Exhibit 10.65.3
AMENDED AND RESTATED
LICENSE AND REAGENT PURCHASE AGREEMENT
THIS AMENDED AND RESTATED LICENSE AND REAGENT PURCHASE AGREEMENT (the
"Agreement"), is made and entered into as of July 1, 2002, by and between
Premier Elkhorn Coal Company, a Kentucky corporation (the "Licensee"), and
Headwaters Incorporated, a Delaware corporation, formerly known as Covol
Technologies, Inc. (the "Licensor").
RECITALS
WHEREAS, Licensor has developed and owns a proprietary process to
produce synthetic coal fuel qualifying for tax credits under Internal Revenue
Code Section 29 from waste coal dust, coal fines, run of mine coal and other
similar coal derivatives (collectively, "Coal Feedstock"), and Licensor is
entitled to license the Coal Technology (as defined below) to Licensee;
WHEREAS, Mohave Fuel Company, L.L.C., a Utah limited liability company
("Mohave"), sold a solid synthetic fuel manufacturing plant (the "Facility") to
Licensee as set forth in that certain Purchase and Sale Agreement dated January
21, 2002 (the "Purchase and Sale Agreement");
WHEREAS, in connection with the Purchase and Sale Agreement, Licensee
and Licensor entered into a License and Binder Purchase Agreement dated January
21, 2000 for the Licensee's use of the Coal Technology and wish to amend certain
terms and restate their agreement herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, Licensor and
Licensee each agree as follows:
Section 1. Definitions. Capitalized terms used herein shall have the
meanings specified in the Purchase and Sale Agreement, unless otherwise
specified below:
1.1 "Bankruptcy Code" has the meaning set forth in Section 16.
1.2 "Claimant" has the meaning set forth in Section 3.2.
1.3 "Coal Technology" means all intellectual property, patents
(including, but not limited to, United States Patent Numbers 5,599,361;
5,487,764; and 5,453,103) and applications therefor, printed and not printed
technical data, know-how, trade secrets, copyrights and other intellectual
property rights, inventions, discoveries, techniques, works, processes, methods,
plans, software, designs, drawings, schematics, specifications, communications
protocols, source and object code and modifications, test procedures, program
cards, tapes, disks, algorithms and all other scientific or technical
information in whatever form including "Developed Technology" relating to,
embodied in or used in the process to produce synthetic coal fuel from Coal
Feedstock, including all such information in existence as of the date of this
Agreement as well as related information later developed by Licensor; provided,
however, that the defined term "Coal Technology" shall not include the
proprietary process/method or other Reagent material or composition developed by
Licensor to produce synthetic coke briquettes from coke breeze, iron revert
materials, or any technology used in any application other than the processing
and production of synthetic coal fuel. Nothing in this Agreement is intended to
grant to Licensee the right to apply the Coal Technology to produce anything
other than synthetic coal fuel intended to qualify for tax credits under Section
29(c)(1)(C) of the Code.
1.4 "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
1.5 "Confidential Information" has the meaning set forth in Section
2.4.
1.6 "Developed Technology" means any inventions, "Improvement" or
technology that Licensor may conceive, make, invent or suggest in connection
with or related to the Coal Technology; provided, however, that "Developed
Technology" shall not include (i) coal fines recovery, coal fines washing,
material handling or product marketing techniques or technologies conceived,
made, invented or suggested by Licensee that are generally applicable to the
coal industry but which are used at the Facility in connection with the Coal
Technology or (ii) any inventions, "Improvement" or technology that Licensee may
conceive, make, invent or suggest in connection with or related to the Coal
Technology.
1.7 "Dow Agreement" means that certain agreement between Dow Chemical
Company and Licensor, effective January 1, 1998.
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1.8 "Facility" has the meaning set forth in the Recitals.
1.9 "Hazardous Substances" means (a) any petrochemical or petroleum
products (provided that for purposes of this Agreement, the Proprietary Reagent
Material shall not be considered to be a petrochemical or petroleum product),
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.
1.10 "Increased Cost of Manufacture" has the meaning set forth in
Section 4.2.
1.11 "Improvement" means an alteration or addition to an invention or
discovery which may enhance performance or economics while maintaining a
product's, device's or method's essential identity and character; provided,
however, that "Improvement" shall not include (i) coal fines recovery, coal
fines washing, material handling, or product marketing techniques or
technologies conceived, made, invented or suggested by Licensee that are
generally applicable to the coal industry but which are used at the Facility in
connection with the Coal Technology or (ii) any alteration or addition to an
invention or discovery which was conceived, made, invented or suggested by
Licensee. An "Improvement" may comprise alterations or additions to either
patented or unpatented inventions, discoveries, technology or devices and may or
may not be patentable.
1.12 "Licensee" has the meaning set forth in the preamble.
1.13 "Licensor" has the meaning set forth in the preamble.
