sellers relating to the design, construction and operation of the Facility and operation of the business prior to the Effective Time, which are relevant to Buyer's use of the Assets, performance under the Contracts and operation of the Facility and the Business after the Effective Time, including without limitation Plans and Specifications, all original tracings of the related drawings and designs and the As-Built Drawings. 1.8. Buyer's Closing Certificate shall mean the certificate of Buyer substantially in the form of Exhibit C attached hereto. 1.9. Closing shall mean the meeting of the parties to be held at 9:00 a.m., local time, on the Closing Date, at the offices of Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond, Virginia, or such other time and place as the parties may mutually agree in writing. 1.10. Closing Date shall mean December 29, 1999, or such other date as the parties may mutually agree in writing. 1.11. Code shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 1.12. Confidentiality Agreement shall mean the Letter Agreement, dated April 27, 1999, between Sellers and **. 1.13. Contracts shall mean all construction agreements relating to the Facility and the Improvements, or components thereof, all as listed on Schedule1.13 attached hereto or as otherwise agreed upon by Buyer prior to the Closing Date. 1.14. Covol Process shall mean Sellers' proprietary synthetic coal fuel production process for manufacturing solid synthetic fuel from coal fines which is defined in and is the subject of the Technology License and Binder Supply Agreement. 1.15. Effective Time shall mean 12:01 a.m., Eastern Time, on the Closing Date. 1.16. Excluded Assets shall mean the items listed on Schedule 1.16 attached hereto 1.17. Facility shall mean the solid synthetic fuel pellet manufacturing Facility and related support Facility owned by Sellers and located at the Facility Site. 1.18. Facility Site shall mean that certain parcel of land located near Price, Utah where the Facility is located as of the Effective Date and which is the leased premises under the Lease. 2 1.19. Fixed Assets shall mean all tangible personal property located at the Facility Site which constitute part of, or are otherwise owned and used by Sellers in the operation of, the Facility as of the Effective Time, including, but not limited to, all fixed assets, chattels, machinery, equipment, computer hardware, fixtures, furniture, furnishings, handling equipment, implements, spare parts, tools and accessories of all kinds which are listed on Schedule 1.19 attached hereto; provided, however, that Fixed Assets shall exclude (i) leased items of property and (ii) the Excluded Assets. 1.20. GAAP shall mean generally accepted accounting principles of the United States as applied by Sellers in a manner consistent with prior periods. 1.21. Improvements shall mean the structures, buildings and improvements now standing on the Facility Site and constituting part of the Facility, and replacements thereof, including, without limitation, all plant equipment, apparatus, and machinery of every kind and nature forming a part of such Facility, buildings, and improvements. 1.22. IRS shall mean the Internal Revenue Service. 1.23. Knowledge of Buyer shall mean the actual knowledge, after due inquiry, of any person listed on Schedule 1.23 attached hereto. 1.24. Knowledge of Seller shall mean the actual knowledge, after due inquiry, of any person listed on Schedule 1.24 attached hereto. 1.25. Law shall mean any federal, state, local or other law or governmental requirement of any kind, and the rules, regulations and orders promulgated thereunder. 1.26. Lease shall mean that certain Lease Agreement by and between U.P.C., Inc. and Covol Technologies, Inc. dated December 23, 1996, as amended by that certain Amendment to Lease Agreement dated as of April 2, 1997. 1.27. License and Binder Purchase Agreement shall mean that certain License and Binder Purchase Agreement to be entered into by Buyer and Sellers, relating to the licensing by the Buyer of Covol's proprietary synthetic coal fuel extrusion, pellet and briquette production process for the Facility, and substantially in the form of Exhibit E attached hereto. 1.28. Lien shall mean any interest in property securing an obligation, whether such interest is based on common law, statute or contract, and including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, any security interest or lien arising from a mortgage, claims, encumbrance, pledge, charge, easement, servitude, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall also include reservations, exceptions, covenants, conditions, restrictions, leases, subleases, licenses, occupancy agreements, pledges, equities, charges, assessments, covenants, reservations, defects in title, encroachments and other burdens, and other title exceptions and encumbrances affecting property of any nature, whether accrued or unaccrued, or absolute or contingent. 3 1.29. Loss shall have the meaning given to such term in Section 8.1(a). 1.30. Material Adverse Effect shall mean a material adverse effect on the Assets and Contracts, taken as a whole, the business to be conducted by Buyer with the Assets or the maintenance and operation of the Facility. 1.31. Opinion of Sellers' Counsel shall mean the opinion of Pillsbury, Madison & Sutro, LLP, counsel of Sellers and Harlan Hatfield, general counsel of Covol Technologies, Inc., substantially in the form of Schedule 1.31. 1.32. Permitted Liens shall mean Liens (but only for amounts not yet due and payable) securing taxes, assessments or governmental charges or levies, Liens of an immaterial nature which could not reasonably be expected to have an adverse effect on the maintenance and operation of the Facility or the good and marketable title of the Assets or the enforceability of the Contracts, and Liens disclosed on Schedule 1.32 attached hereto. 1.33. Plans and Specifications shall have the meaning given such terms in the Contracts. 1.34. Product shall mean the solid synthetic fuel pellet product produced at the Facility using and pursuant to the Covol Process. 1.35. Purchase Consideration shall have the meaning given to such term in Section 2.2 hereof. 1.36. Required Consents shall mean those consents, approvals and waivers required from parties to the Contracts or under the Lease or any subleases or from governmental authorities or other third parties that are necessary or required in order to transfer the Assets and Contracts to Buyer and otherwise give effect to the transactions contemplated herein (other than such consents, the failure of which to obtain, taken as a whole, could not reasonably be expected to have a Material Adverse Effect) and that are specifically identified on Schedule 1.36 attached hereto. 1.37. Section 29 Product shall mean Product which is reasonably expected to constitute "qualified fuels" pursuant to the terms of Section 29(c)(1)(C) of the Code and with respect to which Section 29 is applicable pursuant to the terms of Sections 29(f) and 29(g) of the Code. 1.38. Sellers' Closing Certificate shall mean the certificate of Sellers substantially in the form of Exhibit D attached hereto. 1.39. Sublease and License shall have the meaning given such term in Section 5.7. 1.40. Transaction Documents shall mean this Agreement, the Bill of Sale, the Assignment Agreement, the Sublease and License and those agreements and instruments to be executed and delivered as provided in Section 2.3. 4 ARTICLE II PURCHASE AND SALE 2.1. Purchase and Sale. (a) Buyer and Sellers hereby agree that at the Closing, and upon all of the terms and subject to all of the conditions of this Agreement, Sellers shall sell, convey, transfer and assign to Buyer, and Buyer shall purchase and accept from Sellers, all of the Assets, free and clear of all Liens. (b) Buyer and Sellers hereby agree that at the Closing, and upon all of the terms and subject to all of the conditions of this Agreement, Sellers shall assign to Buyer the Contracts and all rights arising thereunder. 2.2. Payment of the Purchase Consideration. In consideration of Sellers' sale, conveyance, transfer, delivery and assignment of the Assets and Contracts, Buyer shall on the Closing Date make a cash payment to Sellers in the amount of ** Dollars ($**), payable by wire transfer in readily available funds to First Security Bank; Salt Lake City, Utah; 18A 124 000012; for the account of Covol Technology; Acct. #0600019939 (the "Purchase Consideration"). 2.3. Deliveries at Closing. (a) By Sellers to Buyer. At the Closing, Sellers shall deliver the following items to Buyer, each properly executed and dated as of the Closing Date by Sellers and in form and substance reasonably acceptable to Buyer: the Assignment Agreement, the Bill of Sale, the Improvements Deed, the Sublease and License, the License and Binder Purchase Supply Agreement, all Required Consents applicable to Sellers, the Opinion of Sellers' Counsel, Sellers' Closing Certificate, a subordination and nondisturbance agreement, satisfactory in form and substance to Buyer, from all mortgagees and other parties with interests in the Facility Site, the Lease or the Improvements and a certificate of the corporate secretary of Sellers as to such matters as may reasonably be requested by Buyer. (b) By Buyer to Sellers. At the Closing, Buyer shall deliver the Purchase Consideration and the following items to Sellers, each properly executed and dated as of the Closing Date by Buyer and in form and substance reasonably acceptable to Sellers: the Assignment Agreement, the Sublease and License, the License and Binder Purchase Agreement, all Required Consents applicable to Buyer, Buyer's Closing Certificate and a certificate of the corporate secretary (or equivalent official) of Buyer as to such matters as may reasonably be requested by Sellers. 2.4. Allocation of Purchase Price. On the Closing Date, or at a later time agreed to by the parties, not to exceed 30 days following the Closing Date, the purchase price shall be allocated among the Assets and Contracts in accordance with Exhibit F attached hereto. Such allocation shall be intended to comply with 5 the requirements of Section 1060 of the Code, and no party shall take any position inconsistent with such allocation for income tax purposes, except that Buyer's cost for the Assets and Contracts may differ from the amount so allocated to the extent necessary to reflect Buyer's capitalized acquisition costs other than the amount realized by Sellers. 2.5. No Assumption of Liabilities. Buyer does not and will not assume any liability or obligation of any kind of Sellers, or any obligation relating to the use of the Assets or performance by Sellers under the Contracts prior to the Effective Time, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, known or unknown, or otherwise. 2.6. Sales Tax Exemption. To the extent applicable, at the Closing, Buyer will deliver to Sellers appropriate and customary sales tax exemption certificates relating to the transfer of the Assets and the assignment of the Contracts contemplated hereby. ARTICLE III REPRESENTATION AND WARRANTIES OF SELLERS Sellers jointly and severally represent and warrant to Buyer that: 3.1. Corporate Standing. Sellers are corporations or a limited liability company duly organized and validly existing and in good standing under the laws of their states of organization as indicated in the introductory paragraph of this agreement. Sellers have the power to own their property, and to execute, deliver and perform this Agreement and each of the Transaction Documents applicable to it, and to carry on their business as now being conducted. Sellers are duly qualified to do business in and are in good standing as foreign corporations or limited liability companies, authorized to do business under the laws of the States of Utah. 3.2. Authorizations; Binding Agreements. The execution, delivery and performance of this Agreement and the other Transaction Documents by Sellers and each conveyance, assignment, agreement, and other document herein contemplated to be executed by Sellers, have been duly authorized by all necessary corporate and limited liability company action, as the case may be. This Agreement and the other Transaction Documents and the conveyances, assignments, agreements, and other documents herein contemplated to be executed, delivered and performed by Sellers are, or will be upon execution, legal, valid and binding obligations of Sellers, duly enforceable against Sellers in accordance with their terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium, and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity). This Agreement and the other Transaction Documents and the conveyances, assignments, agreements, and other documents herein contemplated to be executed, delivered and performed by Sellers (i) do not and will not result in 6 any violation of, conflict with or default under the terms of any of Sellers' organizational documents (nor, to the Knowledge of Sellers, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default), and (ii) subject only to the Required Consents, do not and will not result in any violation of, conflict with or default under any Contract or any other material permit, lease, venture, indenture, mortgage, agreement, contract, judgment, order or other obligation or restriction to which Sellers, the Assets, the Contracts or the conduct of the maintenance and operation of the Facility may be bound or encumbered (nor, to the Knowledge of Sellers, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default). 3.3. No Actions Affecting Enforcement of the Agreement and the other Transaction Documents. Except as set forth in Schedule 3.3, there are no actions, suits, or proceedings pending, or, to the Knowledge of Sellers, threatened, against Sellers in any court, or administrative governmental body or agency which will affect in any adverse manner the ability of Sellers to execute, deliver and perform this Agreement and the other Transaction Documents. Subject only to the Required Consents and such consents which the failure to obtain could not reasonably be expected to have a Material Adverse Effect, Sellers has obtained all permits, licenses, franchises, authorizations, variances, exemptions, concessions, leases, instruments, orders, consents or approvals of governmental entities and third parties necessary to construct, maintain and operate the Facility and to execute, deliver and perform this Agreement and the other Transaction Documents. 3.4. Taxes. All tax returns and reports relating to the Assets, the Contracts and the conduct of the construction, maintenance and operation of the Facility required by law (including all federal, state, and local property tax, severance and franchise tax laws) to be filed by Sellers prior to the Closing have been timely filed or will be caused to be timely filed, including those tax returns relating to periods prior to Closing that are not yet due, except for such returns and reports which the failure to file could not reasonably be expected to have a material adverse effect on the Assets, the Contracts or the maintenance and operation of the Facility. All taxes, assessments, fees, interest, penalties and other governmental charges relating to the Assets, the Contracts or the conduct of the construction, maintenance and operation of the Facility prior to Closing have been paid when due and payable or payment has been provided for, except for such taxes, assessments, fees, interest, penalties and other governmental charges which the failure to pay could not reasonably be expected to have a material adverse effect on the Assets, the Contracts or the construction, maintenance and operation of the Facility. 3.5. Brokers or Finders Fees. Except as set forth in Schedule 3.5, there are no obligation or liability, contingent or otherwise, for brokers or finders fees created by Sellers with respect to the matters provided for in this Agreement and the other Transaction Documents. No obligation or liability for brokers or 7 finders fees created by Sellers with respect to the matters provided for in this Agreement and the other Transaction Documents shall be imposed upon Buyer, the Assets or the Contracts. 3.6. No Imposition of Liens. The execution, delivery and performance of this Agreement and the other Transaction Documents by Sellers shall not result in the imposition of any Lien, other than Permitted Liens, upon any of the Assets, the Contracts or by which the maintenance and operation of the Facility may be bound or encumbered. 3.7. Title to Assets. Except as set forth on Schedule 3.7, as of the date hereof, Carbon Synfuel, L.L.C. owns, and as of the Effective Time, it will own, good, valid and marketable title to all of the Assets, free and clear of any and all Liens, except for Permitted Liens. As of the Effective Time and upon Buyer's payment of the Purchase Consideration pursuant hereto, good, valid and marketable title to the Assets and holds a fully enforceable leasehold interest in the Facility Site, free and clear of all Liens, except for Permitted Liens, shall pass to Buyer. 3.8. Condition of Assets. Except as set forth on Schedule 3.8, as of the Closing Date, the Fixed Assets, taken as a whole, will be in good operating condition and repair and substantially fit for the production of Section 29 Product at a rate of 360,0000 tons per year, and the Facility has been constructed in conformance with that degree of skill and judgment normally exercised by recognized engineering and construction firms of similar size and experience to that of the contractors under the Contracts, and the Assets comprising the Facility conform to the standards of material and workmanship prevailing in applicable industries and are free from material defects in design, material and workmanship and are of good quality. 3.9. Pending Litigation. Except as disclosed on Schedule 3.9, there are no actions, suits, arbitrations or proceedings currently pending or, to the Knowledge of Sellers, threatened against the Assets or the Contracts. There are no outstanding or unsatisfied judgments, orders or decrees to which Sellers are bound. 3.10. Compliance With Laws. To the Knowledge of Sellers, Sellers are in compliance with all orders, writs, injunctions, decrees, judgments, rulings, laws, rules or regulations of any governmental entity to which Sellers, the Assets or the Contracts are subject, the violation of which could reasonably be expected to have a Material Adverse Effect. 3.11. Status of Contracts. 8 Schedule 1.12 is a true, correct and complete list of all the material contracts entered into by Sellers relating primarily to the Assets. Except as described in the Schedule 3.11, the Contracts are valid and in good standing, and there is no violation of, conflict with or default under the Contracts, the consequence of which could reasonably be expected to have a Material Adverse Effect. Sellers have not received any notice from any party to any Contract that such party intends to terminate, cancel or refuse to renew the same or that such party intends to offset any amount due thereunder or assert any defense to the enforceability thereof. 3.12. Consents. Schedule 1.36 is a true, correct and complete list of all Required Consents. 3.13. Books and Records. As of the Closing Date, the Books and Records shall be complete and correct in all material respects. 