[Letterhead] Lockwood Greene
Planners/Engineers/Architects/Managers
- - ------------------------------------------------------------------------------
4201 Spring Valley Road, Suite 1500
Dallas, Texas 75244
July 26, 1996
Mr. Ken Young
CEO
Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043
Dear Ken:
Andy Kapusta and I enjoyed meeting with you and the Covol Team last Tuesday and
we believe this is now a sound approach to proceed with the Utah Synfuel Plant
No. 1 and install both extruders initially in Carbon County. We are all
optimistic that Tax Code 29 will be extended - hopefully this will allow many
additional opportunities in 1997 and 1998 for the coal synthetic agglomeration
facilities.
The following documents our discussion with regard to Lockwood Greene's
investment of its $600,000 fee associated with Contract LG01. The contract as
currently executed provides for Covol to pay Lockwood Greene's $600,000 fee,
plus cost of all engineering and construction personnel and all associated
expenses.
Lockwood Greene (LG) is willing to use its $600,000 fee in accordance with the
following distribution:
1. LG's fixed fee for Utah Synfuel No. 1 and LG Contract
LG01-due and payable in cash up front $100,000
2. LG's equity investment in Alabama Synfuel No. 1 400,000
3. LG's exclusive rights to provide EPCM services for both
steel mill wastes agglomeration and metallics recovery
projects and coal fines agglomeration projects 100,000
Total LG01 Fee $600,000
In addition, Lockwood Greene/CEC would be reimbursed for all man hours expended
and expenses during the engineering, procurement, and construction phases of the
project in accordance with Contract LG01. We would estimate these costs at
approximately $300,000.
Mr. Ken Young
Covol Technologies, Inc.
July 27, 1996
Page 2
We would like to see additional details with regard to the equity investment in
Utah's Synfuel No. 1. We want to insure that our equity investment will not
expose Lockwood Greene to any other liabilities with regard to the
operational/financial aspects of Utah Synfuel No. 1. We would want
indemnification from Covol that we would be protected from any financial claims
on the project from Covol and third parties.
If you are in agreement with the framework of this understanding and the
attached Memorandum of Understanding between Covol Technologies and Lockwood
Greene Engineers, we would request that you sign two copies of this letter and
the attached Memorandum of Understanding and return one signed copy for our
files. Once this document is signed, we will bill the $100,000 fixed fee
associated with Contract LG01 and we would expect receipt of this payment within
thirty days after invoicing.
Again, we appreciate the opportunity of working with Covol in the development of
these coal agglomeration projects and we further look forward to developing the
steel mill waste stream agglomeration and metallics recovery projects.
Very truly yours,
LOCKWOOD GREENE ENGINEERS, INC.
H. David Rosamond
Senior Vice President
HRD:bp
Attachment
ACCEPTED BY:
COVOL TECHNOLOGIES, INC. LOCKWOOD GREENE ENGINEERS, INC.
By: /s/ Mike Midgley By: /s/ H. David Rosamond
Title: President Title: Sr. Vice President
MEMORANDUM OF UNDERSTANDING
BETWEEN
COVOL TECHNOLOGIES, INC.
AND
LOCKWOOD GREENE ENGINEERS, INC.
Covol Technologies, Inc. (Covol) is a leader in developing technologies for
agglomeration of coal fines and various steel mill waste streams and recovery of
marketable metallic and other marketable minerals/oxides. Covol has their
principal office at:
Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043
Lockwood Greene Engineers, Inc. (LG) has extensive planning, environmental
permitting, engineering, procurement, and construction management experience in
providing professional EPCM services for a wide range of mining and metals
industry clients both domestically and internationally. LG has their principal
offices at:
Lockwood Greene Engineers, Inc.
4201 Spring Valley Road, Suite 1500
Dallas, Texas 75244
In view of a common interest developing coal agglomeration and metallic
recovery and recycling facilities to recover metallic from various steel mill
waste streams, Covol and LG have this day concluded this agreement for the
propose of jointly pursuing, obtaining and executing coal agglomeration, metals
recovery, and recycling facilities.