1.14 "Proprietary Reagent Material" means and refers to the chemical
reagent compound supplied by Licensor and used for the production of synthetic
coal by the Facility.
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1.15 "Purchase and Sale Agreement" has the meaning set forth in the
Recitals.
1.16 "Reduced Cost of Manufacture" has the meaning set forth in Section
4.2.
Section 2. License Grant.
2.1 General. Licensor hereby grants to Licensee a non-exclusive license
to use the Coal Technology, including Developed Technology relating to the Coal
Technology, for the term of this Agreement, for the purpose of commercial
exploitation, including the non-exclusive right to make, have made or use at the
Facility and to offer to sell and to sell or otherwise transfer products that
have been manufactured with the Coal Technology, subject to the terms and
conditions of this Agreement. Licensee hereby accepts the license on the terms
hereof. Licensee shall not have the right to sublicense the Coal Technology,
except to any assignee, transferee or purchaser in accordance with Section 18.
Licensee further agrees to use the Coal Technology only under authority of this
Agreement with Licensor.
2.2 Licensor's Ownership of Developed Technology. All Developed
Technology is and shall become Licensor's absolute property, subject to the
terms of this Agreement.
2.3 Non-licensed Technology. Licensor retains the absolute right to
fully exploit its technologies including, but not limited to, the application of
such technology embodied in the Coal Technology to produce, market and use
synthetic coke briquettes from coke breeze, iron revert materials and any other
materials to which Licensor's technology can be applied.
2.4 Confidentiality. Each of the parties hereby agree to maintain the
Coal Technology confidential and not to disclose the Coal Technology, or any
aspect thereof, including, but not limited to, the Developed Technology
(collectively, the "Confidential Information"). Notwithstanding the foregoing,
information which (i) is or becomes generally available to the public other than
as a result of an unauthorized disclosure by the parties or their respective
agents, employees, directors or representatives, (ii) was available to the party
receiving disclosure on a non-confidential basis prior to its receiving
disclosure hereunder, (iii) lawfully becomes available to the party receiving
disclosure on a non-confidential basis from a third party source (provided that
such source is not known by the party receiving disclosure or its agents,
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employees, directors or representatives to be prohibited from transmitting the
information), (iv) a party is compelled by legal process by any court or other
authority to disclose or (v) is developed by Licensee independently of (or which
does not depend on the use of) Confidential Information received from Licensor,
shall not be subject to the terms of this Section 2.4. In the case of (iv)
above, the compelled party shall give the other party prompt written notice of
such legal process in order that an appropriate protective order can be sought
and each party agrees not to oppose the other party's efforts to prevent the
public disclosure of Confidential Information. At the termination of this
Agreement, each party receiving Confidential Information shall use commercially
reasonable efforts to return all copies of such Confidential Information
(including, without limitation, any reports or memoranda), except to the extent
such Confidential Information is necessary for accounting, tax, regulatory or
other similar purposes. Nothing in this Agreement shall prohibit Licensee from
disclosing the Confidential Information to affiliates or to others as may be
reasonably necessary for Licensee to exploit Licensee's rights under the
Purchase and Sale Agreement and/or this Agreement, provided that the recipient
of any such Confidential Information executes a confidentiality agreement
restricting further disclosure of the Confidential Information.
2.5 Know-How and Assistance. To enable Licensee to benefit fully from
the license of the Coal Technology, Licensor shall provide access to all
relevant documentation, drawings, engineering specifications and other know-how
in its possession, reasonable access to its employees or agents who are familiar
with the Coal Technology, including, but not limited to, Developed Technology,
and shall provide such technical assistance and training as is requested by
Licensee. If Licensor does not have responsibility for the operation of the
Facility, Licensee shall reimburse Licensor for reasonable travel and other
similar out-of-pocket expenses of Licensor in performing services under this
Section 2.5; provided, however, that Licensor shall obtain the prior approval of
Licensee for any expenditures in excess of $5,000.
Section 3. Royalty.
3.1 Royalty Payments. Subject to Section 18 below, during the term of
this Agreement, Licensee shall pay to Licensor a royalty in an amount equal to
$**** per ton of synthetic fuel produced at the Facility and sold during the
period commencing on the date of this Agreement and ending upon the expiration
of the term (or earlier termination) of this Agreement. Such royalty shall be
paid quarterly on the last business day of January, April, July and October of
each calendar year for the synthetic fuel produced at the Facility and sold
during the previous calendar quarter (commencing with the calendar quarter which
includes the date of this Agreement), regardless of whether all or any part of
the Coal Technology is used.
