Financing Agreement - HEADWATERS INC - 1-13-1998

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Financing Agreement - HEADWATERS INC - 1-13-1998 Powered By Docstoc
					FINANCING AGREEMENT THIS AGREEMENT is made and entered into this 14th day of November 1997, by and between Covol Technologies, Inc., a Delaware corporation, whose address is 3280 No. Frontage Road, Lehi, Utah 84043, ("Covol"), and CoBon Energy, L.L.C., a Utah limited liability company, whose address is 1145 East South Union Avenue, Midvale, Utah 84047, hereinafter referred to as ("CoBon"). Covol and CoBon are sometimes referred to herein as the "parties." WITNESSETH: Whereas, Covol and CoBon are parties to that certain "License Agreement" dated September 10, 1996, in which Covol agreed to grant to CoBon the rights to develop up to 1.5 million tons of annual production capacity using Covol's patented Coal Technology, and are also parties to that certain "Project Development Agreement" dated December 30, 1996, which modifies the License Agreement (collectively the "CoBon Agreements"), and Whereas, pursuant to the License Agreement, CoBon has identified a potential project for the development of synthetic fuel manufacturing, briquetting or extruding facilities and related product marketing operations that will use Covol's patented Coal Technology, and Whereas, CoBon has entered into a construction agreement (the "Construction Agreement"), pursuant to which, after due inquiry and research, it has specified certain equipment for its projects, and Whereas, Covol is willing and able to provide supplemental financing for the equipment specified by CoBon. Now, therefore, in consideration of the mutual covenants and conditions contained herein, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows: TERMS: 1. Covol or Covol's financier will issue purchase orders for the pelletizer and dryer equipment in a total amount not to exceed $1,000,000, and for such other mutually agreeable long lead time equipment required pursuant to CoBon's Construction Agreement (the "Equipment"). Within the $1,000,000 limit, Covol will accept full and primary responsibility for the purchase price of the Equipment. CoBon will pay any portion of the purchase price exceeding $1,000,000. CoBon will assist Covol or Covol's financier with the negotiation of all remaining purchase order terms and with the placement of the purchase orders for the Equipment. Except for the purchase price of the Equipment, all other aspects of the purchase order, including but not limited to, negotiation of terms, expediting the order and administration and execution of any claims thereunder, shall be the full and primary responsibility and liability of CoBon, notwithstanding any participation or lack of participation in such other aspects by Covol or its financier. Page 1 *Confidential material has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission (the "Commission").

2. In addition to any other payments and royalties to which Covol is entitled for CoBon's projects under the CoBon Agreements, Covol will have the right to receive payments in the amount of * of Section 29 tax credits generated by the facility employing the Equipment (the "Facility"). CoBon will cause such payments to be made to Covol from CoBon's interest in the Section 29 tax credits, as specified in paragraph 3 below, regardless of the amount of CoBon's interest, and in accord with the same timetable as corresponding royalty payments are made by the Tax Oriented Investor (TOI) who purchases the Facility. 3. Covol or Covol's financier will have the exclusive right through January 27, 1998, to identify and negotiate a

2. In addition to any other payments and royalties to which Covol is entitled for CoBon's projects under the CoBon Agreements, Covol will have the right to receive payments in the amount of * of Section 29 tax credits generated by the facility employing the Equipment (the "Facility"). CoBon will cause such payments to be made to Covol from CoBon's interest in the Section 29 tax credits, as specified in paragraph 3 below, regardless of the amount of CoBon's interest, and in accord with the same timetable as corresponding royalty payments are made by the Tax Oriented Investor (TOI) who purchases the Facility. 3. Covol or Covol's financier will have the exclusive right through January 27, 1998, to identify and negotiate a letter of intent, acceptable to the parties, for the purchase of the Facility by a TOI on terms including Section 29 tax credit royalty payments to CoBon in an amount not less than * per $1.00 of Section 29 tax credits generated by the Facility. CoBon's payment to Covol as referenced in paragraph 2 will be made from the proceeds received by CoBon as a result of CoBon's interest in the Section 29 tax credits. The exclusivity provision set forth in this paragraph notwithstanding, CoBon has the right to hold discussions and negotiate with other TOI's including *, prior to January 27, 1998 as a contingent or back-up to TOI or Covol's efforts. 4. If Covol or Covol's financier succeeds in negotiating an acceptable letter of intent with a TOI under paragraph 3 above, then in addition to the payments specified in paragraph 2 above, Covol and Covol's financier, as the case may be, shall be entitled to all Section 29 tax credit royalty payments * $1.00 interest in the total Section 29 tax credits generated by the Facility. 5. If Covol fails to negotiate an acceptable letter of intent with a TOI under paragraph 3 above, then CoBon may proceed in its efforts to negotiate with its prospective TOI. However, Covol will retain the right, without the exclusivity set forth in paragraph 3, to identify and negotiate with a TOI on terms set forth in paragraphs 3 and 4. 6. If the project for which the Equipment is ordered and purchased by Covol fails for any reason, Covol will assume responsibility for payments due, if any, by CoBon relating to the Equipment and Covol shall, as its sole remedy hereunder, take possession of and retain all rights, title and interest in and to the Equipment. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a duly authorized officer and the Agreement shall be effective as of the date first above written.
COBON ENERGY, L.L.C. COVOL TECHNOLOGIES, INC.

