COVOL TECHNOLOGIES INC
SETTLEMENT AGREEMENT AND RELEASE
<DOCUMENT>
<TYPE>EX-10.70
<SEQUENCE>9
<FILENAME>0009.txt
<DESCRIPTION>SETTLEMENT AGREEMENT AND RELEASE
<TEXT>


                        SETTLEMENT AGREEMENT AND RELEASE

         THIS SETTLEMENT AGREEMENT AND RELEASE ("Agreement") is entered into
this 26th day of June, 2000, by and among COVOL TECHNOLOGIES, INC., a Delaware
corporation ("Covol"), UTAH SYNFUEL #1 LTD., a Delaware limited partnership
("Utah Synfuel"), COALTECH NO. 1 L.P., a Delaware limited partnership
("Coaltech"), AJG FINANCIAL SERVICES, INC., a Delaware corporation ("AJG") and
SQUARE D COMPANY, a Delaware corporation ("Square D").

                                    PREAMBLES

         WHEREAS, Covol, Utah Synfuel, AJG, Square D and Coaltech (collectively,
the "Parties") have entered into various interrelated agreements respecting
Coaltech's synthetic fuel operations in Price, Utah (the "Utah Project"),
including the following agreements (collectively, the "Transaction Documents"):

                  a. Utah Project Purchase Agreement, dated March 7, 1997, by
         and among Covol, Utah Synfuel and Coaltech (the "Purchase Agreement");

                  b. Operation and Maintenance Agreement, dated March 7, 1997,
         by and between Coaltech and Covol (the "Operation and Maintenance
         Agreement");

                  c. License and Binder Purchase Agreement, dated March 7, 1997,
         by and among Coaltech, Covol and Utah Synfuel;

                  d. Sublease Agreement, dated March 7, 1997, by and between
         Coaltech and Covol (the "Sublease");

                  e. Supply and Purchase Agreement for the Supply of Coal Fines
         and the Purchase of Coal Product, dated March 7, 1997, by and among
         Covol, Utah Synfuel, and Coaltech (the "Supply and Purchase
         Agreement");

                  f. Abandonment Option Agreement, dated March 7, 1997, by and
         among AJG and Square D, as Option Holders, and Covol; and

                  g. Repurchase Option Agreement, dated March 7, 1997, by and
         among Coaltech, Covol and Utah Synfuel.


         ** 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.

<PAGE>

         WHEREAS, Covol, AJG and Square D also have entered into that certain
Agreement of Limited Partnership of Coaltech No. 1, L.P., dated March 7, 1997,
by and among Covol as General Partner and AJG and Square D as limited partners
(the "Partnership Agreement");

         WHEREAS, various issues have arisen between the Parties pertaining to
the Utah Project and the Parties' respective rights and obligations under the
Transaction Documents and the Partnership Agreement, including, but not limited
to, the limited partners' forced retirement of Covol as General Partner of
Coaltech on October 29, 1999 and the ownership and operation of the synthetic
fuel facility currently located in Price, Utah and any location to which the
facility may be moved or relocated in the future (the "Facility");

         WHEREAS, Covol, Utah Synfuel, AJG and Coaltech have entered into that
certain Assignment and Amendment Agreement, dated January 26, 2000, a copy of
which is attached hereto as Exhibit A;

         WHEREAS, simultaneous with the signing of this Agreement, Coaltech,
Covol and Utah Synfuel are entering into that certain License and Binder Supply
Agreement dated the date hereof, a copy of which is attached hereto as Exhibit B
(the "Binder Agreement"); and

         WHEREAS, the Parties wish to resolve remaining issues and agree to
settle such issues on the conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties do hereby agree as
follows:

         1. Termination. The Parties agree that each of the Transaction
Documents is terminated and is of no further force or effect, subject to and in
accordance with the terms and conditions set forth herein.

         2. Accounting and Settlement Payments.

                  a. Accounting. The Parties agree that an accounting has been
         rendered of all financial obligations and sums owed under the
         Partnership Agreement and the Transaction Documents by
         PriceWaterhouseCoopers for the period commencing March 7,1997 and
         ending September 30, 1999 (Exhibit C) and by Covol for the period
         commencing October 1, 1999 and ending April 29, 2000 (Exhibit D).
         Exhibit C and Exhibit D will be collectively referred to hereafter as
         the "Accounting." The cost of the accounting by PriceWaterhouseCoopers
         shall be split equally between Covol and Coaltech.

                  b. Settlement Payments. Pursuant to the Accounting, Coaltech
         shall pay Covol $** upon the execution of this Agreement.