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3.2 Royalty Set-off. If any person ("Claimant") asserts a claim that
all or any part of the Coal Technology is not the property of Licensor and is
instead the property of Claimant, Licensee may, pending resolution of such
claim, withhold from the royalty payment otherwise due Licensor pursuant to
Section 3.1, amounts equal to such licensee fees as Claimant may demand for the
use by Licensee of the Coal Technology allegedly owned by Claimant. Any amounts
so withheld will be placed in escrow by Licensee. Upon entrance of a final
non-appealable order by a court of competent jurisdiction that the Coal
Technology is the property of Licensor or upon receipt of a release of Licensee
from liability by Claimant, Licensee shall pay to Licensor any amounts withheld
pursuant to this Section 3.2. If a court of competent jurisdiction enters a
final non-appealable order that all or any portion of the Coal Technology is the
property of the Claimant, Licensee may pay to Claimant a reasonable license fee
and set off any amounts so paid against any amount withheld pursuant to this
Section 3.2 and/or any other royalty otherwise due Licensor without any further
liability with respect thereto. Nothing in this Section 3.2 shall be construed
as limiting in any respect Licensee's rights and remedies related to a breach by
Licensor of the representations and warranties contained in Section 7.3. 3.2
Section 4. Sales of Reagent.
4.1 Sale and Purchase. Licensor shall sell to Licensee, and Licensee
shall purchase from Licensor, the Facility's full requirements of chemical
reagent to produce synthetic fuel, provided, that Licensee's obligation
hereunder may be reduced or eliminated if, after written notice from Licensee to
Licensor, and reasonable opportunity to cure (not to exceed thirty (30) days
from receipt of said notice) (i) Licensor fails to deliver a chemical reagent
that when properly applied to Coal Feedstock produces a "qualified fuel" for
purposes of Section 29 of the Code; (ii) Licensor fails to deliver on the terms
and conditions set forth in this Agreement the Facility's full requirements of
chemical reagent to produce synthetic fuel; (iii) customers of synthetic fuel
produced at the Facility provide Licensor with objective, verifiable evidence
that either (A) an alternative available chemical reagent makes Licensor's
chemical reagents obsolete, or (B) the customer's operating conditions preclude
the use of synthetic fuel produced with Licensor's chemical reagents; or (iv) it
is necessary to do so to comply with applicable environmental agency rulings,
orders, or regulations. Each calendar month Licensor shall deliver an invoice to
Licensee for the chemical reagent delivered to Licensee during the immediately
preceding calendar month. Payments for chemical reagent delivered by Licensor to
Licensee during any calendar month shall be due and payable to Licensor within
fifteen (15) days following receipt of an invoice from Licensor with respect to
such chemical reagent.
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4.2 Price. The price which Licensee shall pay for any Proprietary
Reagent Material delivered by Licensor to Licensee shall be an amount equal to
(a) $**** per dry pound of Covol 298 Proprietary Reagent Material, or (b) $****
per dry pound of Covol 298-1 Proprietary Reagent Material. If during the term of
this Agreement, Licensor's direct and actual costs (including, but not limited
to, material, labor and transportation costs) incurred in connection with the
manufacture and sale of the Proprietary Reagent Material delivered by Licensor
to Licensee pursuant to this Agreement shall exceed the price set forth in
clauses (a) or (b) in the preceding sentence (such price, the "Increased Cost of
Manufacture"), then the parties hereto agree that the price which Licensee shall
pay for Proprietary Reagent Material delivered by Licensor to Licensee pursuant
to this Agreement shall be automatically increased to an amount equal to such
Increased Cost of Manufacture. Licensee shall be entitled to receive volume
pricing general discounts on Proprietary Reagent Material that Licensor receives
under the Dow Agreement, as the same may be amended from time to time.
4.3 Licensor Representations, Warranties and Covenants. Licensor
represents, warrants and covenants as follows:
(1) Licensor shall convey to Licensee good, valid and
marketable title to all Proprietary Reagent Material purchased by Licensee from
Licensor hereunder, free and clear of any and all liens, claims and encumbrances
of any type whatsoever.
(2) Proprietary Reagent Material purchased by Licensee from
Licensor hereunder shall not be a Hazardous Substance and its sale, delivery and
use to produce solid synthetic fuel at the Facility, in each case, as
contemplated by this Agreement shall comply with all applicable laws and
governmental regulations (including, but not limited to, environmental laws and
regulations).
(3) Licensor represents and warrants to Licensee that the
Proprietary Reagent Material when properly applied to Coal Feedstock produces a
"significant chemical change" for purposes of Section 29 of the Code.
(4) Licensor agrees that it shall not substitute other
monomers or polymers for the Dow carboxylated styrene/butadiene/acrylate/acetate
latex formulations currently being used by Licensor to produce Proprietary
Reagent Material without the prior written consent of Buyer and without first
providing Buyer with a written report of a third party fuels expert reasonably
acceptable to the Licensor and Licensee to the effect that (in such third
party's professional judgment) the monomers or polymers so to be substituted
will achieve the results set forth in Section 4.3(c).
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(5) Licensor agrees that all Proprietary Reagent Material
delivered to Licensee shall be in accordance with the specifications set forth
in Exhibit A attached hereto.