3.14. Environmental Conditions. (a) Definitions. When used in this Section: (i) "Environmental Laws" shall mean all applicable laws (including common law), rules, orders, regulations, statutes, ordinances, codes, decrees and requirements of any Governmental Authority regulating, relating to or imposing liability standards of conduct concerning any Hazardous Materials or environmental protection. (ii) "Governmental Authority" shall mean any federal, state, local, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case having jurisdiction over the applicable matter. (iii) "Hazardous Materials" shall mean any solid waste, petroleum or petroleum product, hazardous material, hazardous waste, infectious medical waste, or hazardous or toxic substance defined or regulated as such in any Environmental Law. (b) Environmental Representations and Warranties. Except as set forth on Schedule 3.14 attached hereto: (i) Sellers have not operated the Facility or conducted business or other activities at or from the Facility, in connection with the construction of the Facility or otherwise, in a manner that constituted or constitutes a violation of any applicable Environmental Law; (ii) There has been no off-site shipment or release of any Hazardous Materials by the Sellers on, under, at, from or in any way affecting the Facility or any part thereof, which off-site shipment or release gives rise to liabilities or obligations under applicable Environmental Laws; and 9 (iii) Sellers have not received any notices or claims that they are a responsible party in connection with any claim or notice asserted pursuant to 42 U.S.C. Section 9601 et seq., or any state superfund law, in connection with the Facility. (iv) Seller has received all permits as may be required under applicable Environmental Laws to operate the Facility as of the Effective Time, and Seller is in compliance in all material respects with the terms and conditions of each such permits. Such permits shall be transferable to Buyer and will be effective immediately (or, subject to Section 5.1, as soon as practicable) after the Closing. 3.15. Liabilities. Except for liabilities underlying any Permitted Liens, the Sellers have no liabilities which could reasonably be expected to have a Material Adverse Effect following the Closing, nor has any condition existed or any event occurred which could reasonably be expected to give rise to any such liability. 3.16. Agreements with Related Persons. There are no contracts, licenses, agreements or arrangements with any Affiliate of Sellers in connection with the construction, maintenance, ownership and operation of the Facility, other than as disclosed on Schedule 3.16. 3.17. Adequacy of the Purchased Assets. Except as described in Schedule 3.8 the Assets and the Contracts, together with (i) the technology and know-how being licensed to Buyer by Sellers under the License and Binder Purchase Agreement, (ii) the chemical binder to be supplied to Buyer by Sellers under the License and Binder Purchase Agreement, and (iii) rights and assets required for the relocation of the Facility to the site selected by Buyer (including but not limited to relocation construction contracts, feedstock raw materials, applicable real property rights, permits, etc.) which Buyer may arrange for but which are not the subject of this Purchase Agreement, constitute all of the assets and technology rights reasonably expected to be necessary for the production by Buyer of Section 29 Product at the rate of 360,000 tons per year. 10 3.18. Production Capacity. The Facility has a rated capacity to produce Product at the rate of 360,000 tons per year. 3.19. Section 29 Issues. The Facility was placed "in service" for purposes of the Code prior to July 1, 1998 pursuant to a binding contract entered into prior to January 1, 1997 and effective at all times thereafter through completion of construction. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer hereby represents and warrants to Sellers that: 4.1. Organization and Standing. Buyer is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware and has the power to own its own property, and to execute, deliver and perform this Agreement and each of the Transaction Documents, and to carry on its business as now being conducted. 4.2. Authorizations; Binding Agreements. The execution, delivery, and performance of this Agreement and the other Transaction Documents by Buyer and of each conveyance, assignment, agreement, and other document herein contemplated to be executed by Buyer have been fully authorized by all necessary limited liability company action. This Agreement and the other Transaction Documents and the conveyances, assignments, agreements, and other documents herein contemplated to be executed, delivered and performed by Buyer are, or will be upon execution, legal, valid and binding obligations of Buyer, duly enforceable against Buyer in accordance with their terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium, and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity). This Agreement and the other Transaction Documents and the conveyances, assignments, agreements, and other documents herein contemplated to be executed, delivered and performed by Buyer (i) do not and will not result in any violation of, conflict with or default under the terms of Buyer's organizational documents, and (ii) subject only to the Required Consents, do not and will not result in any violation of, conflict with or default under any material permit, lease, venture, indenture, mortgage, agreement, contract, judgment, order or other obligation or restriction to which Buyer is bound (nor, to the Knowledge of Buyer, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default). 11 4.3. Brokers or Finders Fees. No obligation or liability, contingent or otherwise, for brokers or finders fees created by Buyer with respect to the matters provided for in this Agreement shall be imposed upon Sellers. 4.4. No Action Affecting Enforcement of the Agreement and the other Transaction Documents. There are no actions, suits, or proceedings pending, or, to the Knowledge of Buyer, threatened, against Buyer in any court, or administrative governmental body or agency which will affect in any adverse manner the ability of Buyer to execute, deliver and perform this Agreement and the other Transaction Documents. ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS 5.1. Best Efforts. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper and advisable under applicable Law, and to obtain the Required Consents, necessary to consummate and make effective the transactions contemplated by this Agreement. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action. Buyer and Sellers will execute any additional instruments necessary to consummate the transactions contemplated hereby. To the extent that any permits referenced in Section 3.14(b)(iv) are not transferred at the Closing Date, Sellers will use commercially reasonable efforts to cause such transfer to Buyer as soon as practicable after the Closing Date. 5.2. Public Announcements. Buyer and Sellers will consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement and the transactions contemplated herein, and shall not issue any such press release or make any such public statement prior to such consultation or as to which the other party reasonably objects, except as may be required by Law or by obligations pursuant to any listing agreement with any national securities exchange or inter-dealer quotation system. 5.3. Confidentiality. Notwithstanding the execution of this Agreement, the confidentiality provisions of the Confidentiality Agreement shall remain in full force and effect and shall survive the Closing. 12 5.4. Taxes. Following Closing, Sellers shall timely file all tax returns and reports relating to the Assets, the Contracts and the conduct of the construction, maintenance and operation of the Facility prior to Closing which have not been filed or were not yet due to be filed prior to Closing, and Sellers shall timely pay all taxes, assessments, fees, interest, penalties and governmental charges relating to the Assets, the Contracts or the conduct of the construction, maintenance and operation of the Facility prior to Closing which have not been paid or were not yet due and payable prior to Closing. 5.5. Private Letter Ruling Repurchase Option. Following Closing, Buyer plans to seek a Private Letter Ruling from the IRS as to matters relating to the Facility and Section 29 of the Code. Sellers shall cooperate with and assist Buyer, as reasonably requested by Buyer, in connection with seeking such Private Letter Ruling. In the event that Buyer does seek such a Private Letter Ruling and the IRS refuses or fails to issue it in a form that is satisfactory in the sole and absolute discretion of Buyer, Buyer shall be entitled to elect (by giving written notice to Sellers to such effect) to terminate the obligation to make further royalty payments under Section 3 of the License and Binder Purchase Agreement and, in such event, Sellers shall have the option to purchase, within one year following such notice, the Assets and Contracts (and assume obligations under the Contracts) from Buyer at the greater of (i) the amount of Purchase Consideration theretofore paid by Buyer plus the amount of any capital expenditures made by Buyer in connection with the Facility and Assets plus any obligations of Buyer in respect of the Facility and the Assets and Contracts, or (ii) the fair market value of such Assets and Contracts. 5.6. Solvency Representations and Covenants. Each Seller hereby represents and warrants (as to itself only) that prior to consummating the transactions contemplated herein, (i) the aggregate fair market value of such Seller's assets exceeds the aggregate amount of such Seller's liabilities, including contingent liabilities discounted by the probability of their occurrence, (ii) such Seller is able to pay and is paying its debts generally as and when they become due in the ordinary course of business, (iii) such Seller is adequately capitalized for its current and contemplated business undertakings, and (iv) the Purchase Consideration constitutes reasonably equivalent value and fair consideration for the Assets. Each Seller hereby covenants (as to itself only) that after consummating the transaction contemplated by the Purchase Agreement, (i) the aggregate fair market value of such Seller's assets will exceed the aggregate amount of such Seller's liabilities, including contingent liabilities discounted by the probability of their occurrence, (ii) such Seller will be able to pay and will pay its debts generally as and when they become due in the ordinary course of business, and (iii) such Seller will not be left with unreasonably small capital for its then-current and contemplated business undertakings. 13 5.7. Sublease and License. At, and as a condition to, the Closing, Buyer, Sellers and the landlord under the Lease shall enter into a sublease, license and consent agreement (the "Sublease and License"), in form and substance to be agreed upon by the parties, which shall provide (i) for Sellers to sublease the portion of the leased premises under the Lease and grant those rights under the Lease to the extent necessary to allow Buyer, without restriction, to enter such premises, maintain and operate the Facility and to remove the Facility, after which such sublease shall terminate, (ii) for the granting of a license by the landlord under the Lease providing for the rights referenced in clause (i) above, and (iii) for the consent of the landlord under the Lease to all of the foregoing and to the ultimate removal of the Facility from such leased premises with no further obligation on the part of Buyer. In addition, Sellers shall assign to Buyer, to the extent assignable, or otherwise shall assist Buyer in connection with obtaining, agreements providing for necessary utilities at such site and Sellers shall provide necessary security services relating to the Facility and the Facility Site during the period following the Effective Time and until Buyer removes the Facility from the Facility Site. ARTICLE VI CONDITIONS PRECEDENT TO THE PAYMENT OBLIGATIONS OF BUYER Each and every obligation of Buyer to be performed on the Closing Date shall be subject to the satisfaction, prior to or at the Closing of the following express conditions precedent: 6.1. Compliance with Agreement. Sellers shall have performed and complied in all material respects with all of its obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date. 6.2. Proceedings and Instruments Satisfactory. All proceedings, corporate or other, to be taken by Sellers in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to Buyer. 6.3. No Litigation. No investigation, suit, action or other proceedings (including, without limitation, any petition relating to any of the Sellers under the Bankruptcy Code or similar federal or state law) shall be threatened or pending before any court or governmental agency that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby or in connection with obligations to creditors. 6.4. Representations and Warranties. The representations and warranties made by Sellers in this Agreement shall be true and correct in all respects (as to representations and warranties qualified or limited by the term 14 "Material Adverse Effect," the word "material," or phrases of like import), and in all material respects (as to representations and warranties not so qualified or limited) as of the Closing Date with the same force and effect as though said representations and warranties had been made on the Closing Date. 6.5. Consents. All Required Consents applicable to Sellers shall have been obtained, including without limitation consents relating and required of the landlord under the Lease pursuant to the Sublease and License. 6.6. Tax Opinion. Buyer shall have received an opinion of Hunton & Williams, counsel to Buyer, in form and substance satisfactory to Buyer, with respect to matters related to Section 29 of the Code. ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS Each and every obligation of Sellers to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 7.1. Compliance with Agreement. Buyer shall have performed and complied in all material respects with all of its obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date. 7.2. Proceedings and Instruments Satisfactory. All proceedings, corporate or other, to be taken by Buyer in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to Sellers. 7.3. No Litigation. No investigation, suit, action or other proceeding shall be threatened or pending before any court or governmental agency that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby. 7.4. Representations and Warranties. The representations and warranties made by Buyer in this Agreement shall be true and correct in all respects (as to representations and warranties qualified or limited by the term "Material Adverse Effect," the word "material," or phrases of like import), and in all material respects (as to representations and warranties not so qualified or limited) as of the Closing Date 15 with the same force and effect as though such representations and warranties had been made on the Closing Date. 7.5. Required Consents. All Required Consents applicable to Buyer shall have been obtained. ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS 8.1. Sellers' Indemnity. (a) Sellers hereby jointly and severally indemnify and hold Buyer harmless from and against, and agree to defend promptly Buyer from, and reimburse Buyer for, any and all losses, damages, costs, expenses, liabilities, obligations and claims of any kind, including, without limitation, environmental liabilities (whether involving personal injury or property damage), reasonable attorneys' fees and other legal costs and expenses (hereinafter referred to collectively as "Losses"), that Buyer and any Affiliate of Buyer may at any time suffer or incur, or become subject to, as a result of or in connection with: (i) any breach or inaccuracy of any of the representations and warranties made by Sellers in this Agreement or any other agreement or instrument delivered by Sellers pursuant hereto; (ii) any failure of Sellers to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the agreements and instruments delivered by Sellers pursuant to this Agreement; (iii) claims by third parties (including governmental authorities) against Buyer relating to the construction, operation and ownership by Sellers of the Assets and the performance by Sellers under the Contracts in each case under this clause (iii) for the period prior to the Effective Time; (iv) any violations of, or failure to operate in accordance with, necessary permits prior to the Effective Time; (v) except as otherwise provided in the Sublease and License, all obligations and liabilities under the Lease; and (vi) any and all liabilities and obligations of Sellers; (b) In the event a claim against Buyer arises that Buyer reasonably believes is covered by the indemnity provisions of Section 8.1(a) of this Agreement, notice shall be given promptly by Buyer to Sellers containing detail reasonably sufficient for Sellers to identify the nature and basis of the claim. Provided that Sellers admit in writing to Buyer that such claim is covered by the indemnity provisions of Section 8.1(a) hereof, Sellers shall have the right to contest and defend by all appropriate legal proceedings such claim and to control all settlements (unless Buyer agrees to assume the cost of settlement and to forgo such indemnity) and to select lead counsel to defend any and all such claims at the sole cost and expense of Sellers; provided, however, that Sellers may not effect any settlement that could result in any cost, expense or liability to Buyer unless Buyer consents in writing to such settlement and Sellers agree to indemnify Buyer therefor. Buyer may select counsel to participate with Sellers' counsel in any such defense, in which event Buyer's counsel shall be at its own sole cost and expense. In connection with any such claim, action or proceeding, the parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. 16 (c) Sellers shall not be required to indemnify and hold harmless Buyer pursuant to Section 8.1(a)(i) hereof in respect of the representations and warranties made by Sellers herein unless such right to indemnification is asserted by Buyer (whether or not such Losses have actually been incurred) by notice to Sellers within 12 months after the Closing Date, with the exception of (i) the representations and warranties set forth in Sections 3.4 and 3.19, which must be asserted by Buyer within the applicable statute of limitations or any extensions thereof required by any applicable authority relating to the taxes or assessments giving rise to the Loss, plus 60 days, (ii) the representations and warranties set forth in Section 3.10, which must be asserted by Buyer within the applicable statute of limitations for the violation of the underlying law that forms the basis of such claim, plus 60 days, (iii) the representations and warranties set forth in Sections 3.1, 3.2, and 3.8, which shall be without time limitation, and (iv) the representations and warranties set forth in Section 3.14 hereof, which must be asserted within 24 months after the Closing Date. (d) Notwithstanding the foregoing, Sellers shall not be required to indemnify Buyer under Section 8.1(a)(i) in respect of the representations and warranties made by Sellers unless the amount of all Losses for which indemnification is sought by Buyer under Section 8.1(a)(i) exceeds, in the aggregate, $250,000, in which event, Sellers' indemnity obligation hereunder would apply to all such Losses. Sellers' aggregate indemnification obligation pursuant to Section 8.1(a)(i) shall in no event exceed the Purchase Consideration described in Section 2.2 and paid to Sellers. (e) The indemnification provided in this Section 8.1, including the limitations with respect thereto, shall be the exclusive remedy for Buyer with respect to Losses as a result of or in connection with the matters described in Section 8.1(a)(i), notwithstanding any provisions in this Agreement or any other such agreement or instrument to the contrary. 