                                       2
<PAGE>

                  c. Site Termination Costs. Coaltech shall pay Covol $** to be
         applied to the costs of Covol in terminating (i) the obligation to make
         monthly payments to the landlord of the Premises under the lease dated
         December 23, 1996 (the "Lease"); and (ii) the Gas Gathering, Purchase
         and Sale Agreement dated June 4, 1997 with the Drunkards Wash Owners.
         Covol shall pay the costs of any Premises restoration and environmental
         remediation.

         3. Representations and Warranties. Covol and Utah Synfuel jointly and
severally represent and warrant to Coaltech, AJG and Square D that as of the
date of this Agreement, the following are true:

                  a. Title. At the closing on March 7, 1997, Covol and Utah
         Synfuel conveyed to Coaltech, marketable title to and possession of the
         Purchased Assets (as defined in the Purchase Agreement) free and clear
         of all Liens (as defined in the Purchase Agreement), other than
         Permitted Liens (as defined in the Purchase Agreement). During the
         period commencing March 7, 1997 ending October 29, 1999, Covol, as
         General Partner of Coaltech, except as set forth on Schedule 1 attached
         hereto, has not (i) sold, leased, assigned, hypothecated or agreed to
         sell, lease, assign, hypothecate or otherwise transferred or disposed
         of, or agreed to transfer or dispose of any of the Purchased Assets; or
         (ii) permitted or allowed any of the Purchased Assets to be subject to
         any liens other than pursuant to the Security Agreement (as defined in
         the Purchase Agreement). During the period commencing October 29, 1999
         through the date hereof, to the knowledge of Covol and/or Utah Synfuel,
         Covol, except as set forth on Schedule 1 hereto, has not (i) sold,
         leased, assigned, hypothecated or agreed to sell, lease, assign,
         hypothecate or otherwise transferred or disposed of, or agreed to
         transfer or dispose of any of the Purchased Assets; or (ii) permitted
         or allowed any of the Purchased Assets to be subject to any liens other
         than pursuant to the Security Agreement (as defined in the Purchase
         Agreement).

                  b. Condition of Purchased Assets. As of October 29, 1999, the
         Purchased Assets were in good operating condition and repair, subject
         only to normal wear and tear. As of the date hereof, to the knowledge
         of Covol and/or Utah Synfuel, the Purchased Assets are in good
         operating condition and repair, subject to only normal wear and tear.

                  c. Proprietary Property. In the event Coaltech and/or any of
         its agents or affiliates uses the Purchased Assets to produce synthetic
         fuel any time after the date hereof, without use of the Synthetic Fuel
         Technology (as defined in the Binder Agreement) or other proprietary
         information from Covol and Utah Synfuel pursuant to the Binder
         Agreement, the sole obligations of Coaltech, AJG and Square D to Covol
         and Utah Synfuel shall be the payment obligations under Section 4(d)
         hereof and under the Binder Agreement.

         4. Covenants.

                                       3
<PAGE>

                  a. Access to the Premises. Covol agrees that Coaltech, AJG and
         Square D (and any of their agents) shall continue to have access to the
         Premises (as defined in the Sublease) for a period commencing the date
         hereof ending July 31, 2000 for the purposes of removing and
         relocating, at Coaltech's expense, all of the Purchased Assets. Covol
         and Utah Synfuel shall cooperate with AJG, Coaltech and Square D during
         such period in arranging security, maintenance and other services for
         the Facility.

                  b. Payments to Geocapital. Coaltech agrees that it will
         continue to pay all fees due to Geocapital pursuant to Section 5.3(c)
         of the Purchase Agreement and that certain Letter Agreement between
         Coaltech and Geocapital, Inc., dated March 7, 1997, for coal produced
         using the Purchased Assets (as defined in the Purchase Agreement) until
         December 31, 2007.

                  c. Payments to Coalco Corporation. Covol and Utah Synfuel
         agree that it will continue to make all payments due to CoalCo.
         Corporation as a result of the transactions contemplated by the
         Transaction Documents pursuant to Section 5.3(c) of the Purchase
         Agreement.