(6) At Licensee's request, Licensor shall replace, or refund
the purchase price of, all non-conforming Proprietary Binding Material. In
addition, Licensor shall (i) pay all of Licensee's costs and expenses incurred
to return, remove or dispose of non-conforming Proprietary Reagent Material and
(ii) indemnify, defend and hold harmless Licensee and its partners, directors,
officers, members, agents, representatives, subsidiaries and affiliates from and
against any and all claims, demands or suits (by any party, including any
governmental entity), losses, liabilities, damages, obligations, penalties,
payments, costs and expenses (including the costs and expenses of enforcing this
indemnification and defending any and all actions, suits, proceedings, demands
and assessments, which shall include reasonable attorneys' fees and court costs)
resulting from, relating to, arising out of, or incurred in connection with any
products liability claim resulting from, relating to, arising out of, or
incurred in connection with the delivery to and use by Licensee of Proprietary
Reagent Material delivered by Licensor; provided, however, that in no event
shall Licensor's liability under this Section 4.3(f)(ii) exceed the greater of
(i) the proceeds received from insurance provided for in Section 4.8 and (ii)
the proceeds received under the Dow Agreement and/or any of its other vendor or
Reagent manufacturing agreements which Licensor may enter into from time to
time.
(7) Licensor agrees that there will be available at the
Facility from time to time as reasonably requested by Licensee sufficient
quantities of the Proprietary Reagent Material to supply the Facility's full
requirements from the date hereof until at least December 31, 2007.
4.4 Order Procedure. Licensee shall deliver all purchase orders for
chemical Reagent at least thirty (30) days in advance of the first day of the
month in which delivery of such chemical Reagent is required under such purchase
order. (For example, Licensee shall deliver a purchase order for December
delivery by no later than November 1st). Each such purchase order shall be
delivered either (i) in writing (including by fax) or (ii) orally by telephone
by an authorized agent of Licensee (subject to the condition that it is followed
by a written purchase order within twenty-four (24) hours). Such purchase orders
shall be sent to Licensor at such address as Licensor shall direct in writing
from time to time.
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4.5 Delivery and Acceptance. All Proprietary Reagent Material purchased
hereunder shall be delivered F.O.B. the Facility. Licensor shall arrange for any
necessary transportation of the Proprietary Reagent Material to the Facility and
shall deliver or cause to be delivered to Licensee a material safety data sheet
in respect of each delivery of Proprietary Reagent Material to Licensee.
Licensee shall bear the expense of unloading Proprietary Reagent Material from
the trucks. Licensee shall have a reasonable opportunity to sample Proprietary
Reagent Material delivered to it hereunder to confirm that such Proprietary
Reagent Material conforms to the terms and requirements hereof (including, but
not limited to, the specifications set forth in Exhibit A attached hereto), and
Licensee shall not be deemed or required to accept any such Proprietary Reagent
Material prior to the completion of such sampling. From time to time as
requested by Licensee, Licensor shall certify in writing to Licensee that the
representations and warranties in Section 4.3 are true and complete with respect
to the Proprietary Reagent Material delivered to Licensee pursuant to this
Agreement.
4.6 Grant of License. Licensor hereby grants to Licensee a nonexclusive
license for the term of this Agreement (or such shorter period as provided in
the proviso hereto) to use the technology used to manufacture the Proprietary
Reagent Material, to manufacture the Proprietary Reagent Material in sufficient
quantities to operate the Facility to full capacity, and such technology shall
be deemed "Coal Technology" for the purposes of this Agreement; provided,
however, that Licensee shall not be permitted to use, and Licensee agrees that
it shall not use, such license unless and until Licensor has given notice to
Licensee of its inability to deliver the Proprietary Reagent Material to
Licensee (which Licensor shall give to Licensee not less than ninety (90) days
before its ability to deliver the Proprietary Reagent Material to Licensee will
be interrupted or terminated for any reason, including Licensor's insolvency,
bankruptcy or liquidation) or, in the absence of such notice, the actual failure
by Licensor to deliver the Proprietary Reagent Material to Licensee for at least
five (5) calendar days after Licensee gives written notice of non-delivery to
Licensor. Upon the occurrence of the events described in the immediately
proceeding proviso, Licensor agrees to coordinate and arrange for, and does
hereby authorize and permit, Licensee, its sublicensees or assignees, to
purchase the Proprietary Reagent Material directly from Licensor's Proprietary
Reagent Material manufacturer or other sources. The license granted to Licensee
under this Section shall cease (subject to reinstatement upon the reoccurrence
of the events contemplated above) and sales of Proprietary Reagent Material
under the terms of this Agreement shall be reinstated, in each case, on a date
not less than ninety (90) days after Licensor gives notice to Licensee, together
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with evidence reasonably satisfactory to Licensee, that Licensor is able to
deliver the Proprietary Reagent Material to Licensee in accordance with this
Agreement. No additional fee or royalty shall be payable to Licensor in
connection with the license granted pursuant to this Section and Licensor shall
be responsible for any additional out-of-pocket costs incurred by Licensee in
connection with the production of Proprietary Reagent Material pursuant to this
Section.
