AMENDED AND RESTATED PROMISSORY NOTE
U.S. $6,500,000 Dated as of May 25, 2000
FOR VALUE RECEIVED, the undersigned, Birmingham Syn Fuel, L.L.C., an
Oregon limited liability company ("Debtor"), promises to pay to the joint order
of Covol Technologies, Inc., a Delaware corporation ("Covol"), and Alabama
Synfuel #1 Ltd., a Delaware limited partnership ("ASF"), the principal amount of
Six Million Five Hundred Thousand Dollars ($6,500,000), together with interest
thereon at the Interest Rate (as hereinafter defined) (collectively, the
"Obligations") from the date hereof until paid in full, all in accordance with
the terms of this Amended and Restated Promissory Note (the "Note").
This Note is delivered pursuant to that certain Settlement Agreement
and Mutual Release ("Settlement Agreement"), dated as of May 25, 2000, by and
among Covol and ASF (collectively, "Lender"), on the one hand, and Debtor,
PacifiCorp Syn Fuel, L.L.C., an Oregon limited liability company, and PacifiCorp
Financial Services, Inc., an Oregon corporation ("Financial"), on the other
hand. For purposes of this Note, capitalized terms used but not otherwise
defined herein shall have the meanings ascribed thereto in the Settlement
Agreement.
Interest shall accrue on the aggregate principal balance of this Note
from the date hereof until the repayment in full of the Obligations at a rate of
six percent (6%) per annum simple interest ("Interest Rate"). Interest shall be
calculated based on a 365-day year calculated for the actual number of days
elapsed and shall not compound. Accrued interest shall be due and payable
quarterly in arrears on each March 31, June 30, September 30 and December 31
until final payment of the Obligations, with the first such interest payment due
on June 30, 2000. All accrued and unpaid Obligations outstanding under this Note
shall be due and payable on February 20, 2003.
In addition to any rights of the Debtor under the Settlement Agreement,
the Transaction Documents and applicable law, any amounts owing to Debtor from
either the Lender or Covol under any of the Settlement Agreement or the
Transaction Documents may be offset and applied toward the payment of the
Obligations owing to the Lender, whether or not the Obligations, or any part
thereof, shall be due and payable; provided, however, that Debtor shall give
Lender ten (10) business days' written notice prior to exercising such right of
offset.
Subject to the immediately preceding paragraph, and upon thirty days
written notice by Lender of (i) a failure by the Debtor to make payments
required pursuant to the terms hereof, or (ii) an absolute and irrevocable
abandonment of the Alabama Project, the Lender may declare this Note immediately
due and payable without further presentment, demand, protest or notice of any
kind, and thereafter interest shall continue to accrue at the Interest Rate.
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In no contingency or event whatsoever shall the rate or amount of
interest paid by the Debtor under this Note exceed the maximum amount
permissible under the law, which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such court
determines that Lender has received interest under this Note in excess of the
maximum amount permitted by such law (i) Lender shall apply such excess to (A)
first, the unpaid principal portion of the Obligations, and (B) second, to the
accrued but unpaid interest portion of the Obligations, or (C) third, if the
amount of such excess exceeds the Obligations, Lender shall promptly refund such
excess interest to Debtor and (ii) the provisions of this Note shall be deemed
amended to provide for such permissible rate. All sums paid, or agreed to be
paid, by Debtor which are, or hereafter may be construed to be, compensation for
the use, forbearance or detention of money shall, to the extent permitted by
applicable law, be amortized, spread and allocated throughout the full term of
such indebtedness until the indebtedness is paid in full.
Both principal and interest are payable in United States Dollars in
immediately available funds.
This Note is subject to voluntary prepayment in whole or in part at the
election of the Debtor.
The payment of this Note is secured by a security interest in the
Alabama Project, as more fully described in the Security Agreement, dated as of
February 20, 1998, by and between Debtor and Lender as amended and restated by
that Amended and Restated Security Agreement, dated the date hereof, by and
between Debtor and Lender, and a Collateral Assignment of Sublease, dated as of
February 20, 1998, delivered by Debtor for the benefit of the Lender, as amended
and restated by that Amended and Restated Collateral Assignment of Lease, dated
the date hereof, delivered by Debtor for the benefit of the Lender.