                  d. Payments to Covol by AJG and Square D. AJG and Square D
         severally agree to pay Covol ** percent (**%) of the "Net Benefit"
         derived by AJG and Square D or any of their affiliates arising from or
         related to the Purchased Assets for the period commencing the date
         hereof and ending December 31, 2007. For the purpose of this Section
         4(d), the term "Net Benefit" shall include, but not limited to (i) sale
         proceeds, lease payments, partnership distributions or other benefits
         that may be derived upon the sale, lease, assignment, or other transfer
         involving the Purchased Assets, if any, (ii) in any calendar quarter,
         the positive difference available to AJG and Square D, if any, between
         (1) the sum of the value of the tax credits and gross sales revenues
         generated by the sale of synthetic fuel, less (2) the costs of
         producing and selling synthetic fuel; and (iii) any other economic
         benefit received by AJG or Square D arising from or related to the
         Purchased Assets; provided that no economic benefit of AJG or Square D
         shall be included more than once for purposes of calculating the "Net
         Benefit."

         5. Indemnification.

                                       4
<PAGE>

                  a. Indemnification of Coaltech, AJG and Square D. Covol and
         Utah Synfuel jointly and severally agree to indemnify, defend, and hold
         Coaltech, AJG and Square D and their officers, directors, shareholders,
         partners, employees, representatives and agents and their respective
         successors and assigns (the "Coaltech Group"), harmless from and
         against any and all costs, expenses, losses, direct or indirect
         damages, fines, penalties or liabilities (including, without
         limitation, interest which may be imposed by a court in connection
         therewith), court costs, litigation expenses, reasonable attorneys' and
         paralegals' fees and accounting fees (collectively, the "Damages")
         suffered, sustained or incurred by any member of the Coaltech Group
         with respect to, arising from or in connection with, or alleged to
         result from, arise out of or in connection with:

                           i. a breach by Covol or Utah Synfuel of, or the
                  inaccuracy of, any representation or warranty made by Covol or
                  Utah Synfuel and contained in this Agreement or the Binder
                  Agreement;

                           ii. a breach or nonperformance by Covol or Utah
                  Synfuel of any covenant, restriction or agreement made by
                  Covol or Utah Synfuel and contained in this Agreement or the
                  Binder Agreement; or

                           iii. any claims, suits, action or cause of action or
                  proceeding brought by any person other than a member of the
                  Coaltech Group that arises out of or is based upon (A) a
                  breach by Covol and/or Utah Synfuel of the Partnership
                  Agreement or any of the Transaction Documents or (B) Covol's
                  operation of the Utah Project.

                  b. Indemnification of Covol and Utah Synfuel. Coaltech, AJG
         and Square D, severally (solely as to its own breaches) agree to
         indemnify, defend, and hold Covol and Utah Synfuel and their officers,
         directors, shareholders, employees, partners, representatives and
         agents and their respective successors and assigns (the ACovol Group@)
         harmless from and against any and all Damages suffered, sustained or
         incurred by any member of the Covol Group with respect to, arising from
         or in connection with or alleged to result from, arise out of or in
         connection with:

                           i. a breach by Coaltech, AJG or Square D of, or the
                  inaccuracy of, any representation or warranty made by Coaltech
                  and contained in this Agreement or the Binder Agreement;

                           ii. a breach or nonperformance by Coaltech, AJG or
                  Square D of any covenant, restriction or agreement made by
                  Coaltech, AJG or Square D and contained in this Agreement or
                  the Binder Agreement; or

                           iii. any claim, suit, action or cause of action or
                  proceeding brought by any person other than a member of the
                  Covol Group that arises out of or is based upon (A) the breach
                  by AJG and/or Square D of the Partnership Agreement or any of
                  the Transaction Documents or (B) the continuation of the
                  Coaltech business from and after October 29, 1999 (unless such
                  claim, suit, action or cause of action or proceeding resulted
                  from an act or omission by Covol and/or Utah Synfuel).