4.7 Required Insurance.
(1) Types. Licensor shall obtain and maintain, at its own
cost, from reputable insurers at all times during the term of this Agreement,
general third party liability insurance, including product liability coverage,
with a $10,000,000 coverage limit, which may be comprised of a $1,000,000 per
occurrence primary policy and a $10,000,000 umbrella policy.
(2) "Occurrence" Basis Coverage. To the extent available on
commercially reasonable terms at commercially reasonable rates the liability
coverage required in this Section 4.7 shall be written on an "occurrence" basis.
(3) Named Insured. Licensor shall cause Licensee to be named
as an additional insured on all the insurance policies required under this
Section 4.7.
(4) Subrogation Waiver. Licensor shall cause all the insurance
policies required under this Section 4.7 to contain a waiver of subrogation by
the insurer in favor of Licensee.
(5) Notice of Cancellation/Coverage Reduction. Licensor shall
insure that each insurance policy required under this Section 4.7 shall contain
a "notice of cancellation/coverage reduction" provision requiring the insurer to
give at least thirty (30) days prior written notice to Licensee of the
cancellation of and/or material change to (including, but not limited to, a
reduction in coverage under such insurance policy) its insurance policy.
(6) Default. If Licensor fails duly to perform it obligations
to effect and maintain any of the insurance required pursuant to this Section
4.7, Licensee may, but shall not be obligated to, upon written notice to
Licensor, in the name of and on behalf of Licensor effect and maintain such
insurance, and all costs and expenses thereby incurred by Licensee shall be paid
by Licensor within ten (10) days of written demand.
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(7) Certificates of Insurance. Licensor shall cause its
insurers under each insurance policy required under this Section 4.7 to provide
Licensee with certificates of insurance evidencing the insurance policies and
endorsements required by this Section 4.7. Failure of the Licensee to receive
such certificates shall not relieve Licensor of its obligation to obtain and
maintain insurance in accordance with this Section 4.7. Failure to obtain
insurance pursuant to this Section 4.7 shall in no way relieve or limit
Licensor's obligations and liabilities under this Agreement.
Section 5. Records; Inspection; Confidentiality.
5.1 Records. Each party hereto shall keep accurate records containing
all data reasonably required for the computation and verification of the amounts
to be paid by the respective parties under this Agreement (including, but not
limited to, any Reduced Cost of Manufacture or Increased Cost of Manufacture),
and shall permit each other party or an independent accounting firm designated
by such other party to inspect and/or audit such records during normal business
hours upon reasonable advance notice. All costs and expenses incurred by a party
in connection with such inspection shall be borne by it.
5.2 Confidentiality. Each party agrees to hold confidential from all
third parties all information contained in records examined by or on behalf of
it pursuant to this Section 5; provided, however, that information shall not be
subject to the terms of this Section 5 which (i) is or becomes generally
available to the public other than as a result of an unauthorized disclosure by
the parties or their respective agents, employees, directors or representatives,
(ii) was available to the party receiving disclosure on a non-confidential basis
prior to its receiving disclosure hereunder, (iii) lawfully becomes available to
the party receiving disclosure on a non-confidential basis from a third party
source (provided that such source is not known by the party receiving disclosure
or its agents, employees, directors or representatives to be prohibited from
transmitting the information), (iv) a party is compelled by legal process by any
court or other authority to disclose, or (v) is developed by the party
independently of (or which does not depend on the use of) disclosure hereunder.
In the case of (iv) above, the compelled party shall give the other party prompt
written notice of such legal process in order that an appropriate protective
order can be sought and each party agrees not to oppose the other party's
efforts to prevent the public disclosure of such information. At the termination
of this Agreement, each party receiving copies of such information (including,
without limitation, any reports or memoranda) shall use commercially reasonable
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efforts to return all such copies, except to the extent such information is
necessary for accounting, tax, regulatory or other similar purposes. Nothing in
this Agreement shall prohibit Licensee from disclosing such information to
affiliates or to others as may be reasonably necessary for Licensee to exploit
Licensee's rights under the Purchase and Sale Agreement and/or this Agreement,
provided that the recipient of any such information executes a confidentiality
agreement restricting further disclosure of such information.
Section 6. Enforcement Of Proprietary Rights. Licensee shall cooperate in good
faith, with Licensor's efforts to enforce its proprietary patent and trade
secret rights at Licensor's sole expense.
Section 7. General Representations, Warranties and Covenants.