1. Cooperation. Both firms agree that they will cooperate together in
the development and exchange of information as well as in the promotion of their
respective and mutual interests. Both firms agree that the pursuit of the
aforementioned projects are on an exclusive basis. Both parties will promote
projects in the interest of both firms and will communicate to each other on
business opportunities that come to their knowledge.
2. Job Prospects. Whenever one of the parties obtains or is offered a
job assignment in the field of coal agglomeration or metallic recovery, it will
disclose such a possible collaboration to the other party. In such case, it will
be determined by discussion between the parties if such collaboration could be
mutually advantageous. If, after the discussion, one of the parties has a strong
compelling or contractual reason to work with a third party or desires not to
further pursue such assignment, it will so advise the other party in writing,
and after acceptance by the other party, will leave both parties free from any
further obligations pursuant to this Memorandum of Understanding as it concerns
such specific job assignment.
3. Future Agreements. When a prospect is deemed mutually
advantageous for joint participation, the form of participation, the particular
1
organization, financing, work share, project share, etc. will be the object of
individual agreements to be entered into by the parties to this Memorandum of
Understanding.
4. Prohibitions. It is expressly understood that neither party to this
Memorandum of Understanding shall have the right to represent the other party or
to use in any way the name, characterization, or trademark of the other party.
Neither party to this Memorandum of Understanding shall utilize or commit any of
the money, property, or credit of the other party.
5. Evaluation. The parties will meet together whenever required
but in no event less than every six (6) months to evaluate the objectives and
achievements of the parties' collaboration pursuant to this Memorandum of
Understanding.
6. Notice. Any notice required to be given herein shall be
deemed to have been sufficiently given to either party for all purposes hereof
if mailed by registered airmail, postage prepaid, addressed as follows:
Lockwood Greene Engineers, Inc. Covol Technologies, Inc.
Attn: H. David Rosamond Attn: Steven R. Brown
4201 Spring Valley Road, #1500 3280 North Frontage
Dallas, Texas 75244 Lehi, Utah 84043
7. Force Majeure. Neither party shall be in default of the terms
of this Memorandum of Understanding if such default is directly or indirectly
caused by an act of force majeure.
8. Exclusivity. LG will have a right of first refusal for engineering,
procurement, and construction management services exclusively on all coal
agglomeration, steel mill waste stream metallics agglomeration, and metal
recovery projects provided that LG is acceptable to ultimate customer.
9. Remuneration. In return for the exclusivity committed to LG
in Paragraph 8, LG will reduce the $600,000 fixed fee by $100,000 for Contract
LG01 for the first coal fines agglomeration facility.
10. Recision and Mutual Release. In further consideration of this
Memorandum of Understanding, the parties hereby cancel those certain twenty-one
contracts (LG02-LG22) entered into between the parties on December 28, 1995 and
December 29, 1995. The parties also release each other from any and all claims
and liabilities against each other and arising from said contracts. (Contract
LG01 remains in force.)
11. Terms of Memorandum of Understanding. This Memorandum of
Understanding will remain in force for one (1) year from the date of this
Memorandum of Understanding or until one of the parties gives written notice of
its desire to discontinue it with at least thirty (30) days' notice. If this
notice is given while jobs already taken in collaboration between the parties
are still outstanding, each of the parties will continue its performance until
2
such work is properly accomplished. If none of the parties gives notice within
the aforesaid one (1) year, this Memorandum of Understanding will automatically
be renewed for another one (1) year and so on.
12. Assignment. This Memorandum of Understanding shall not be
assigned by either of the parties without the written consent of the other
party.
IN WITNESS WHEREOF, the parties hereto have entered into the Memorandum
of Understanding effective as of the 28th day of August 1996.
LOCKWOOD GREENE ENGINEERS, INC. COVOL TECHNOLOGIES, INC.
By: /s/ H. David Rosamond By: /s/ Mike Midgley
H. David Rosamond Mike Midgley
Title:______________________ Title: President
3