         6. Release.

                                       5
<PAGE>

                  a. Release by Covol and Utah Synfuel. Except for (i) the
         obligations of Coaltech, AJG and Square D under this Agreement, Binder
         Agreement and the Assignment and Amendment Agreement and (ii) the
         Excluded Claims (as defined below), Covol and Utah Synfuel, on behalf
         of the Covol Group, hereby release, covenant not to sue, and forever
         discharge the Coaltech Group and each member thereof, from and against
         any and all claims, demands, liabilities, causes of action and damages
         of any and every kind, nature, character, known and unknown, which any
         member of the Covol Group has, had or may have against the Coaltech
         Group or any member thereof relating to the Transaction Documents
         and/or the Partnership Agreement.

                  b. Release by Coaltech, AJG and Square D. Except for (i) the
         obligations of Covol and Utah Synfuel under this Agreement, the Binder
         Agreement and the Assignment and Amendment Agreement and (ii) the
         Excluded Claims (as defined below), Coaltech, AJG and Square D, on
         behalf of the Coaltech Group, hereby release, covenant not to sue, and
         forever discharge the Covol Group and any member thereof, from and
         against any and all claims, demands, liabilities, causes of action and
         damages of any and every kind, nature, character, known and unknown,
         which any member of the Coaltech Group has, had or may have against
         them arising from, relating to the Transaction Documents and/or the
         Partnership Agreement.

         The Parties acknowledge that certain members of the Covol Group are
parties to written agreements with certain members of the Coaltech Group besides
the Partnership Agreement and the Transaction Documents, including, without
limitation, the Debenture (as that term is defined in the Assignment and
Amendment Agreement), that certain written contract styled Agreement Concerning
Additional Facilities effective December 27, 1996 between Covol and AJG and that
certain letter agreement dated October 27, 1997 between Covol and AJG. For
purposes of this Agreement, "Excluded Claims" shall mean any and all rights and
obligations of any of the Parties pursuant to any other agreements between any
member of the Coaltech Group and its affiliates and any member of the Covol
Group and its affiliates besides the Partnership Agreement and the Transaction
Documents, which rights and obligations shall continue in full force and effect
notwithstanding the mutual releases given pursuant to this Section 6 of this
Agreement.

         7. No Admission. The Parties agree that the Agreement does not
represent any admission of guilt or liability by any of the Parties.

         8. Represented by Counsel. In entering the Agreement, the Parties
represent that they have relied upon the advice of their respective attorneys,
who are the attorneys of their own choice, and the terms of this Agreement have
been interpreted, completely read and explained to them by their attorneys, and
that those terms are fully understood and voluntarily accepted.

         9. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Parties hereto and their successors and assigns.

                                       6
<PAGE>

         10. Waiver. No waiver of any provision hereof shall operate as a waiver
of such provision or any other provision on a future occasion. This Agreement
may not be modified except pursuant to the written agreement of the party
against whom enforcement is sought.

         11. Headings. The headings used herein are for convenience only and
shall not be used to aid in the interpretation of any provision of the
Agreement.

         12. Integration Clause. This Agreement, the Binder Agreement and the
Assignment and Amendment Agreement contain the entire agreement between the
Parties concerning the subject matter of this Agreement and supersedes all prior
negotiations, proposed agreements or understandings, except as set forth herein.

         13. Contract Execution. This Agreement may be executed in duplicate
counterparts, each of which shall be considered and have the full force and
effect as an original.

         14. Rules of Construction. No rule of construction requiring
interpretation against the draftsman hereof shall apply in the interpretation of
this Agreement.

         15. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, without regard to its conflicts of laws principles.

                                       7
<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed and delivered this
Settlement Agreement and Release on the day and year first written above.

COVOL TECHNOLOGIES, INC.,                UTAH SYNFUEL #1 LTD.,
a Delaware corporation                   a Delaware limited partnership


By: /s/ Harlan M. Hatfield               By: /s/ Harlan M. Hatfield, V.P.
   -----------------------------             ----------------------------------
   Its: V.P.                                 Its: Covol Technologies, Inc., G.P.


COALTECH NO. 1 L.P.,                     AJG FINANCIAL SERVICES, INC.,
a Delaware limited partnership           a Delaware corporation


By: /s/ David S. O'Neill                 By: /s/ John C. Rosengren
   -----------------------------             ---------------------------
   Its: Manager of the General Partner       Its: V-P


SQUARE D COMPANY,
a Delaware corporation

By: /s/ Dick O'Shanna
    Its: V.P., Treasurer

                                       8
<PAGE>

                                   Schedule 1

None.



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