8.2. Buyer's Indemnity. (a) Buyer hereby indemnifies and holds Sellers harmless from and against, and agrees to defend promptly Sellers from and reimburse Sellers for, any and all Losses that Sellers may at any time suffer or incur, or become subject to, as a result of or in connection with: (i) any breach or inaccuracy of any of the representations and warranties made by Buyer in this Agreement or any other agreement or instrument delivered by Buyer pursuant hereto; (ii) any failure by Buyer to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the agreements and instruments delivered by Buyer pursuant to this Agreement; and (iii) claims by third parties (including governmental authorities) against Sellers relating to the operation and ownership by Buyer of the Assets for the period following the Effective Time. (b) In the event a claim against Sellers arises that is covered by the indemnity provisions of Section 8.2 of this Agreement, notice shall be given promptly by Sellers to Buyer containing detail reasonably sufficient for Buyer to identify the nature and basis of the claim. Provided that Buyer admits in writing to Sellers that such claim is covered by the indemnity provisions of Section 8.2 hereof, Buyer shall have the right to contest and defend by all appropriate legal proceedings such claim and to control all settlements (unless Sellers agrees to 17 assume the cost of settlement and to forgo such indemnity) and to select lead counsel to defend any and all such claims at the sole cost and expense of Buyer; provided, however, that Buyer may not effect any settlement that could result in any cost, expense or liability to Sellers unless Sellers consents in writing to such settlement and Buyer agrees to indemnify Sellers therefor. Sellers may select counsel to participate with Buyer's counsel in any such defense, in which event Sellers' counsel shall be at the sole cost and expense of Sellers. In connection with any such claim, action or proceeding, the parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. (c) Buyer shall not be required to indemnify and hold harmless Sellers pursuant to Section 8.2(a)(i) hereof in respect of the representations and warranties made by Buyer herein unless such right to indemnification is asserted by Sellers (whether or not such Losses have actually been incurred) by notice to the Buyer within 12 months after the Closing Date, with the exception of the representations and warranties set forth in Sections 4.1 and 4.2 hereof, which shall be without time limitation. (d) Notwithstanding the foregoing, Buyer shall not be required to indemnify Sellers under Section 8.2(a)(i) in respect of the representations and warranties made by Buyer unless the amount of all Losses for which indemnification is sought by Sellers under Section 8.2(a)(i) exceeds, in the aggregate, $250,000, in which event, Buyer's indemnity obligation hereunder would apply to all such Losses. (e) The indemnification provided in this Section 8.2, including the limitations with respect thereto, shall be the exclusive remedy for Sellers with respect to Losses as a result of or in connection with the matters described in Section 8.2(a)(i), notwithstanding any provisions in this Agreement or any other such agreement or instrument to the contrary. 8.3. Bulk Sales Compliance. To the extent applicable, Buyer hereby waives compliance by Sellers with the provisions of the bulk sales law of any U.S. jurisdiction, and in any event, Sellers covenants and agrees to pay and discharge when due all claims of any governmental entities and creditors of Sellers and its subsidiaries that could be asserted against Buyer by reason of such non-compliance. Sellers agrees to indemnify and hold Buyer harmless from and against and shall on demand reimburse Buyer for any and all Losses suffered by Buyer by reason of Sellers' failure to pay and discharge any such claims. 8.4. Additional Instruments. At any time and from time to time after the Closing, at either party's request and without further consideration, Sellers or Buyer, as the case may be, shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation and take such other action as Sellers or Buyer may reasonably deem necessary or desirable in order to more effectively transfer, convey, and assign to Buyer, and confirm Buyer's title to and interest in and responsibility and liability for, the Assets and Contracts and the consummation of the transactions contemplated herein. Without limiting the generality of the foregoing, Sellers will 18 cooperate with and assist Buyer in renewing, or transferring, into Buyer's name those Permits for which Buyer requests such assistance and cooperation at the appropriate time for such renewal or transfer as determined by Buyer. 8.5. Access to Books, Records and Employees. From and after the Closing Date, Buyer will authorize and permit Sellers and its respective representatives to have access during normal business hours, upon reasonable notice and for reasonable purposes and in such manner as will not unreasonably interfere with the conduct of Buyer's business, to Books and Records within the control of Buyer that relate to the Facility. From and after the Closing Date, Sellers will authorize and permit Buyer and its representatives to have access during normal business hours, upon reasonable notice and for reasonable purposes and in such manner as will not unreasonably interfere with the conduct of Sellers' business, to all books and records, files, documents and other correspondence related to the Facility prior to the Effective Time, which are not included among the Books and Records. Buyer and Sellers agree to maintain all books, records, files, documents and other correspondence related to the Facility prior to the Effective Time in accordance with their respective normal document retention practices after the Closing Date. ARTICLE IX TERMINATION 9.1. Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned as follows: (a) at any time prior to the Closing Date by mutual written agreement of Sellers and Buyer; or (b) by either Sellers or Buyer if the Effective Time shall not have occurred on or before January 15, 2000, provided, however, that the right to terminate this Agreement pursuant to this clause (b) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur prior to such date. 9.2. Rights on Termination; Waiver. (a) If this Agreement is terminated pursuant to Section 9.1, all further obligations of the parties under or pursuant to this Agreement shall terminated. (b) If any of the conditions set forth in Article VI of this Agreement have not been satisfied, Buyer may nevertheless elect to waive such conditions and proceed with the consummation of the transactions contemplated hereby. If any of the conditions set forth in Article VII of this Agreement have not been satisfied, Sellers may nevertheless elect to waive such conditions and proceed with the consummation of the transactions contemplated hereby. The election by Buyer or Sellers to terminate this Agreement pursuant to Section 9.1 (b) shall not in any way affect the rights of such party against the other party for any breach or default under this Agreement. 19 ARTICLE X MISCELLANEOUS 10.1. Entire Agreement; Amendment. This Agreement and the documents referred to herein and to be delivered pursuant hereto constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein or therein. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. The representations and warranties of each party hereto shall be deemed to be material and to have been relied upon by the other party. The representations, warranties, covenants and agreements of Sellers and Buyer contained herein shall survive the execution and delivery of this Agreement and consummation of the transactions contemplated hereby and, as to the representations and warranties, shall be effective until the relevant time limitation for making any indemnity claim with respect to such representations and warranties under Sections and shall have been reached and no longer. All agreements, understandings, representations, warranties and covenants made by Sellers herein shall be joint and several obligations of Sellers. 10.2. Expenses. Except as otherwise specifically provided herein, each of the parties hereto shall pay the fees and expenses of their respective counsel, accountants and other experts and the other expenses incident to the negotiation and preparation of this Agreement and consummation of the transactions contemplated hereby. 10.3. Governing Law; Consent to Jurisdiction. This Agreement shall be construed and interpreted according to the laws of the State of New York, without regard to the conflicts of law rules thereof; provided, however, that Section 5-1401 of the New York General Obligations Law shall apply to this Agreement. Each of the parties hereto, in respect of itself and its properties, agrees to be subject to (and hereby irrevocably submits to) the nonexclusive jurisdiction of the United States federal court for the Southern District of New York or New York state court sitting in the Borough of Manhattan, New York, in respect of any suit, action or proceeding arising out of or relating to this Agreement or the transactions contemplated herein, and irrevocably agrees that all claims in respect of any such suit, action or proceeding may be heard and determined in any such court. Each of the parties hereto irrevocably waives, to the fullest extent it may effectively do so under applicable Law, any objection to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Either party hereto may make service on the other 20 party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section hereof. Nothing in this Section , however, shall affect the right of any party to bring any action or proceeding arising out of or relating to this Agreement in any other court or to serve legal process in any other manner permitted by law or in equity. 10.4. Assignment. This Agreement and each party's respective rights hereunder may not be assigned, by operation of law or otherwise, without the prior written consent of the other party provided, however, that Buyer may assign this Agreement to an Affiliate of Buyer without the consent of Sellers. 10.5. Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given at the earlier of the date (a) when delivered personally or by messenger or by overnight delivery service to an officer of the other party, (b) five days after being mailed by registered or certified United States mail, postage prepaid, return receipt requested, or (c) when received via telecopy, telex or other electronic transmission, in all cases addressed to the person for whom it is intended at his address set forth below or to such other address as a party shall have designated by notice in writing to the other party in the manner provided by this Section: If to Buyer: ** Fax: ** Attn: Manager of Assets With a copy to: ** Hunton & Williams Fax: ** Riverfront Plaza, East Tower Attn: General Counsel 951 East Byrd Street Richmond, Virginia 23219 Fax: (804) 788-8218 Attn: Kenneth J. Alcott, Esq. If to Sellers: Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84043 Fax: (801) 768-4483 Attn: Brent M. Cook and With a copy to: Covol Technologies, Inc. Pillsbury Madison & Sutro LLP 3280 North Frontage Road 235 Montgomery Street Lehi, Utah 84043 San Francisco, CA 94104 Fax: (801) 768-4483 Fax: (415) 983-1200 Attn: General Counsel Attn: Linda C. Williams, Esq. 21 10.6. Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 10.7. Interpretation. Unless the context requires otherwise, all words used in this Agreement in the singular number shall extend to and include the plural, all words in the plural number shall extend to and include the singular and all words in any gender shall extend to and include all genders. All references to contracts, agreements, leases or other understandings or arrangements shall refer to oral as well as written matters. The specificity of any representation or warranty contained herein shall not be deemed to limit the generality of any other representation or warranty contained herein. 10.8. Severability. If any provision, clause or part of this Agreement, or the application thereof under certain circumstances, is held invalid, the remainder of this Agreement, or the application of such provision, clause or part under other circumstances, shall not be affected thereby. 10.9. No Reliance. No third party is entitled to rely on any of the representations, warranties and agreements contained in this Agreement. Buyer and Sellers assume no liability to any third party because of any reliance on the representations, warranties and agreements of Buyer or Sellers contained in this Agreement. Nothing contained in this Agreement shall be construed as creating a partnership or joint venture or any agency relationship between the parties hereto, or any other relationship other than buyer and Sellers as provided herein. 10.10. Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 10.11. Specific Performance. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with the terms hereof and that 22 the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. [Remainder of this page intentionally left blank] 23 IN WITNESS WHEREOF, each party hereto has caused this Purchase Agreement to be executed in its name by a duly authorized officer as of the day and year first above written. ** By: /**/ --------------------------------------- Its: Vice President and Chief Financial Officer COVOL TECHNOLOGIES, INC. By: /Kirk A. Benson/ --------------------------------------- Its: Chairman and Chief Executive Officer SYNFUEL INVESTMENTS, INC. By: /Brent M. Cook/ --------------------------------------- Its: President CARBON SYNFUELS, L.L.C. By: Covol Technologies, Inc. By: /Brent M. Cook/ --------------------------------------- Its: President 24 EX-10.65 3 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT by and between ** ** and COVOL TECHNOLOGIES, INC. POCAHONTAS SYNFUEL, L.L.C. SYNFUEL INVESTMENTS, INC. January 13, 2000 ** This Exhibit contains confidential material which has been omitted pursuant to a Confidential Treatment Request. The omitted information has been filed separately with the Securities and Exchange Commission. i TABLE OF CONTENTS Page RECITALS ..................................................................1 ARTICLE I DEFINITIONS......................................................2 1.1 Affiliate................................................2 1.2 Agreement................................................2 1.3 As-Built Drawings........................................2 1.4 Bill of Sale.............................................3 1.5 Books and Records........................................3 1.6 Buyer's Closing Certificate..............................3 1.7 Buyer's Financing Statement(s)...........................3 1.8 Buyer Indemnified Persons................................3 1.9 Buyer's Officer Certificate..............................3 1.10 Closing..................................................3 1.11 Closing Date.............................................3 1.12 Code.....................................................4 1.13 Commercial Operation Date................................4 1.14 Confidentiality Agreement................................4 1.15 Construction Agreement...................................4 1.16 Contracts................................................4 1.17 Cooperation Agreement....................................4 1.18 Copyrights...............................................4 1.19 Covol Process............................................4 1.20 Effective Time...........................................4 1.21 Environmental Claim......................................5 1.22 Environmental Condition..................................5 1.23 Environmental Laws.......................................5 1.24 Excluded Assets..........................................5 1.25 Excluded Liabilities.....................................5 1.26 Facility.................................................6 1.27 Facility Site............................................6 1.28 Fixed Assets.............................................6 1.29 [Intentionally Omitted].................................6 1.30 Hazardous Substances.....................................6 1.31 Initial Consideration....................................6 1.32 Intellectual Property....................................6 1.33 IRS......................................................6 1.34 Knowledge of Buyer.......................................7 1.35 Knowledge of Sellers.....................................7 ii 1.36 Law......................................................7 1.37 Lender...................................................7 1.38 Lender Release...........................................7 1.39 License and Binder Purchase Agreement....................7 1.40 Licenses.................................................7 1.41 Lien.....................................................7 1.42 Losses...................................................8 1.43 Material Adverse Effect..................................8 1.44 New Facility Site........................................8 1.45 Opinions of Sellers' Counsel.............................8 1.46 Party....................................................8 1.47 Patents..................................................8 1.48 Payoff Amount............................................8 1.49 Permitted Liens..........................................9 1.50 Person...................................................9 1.51 Pocahontas' Account......................................9 1.52 Product..................................................9 1.53 Purchase Consideration...................................9 1.54 Real Property Owners.....................................9 1.55 Release..................................................9 1.56 Relocation Period........................................9 1.57 Remaining Initial Consideration.........................10 1.58 Required Consents.......................................10 1.59 Section 29 Product......................................10 1.60 Sellers' Affidavits.....................................10 1.61 Sellers' Closing Certificates...........................10 1.62 Sellers' Indemnified Persons............................10 1.63 Sellers' Intellectual Property..........................11 1.64 Sellers' Officer Certificates...........................11 1.65 Solvent.................................................11 1.66 Subsequent Consideration................................11 1.67 Trademarks..............................................11 1.68 Trade Secrets...........................................11 1.69 