7.1 Authority. Each party represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (i) have been duly
authorized on its behalf by all requisite action, corporate or otherwise, (ii)
does not and will not result in any violation of, conflict with or default under
the terms of any of its organizational documents (nor, to its knowledge, does
there exist any condition which upon the passage of time or the giving of notice
would cause such violation, conflict or default), and (iii) does not and will
not result in any violation of, conflict with or default under any collective
bargaining agreement, permit, lease, venture, indenture, mortgage, agreement,
contract, judgment, order or other obligation or restriction to which it or its
assets may be bound or encumbered (nor, to its knowledge, does there exist any
condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default), (b) it has the full right, power and
authority to enter into this Agreement and to carry out the terms of this
Agreement, (c) it has duly executed and delivered this Agreement, and (d) this
Agreement is its valid and binding obligation, enforceable 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).
7.2 No Consent. Each party represents and warrants to the other party
that no approval, consent, authorization, order, designation or declaration of
any court or regulatory authority or governmental body or any third-party is
required to be obtained by it, nor is any filing or registration required to be
made therewith by it for the consummation by it of the transactions contemplated
under this Agreement.
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7.3 Intellectual Property Matters.
(1) Licensor represents and warrants to Licensee that (i) it
owns, free and clear of all liens and encumbrances, patents related to the Coal
Technology (including, but not limited to, United States Patent Numbers
5,599,361, 5,487,764 and 5,453,103) and has developed and to the best of its
knowledge exclusively owns the Coal Technology, including, but not limited to,
printed and not printed technical data, know-how, trade secrets, copyrights, and
other intellectual property rights and all other scientific or technical
information in whatever form relating to, embodied in or used in the process to
produce synthetic coal fuel from waste coal dust, coal fines, run of mine coal
and other similar coal feedstock, and, the right to freely make, use, sell and
exploit the Coal Technology and Proprietary Reagent Material used in
manufacturing synthetic coal fuel from waste coal dust, coal fines, run of mine
coal and other similar coal feedstocks, (ii) it has the sole and complete right
and power to grant to Licensee the licenses granted herein, and (iii) the sale
or use of the rights, Proprietary Reagent Material and Coal Technology and/or
licenses granted herein as contemplated by this Agreement do not and will not
infringe any third-party's intellectual property rights.
(2) Except as otherwise expressly provided in this Agreement,
Licensor agrees that it will not take any action or fail to take any action
during the term of this Agreement that would negate this Agreement or cause a
loss to Licensee of the licenses granted hereunder.
(3) If during the term of this Agreement a third party has
infringed any intellectual property rights associated with the Coal Technology
or otherwise misappropriated any Coal Technology, Licensor shall, at Licensor's
expense, institute and conduct legal actions against such third party or enter
into such agreements or accord in settlement as are deemed appropriate by
Licensor, in which case Licensor shall be entitled to any sums recovered in
connection therewith from third parties. If Licensor does not take any action,
Licensee shall have the right, but not the obligation, to take action as a
plaintiff in the prosecution of any infringement or misappropriation action
affecting the Facility, and Licensee shall be entitled to any sums recovered in
connection therewith from third parties. If Licensee and Licensor have jointly
conducted an infringement or misappropriation action, after each party has been
reimbursed for costs and expenses incurred by it in prosecuting the action, any
sums recovered in connection therewith from third parties shall be distributed
to Licensee and Licensor based on the proportionate amount of damages suffered
by Licensee and Licensor. Licensee shall always have the right to be represented
at its expense by counsel of its own selection in any action. In no event shall
Licensor enter into any agreement or settlement inconsistent with the terms of
this Agreement.
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7.4 Indemnification. Each party agrees to indemnify, defend and hold
harmless the other party and its partners, directors, officers, members, agents,
representatives, subsidiaries and affiliates from and against any and all
claims, demands or suits (by any party, including any governmental entity),
losses, liabilities, damages, obligations, penalties (including, but not limited
to, for violation of environmental laws), payments, costs (including, but not
limited to, costs of remediation) and expenses (including, but not limited to,
the costs and expenses of enforcing this indemnification and defending any and
all actions, suits, proceedings, demands and assessments, which shall include
reasonable attorneys' fees and court costs) resulting from, relating to, arising
out of, or incurred in connection with its breach of any of the representations,
warranties and/or covenants contained in this Agreement.
Section 8. Term. The term of this Agreement will begin on the date of this
Agreement and will expire, unless terminated earlier pursuant to Section 9, on
the later of: (a) December 31, 2007, (b) the end of the term of Section 29 of
the Code, or (c) the last to expire of the U.S. patents referred to under the
definition of Coal Technology above or any other U.S. patents in existence at
the date of this Agreement that disclose and claim Covol's proprietary Coal
Technology. Any extension of this Agreement must be in writing and signed by
both parties.
Section 9. Events of Default; Remedies.