This Note is assignable by Lender (any such assignment, other than a
Pledge, as defined below, a "Sale"); provided, however, that in the event of a
proposed Sale, Financial shall have the following limited right to purchase the
Note: prior to: (i) offering the Note for Sale or (ii) accepting an offer for
the Sale of the Note, Lender must offer (the "Sale Offer") in writing to sell
the Note to Financial at the price and terms it expects to receive in the case
of clause (i) or would receive in the case of clause (ii). The Sale Offer shall
also state the date for the consummation of the sale of the Note to Financial
(the "Financial Sale Consummation Date"); provided that the Financial Sale
Consummation Date shall not be less than fifteen (15) days after Lender's
receipt of Financial's written acceptance of the Sale Offer. Financial shall
have thirty (30) days after the delivery to it of the Sale Offer in which to
agree in writing to purchase the Note. If Lender receives written notice from
Financial within thirty (30) days of Financial's receipt of the Sale Offer that
Financial has agreed to purchase the Note on the Financial Sale Consummation
Date at the price and terms set forth in the Offer, the parties shall close the
sale on the Financial Sale Consummation Date. If Financial fails to exercise in
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writing its right to purchase the Note within the time period specified above,
Financial shall be deemed to have consented to the proposed Sale to a third
party upon the same price and terms set forth in the Sale Offer. In the event
that Financial has accepted the Sale Offer within thirty (30) days, but fails to
complete the purchase on the Financial Sale Consummation Date (unless such
failure is caused by Lender, Covol or any affiliate thereof), then, without
limiting any other rights which Lender may have against Debtor, neither Debtor
nor Financial shall have the right to purchase the Note with respect to any
subsequent proposed Sale. In the event Financial elects not to purchase the Note
as contemplated above, Lender shall have a three-month period in which it may
sell the Note to any third party on the same or higher price and the same or
less seller-friendly terms as presented to Financial. If a subsequent Sale is
for a lower price or on terms otherwise more favorable to the purchaser than the
terms and conditions presented to Financial, Lender shall be required to make a
new offer to Financial on price and terms identical to such third party
proposal. Notwithstanding the foregoing, Lender may pledge and grant a security
interest with respect to this Note and the Lender's rights hereunder (a
"Pledge") to any person or entity ("Outside Lender") in connection with a
financing arrangement requiring a Pledge (any such arrangement, a "Loan");
provided, however, that in the event of a proposed Pledge, Financial shall have
the following limited right to extend to Lender the Loan and, if Financial
elects not to provide the Loan, the Outside Lender shall provide Financial a
right of first refusal to purchase the Note in the event of a foreclosure. Prior
to consummating the Loan, Lender must offer (the "Loan Offer") in writing to
enter into the Loan with Financial on the same terms its expects to receive from
the prospective Outside Lender. The Loan Offer shall also state the date for the
consummation of the Loan with Financial (the "Financial Loan Consummation
Date"); provided that the Financial Loan Consummation Date shall not be less
than five (5) business days after Lender's receipt of Financial's written
acceptance of the Loan Offer. Financial shall have fifteen (15) days after the
delivery to it of the Loan Offer in which to agree in writing to enter into the
Loan. If Lender receives written notice from Financial within fifteen (15) days
of Financial's receipt of the Loan Offer that Financial has agreed to enter into
the Loan on the Financial Loan Consummation Date on the terms set forth in the
Loan Offer, the parties shall close the financing on the Financial Loan
Consummation Date. If Financial fails to exercise in writing its right to enter
into the Loan within the time period specified above, Financial shall be deemed
to have consented to the proposed Loan with an Outside Lender upon the same
terms set forth in the Loan Offer. In the event that Financial has accepted the
Loan Offer within ten (10) days, but fails to close the financing on the
Financial Loan Consummation Date (unless such failure is caused by Lender, Covol
or any affiliate thereof), then, without limiting any other rights which Lender
may have against Debtor, neither Debtor nor Financial shall have the right to
extend a Loan with respect to any subsequent proposed Loan. In the event
Financial elects not to enter into the Loan as contemplated above, Lender shall
have a three-month period in which it may consummate a Loan with an Outside
Lender on the same or less lender-friendly terms as presented to Financial. If a
subsequent Loan is on terms more favorable to the Outside Lender than the terms
and conditions presented to Financial, Lender shall be required to make a new
offer to Financial on terms identical to such third party
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proposal. In the event this Note is subject to a Pledge and a foreclosure
proceeding is commenced, Financial shall be provided at least fifteen (15) days
prior written notice of such sale and Financial shall be entitled to purchase
the Note at the highest bonafide bid price at such sale. Any assignment of this
Note without first complying with the notice and offer provisions set forth in
this paragraph shall be void and of no force or effect. Without limiting the
foregoing, unless Debtor receives notice of assignment of this Note, Debtor
shall be entitled to deal solely with the Lender with respect to the subject
matter of this Note. Notwithstanding anything to the contrary contained herein,
Lender may assign this Note to any wholly-owned subsidiary of Covol or any
entity owning, directly or through one or more wholly-owned entities, all of the
outstanding capital stock of Covol; provided that Covol remains either a parent
or subsidiary of assignee at all times until the Note is paid in full.
Debtor hereby waives presentment for payment, demand, notice of
dishonor and protest of this Note and further agrees that this Note shall be
deemed to have been made under and shall be governed by the laws of the State of
Utah in all respects, including matters of construction, validity and
performance, and that none of its terms or provisions may be waived, altered,
modified or amended except as Lender may consent thereto in writing duly signed
by Lender or its authorized agent. No failure to exercise, and no delay in
exercising, any rights hereunder on the part of the holder hereof shall operate
as a waiver of such rights.
This Note amends and restates the Original Note in its entirety. The
Original Note is hereby terminated and of no further force or effect.
This Note shall be binding upon and inure to the benefit of the Lender
and its respective heirs, executors, administrators, personal representatives
and permitted successors and assigns.
WAIVER OF JURY TRIAL: THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE OBLIGATIONS,
THE TRANSACTION DOCUMENTS, THE DEBTOR-CREDITOR RELATIONSHIP OF DEBTOR AND LENDER
OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
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IN WITNESS WHEREOF, Debtor has caused this Note to be executed as of
the date and year first above written.
BIRMINGHAM SYN FUEL, L.L.C.
By: /s/ Craig Longfield
Name: Craig Longfield
Title: President
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