Transaction Documents...................................12 1.70 Transfer Taxes..........................................12 1.71 UCC.....................................................12 1.72 UCC Termination Statement(s)............................12 1.73 Use and Non-Disturbance Agreement.......................12 ARTICLE II PURCHASE AND SALE..............................................12 2.1 Purchase and Sale; Assignment...........................12 2.2 Payment of the Purchase Consideration...................13 iii 2.3 Deliveries at Closing...................................13 2.4 Allocation of Purchase Price............................15 2.5 No Assumption of Liabilities............................15 2.6 Prorations..............................................16 2.7 Sales Tax Exemption.....................................16 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS ....................16 3.1 Corporate Standing......................................16 3.2 Authorizations; Binding Agreements......................17 3.3 No Consents.............................................18 3.4 Taxes...................................................18 3.5 Brokers or Finders Fees.................................18 3.6 No Imposition of Liens..................................19 3.7 Title to Assets; Good Title Conveyed....................19 3.8 Condition of Assets.....................................19 3.9 Litigation..............................................20 3.10 Compliance with Laws....................................20 3.11 Status of Contracts.....................................20 3.12 Consents................................................21 3.13 Books and Records.......................................21 3.14 Environmental Matters...................................21 3.15 Liabilities.............................................22 3.16 Agreements with Related Persons.........................22 3.17 Adequacy of the Purchased Assets........................22 3.18 Section 29 Issues.......................................23 3.19 Intellectual Property...................................24 3.20 Product Liability.......................................24 3.21 Ownership...............................................24 3.22 Full Disclosure.........................................25 3.23 Solvency................................................25 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER........................25 4.1 Organization and Standing...............................25 4.2 Authorizations; Binding Agreements......................26 4.3 Brokers or Finders Fees.................................27 4.4 No Actions Affecting Enforcement of the Agreement and the other Transaction Documents...........27 4.5 Consents................................................27 ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS...........................28 5.1 Subsequent Actions......................................28 5.2 Public Announcements....................................29 iv 5.3 Confidentiality.........................................29 5.4 Taxes...................................................29 5.5 Use of and Access to Facility...........................30 5.6 Damage to Facility......................................31 ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER................................................31 6.1 No Termination; Compliance with Agreement...............32 6.2 Actions.................................................32 6.3 Instruments Satisfactory................................32 6.4 No Litigation...........................................32 6.5 Representations and Warranties..........................32 6.6 Material Adverse Change.................................33 6.7 Board Approval..........................................33 6.8 Financing Statements....................................33 6.9 Consents................................................34 ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS..............................................34 7.1 No Termination; Compliance with Agreement...............34 7.2 Actions.................................................34 7.3 Instruments Satisfactory................................35 7.4 No Litigation...........................................35 7.5 Representations and Warranties..........................35 7.6 Consents................................................35 ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS.........................36 8.1 Sellers' Indemnity......................................36 8.2 Buyer's Indemnity.......................................38 8.3 Bulk Sales Compliance. .................................40 8.4 Additional Instruments..................................40 8.5 Access to Books, Records and Employees..................40 ARTICLE IX TERMINATION....................................................41 9.1 Termination.............................................41 9.2 Rights on Termination; Waiver...........................42 ARTICLE X MISCELLANEOUS...................................................42 10.1 Entire Agreement; Amendment.............................42 10.2 Expenses................................................43 10.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial....................................43 v 10.4 Assignment..............................................44 10.5 Notices.................................................45 10.6 Counterparts; Headings..................................46 10.7 Interpretation..........................................46 10.8 Severability............................................47 10.9 No Reliance.............................................48 10.10 Parties in Interest.....................................48 10.11 Specific Performance. .................................48 10.12 Time of Essence.........................................48 10.13 Representations, Warranties and Covenants...............48 10.14 Election of Remedies....................................49 10.15 ** Undertaking..........................................49 vi EXHIBITS AND SCHEDULES SCHEDULE 1.16 Contracts SCHEDULE 1.27 Facility Site SCHEDULE 1.28 Fixed Assets SCHEDULE 1.49 Permitted Liens SCHEDULE 3.5 Brokers or Finders Fees of Sellers SCHEDULE 3.7 Exceptions to Title SCHEDULE 3.8 Condition of Assets SCHEDULE 3.9 Sellers' Litigation SCHEDULE 3.11 Default under the Contracts SCHEDULE 3.12 Sellers' Required Consents SCHEDULE 3.14 Environmental Matters SCHEDULE 3.16 Agreements With Related Persons SCHEDULE 4.3 Brokers or Finders Fees of Buyer SCHEDULE 4.4 Buyer's Litigation SCHEDULE 4.5 Buyer's Required Consents EXHIBIT A [Intentionally Omitted] EXHIBIT B Bill of Sale EXHIBIT C [Intentionally Omitted] EXHIBIT D Officer's Certificate of Buyer EXHIBIT E Lender Release EXHIBIT F License and Binder Purchase Agreement EXHIBIT G-1 Opinion of Pillsbury Madison & Sutro, LLP, Counsel to Sellers EXHIBIT G-2 Opinion of Harlan Hatfield, General Counsel of Sellers EXHIBIT G-3 Opinion of Jackson & Kelly, Counsel to Sellers EXHIBIT H [Intentionally Omitted] EXHIBIT I-1 Officer's Certificate of Covol EXHIBIT I-2 Officer's Certificate of Synfuel EXHIBIT I-3 Officer's Certificate of Pocahontas EXHIBIT J Use and Non-Disturbance Agreement vii ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT, made as of January 13, 2000, by and between **, a Kentucky corporation ("Buyer"); and, for the sole and limited purpose of Section 10.15, **, a Kentucky corporation ("**"), and POCAHONTAS SYNFUEL, L.L.C., a Utah limited liability company ("Pocahontas"); COVOL TECHNOLOGIES, INC., a Delaware corporation ("Covol"); and SYNFUEL INVESTMENTS, INC., a Utah corporation ("Synfuel" and together with Pocahontas and Covol, "Sellers"). RECITALS WHEREAS, Covol constructed a solid synthetic fuel manufacturing facility located near North Fork, McDowell County, West Virginia; WHEREAS, pursuant to a Bill of Sale dated September 29, 1999, Covol sold a one percent (1%) undivided interest in such solid synthetic fuel manufacturing facility to Synfuel in exchange for three hundred (300) shares of capital stock of Synfuel, which constitutes one hundred percent (100%) of the outstanding capital stock of Synfuel; WHEREAS, pursuant to a Bill of Sale dated September 29, 1999, Synfuel sold its one percent (1%) interest and Covol sold its remaining ninety-nine percent (99%) interest in such solid synthetic fuel manufacturing facility to Pocahontas in exchange for a one percent (1%) member interest and a ninety-nine percent (99%) member interest, respectively, in Pocahontas; WHEREAS, Pocahontas continues to own the fixed assets that comprise such solid synthetic fuel manufacturing facility; WHEREAS, Sellers own certain books, records and information relating to the engineering, design, construction, operation and maintenance of such solid synthetic fuel manufacturing facility and the substantiation of the eligibility of solid synthetic fuel produced at such solid synthetic fuel manufacturing facility to qualify for credit under Section 29(a) of the Code; 1 WHEREAS, Pocahontas and, to the extent each of Covol and Synfuel have retained any right, title or interest in any of such fixed assets and books, records and information, Covol and Synfuel desire to sell, convey, transfer, deliver and assign such fixed assets and books, records and information to Buyer, and Buyer desires to purchase and accept such fixed assets and books, records and information from each of Sellers, as applicable, all on the terms and subject to the conditions set forth herein; and WHEREAS, Covol and Synfuel, as the sole owners of Pocahontas, will derive substantial benefit from the sale of such fixed assets and books, records and information to Buyer and the other transactions contemplated by this Agreement. NOW, THEREFORE, in consideration of the Recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by the Parties that: ARTICLE I DEFINITIONS Unless the context otherwise requires, when used in this Agreement, the following capitalized terms shall have the meanings specified: 1.1 Affiliate shall mean, as to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person. 1.2 Agreement shall mean this Asset Purchase Agreement, together with the Exhibits and Schedules attached hereto, as the same may be amended from time to time in accordance with the terms hereof. 1.3 As-Built Drawings shall mean the "as-built" construction drawings provided to Covol by, or on behalf of, TIC The Industrial Company pursuant to the Construction Agreement, and all other design and construction drawings owned or in the possession of Sellers which relate to the completed Facility. 2 1.4 Bill of Sale shall mean the Bill of Sale to be entered into by each of Sellers in favor of Buyer relating to the Facility, in the form of Exhibit B attached hereto. 1.5 Books and Records shall mean original or true and complete copies of all books, records, files, data, drawings (including, but not limited to, the As-Built Drawings), operation and parts manuals and information of Sellers relating to the engineering, design, construction, operation and maintenance of the Facility and the substantiation of the eligibility of Product produced at the Facility to qualify for credit under Section 29(a) of the Code. 1.6 Buyer's Closing Certificate shall mean the certificate of an officer of Buyer, certifying as to the satisfaction of the conditions set forth in Article VII. 1.7 Buyer's Financing Statement(s) shall mean all filings (including, but not limited to, UCC financing statements), registrations and recordings which Buyer may, in its sole discretion, require to be filed by or on behalf of Buyer with respect to its right, title and/or interest in the Facility. 1.8 Buyer Indemnified Persons shall have the meaning set forth in Section 8.1(a). 1.9 Buyer's Officer Certificate shall mean a certificate of the corporate secretary (or equivalent officer) of Buyer, in the form of Exhibit D attached hereto, certifying as to the matters set forth in Exhibit D attached hereto. 1.10 Closing shall mean the meeting of the Parties to be held at 11:00 a.m., local time, on the Closing Date, at the offices of Skadden, Arps, Slate, Meagher & Flom, 1440 New York Avenue, N.W., Washington, D.C., or such other time and place as the Parties may mutually agree in writing. 1.11 Closing Date shall mean January 14, 2000 or, if later, five (5) business days following the date on which all conditions set forth in Articles VI and VII have been satisfied or waived by the applicable Parties, as the case may be, or such other date as the Parties may mutually agree in writing. 3 1.12 Code shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder. 1.13 Commercial Operation Date shall mean the first date after the Closing Date on which the Facility has produced at least 14,000 tons of commercially saleable Section 29 Product at the New Facility Site over a consecutive 14-day period beginning after the Closing Date. 1.14 Confidentiality Agreement shall mean the Letter Agreement, dated March 24, 1999, between Covol and **. 1.15 Construction Agreement shall mean the Construction Agreement, dated December 26, 1996, Contract No. TIC002WV, between Covol and TIC The Industrial Company, as amended. 1.16 Contracts shall mean all of the agreements entered into by or on behalf of Sellers relating to the engineering, design, construction, operation and/or maintenance of the Facility, all as listed on Schedule 1.16 attached hereto. 1.17 Cooperation Agreement shall mean that certain Cooperation Agreement to be entered into between Covol and the Real Property Owners with respect to the payment of certain monies, the release of certain liens with respect to the Facility Site and the execution and delivery by the Real Property Owners of the Use and Non-Disturbance Agreement. 1.18 Copyrights shall mean U.S. and foreign registered and unregistered copyrights (including, but not limited to, those in computer software and databases), rights of publicity and all registrations and applications to register the same. 1.19 Covol Process shall mean Covol's proprietary synthetic coal fuel production process for manufacturing solid synthetic fuel which is defined as "Coal Briquetting Technology" in and is the subject of the License and Binder Purchase Agreement. 1.20 Effective Time shall mean 12:01 a.m., Eastern Time, on the Closing Date. 4 1.21 Environmental Claim shall mean any claim, action, cause of action, investigation or notice (written or oral) by any Person alleging actual or potential liability for investigatory, cleanup or governmental response costs, or natural resources or property damages, or personal injuries, attorney's fees or penalties relating to (i) the presence, or Release into the environment, of any Hazardous Substance at the Facility Site, now or in the past, or (ii) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. 1.22 Environmental Condition shall mean the presence or Release to the environment of Hazardous Substances, including, but not limited to, any migration of Hazardous Substances through air, soil or groundwater at, to or from the Facility Site regardless of when such presence or Release occurred or is discovered. 1.23 Environmental Laws shall mean all laws, statutes, regulations, ordinances, administrative or judicial orders or decrees, or the common law, in each case, as amended from time to time, relating to (a) pollution or protection of the environment, natural resources or human health and safety, including Laws relating to Releases or threatened Releases of Hazardous Substances or otherwise relating to the manufacture, formulation, generation, processing, distribution, use, treatment, storage, Release, transport, investigation, remediation, abatement, cleanup or handling of Hazardous Substances, (b) record keeping, notification, disclosure and reporting requirements respecting Hazardous Substances, and (c) the management or use of natural resources. 1.24 Excluded Assets shall mean all real and personal property of any nature and kind located at the Facility Site and not listed on Schedule 1.27 attached hereto, including, but not limited to, any foundations (concrete or otherwise), underground pilings, footings and piers, concrete flooring, containment structures, buried pipes or other structures, feedstock, work in progress, finished goods, chemical binder and any other inventory and accounts. 1.25 Excluded Liabilities shall have the meaning set forth in Section 2.5. 1.26 Facility shall mean, collectively, the Books and Records and the Fixed Assets. 5 1.27 Facility Site shall mean that certain parcel of land located in McDowell County near North Fork, West Virginia, where the Fixed Assets are located, as more specifically described in Schedule 1.27 attached hereto. 1.28 Fixed Assets shall mean all tangible personal property which constitute part of the solid synthetic fuel manufacturing facility located at the Facility Site as of the Effective Time, including, but not limited to, all fixed assets, chattels, machinery, equipment, computer hardware, fixtures, furniture, furnishings, handling equipment, implements, parts, tools and accessories of all kinds which are listed on Schedule 1.28 attached hereto; provided, however, that "Fixed Assets" shall not include the Excluded Assets. 1.29 [Intentionally Omitted] 1.30 Hazardous Substances shall mean (a) any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid which may contain polychlorinated biphenyls, (b) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "hazardous constituents," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants," "pollutants," "toxic pollutants" or words of similar meaning and regulatory effect under any applicable Environmental Law and (c) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law. 1.31 Initial Consideration shall have the meaning set forth in Section 2.2. 1.32 Intellectual Property shall mean all Trademarks, Patents, Copyrights, Trade Secrets and Licenses. 1.33 IRS shall mean the Internal Revenue Service. 1.34 Knowledge of Buyer shall mean the actual knowledge, after due inquiry, of Buyer. 6 1.35 Knowledge of Sellers shall mean the actual knowledge, after due inquiry, of Sellers. 1.36 Law shall mean any federal, state, local or other law or governmental requirement of any kind, and the rules, regulations and orders promulgated thereunder. 1.37 Lender shall mean AJG Financial Services, Inc., a Delaware corporation. 1.38 Lender Release shall mean the Acknowledgment and Release in favor of Covol and Pocahontas to be entered into by Lender, in the form of Exhibit E attached hereto. 1.39 License and Binder Purchase Agreement shall mean that certain License and Binder Purchase Agreement to be entered into between Buyer and Covol, in the form of Exhibit F attached hereto. 1.40 Licenses shall mean all licenses and agreements pursuant to which Sellers have acquired rights in or to any Trademarks, Patents or Copyrights used by or for the benefit of the operation of the Facility, or licenses and agreements pursuant to which Sellers have licensed or transferred the right to use any such Trademarks, Patents or Copyrights which constitutes a part of the Facility. 