9.1 Events of Default. The following shall constitute an event of
default ("Event of Default") under this Agreement:
(1) Licensor shall have breached any of its obligations
pursuant to Section 4.8, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice thereof by the
non-defaulting party;
(2) a party shall have breached in any material respect any of
its representations, warranties, covenants or other agreements contained in this
Agreement (other than as provided in Section 9.1(a)), which breach cannot be or
has not been cured within sixty (60) days after the giving of written notice
thereof by the non-defaulting party;
(3) a party becomes insolvent or is unable to pay its debts as
they fall due, seeks protection voluntarily or involuntarily under any law
relating to bankruptcy, receivership, insolvency, administration, liquidation,
dissolution or similar law of any jurisdiction (other than for the purposes of a
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reorganization with a view to continuing the business as a going concern under
relevant bankruptcy or insolvency proceedings) or enters into a general
assignment or arrangement or a composition with or for the benefit of its
creditors; or
(4) a party takes any step (including the filing or
presentation of a petition, the convening of a meeting or the filing of an
application or consent) in any jurisdiction for, or with a view to, the
appointment of an administrator, liquidator, receiver, trustee, custodian or
similar official (other than for the purposes of a reorganization with a view to
continuing the business as a going concern under relevant bankruptcy or
insolvency proceedings) for such party and/or the whole or any part of the
business, undertaking, property, assets, receiver or uncalled capital of such
party or any such person is appointed.
9.2 Remedies.
(1) Upon the occurrence of an Event of Default, the
non-defaulting party may, in addition to exercising any of its remedies at law
or equity or any of its other remedies provided for in this Agreement, terminate
this Agreement upon written notice thereof to the defaulting party.
(2) Upon termination of this Agreement, all rights granted to
and future obligations of the parties shall immediately cease; provided,
however, that termination shall not relieve either party of its obligations
accrued during the term of this Agreement (including, but not limited to, any
pre-termination obligation Licensee may have to pay Licensor) which has not been
fulfilled, and all representations, warranties, indemnification obligations and
confidentiality agreements made herein shall survive termination of this
Agreement.
(3) If either party terminates this Agreement pursuant to this
Section 9.2, Licensee shall promptly return and cause all agents of Licensee to
promptly return to Licensor all Confidential Information (except to the extent
such Confidential Information is necessary for accounting, tax, regulatory or
other similar purposes) and all Coal Technology then in Licensee's possession,
and Licensee shall not thereafter use for its own commercial benefit or disclose
to any third person any Confidential Information or Coal Technology before the
end of the term of Section 29 of the Code. Notwithstanding the foregoing,
Confidential Information shall not be subject to the terms of this Section
9.2(c) which (i) is or becomes generally available to the public other than as a
result of an unauthorized disclosure by the Licensee or its respective members,
agents, employees, directors or representatives, (ii) was available to the
Licensee on a non-confidential basis prior to its receiving disclosure
hereunder, (iii) lawfully becomes available to the Licensee on a
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non-confidential basis from a third party source (provided that such source is
not known by the Licensee or its members, agents, employees, directors or
representatives to be prohibited from transmitting the information), (iv) the
Licensee is compelled by legal process by any court or other authority to
disclose or (v) is developed by Licensee independently of (or which does not
depend on the use of) Confidential Information received from Licensor; provided,
however, that in the case of (iv) above, the Licensee shall give the Licensor
prompt written notice of such legal process in order that an appropriate
protective order can be sought and Licensee agrees not to oppose Licensor's
efforts to prevent the disclosure of Confidential Information.
Section 10. Waiver. The failure of any party to enforce at any time any
provision of this Agreement shall not be construed as a waiver of such provision
or the right thereafter to enforce each and every provision. No waiver by any
party, either express or implied, of any breach of any of the provisions of this
Agreement shall be construed as a waiver of any other breach of such term or
condition.
Section 11. Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be invalid or unenforceable in any respect
for any reason, the validity and enforceability of any such provision in any
other respect and of the remaining provisions of this Agreement shall not be in
any way impaired.
Section 12. Notices. All notices required or authorized by this Agreement shall
be effective upon receipt and given to the parties in writing by fax, mail, or
courier as follows:
To Licensor: Brent M. Cook, President
Headwaters Incorporated
11778 South Election Road, Suite 210
Draper, UT 84020
Fax: (801) 984-9410
To Licensee: Premier Elkhorn Coal Company
c/o TECO Coal Corporation
200 Allison Boulevard
Corbin, Kentucky 40701
Fax: (606) 523-4180
Attn: President
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With a copy to: TECO Energy, Inc.
702 N. Franklin Street
Tampa, Florida 33602
Fax: (813) 228-4811
Attn: General Counsel
Section 13. Remedies Cumulative. Remedies provided under this Agreement shall be
cumulative and in addition to other remedies provided by law or in equity.
Section 14. Entire Agreement. This Agreement, together with the Transaction
Documents (as defined in the Purchase and Sale Agreement), constitutes the
entire agreement of the parties relating to the subject matter hereof. There are
no promises, terms, conditions, obligations or warranties other than those
contained herein and therein. This Agreement and the Transaction Documents
supersede any and all prior communications, representations or agreements,
verbal or written, between the parties relating to the subject matter hereof.