1.41 Lien shall mean any interest in property of any nature (including, but not limited to, real and personal property and tangible and intangible property) securing an obligation, whether such interest is based on common law, statute or contract, and including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership, any security interest or lien arising from a mortgage, claims, encumbrance, pledge, charge, easement, servitude, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall also include reservations, exceptions, covenants, conditions, restrictions, leases, subleases, licenses, options, rights of first refusal, occupancy agreements, pledges, equities, charges, assessments, covenants, reservations, defects in title, encroachments and other burdens, and other title exceptions and encumbrances affecting property of any nature, whether accrued or unaccrued, or absolute or contingent. 7 1.42 Losses shall have the meaning set forth in Section 8.1(a). 1.43 Material Adverse Effect shall mean a material adverse effect on (a) the operation and maintenance of the Facility at the Facility Site or the New Facility Site, (b) Buyer's good, valid and marketable title to all or any portion of the Facility, free and clear of all Liens, and (c) the ability of Buyer to produce commercially saleable Section 29 Product from the Facility at the New Facility Site. 1.44 New Facility Site shall mean that certain parcel of land located in ** County, Kentucky, where the Facility is to be relocated. 1.45 Opinions of Sellers' Counsel shall mean the opinions of: (a) Pillsbury Madison & Sutro, LLP, counsel to Sellers, in the form of Exhibit G-1; (b) Harlan Hatfield, General Counsel of Sellers, in the form of Exhibit G-2 and (c) Jackson & Kelly, counsel to Sellers, in the form of Exhibit G-3 . 1.46 Party shall mean each of, and Parties shall mean all of, Buyer, ** (for the sole and limited purpose of Section 10.15), Pocahontas, Covol and Synfuel. 1.47 Patents shall mean issued U.S. and foreign patents and pending patent applications, patent disclosures and any and all divisions, continuations, continuations-in-part, reissues, re-examinations and extension thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention and like statutory rights. 1.48 Payoff Amount shall mean an amount equal to the total outstanding principal, accrued but unpaid interest and other costs and expenses, if any, owed by Covol and/or Pocahontas to Lender as of the Closing Date in complete satisfaction of the then outstanding debt with Lender pursuant to that certain Loan and Security Agreement, dated February 26, 1998, between Covol and Lender and the Secured Draw Down Promissory Note, dated February 26, 1998, by Covol in favor of Lender, which amount Covol shall certify in Sellers' Closing Certificates. 1.49 Permitted Liens shall mean (a) Liens (but only for amounts not yet due and payable) securing taxes, assessments or governmental charges or levies, and (b) Liens which are (i) not in excess of $5,000.00 or of an immaterial nature 8 which do not have a Material Adverse Effect and (ii) disclosed on Schedule 1.49 attached hereto. 1.50 Person shall mean a natural person, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, administrative agency or commission or other governmental or other regulatory authority or agency or other entity or organization. 1.51 Pocahontas' Account shall mean such account in Pocahontas' name as shall be set forth in Sellers' Closing Certificates. 1.52 Product shall mean the solid synthetic fuel produced and sold at the Facility using and pursuant to the Covol Process. 1.53 Purchase Consideration shall have the meaning given to such term in Section 2.2. 1.54 Real Property Owners shall mean Black Diamond Enterprises, Inc., a Virginia corporation, Bygoma Energy, L.L.C., a West Virginia limited liability company, Norman Mullins, an individual past the age of majority in, and resident of, Virginia, and Ralph Woods, an individual past the age of majority in, and resident of Virginia. 1.55 Release shall mean any release, spill, leak, discharge, disposal of, pumping, pouring, emitting, emptying, injecting, leaching, dumping or allowing to escape into or through the environment. 1.56 Relocation Period shall mean the Use Period (as defined in the Use and Non-Disturbance Agreement) and any Extended Use Period(s) (as defined in the Use and Non-Disturbance Agreement). 1.57 Remaining Initial Consideration shall mean an amount equal to the greater of (i) the amount of the difference between the Initial Consideration and the Payoff Amount and (ii) zero (0). 1.58 Required Consents shall mean (a) in the case of Sellers, all consents, approvals and waivers of any Persons that are required in connection with the sale, conveyance, transfer, delivery and assignment of the Facility by Sellers to 9 Buyer and the execution and delivery by Sellers of this Agreement and the Transaction Documents and the performance of their obligations hereunder and thereunder and (b) in the case of Buyer, all consents, approvals and waivers of any Persons that are required in connection with the purchase and acceptance of the Facility by Buyer and the execution and delivery by Buyer of this Agreement and the Transaction Documents and the performance of its obligations hereunder and thereunder, in each case, including, but not limited to, (i) any consents, approvals and waivers from parties to loan agreements, contracts, leases or other agreements and from governmental authorities, whether federal, state or local and (ii) any consents, approvals or resolutions of directors or shareholders of any Party or any other Person. 1.59 Section 29 Product shall mean Product which constitutes a "qualified fuel" pursuant to the terms of Section 29(c)(1)(C) of the Code and with respect to which Section 29 of the Code is applicable pursuant to the terms of Sections 29(f) and 29(g) of the Code. 1.60 Sellers' Affidavits shall mean such affidavits of directors, officers and/or employees of Sellers as Buyer may request (i) to substantiate Sellers' representations and warranties in Section 3.18 and (ii) as to such other matters as Buyer may reasonably request. 1.61 Sellers' Closing Certificates shall mean the certificate of an officer of each Seller, certifying as to the satisfaction of the conditions set forth in Article VI and to such other matters as are expressly provided for herein or which Buyer may request. 1.62 Sellers' Indemnified Persons shall have the meaning set forth in Section 8.2(a). 1.63 Sellers' Intellectual Property shall mean all Intellectual Property that is used in connection with the Facility. 1.64 Sellers' Officer Certificates shall mean certificates of the corporate secretary (or equivalent officer) of each Seller, in the form of Exhibits I-1, I-2 and I-3 attached hereto, certifying as to the matters set forth in Exhibits I-1, I-2 and I-3 attached hereto and such other matters as Buyer may reasonably request. 10 1.65 Solvent shall mean as to each Seller, (a) the assets of such Seller, both at a fair valuation and at present fair salable value, exceed its debts, (b) the present fair salable value of such Seller's assets exceeds the amount that will be required to pay its profable liability on its existing debts as they become absolute and matured, (c) such Seller is generally paying its debts as they become due, (d) such Seller will have sufficient capital with which to conduct its business as presently conducted and as proposed to be conducted and (e) such Seller has not incurred debts, and does not intend to incur debts, beyond its ability to pay such debts as they mature. For purposes of this definition, (i) "debt" means any liability on a claim, and (ii) "claim" means (x) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured or (y) a right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured; provided, that with respect to any contingent debts, such debts shall be computed at the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured debt. 1.66 Subsequent Consideration shall have the meaning set forth in Section 2.2. 1.67 Trademarks shall mean U.S. and foreign registered and unregistered trademarks, trade dress, service marks, logos, trade names, corporate names and all registrations and applications to register the same. 1.68 Trade Secrets shall mean all categories of trade secrets as defined in the Uniform Trade Secrets Act, including business information. 1.69 Transaction Documents shall mean this Agreement, the Bill of Sale, the Use and Non-Disturbance Agreement, the Cooperation Agreement, the Lender Release, the UCC Termination Statement(s) and those agreements and instruments to be executed and delivered as provided in Section 2.3. 1.70 Transfer Taxes shall mean any property transfer or gains tax, sales tax, conveyance fee, use tax, stamp tax, stock transfer tax or other similar tax, including any related penalties, interest and additions to tax. 11 1.71 UCC shall mean the Uniform Commercial Code of the State of New York. 1.72 UCC Termination Statement(s) shall mean those filings (including, but not limited to, UCC termination statements), registrations and recordings which Buyer may, in its sole discretion, require to terminate any filings (including, but not limited to, UCC financing statements), registrations or recordings with respect to the Facility, including, but not limited to, UCC termination statements terminating all of Lender's UCC financing statements and other filings with respect to the Facility. 1.73 Use and Non-Disturbance Agreement shall mean the Use and Non-Disturbance Agreement to be entered into between Buyer and each of the Real Property Owners, in the form of Exhibit J attached hereto. ARTICLE II PURCHASE AND SALE 2.1 Purchase and Sale; Assignment. Buyer and Sellers hereby agree that at the Closing, and upon all of the terms and subject to all of the conditions of this Agreement: (a) Pocahontas shall sell, convey, transfer, deliver and assign to Buyer, and Buyer shall purchase and accept from Pocahontas, the Fixed Assets and the Books and Records, free and clear of all Liens; and (b) Covol and Synfuel shall, to the extent to which they have any right, title or interest in, to and under the Fixed Assets and the Books and Records, convey, transfer, deliver and assign to Buyer, and Buyer shall purchase and accept from Covol and Synfuel, the Fixed Assets and the Books and Records, free and clear of all Liens. 2.2 Payment of the Purchase Consideration. In consideration of Sellers' sale, conveyance, transfer, delivery and assignment of the Facility to Buyer on the Closing Date in accordance with this Agreement, Buyer shall: 12 (a) on the Closing Date, make a cash payment to Pocahontas in the amount of ** ($**) (the "Initial Consideration") payable by wire transfer in readily available funds as follows: (i) the Payoff Amount to Harris Trust & Savings Bank, ABA # 071 000 288, Account # 160-4586, AJG Financial Services, Inc., for the account of Lender and (ii) the Remaining Initial Consideration to Pocahontas' Account; and (b) on the Commercial Operation Date, make a cash payment to Pocahontas in the amount of ** Dollars ($**) (the "Subsequent Consideration" and together with the payments described in clauses (a)(i), (a)(ii) of this Section 2.2, the "Purchase Consideration") payable by wire transfer in readily available funds to Pocahontas' Account; provided, however, that Buyer shall have no obligation to make payment to Sellers of the Subsequent Consideration in the event that the Commercial Operation Date is not achieved. 2.3 Deliveries at Closing. (a) By Sellers to Buyer. At the Closing, Sellers shall deliver, or cause to be delivered, to Buyer the following documents, each fully executed (other than by Buyer) and dated as of the Closing Date, and otherwise in form and substance satisfactory to Buyer: (i) the Bill of Sale; (ii) the License and Binder Purchase Agreement; (iii) the Use and Non-Disturbance Agreement and the Cooperation Agreement; (iv) the agreements listed on Schedule 3.5 attached hereto; (v) the Lender Release; (vi) the UCC Termination Statement(s); (vii) the Buyer Financing Statement(s); 13 (viii) the Sellers' Required Consents specified on Schedule 3.12 attached hereto; (ix) the Opinions of Sellers' Counsels; (x) the Sellers' Affidavits; (xi) the Sellers' Closing Certificates; (xii) the Sellers' Officers Certificates; and (xii) all such other agreements, deeds, endorsements, assignments and other instruments as Buyer may, in its sole discretion, request to vest in Buyer good, valid and marketable title to the Facility, free and clear of all Liens, and to consummate the transactions contemplated herein. (b) By Buyer to Sellers. At the Closing, Buyer shall deliver, or cause to be delivered, to Sellers the following documents, each executed by Buyer and dated as of the Closing Date by Buyer and otherwise in form and substance satisfactory to Sellers: (i) the License and Binder Purchase Agreement; (ii) the Use and Non-Disturbance Agreement; (iii) the Buyer's Required Consents specified on Schedule 4.5 attached hereto; (iv) the agreements listed on Schedule 4.3 attached hereto; (v) the Buyer's Closing Certificate; and (vi) the Buyer's Officers Certificates. 14 2.4 Allocation of Purchase Price. On the Closing Date, or at a later time agreed to by the Parties, not to exceed thirty (30) days following the Closing Date, the Purchase Consideration shall be allocated among the Fixed Assets, in accordance with the allocation to be agreed to by the Parties and set forth in writing. Such allocation shall be intended to comply with the requirements of Section 1060 of the Code, and no Party shall take any position inconsistent with such allocation for income tax purposes, except that Buyer's cost for the Fixed Assets may differ from the amount so allocated to the extent necessary to reflect Buyer's capitalized acquisition costs other than the Purchase Consideration. 2.5 No Assumption of Liabilities. Notwithstanding anything to the contrary in this Agreement or any of the Transaction Documents, Buyer does not and will not assume any liability or obligation of Sellers of whatever nature or kind, whether absolute or contingent, accrued or unaccrued, asserted or unasserted, known or unknown, or otherwise, including, but not limited to, (i) any liability or obligation of Sellers arising out of, in respect of, or relating to the ownership or use of the Facility or performance by Sellers under any of the Contracts or (ii) any liabilities or obligations of Sellers arising out of the Environmental Conditions at, on, under or related to the Facility Site or arising in connection with or under Environmental Law in connection with the operation of the Facility (collectively, the "Excluded Liabilities"). 2.6 Prorations. As of the Closing Date, any utility charges, personal property taxes, assessments or other governmental charges or levies relating to the Facility shall be prorated as of the Effective Time. Such prorations may be estimated as necessary and final settlement shall be made within ninety (90) days of the Closing Date. 2.7 Sales Tax Exemption. All Transfer Taxes incurred in connection with this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby 15 shall be borne by Sellers. Sellers, at their expense, shall prepare and file, to the extent required by applicable Law, all necessary tax returns and other documentation with respect to all such Transfer Taxes. To the extent applicable, at the Closing, Buyer shall deliver to Sellers appropriate sales tax exemption certificates relating to the transfer of the Facility. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS Each Seller represents and warrants to Buyer that all of the statements by such Seller and each of the other Sellers contained in this Article III are true and complete as of the date of this Agreement (or, if made as of a specified date, as of such date), and will be true and complete as of the Closing Date as though made on the Closing Date: 3.1 Corporate Standing. (a) Each Seller is a corporation or limited liability company duly organized and validly existing and in good standing under the laws of its state of organization or incorporation. (b) Each Seller has the power to own its property and to execute, deliver and perform this Agreement and each of the Transaction Documents to which it is a party, and to carry on its business as now being conducted. (c) Each Seller is duly qualified to do business in and is in good standing as a foreign corporation or limited liability company, authorized to do business under the laws of the States of Utah and West Virginia. 3.2 Authorizations; Binding Agreements. (a) Each Seller has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to consumate the transactions contemplated herein and therein. (b) The execution, delivery and performance by each Seller of this Agreement and the other Transaction Documents to which it is a party and each conveyance, assignment, agreement and other document herein and therein 16 contemplated to be executed by each Seller, has been duly authorized by all necessary corporate and company action. (c) No vote of, or consent by, the holders of any class or series of stock or indebtedness having general voting rights and debt convertible into securities having such rights issued by each Seller is necessary to authorize the execution and delivery by it of this Agreement or the other Transaction Documents to which it is a party or the consummation by it of the transactions contemplated hereby and thereby. (d) This Agreement and the other Transaction Documents and the conveyances, assignments, agreements, and other documents herein contemplated to be executed, delivered and performed by each Seller is, or will be upon execution, legal, valid and binding obligations of each such Seller, duly enforceable against such Seller in accordance with its terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity). (e) This Agreement and the other Transaction Documents and the conveyances, assignments, agreements and other documents herein and therein contemplated to be executed, delivered and performed by each Seller (i) does not and will not result in any violation of, conflict with or default under the terms of any of such Seller's organizational documents (nor, to the Knowledge of Sellers, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default), and (ii) subject only to Sellers' Required Consents, does not and will not result in any violation of, conflict with or default under any Contract, any collective bargaining agreement, any permit, or any other material lease, venture, indenture, mortgage, agreement, contract, judgment, order or other obligation or restriction to which such Seller or the Facility may be bound or encumbered (nor, to the Knowledge of Sellers, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default). 3.3 No Consents. Subject only to Sellers' Required Consents, each Seller has obtained all permits, licenses, franchises, authorizations, variances, exemptions, concessions, 17 leases, instruments, orders, consents or approvals of governmental entities and third parties necessary to construct, maintain and operate the Facility at the Facility Site and to execute, deliver and perform this Agreement and the other Transaction Documents to which it is a party. 3.4 Taxes. All tax returns and reports relating to the Facility and the conduct of the construction, maintenance and operation of the Facility required by law (including all federal, state and local property tax, severance and franchise tax laws) to be filed by Sellers prior to the Closing have been timely filed or will be caused to be timely filed, including those tax returns relating to periods prior to Closing that are not yet due. All taxes, assessments, fees, interest, penalties and other governmental charges relating to the Facility or the conduct of the construction, maintenance and operation of the Facility prior to Closing have been paid when due and payable or payment has been provided for. 3.5 Brokers or Finders Fees. Except as set forth in Schedule 3.5 attached hereto, there are no obligation or liability, contingent or otherwise, for broker's or finder's fees created by Sellers with respect to the matters provided for in this Agreement and the other Transaction Documents. No obligation or liability for broker's or finder's fees created by Sellers with respect to the matters provided for in this Agreement and the other Transaction Documents shall be imposed upon Buyer or the Facility. 3.6 No Imposition of Liens. The execution, delivery and performance of this Agreement and the other Transaction Documents by each Seller shall not result in the imposition of any Lien, other than Permitted Liens, upon the Facility. 3.7 Title to Assets; Good Title Conveyed. Except as set forth on Schedule 3.7 attached hereto, Sellers own good, valid and marketable title to all of the Facility, free and clear of any and all Liens, except for Permitted Liens. The Bill of Sale and the deeds, endorsements, assignments and other instruments to be executed and delivered by Sellers to Buyer 18 at the Closing will be valid and binding obligations of Sellers, enforceable in accordance with their respective terms, and will effectively vest in Buyer good, valid and marketable title to all of the Facility, free and clear of any and all Liens, except for Permitted Liens. 3.8 Condition of Assets. Except as set forth on Schedule 3.8 attached hereto, the Facility is in good operating condition and repair and is adequate and substantially fit for the production and sale of Section 29 Product at a rate of at least 360,000 tons per year, and the Facility has been constructed in conformance with that degree of skill and judgment normally exercised by recognized engineering and construction firms of similar size and experience to that of the contractors under the Contracts, and the assets comprising the Facility conform to the standards of material and workmanship prevailing in applicable industries, are free from material defects in design, material and workmanship, are of good quality and are not in need of maintenance or repairs, except for ordinary, routine maintenance and repairs which are not material in nature or cost. 3.9 Litigation. Except as disclosed on Schedule 3.9 attached hereto, there are no actions, suits, inquiries, proceedings or investigations by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the Knowledge of Sellers, threatened against or involving Sellers or the Facility, or which questions or challenges the validity of this Agreement or any of the Transaction Documents or any action taken or to be taken by Sellers pursuant to this Agreement or any of the Transaction Documents in connection with the transactions contemplated herein or therein, and to the Knowledge of Sellers, there is no valid basis for any such action, suit, inquiry, proceeding or investigation. There are no outstanding or unsatisfied judgments, orders or decrees against Sellers or the Facility. 19 3.10 Compliance with Laws. Each Seller has complied in a timely manner and in all material respects with all orders, writs, injunctions, decrees, judgments, rulings, laws, rules and regulations and ordinances of all federal, state and local governments and agencies thereof that affect the business, properties or assets (including, but not limited to, the Facility) of such Seller, and no notice, charge, claim, action or assertion has been received by any Seller or has been filed, commenced or, to the Knowledge of Sellers, threatened against any Seller or the Facility alleging any violation of any of the foregoing. 3.11 Status of Contracts. Schedule 1.16 attached hereto is a true, correct and complete list of all agreements entered into by or on behalf of Sellers relating to the engineering, design, construction, operation and/or maintenance of the Facility which commit one or more Sellers to spend more than $15,000.00. Except as described in Schedule 3.11 attached hereto, each of the Contracts is valid, binding and enforceable against Sellers in accordance with its terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity), and there is no violation of, conflict with or default under the Contracts, the consequence of which could reasonably be expected to have a Material Adverse Effect. Sellers have not received any notice from any party to any Contract that such party intends to terminate, cancel or refuse to renew the same or that such party intends to offset any amount due thereunder or assert any defense to the enforceability thereof. 3.12 Consents. Schedule 3.12 attached hereto is a true, correct and complete list of all of Sellers' Required Consents. 3.13 Books and Records. The Books and Records shall be complete and correct in all material respects. 20 3.14 Environmental Matters. Except as set forth on Schedule 3.14 attached hereto: (a) Sellers have not operated the Facility or conducted business or other activities at or from the Facility, in connection with the construction of the Facility or otherwise, in a manner that constituted or constitutes a violation of any applicable Environmental Law. (b) Sellers have heretofore delivered to Buyer true and complete copies of all environmental studies made in the last five (5) years relating to the Facility and the Facility Site. (c) There is no civil, criminal or administrative action, suit, demand, claim, hearing, notice of violation, investigation, proceeding, notice or demand letter, or request for information, existing or pending, or to the Knowledge of Sellers, threatened, relating to the Facility or the Facility Site, relating in any way to the Environmental Laws or Hazardous Substances, including, but not limited to, claims, notices or requests for information arising under the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq. or analogous state or local laws. (d) Sellers have not, and no other Person has, Released, discharged, or otherwise disposed of any Hazardous Substances on, beneath or adja cent to the Facility or the Facility Site, except for (i) Releases of Hazardous Substances subject to and in compliance with a permit or authorization pursuant to applicable Environmental Law or (ii) Releases, discharges or disposals that are not reasonably likely to result in a claim against Sellers or Buyer. (e) Sellers have not received any notice or order from any governmental agency or private or public entity advising them that they are responsi ble for or potentially responsible for investigation, remediation or cleanup of any Hazardous Substances at any location, including, but not limited to, the Facility or Facility Site, and have not entered into any agreements or consent decrees or order, or been the subject of unilateral orders, concerning such investigation, remediation or cleanup, nor are Sellers aware of any facts which might reasonably give rise to such notice, order, decree or agreement. 21 (f) All tanks on or under the Facility Site have been emptied, all lines on or under the Facility Site have been purged and all containments on or under the Facility Site have been emptied. 3.15 Liabilities. Except for liabilities underlying any Permitted Liens, Sellers have no liabilities which could reasonably be expected to have a Material Adverse Effect following the Closing, nor has any condition existed or any event occurred which could reasonably be expected to give rise to any such liability. 3.16 Agreements with Related Persons. There are no contracts, licenses, agreements or arrangements with any Affiliate of Sellers in connection with the construction, maintenance, ownership and operation of the Facility, other than as disclosed on Schedule 3.16 attached hereto. 3.17 Adequacy of the Purchased Assets. Except as described in Schedule 3.8 attached hereto, the Facility, together with (i) the technology and know-how being licensed to Buyer by Covol pursuant to the License and Binder Purchase Agreement, (ii) the chemical binder to be supplied to Buyer by Covol under the License and Binder Purchase Agreement, and (iii) relocation-specific rights and assets (including but not limited to relocation construction contracts, feedstock raw materials, real property rights, permits, etc.) which Buyer may arrange for but which are not the subject of this Agreement, constitute all of the assets and technology rights reasonably expected to be necessary for the production by Buyer of Section 29 Product at the New Facility Site at the rate of at least 360,000 tons per year. 3.18 Section 29 Issues. (a) The Facility satisfies the requirements of Sections 29(f)(1)(B) and (g)(1)(A) of the Code of having been placed "in service" prior to July 1, 1998 pursuant to a binding written contract in effect prior to January 1, 1997 and effective at all times thereafter through completion of construction. 22 (b) The Construction Agreement was, and the parties thereto treated the Construction Agreement as, a valid and binding agreement, enforceable in accordance with its terms at all times from December 26, 1996 until July 1, 1998, and neither party to the Construction Agreement provided or received any notice of default, breach, termination or intent to terminate prior to July 1, 1998. (c) The sale of the Product produced at the Facility using the Covol Process constitutes a "qualified fuel" for purposes of Section 29(c)(1)(C) of the Code and is eligible for the credit under Section 29(a) of the Code. (d) The sale and relocation of the Facility will not cause the Facility to fail to satisfy the placed in-service requirements of Section 29(f) and (g) of the Code or otherwise cause the sale of the Product produced at the Facility using the Covol Process not to be eligible for the credit under Section 29(a) of the Code. (e) There have not been any grants, tax-exempt financing or subsidized energy financing provided in connection with the Facility within the meaning of Section 29(b)(3) of the Code. (f) No rulings have been requested from the IRS with respect to the Facility or the Construction Agreement prior to the date of this Agreement. 3.19 Intellectual Property. Sellers own, or are licensed or otherwise possess legally enforceable rights to use Sellers' Intellectual Property, and the consummation of the transactions contemplated herein and in the Transaction Documents will not alter or impair such ability in any respect. There are no oppositions, cancellations, invalidity proceedings, interferences or re-examination proceedings presently pending with respect to Sellers' Intellectual Property. The conduct of the business of the Facility and Sellers' Intellectual Property does not infringe any Intellectual Property rights or any other proprietary right of any Person, and Sellers have not received any written notice from any other Person pertaining to or challenging the right of Sellers to use any of Sellers' Intellectual Property. Sellers have not made any claim of a violation or infringement by others of its rights to or in connection with Sellers' Intellectual Property which is still pending. 23 3.20 Product Liability. There are not presently pending, or, to the Knowledge of Sellers, threatened, and, to the Knowledge of Sellers, there is no basis for, any civil, criminal or administrative actions, suits, demands, claims, hearings, notices of violation, investigations, proceedings or demand letters relating to any alleged hazard or alleged defect in design, manufacture, materials or workmanship, including any failure to warn or alleged breach of express or implied warranty or representation, relating to any Product produced at the Facility. 3.21 Ownership. (a) Synfuel is a wholly owned subsidiary of Covol, with Covol owning all the outstanding capital stock of Synfuel, free and clear of all Liens and all material claims or charges of any kind, and all such outstanding capital stock of Synfuel is validly issued, fully paid and nonassessable, and there are no outstanding options, rights or agreements of any kind relating to the issuance, sale or transfer of any capital stock or other equity securities of Synfuel. (b) Pocahontas is an indirect wholly owned subsidiary of Covol, with Covol owning directly a ninety-nine percent (99%) member interest and indirectly, through its ownership of Synfuel, a one percent (1%) member interest in Pocahontas, in each case, free and clear of all Liens and all material claims or charges of any kind, and all such member interests of Pocahontas are validly issued, fully paid and nonassessable, and there are no outstanding options, rights or agreements of any kind relating to the issuance, sale or transfer of any member interest or other equity securities of Pocahontas. 3.22 Full Disclosure. Sellers have not failed to disclose to Buyer any facts material to the business, results of operations, assets, liabilities, financial condition or prospects of the Facility. No representation or warranty by any Seller contained in this Agreement or any of the Transaction Documents to which such Seller is a party and no statement contained in any document, certificate or other writing furnished or to be furnished by any Seller to Buyer or any of its representatives pursuant to the provisions hereof or thereof or in connection with the transactions contemplated herein or therein, contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was made, in order to make the statements herein or therein not misleading. 24 3.23 Solvency. Each of the Sellers is and, after giving effect to the transactions contemplated in this Agreement and the Transaction Documents, will be Solvent. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Sellers that all of the statements contained in this Article IV are true and complete as of the date of this Agreement (or, if made as of a specified date, as of such date), and will be true and complete as of the Closing Date as though made on the Closing Date: 4.1 Organization and Standing. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Kentucky and has the power to own its own property, and to execute, deliver and perform this Agreement and each of the Transaction Documents to which it is a party, and to carry on its business as now being conducted. 4.2 Authorizations; Binding Agreements. (a) Buyer has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which Buyer is a party and to consummate the transactions contemplated herein and therein. (b) The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party and of each conveyance, assignment, agreement and other document herein and therein contemplated to be executed by it have been fully authorized by all necessary corporate action (other than approval by Buyer's board of directors). (c) No vote of, or consent by, the holders of any class or series of stock or indebtedness having general voting rights and debt convertible into securities having such rights issued by Buyer is necessary to authorize the execution and delivery by Buyer of this Agreement or the other Transaction Documents to which it is a party or the consummation by it of the transactions contemplated hereby and thereby. 25 (d) This Agreement and the other Transaction Documents to which Buyer is a party and the conveyances, assignments, agreements and other documents herein and therein contemplated to be executed, delivered and performed by Buyer are, or will be upon execution, legal, valid and binding obligations of Buyer, duly enforceable against Buyer in accordance with their terms (subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect relating to the rights and remedies of creditors as well as to general principles of equity). (e) This Agreement and the other Transaction Documents to which Buyer is a party and the conveyances, assignments, agreements and other documents herein and therein contemplated to be executed, delivered and performed by Buyer (i) do not and will not result in any violation of, conflict with or default under the terms of Buyer's organizational documents, and (ii) subject only to Buyer's Required Consents, do not and will not result in any violation of, conflict with or default under any material permit, lease, venture, indenture, mortgage, agreement, contract, judgment, order or other obligation or restriction to which Buyer is bound (nor, to the Knowledge of Buyer, does there exist any condition which upon the passage of time or the giving of notice would cause such violation, conflict or default). 4.3 Brokers or Finders Fees. Except as set forth on Schedule 4.3 attached hereto, there are no obligations or liabilities, contingent or otherwise, for broker's or finder's fees created by Buyer with respect to the matters provided for in this Agreement and the other Transaction Documents. 4.4 No Actions Affecting Enforcement of the Agreement and the other Transaction Documents. Except as disclosed on Schedule 4.4 attached hereto, there are no actions, suits, inquiries, proceedings or investigations by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the Knowledge of Buyer, threatened against or involving Buyer, or which questions or challenges the validity of this Agreement or any of the Transaction Documents to which Buyer is a party or any action taken or to be taken by Buyer 26 pursuant to this Agreement or any of the Transaction Documents to which it is a party in connection with the transactions contemplated herein or therein, and to the Knowledge of Buyer there is no valid basis for any such action, suit, inquiry, proceeding or investigation. 4.5 Consents. Schedule 4.5 attached hereto is a true, correct and complete list of all of Buyer's Required Consents. ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS 5.1 Subsequent Actions. (a) Subject to the terms and conditions herein provided, each of the Parties agrees to use commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper and advisable under applicable Law, and to obtain the Required Consents, necessary to consummate and make effective the transactions contemplated by this Agreement, including, but not limited to, Buyer agrees to use commercially reasonable efforts (i) to relocate the Facility to the New Facility Site, (ii) to produce and sell Section 29 Product from the Facility at the New Facility Site, (iii) to achieve the Commercial Operation Date by no later than December 31, 2000 and (iv) to provide Sellers with monthly production records indicating the quantity of Product produced at the Facility at the New Facility Site. (b) If at any time after the Effective Time, Buyer will consider or be advised that any deeds, bills of sale, instruments of conveyance, financing statements, powers of attorney, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm ownership (of record or otherwise) in the Facility, its right, title or interest in, to or under any or all of the Facility or otherwise to carry out this Agreement, Sellers shall execute and deliver all deeds, bills of sale, instruments of conveyance, financing statements, powers of attorney, assignments and assurances and take or do, or cause to be taken or done, all such other actions and things as may be requested by Buyer in order to 27 vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Facility or otherwise to carry out this Agreement. (c) In case at any time after the Effective Time any further action is necessary, proper or desirable to carry out the purposes of this Agreement, as soon as reasonably practicable, each Party shall take or cause its proper officers or directors to take, all such necessary, proper or desirable action. Buyer and Sellers will execute any additional instruments necessary to consummate the transactions contemplated hereby. 