This Agreement may not be amended except in writing signed by the parties
hereto.
Section 15. Relocation of the Facility. Licensee shall have the right to
relocate the Facility to Pike County, Kentucky or any other site or sites with
respect to which Licensor has not as of the date of this Agreement conveyed a
conflicting exclusive territorial license to a third party, provided that any
such relocation shall not affect the terms of this Agreement which shall remain
in full force and effect. As used in this Agreement, the Facility refers to the
subject synthetic fuel manufacturing plant regardless of the location or
configuration thereof.
Section 16. License Status in Bankruptcy. (a) This Agreement shall constitute an
executory contract under Section 365 of the United States Bankruptcy Code, 11
U.S.C. ss. ss. 101 et seq. (the "Bankruptcy Code"). All rights and licenses
granted pursuant to this Agreement are, and shall be deemed to be, licenses of
and right to "intellectual property" as that term is defined in Section
101(35A), and as used in Section 365, of the Bankruptcy Code. The parties agree
that (i) Licensor is a "licensor" under Section 365(n) of the Bankruptcy Code
and (ii) Licensee, as licensee under this Agreement, shall possess and may fully
exercise all of its rights, remedies and elections afforded by and under the
Bankruptcy Code.
(b) The parties further agree that, in the event of the
commencement of a case by or against Licensor under the Bankruptcy Code,
Licensee shall be entitled to all applicable rights under Section 365 of the
Bankruptcy Code. Without limiting the foregoing, the parties hereby agree that
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Licensee has (i) the right to complete duplicate/ or complete access to, as
appropriate) any such intellectual property referred to in subsection (a) above
and any and all embodiments of such intellectual property upon the written
request of Licensee and (ii) the right (unless and until the Agreement is
rejected), upon written request of Licensee, (A) to compel the Licensor to
perform the Agreement or to provide to Licensee such intellectual property
(including any and all embodiments thereof) and (B) to compel Licensor not to
interfere with Licensee's rights as provided in this Agreement/or any
supplemental agreement) to such intellectual property (including any and all
embodiments thereof), including any right to obtain such intellectual
property/or any embodiment thereof) from another entity (including without
limitation, the escrow referred to in Section 4.7).
Section 17. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
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).
(1) Licensor, in respect of itself and its properties, (i)
agrees to be subject to (and hereby irrevocably submits to) the nonexclusive
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 may be determined in any
Federal or state court sitting in the Commonwealth of Kentucky.
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(2) Licensee, in respect of itself and its properties, (i)
agrees to be subject to (and hereby irrevocably submits to) the nonexclusive
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 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 our of or relating to this Agreement and the transactions contemplated
hereby may be determined in any Federal or state court sitting in the State of
Utah.
(3) 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 12,
provided that nothing in this Section 17, shall affect the right of any party to
serve legal process in any other manner permitted by law or in equity.
(4) 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.
Section 18. Assignment. This Agreement may not be assigned, in whole or in part,
by any party without the prior written consent of the other party, which consent
shall not be unreasonably withheld, except that each party shall have the right
to assign their respective rights and obligations under this Agreement without
the prior consent of the other party to (i) any affiliate or any entity which
controls, is controlled by or is under common control with such party, where
"control" by an entity is established by the ownership, directly or indirectly,
of at least fifty percent (50%) of each class of the outstanding securities of
the controlled entity, provided that no such assignment shall release such party
from their respective obligations hereunder or (ii) in the case of Licensee, to
any transferee or purchaser of the Facility, provided that no such attempted
assignment of rights or delegation of duties by Licensee shall be valid unless
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the putative transferee shall have agreed unqualifiedly to assume the
obligations of Licensee under this Agreement. Licensee covenants not to transfer
or sell ownership of the Facility except on condition that the Licensee, as a
part of such transfer, assigns its obligations under this Agreement to the
transferee or purchaser.
Section 19. Further Assurances. Each party agrees, at the request of the other
party, at any time and from time to time, to execute and deliver all such
further documents, and to take and to forbear from all such action, as may be
reasonably necessary or appropriate in order to more effectively carry out the
provisions of this Agreement.
Section 20. Interpretation. Unless the context requires otherwise:
(1) 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.
(2) Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation."
(3) 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
section and exhibit references are to the sections and exhibits of this
Agreement.
(4) 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.
(5) A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
(6) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.
(7) All references to contracts, agreements, leases or other
understandings or arrangements shall refer to oral as well as written matters.
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(8) 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.
(9) 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.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, each party has caused the License and Reagent
Purchase Agreement to be executed by the duly authorized representative of the
parties on the date and year first above written.
PREMIER ELKHORN COAL CO. HEADWATERS INCORPORATED
By: /s/ J.J. Shackleford By: /s/ Brent M. Cook
-------------------------- -------------------------
Name: J.J. Shackleford Name: Brent M. Cook
Title: President Title: President
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