5.2 Public Announcements. Buyer and Sellers will consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement and the transactions contemplated herein, and shall not issue or cause the publication of any such press release or make, or cause to be made, any such public statement prior to such consultation or as to which the other Party reasonably objects, except as may be required by Law or by obligations pursuant to any listing agreement with any national securities exchange or inter-dealer quotation system. 5.3 Confidentiality. Notwithstanding the execution of this Agreement, the confidentiality provisions of the Confidentiality Agreement shall remain in full force and effect and shall survive the Closing; provided, however, that notwithstanding anything to the contrary contained in the Confidentiality Agreement, this Agreement or any of the Transaction Documents, the provisions of the Confidentiality Agreement shall not apply to (a) any documents or information that Buyer shall disclose to Affiliates or to other Persons as may be necessary for Buyer (i) to consummate the transactions contemplated in this Agreement and the Transaction Documents, (ii) to operate and maintain the Facility or (iii) to produce and sell Product at the New Facility Site and (b) any documents prepared in connection with a proceeding before or filed with, or other disclosure made to, a court, arbitration tribunal or mediation service in order to enforce Buyer's rights arising in connection with the termination of this Agreement pursuant to Article IX. 28 5.4 Taxes. (a) Following Closing, Sellers shall timely file all tax returns and reports relating to the Facility and the conduct of the construction, maintenance and operation of the Facility prior to Closing which have not been filed or were not yet due to be filed prior to Closing, and Sellers shall timely pay all taxes, assessments, fees, interest, penalties and governmental charges relating to the Facility or the conduct of the construction, maintenance and operation of the Facility prior to Closing which have not been paid or were not yet due and payable prior to Closing. (b) Following Closing, Buyer may seek one or more Private Letter Rulings from the IRS as to matters relating to the Facility and Section 29 of the Code. Sellers shall cooperate with and assist Buyer, as reasonably requested by Buyer, in connection with seeking such Private Letter Rulings. 5.5 Use of and Access to Facility. Beginning on the date of this Agreement and ending on the last day of the Relocation Period: (a) Sellers shall (i) afford, or cause to be afforded, to Buyer and its authorized representatives reasonable access to the Facility and to all books and records relating to the Facility (whether on or off the Facility Site), (ii) permit Buyer to make such inspections and to make copies of such books and records as it may reasonably require, and (iii) furnish Buyer with such financial and operating data and other information concerning the Facility as Buyer may from time to time reasonably request. Buyer and its authorized representatives shall conduct all such inspections in a manner that will minimize disruptions to the business and operations of Sellers and/or the Facility. (b) Sellers agree that Buyer and its authorized representatives (including its designated engineers or consultants) may at any time enter into and upon all or any portion of the Facility or the Facility Site in order to investigate and assess, as Buyer deems necessary or appropriate in its sole and absolute discretion, the environmental condition of such properties or the business conducted thereat. Such investigation may include, but need not be limited to, the performance of soil and surface or ground water sampling, monitoring, borings or testing and any other tests, investigations, audits, assessments, studies, inspections or 29 other procedures relating to environmental conditions or Hazardous Substances. Sellers shall cooperate with Buyer and its authorized representatives in conducting such investigation, shall provide, or cause to be provided, Buyer and its authorized representatives full access to the Facility and the Facility Site, together with full permission to conduct such investigation. (c) Sellers shall grant and provide, or cause to be granted and provided, to Buyer (at no additional cost to Buyer) such access (including, but not limited to, rights of ingress and egress) to the Facility Site as Buyer may reasonably request in order to permit Buyer to remove the Facility from the Facility Site for a period of up to (12) months beginning on the Closing Date (for purposes of this Section, the "Use Period"); provided, however, that during the Use Period the maintenance of the roads that are to be used by Buyer on the Plant Property (as defined in the Use and Non-Disturbance Agreement) shall be at Buyer's expense; provided further that Buyer shall have no obligation to maintain such roads for use by any other Person. During the Use Period, Sellers shall permit Buyer (at no additional cost to Buyer) to store all or such portion of the Facility at the Facility Site as Buyer may require. (d) Sellers shall provide, or cause to be provided, to Buyer, all utilities (including, without limitation, gas, electric, water, waste disposal and telephone) required in connection with the maintenance, removal and relocation of the Facility by Buyer, provided that Buyer shall reimburse Sellers for any actual costs or expenses so incurred on behalf of Buyer. Buyer agrees to provide, or cause to be provided, at its own cost, security at the Facility Site for so long as the Facility is located at the Facility Site. 5.6 Damage to Facility. In the event that after the date of this Agreement but before the Closing Date, the Facility shall have been materially and adversely affected by reason of any loss, taking, condemnation, destruction or physical damage, whether or not insured against, Sellers agree that they shall use reasonable best efforts, at their own expense, to repair the Facility such that it is in materially the same condition as it was prior to such loss, taking, condemnation, destruction or physical damage. 30 ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER Each and every obligation of Buyer to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent, in each case, in form and substance satisfactory to Buyer: 6.1 No Termination; Compliance with Agreement. This Agreement shall not have been terminated in accordance with its terms, and Sellers shall have performed and complied in all material respects with all of their obligations under this Agreement which are to be performed or complied with by them prior to or on the Closing Date. 6.2 Actions. Each Seller shall have taken all actions, corporate or otherwise, necessary in connection with the execution and delivery of this Agreement and the Transaction Documents to which it is a party and the performance of its obligations hereunder and thereunder. 6.3 Instruments Satisfactory. Each of Sellers shall deliver, or cause to be delivered, to Buyer the documents specified in Section 2.3(a), each fully executed (other than by Buyer) and dated as of the Closing Date, and otherwise in form and substance satisfactory to Buyer. 6.4 No Litigation. No investigation, suit, action or other proceedings shall be threatened or pending before any court or governmental authority that seeks restraint, prohibition, damages or other relief in connection with the execution and delivery of this Agreement or the Transaction Documents or the consummation of the transactions contemplated hereby and thereby. 31 6.5 Representations and Warranties. (a) The representations and warranties made by Sellers in this Agreement and the Transaction Documents shall be true and correct in all respects (subject to any express qualifications or limitations stated herein or therein, other than the qualifications and limitations set forth in the provisio to Sellers' representations and warranties in the last sentence of Section 3.1) as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. (b) Between the date of this Agreement and the Closing Date, the Facility shall not have suffered any material adverse change in its assets or operations by reason of any loss, taking, condemnation, destruction, physical damage or otherwise, whether or not insured against. 6.6 Material Adverse Change. (a) The Fixed Assets shall not have been materially and adversely affected by reason of any loss, taking, condemnation, destruction or physical damage, whether or not insured against. (b) There shall not have occurred any Material Adverse Effect. (c) Neither any investigation of the Facility or Sellers by Buyer, nor any document delivered to Buyer as contemplated by this Agreement, shall have revealed any facts or circumstances which, in the sole and exclusive judgment of Buyer, reflect in a material adverse way on the financial condition, assets, liabilities (absolute, accrued, contingent or otherwise), business, operations or prospects of Sellers or the Facility. 6.7 Board Approval. Buyer shall have obtained approval of its Board of Directors to execute and deliver this Agreement and the Transaction Documents and to perform its obligations hereunder and thereunder. 6.8 Financing Statements. 32 Sellers shall have executed, or cause to be executed on its behalf, Buyer's Financing Statements, and such financing statements shall have been filed in the appropriate jurisdiction. 6.9 Consents. All consents and approvals of any Person (including, but not limited to, Sellers' Required Consents) necessary to the consummation of the Closing and the execution and delivery by Sellers of this Agreement and the Transaction Documents and the performance of their respective obligations hereunder and thereunder, including, but not limited to, (i) any consents, approvals and waivers from parties to loan agreements, contracts, leases or other agreements and from governmental authorities, whether federal, state or local and (ii) any consents, approvals or resolutions of directors or shareholders of any Party or any other Person, shall have been obtained, and a copy of each such consent or approval shall have been provided to Buyer at or prior to Closing. ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS Each and every obligation of Sellers to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent, in each case, in form and substance satisfactory to Sellers: 7.1 No Termination; Compliance with Agreement. This Agreement shall not have been terminated in accordance with its terms, and Buyer shall have performed and complied in all material respects with all of its obligations under this Agreement which are to be performed or complied with by it prior to or on the Closing Date. 7.2 Actions. Buyer shall have taken all actions, corporate or otherwise, necessary in connection with the execution and delivery of this Agreement and the Transaction 33 Documents to which it is a party and the performance of its obligations hereunder and thereunder. 7.3 Instruments Satisfactory. Buyer shall deliver, or cause to be delivered, to Sellers the documents specified in Section 2.3(b), each executed by Buyer and dated as of the Closing Date, and otherwise in form and substance satisfactory to Buyer. 7.4 No Litigation. No investigation, suit, action or other proceeding shall be threatened or pending before any court or governmental authority that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the Transaction Documents or the consummation of the transactions contemplated hereby and thereby. 7.5 Representations and Warranties. The representations and warranties made by Buyer in this Agreement and the Transaction Documents shall be true and correct in all respects (subject to any express qualifications or limitations stated herein or therein) as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. 7.6 Consents. All consents and approvals of any Person (including, but not limited to, Buyer's Required Consents) necessary to the consummation of the Closing and the execution and delivery by Buyer of this Agreement and the Transaction Documents to which it is a party and the performance of their respective obligations hereunder and thereunder, including, but not limited to, (i) any consents, approvals and waivers from parties to loan agreements, contracts, leases or other agreements and from governmental authorities, whether federal, state or local and (ii) any consents, approvals or resolutions of directors or shareholders of any Party or any other Person, shall have been obtained, and a copy of each such consent or approval shall have been provided to Sellers at or prior to Closing. 34 ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS 8.1 Sellers' Indemnity. (a) Sellers shall indemnify and hold harmless from and against, and agree to defend promptly Buyer, any Affiliate of Buyer and the officers, directors, employees, agents, representatives and advisors of Buyer or any Affiliate of Buyer (collectively, "Buyer Indemnified Persons") from, and reimburse Buyer Indemnified Persons for, any and all losses, damages, costs, expenses, liabilities, judgments, settlements, obligations and claims of any kind, including, but not limited to, environmental penalties, costs (including, but not limited to, costs of remediation) and liabilities (whether involving personal injury or property damage), reasonable attorneys' fees and other legal costs and expenses (hereinafter referred to collectively as "Losses"), that any Buyer Indemnified Person may at any time suffer or incur, or become subject to, as a result of or in connection with: (i) any breach or inaccuracy of any of the representations and warranties made by Sellers in this Agreement, the Transaction Documents or any other agreement or instrument delivered by Sellers pursuant hereto or thereto; (ii) any failure of Sellers (before or after the Closing Date) to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement, the Transaction Documents or under any of the agreements and instruments delivered by Sellers pursuant to hereto or thereto; (iii) claims by third parties (including governmental authorities) against Buyer relating to the construction, operation, maintenance and ownership by Sellers of the Facility and the performance by Sellers under the Contracts, in each case under this clause (iii) for the period prior to the Effective Time; (iv) any of the matters referenced in Schedules 3.5 and 3.11 attached hereto; (v) any violations of, or failure to operate the Facility in accordance with, necessary permits prior to the Effective Time; (vi) failure by Sellers to satisfy and perform any of their obligations herein or under the Transaction Documents after the Closing and any cost incurred to satisfy and perform any such obligation or resulting from any additional or modified terms under any Contracts (or substitute contracts) required for or resulting from the satisfaction and performance of such obligations; and (vii) any of the events, circumstances or conditions described in Section 3.14, any 35 pollution or threat to human health or the environment that (A) is related in any way to Sellers' (or any other owner's (including, but not limited to, each of the Real Property Owners) or operator's) management, use, control, ownership or operation of the Facility or Facility Site prior to the Closing, including all on-site and off-site activities involving Hazardous Substances, and (B) occurred, existed, arises out of conditions or circumstances that occurred or existed, or was caused, in whole or in part, on or before the Closing Date; or any Environmental Claim against the Facility or any Person whose liability for such Environmental Claim was assumed or retained either contractually or by operation of law; and (viii) any and all Excluded Liabilities. (b) In the event a claim against a Buyer Indemnified Person arises that Buyer reasonably believes is covered by the indemnity provisions of Section 8.1(a), notice shall be given promptly by Buyer to Sellers containing details reasonably sufficient for Sellers to identify the nature and basis of the claim. Provided that Sellers admit in writing to Buyer that such claim is covered by the indemnity provisions of Section 8.1(a), Sellers shall have the right to contest and defend by all appropriate legal proceedings such claim and to control all settlements (unless Buyer agrees to assume the cost of settlement and to forgo such indemnity) and to select lead counsel to defend any and all such claims at the sole cost and expense of Sellers; provided, however, that (i) Sellers may not effect any settlement that could result in any cost, expense or liability to Buyer unless Buyer consents in writing to such settlement and Sellers agree to indemnify Buyer therefor and (ii) in the event that Buyer reaches a settlement with respect to such a claim, Sellers shall not unreasonably withhold their consent to such settlement. Buyer may select counsel to participate with Sellers' counsel in any such defense, in which event Buyer's counsel shall be at its own sole cost and expense. In connection with any such claim, action or proceeding, the Parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. (c) Sellers shall not be required to indemnify and hold harmless Buyer Indemnified Persons pursuant to Section 8.1(a)(i) in respect of the representations and warranties made by Sellers herein unless such right to indemnification is asserted by Buyer (whether or not such Losses have actually been incurred) by notice to Sellers within twelve (12) months after the Closing Date, with the exception of (i) the representations and warranties set forth in Sections 3.4 and 3.19, which must be asserted by Buyer within the applicable statute of limitations or any extensions thereof required by any applicable authority relating to the taxes or assessments giving rise to the Loss, plus sixty (60) days, (ii) the representations and 36 warranties set forth in Section 3.12, which must be asserted by Buyer within the applicable statute of limitations for the violation of the underlying law that forms the basis of such claim, plus sixty (60) days, (iii) the representations and warranties set forth in Sections 3.1, 3.2, and 3.7, which shall be without time limitation, and (iv) the representations and warranties set forth in Section 3.14, which must be asserted within twenty-four (24) months after the Closing Date. (d) Notwithstanding the foregoing, Sellers shall not be required to indemnify Buyer Indemnified Persons under Section 8.1(a)(i) in respect of the representations and warranties made by Sellers (other than in the case of fraud or misrepresentation) unless the amount of all Losses for which indemnification is sought by Buyer under Section 8.1(a)(i) exceeds, in the aggregate, $75,000.00, in which event, Sellers' indemnity obligation hereunder would apply to all such Losses. Sellers' aggregate indemnification obligation pursuant to Section 8.1(a)(i) shall in no event exceed the Purchase Consideration paid to Sellers. (e) Subject to Section 10.11, the indemnification provided in this Section 8.1, including the limitations with respect thereto, shall be the exclusive remedy for Buyer with respect to Losses as a result of or in connection with the matters described in Section 8.1(a)(i), notwithstanding any provisions in this Agreement or any other such agreement or instrument to the contrary. 8.2 Buyer's Indemnity. (a) Buyer hereby indemnifies and holds harmless from and against, and agrees to defend promptly Sellers, any Affiliate of Sellers and the officers, directors, employees, agents, representatives and advisors of Sellers or any Affiliate of Sellers (collectively, "Sellers' Indemnified Persons") from and reimburse Sellers' Indemnified Persons for, any and all Losses that Sellers' Indemnified Persons may at any time suffer or incur, or become subject to, as a result of or in connection with: (i) any breach or inaccuracy of any of the representations and warranties made by Buyer in this Agreement or any other agreement or instrument delivered by Buyer pursuant hereto; (ii) any failure by Buyer to carry out, perform, satisfy and discharge any of its covenants, agreements, undertakings, liabilities or obligations under this Agreement or under any of the agreements and instruments delivered by Buyer pursuant to this Agreement; and (iii) claims by third parties (including governmental authorities) against Sellers relating to the operation and ownership by Buyer of the Facility for the period following the Effective Time. 37 (b) In the event a claim against a Sellers' Indemnified Person arises that is covered by the indemnity provisions of Section 8.2(a), notice shall be given promptly by Sellers to Buyer containing detail reasonably sufficient for Buyer to identify the nature and basis of the claim. Provided that Buyer admits in writing to Sellers that such claim is covered by the indemnity provisions of Section 8.2(a), Buyer shall have the right to contest and defend by all appropriate legal proceedings such claim and to control all settlements (unless Sellers agrees to assume the cost of settlement and to forgo such indemnity) and to select lead counsel to defend any and all such claims at the sole cost and expense of Buyer; provided, however, that (i) Buyer may not effect any settlement that could result in any cost, expense or liability to Sellers unless Sellers consents in writing to such settlement and Buyer agrees to indemnify Sellers therefor and (ii) in the event that Sellers reach a settlement with respect to such a claim, Buyer shall not unreasonably withhold their consent to such settlement. Sellers may select counsel to participate with Buyer's counsel in any such defense, in which event Sellers' counsel shall be at the sole cost and expense of Sellers. In connection with any such claim, action or proceeding, the Parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. (c) Buyer shall not be required to indemnify and hold harmless Sellers' Indemnified Persons pursuant to Section 8.2(a)(i) in respect of the representations and warranties made by Buyer herein unless such right to indemnification is asserted by Sellers (whether or not such Losses have actually been incurred) by notice to the Buyer within twelve (12) months after the Closing Date, with the exception of the representations and warranties set forth in Sections 4.1 and 4.2, which shall be without time limitation. (d) Notwithstanding the foregoing, Buyer shall not be required to indemnify Sellers' Indemnified Persons under Section 8.2(a)(i) in respect of the representations and warranties made by Buyer (other than in the case of fraud or misrepresentation) unless the amount of all Losses for which indemnification is sought by Sellers under Section 8.2(a)(i) exceeds, in the aggregate, $75,000.00, in which event, Buyer's indemnity obligation hereunder would apply to all such Losses. Buyer's aggregate indemnification obligation pursuant to Section 8.2(a)(i) shall in no event exceed the Purchase Consideration paid to Sellers. (e) Subject to Section 10.11, the indemnification provided in this Section 8.2, including the limitations with respect thereto, shall be the 38 exclusive remedy for Sellers with respect to Losses as a result of or in connection with the matters described in Section 8.2(a)(i), notwithstanding any provisions in this Agreement or any other such agreement or instrument to the contrary. 8.3 Bulk Sales Compliance. To the extent applicable, Sellers shall comply with the provisions of the bulk sales law of any U.S. jurisdiction, and Sellers covenants and agrees to pay and discharge when due all claims of any governmental entities and creditors of Sellers and its subsidiaries that could be asserted against Buyer by reason of such non-compliance. Sellers agrees to indemnify and hold Buyer harmless from and against and shall on demand reimburse Buyer for any and all Losses suffered by Buyer by reason of Sellers' failure to pay and discharge any such claims. 8.4 Additional Instruments. At any time and from time to time after the Closing, at either Party's request and without further consideration, Sellers or Buyer, as the case may be, shall execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation and take such other action (including, but not limited to, the filings of liens and execution of financing statements) as Sellers or Buyer may reasonably deem necessary or desirable in order to more effectively transfer, convey, and assign to Buyer, and confirm Buyer's title to and interest in and responsibility and liability for, the Facility and the consummation of the transactions contemplated herein. Without limiting the generality of the foregoing, Sellers will cooperate with and assist Buyer in renewing, or transferring, into Buyer's name those permits for which Buyer requests such assistance and cooperation at the appropriate time for such renewal or transfer as determined by Buyer. 8.5 Access to Books, Records and Employees. From and after the Closing Date, Buyer will authorize and permit Sellers and its respective representatives to have access during normal business hours, upon reasonable notice and for reasonable purposes and in such manner as will not unreasonably interfere with the conduct of Buyer's business, to Books and Records and within the control of Buyer that relate to the Facility. From and after the Closing Date, Sellers will authorize and permit Buyer and its representatives to have access during normal business hours, upon reasonable notice and for reasonable 39 purposes and in such manner as will not unreasonably interfere with the conduct of Sellers' business, to all books and records, files, documents and other correspondence related to the Facility prior to the Effective Time, which are not included among the Books and Records. Buyer and Sellers agree to maintain all books, records, files, documents and other correspondence related to the Facility prior to the Effective Time for a period of seven (7) years after the Closing Date. ARTICLE IX TERMINATION 9.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing Date as follows: (a) by mutual written agreement of all of the Parties; (b) by either Buyer or Sellers if any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency shall issue an order, decree or ruling or take any other action, which permanently restrains, enjoins or otherwise prohibits the acquisition by Buyer of the Facility and such order, decree, ruling or other action shall have become final and non-appealable; (c) by either Buyer or Sellers if the other Party or Parties, as the case may be, shall have breached in any material respect any of its or their, as the case may be, representations, warranties, covenants or other agreements contained in this Agreement or any of the Transaction Documents, which breach cannot be or has not been cured within thirty (30) days after the giving of written notice thereof by such non-breaching Party; or (d) by either Sellers or Buyer if the Closing Date shall not have occurred on or before January 31, 2000; provided, however, that the right to terminate this Agreement pursuant to this clause (d) shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing Date to occur prior to such date. 9.2 Rights on Termination; Waiver. 40 (a) If this Agreement is terminated pursuant to Section 9.1, all further obligations of the Parties under or pursuant to this Agreement shall terminate and there shall be no liability or obligation thereafter on the part of either Party to the other Party or Parties, as the case may be, except with respect to any fraud or breach of this Agreement prior to such termination. (b) If any of the conditions set forth in Article VI of this Agreement have not been satisfied, Buyer may nevertheless elect to waive such conditions and proceed with the consummation of the transactions contemplated hereby. If any of the conditions set forth in Article VII of this Agreement have not been satisfied, Sellers may nevertheless elect to waive such conditions and proceed with the consummation of the transactions contemplated hereby. ARTICLE X MISCELLANEOUS 10.1 Entire Agreement; Amendment. (a) This Agreement and the documents referred to herein and to be delivered pursuant hereto constitute the entire agreement between the Parties pertaining to the subject matter hereof, and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions of the Parties, whether oral or written, and there are no warranties, representations or other agreements between the Parties in connection with the subject matter hereof, except as specifically set forth herein or therein. (b) No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by all of the Parties. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 10.2 Expenses. Except as otherwise specifically provided herein, each of the Parties shall pay the fees and expenses of their respective counsel, accountants and other 41 experts and all other costs and expenses incident to the negotiation and preparation of this Agreement and consummation of the transactions contemplated hereby. 10.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR ANY SUCCESSOR PROVISION THERETO). (b) Each Seller, in respect of itself and its properties, (i) agrees to be subject to (and hereby irrevocably submits to) the non-exclusive jurisdiction of any Federal court located in the Commonwealth of Kentucky or any Kentucky state court in the event of any dispute arising out of or relating to this Agreement or the transactions contemplated hereby, (ii) agrees that it shall not attempt to deny or defeat such jurisdiction by motion or other request for leave from any such court and irrevocably waives, to the fullest extent it may effectively do so under applicable Law, any objection to the laying of the venue of any such action in any such court and any claim that any such action brought in any such court has been brought in an inconvenient forum, (iii) agrees that it shall not bring any action arising out of or relating to this Agreement or any transactions contemplated hereby in any court other than a Federal or state court sitting in the Commonwealth of Kentucky, and (iv) irrevocably agrees that all disputes arising out of or relating to this Agreement and the transactions contemplated hereby that are brought by Sellers may be determined in any Federal or state court sitting in the Commonwealth of Kentucky. (c) Buyer, in respect of itself and its properties, (i) agrees to be subject to (and hereby irrevocably submits to) the non-exclusive jurisdiction of any Federal court located in the State of Utah or any Utah state court in the event of any dispute arising out of or relating to this Agreement or the transactions contemplated hereby, (ii) agrees that it shall not attempt to deny or defeat such jurisdiction by motion or other request for leave from any such court and irrevocably waives, to the fullest extent it may effectively do so under applicable Law, any objection to the laying of the venue of any such action in any such court and any 42 claim that any such action brought in any such court has been brought in an inconvenient forum, (iii) agrees that it shall not bring any action arising out of or relating to this Agreement or any transactions contemplated hereby in any court other than a Federal or state court sitting in the State of Utah, and (iv) irrevocably agrees that all disputes arising out of or relating to this Agreement and the transactions contemplated hereby and that are brought by Buyer may be determined in any Federal or state court sitting in the State of Utah. (d) Either Party may make service on the other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 10.5, provided that nothing in this Section 10.3, shall affect the right of any Party to serve legal process in any other manner permitted by law or in equity. (e) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTION DOCUMENTS OR ANY MATTER ARISING HEREUNDER OR THEREUNDER. 10.4 Assignment. This Agreement and each Party's respective rights, interests and obligations hereunder may not be assigned, by operation of law or otherwise, without the prior written consent of the other Party or Parties, as the case may be; provided, however, that Buyer may assign, in its sole discretion, any or all of its rights, interests and/or obligations under this Agreement to an Affiliate without such consent. 10.5 Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given at the earlier of the date (a) when delivered personally or by messenger or by overnight delivery service to an officer of the other Party or (b) when received via telecopy, telex or other electronic transmission, in all cases addressed to the Person for whom it is intended at his address set forth below or to such other address as a Party shall have designated by notice in writing to the other Party in the manner provided by this Section: 43 If to Buyer: ** Fax: ** Attn: President With a copy to: ** Fax ** Attn: General Counsel If to **: ** Fax: ** Attn: President If to Sellers: Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84043-9534 Fax: (801) 768-4483 Attn: Brent M. Cook With a copy to: Covol Technologies, Inc. Pillsbury Madison & Sutro LLP 3280 North Frontage Road 235 Montgomery Street Lehi, Utah 84043-9534 San Francisco, CA 94104 Fax: (801) 768-4483 Fax: (415) 983-1200 Attn: General Counsel Attn: Linda C. Williams, Esq. 10.6 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute but one and the same Agreement. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 10.7 Interpretation. Unless the context requires otherwise: (a) When a reference is made in this Agreement to an article or section, such reference shall be to an article or section of this Agreement. 44 (b) Whenever the words "include", "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." (c) The words "hereof", "herein" and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraphs, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement. (d) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning. (e) A reference to any Party to this Agreement or any other agreement or document shall include such Party's successors and permitted assigns. (f) A reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or reenactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto. (g) All references to contracts, agreements, leases or other understandings or arrangements shall refer to oral as well as written matters. (h) The specificity of any representation or warranty contained herein shall not be deemed to limit the generality of any other representation or warranty contained herein. (i) The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement. 45 10.8 Severability. Any term or provision of this Agreement that is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction or other authority declares that any term or provision hereof is invalid, void or unenforceable, the parties agree that the court making such determination shall have the power to reduce the scope, duration, area or applicability of the term or provision, to delete specific words or phrases, or to replace any invalid, void or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision. 10.9 No Reliance. No third party is entitled to rely on any of the representations, warranties and agreements contained in this Agreement. Buyer and Sellers assume no liability to any third party because of any reliance on the representations, warranties and agreements of Buyer or Sellers contained in this Agreement. Nothing contained in this Agreement shall be construed as creating a partnership or joint venture or any agency relationship between the Parties, or any other relationship other than Buyer and Sellers as provided herein. 10.10 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. 10.11 Specific Performance. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with the terms hereof or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement 46 and to enforce specifically the terms and provisions of this Agreement, in addition to any other remedy at law or equity. 10.12 Time of Essence. Each of the Parties hereby agrees that, with regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence. 10.13 Representations, Warranties and Covenants. The representations and warranties of each Party shall be deemed to be material and to have been relied upon by the other Party. The representations, warranties, covenants and agreements of Sellers and Buyer contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby and, as to the representations and warranties, shall be effective until the relevant time limitation for making any indemnity claim with respect to such representations and warranties under Sections 8.1 and 8.2. shall have been reached. 10.14 Election of Remedies. Neither the exercise of nor the failure to exercise a right of set-off, or to give notice of a claim under this Agreement, will constitute an election of remedies or limit Buyer in any manner in the enforcement of any other remedies that may be available to any of them, whether at law or in equity. 10.15 ** Undertaking. In the event that Buyer shall fail to pay Pocahontas all or any portion of the Subsequent Consideration in accordance with the terms of this Agreement, ** agrees that it shall, subject to the terms and conditions of this Agreement, pay to Pocahontas the unpaid amount of the Subsequent Consideration which is due and payable under this Agreement; provided, however, that in no event shall ** be obligated to pay pursuant to this Section 10.15 in excess of an amount equal to the Subsequent Consideration, less the amount of any payment or payments made by, or on behalf of Buyer, to Pocahontas pursuant to Section 2.2(b). [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 47 IN WITNESS WHEREOF, each Party has caused this Purchase Agreement to be executed in its name by a duly authorized officer as of the day and year first above written. ** By: ----------------------------------------- Name: Title: COVOL TECHNOLOGIES, INC. By: /Kirk A. Benson/ ----------------------------------------- Name: Kirk A. Benson Title: Chairman and Chief Executive Officer SYNFUEL INVESTMENTS, INC. By: /Brent M. Cook/ ----------------------------------------- Name: Brent M. Cook Title: President POCAHONTAS SYNFUEL, L.L.C. By: Covol Technologies, Inc., Manager By: /Brent M. Cook/ ----------------------------------------- Name: Brent M. Cook Title: President 48 For the sole and limited purpose of Section 10.15 of this Asset Purchase Agreement ** By: /**/ ----------------------------------------- Name: ** Title: ** 49 -----END PRIVACY-ENHANCED MESSAGE-----