By:/s/ Steven Nash -----------------Its: President Date: 11/14/97

By: /s/ Brent M. Cook ------------------Its: President Date: 11/14/97

Page 2 * Confidential material omitted and filed separately with the Commission.

PELLETCO Corporation A Palmer Affiliate 13 Elm Street 605 Willowglen Rd. 920 E. Deerpath 60 E. 88th Street Cohasset, MA Santa Barbara, CA Lake Forest, IL New York, NY 02025-1828 93105 60045 10128 Tel: 781/383-3200 Tel: 805/587-2315 Tel: 347/234-0832 Tel: 212/876-6060 Fax: 781/383-3205 Fax: 805/587-2795 Fax: 347/234-3397 Fax: 212/2893490 November 20, 1997
Covol Technologies, Inc. 3820 North Frontage Road Lehi, Utah 84043 By Facsimile to: 801-768-4483

PELLETCO Corporation A Palmer Affiliate 13 Elm Street 605 Willowglen Rd. 920 E. Deerpath 60 E. 88th Street Cohasset, MA Santa Barbara, CA Lake Forest, IL New York, NY 02025-1828 93105 60045 10128 Tel: 781/383-3200 Tel: 805/587-2315 Tel: 347/234-0832 Tel: 212/876-6060 Fax: 781/383-3205 Fax: 805/587-2795 Fax: 347/234-3397 Fax: 212/2893490 November 20, 1997
Covol Technologies, Inc. 3820 North Frontage Road Lehi, Utah 84043 Attn: Brent M. Cook, Chief Executive Officer By Facsimile to: 801-768-4483

Gentlemen: Pelletco Corporation ("Pelletco") entered into a License Agreement dated as of August 5, 1997 (the "License Agreement") with Covol Technologies, Inc. ("Covol"). Under the definition of "Project" in Section 1 of the License Agreement, a facility located at one of the first five (5) sites listed on Exhibit A thereto is included in such definition of "Projects" for the purposes of the License Agreement and the License Agreement applies to such site only if two conditions are satisfied. Those two conditions are as follows: (i) Pelletco has given Covol written notice of its intention to have the License Agreement apply to such facility, and (ii) such notice, if given, is given within 120 days of the execution and delivery of the License Agreement. This 120-day period will expire on or about December 3, 1997. Pelletco respectfully requests Covol to extend this period in the foregoing provision by an additional 60 days so that Pelletco would be entitled to give such notice for the purposes of this provision at any time prior to February 5, 1998. The granting of such extension by this letter will constitute an amendment of the License Agreement but only to the extent of such extension. Please indicate your consent and agreement to such extension by signing in the space provided below. Very truly yours, PELLETCO CORPORATION
By: /s/ Donald R. Logan -----------------------------Donald R. Logan, Vice President

AGREED AND ACCEPTED ON NOVEMBER 24, 1997 COVOL TECHNOLOGIES, INC.
By: /s/ Alan D. Ayers -------------------Name/Title: Alan D. Ayers Chief Operating Officer

LICENSE AGREEMENT

LICENSE AGREEMENT THIS LICENSE AND BINDER PURCHASE AGREEMENT (the "Agreement'), is made and entered into as of August 5, 1997 by and between Pelletco Corporation, a Massachusetts corporation (the "Licensee"), and Covol Technologies, Inc., a Delaware corporation (the "Licensor"). WHEREAS Licensor has represented that it has developed a proprietary process to produce synthetic coal fuel extrusions, pellets and briquettes from waste coal dust, coal fines and other coal derivatives, and that Licensor has sufficient rights to such proprietary process pursuant to which Licensor is entitled to license the coal extruding and Briquetting technology to Licensee; WHEREAS Licensee intends to develop a facility to produce synthetic coal fuel extrusions, pellets and/or briquettes or substantially similar products from waste coal dust, coal fines and other coal derivatives at one or more of the locations set forth on Exhibit A attached hereto and made a part hereof (individually, a "Project" and collectively, the "Projects"); and WHEREAS Licensee wishes to obtain and Licensor wishes to grant to Licensee a license for the Coal Briquetting Technology (as defined below) in connection with each Project on the terms and conditions set forth in this Agreement, and Licensee wishes to obtain and Licensor wishes to sell to Licensee the Proprietary Binder Material (as defined below) manufactured by Licensor for use in the operation of each Project. NOW, THEREFORE, in consideration of the foregoing premises, 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. "Coal Briquetting Technology" means all intellectual property, patents (including but not limited to United States Patent Numbers 5,487,764 and 5,453,103) and applications therefor, printed and unprinted 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 relating to, embodied in or used in the proprietary process to produce synthetic coal fuel extrusions, pellets and briquettes from waste coal dust, coal fines and other similar coal derivatives, 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 Briquetting Technology" shall not include the proprietary process developed by Licensor to produce synthetic coke extrusions and briquettes from coke breeze, iron revert materials, or any technology for other than the processing and production of synthetic coal fuel extrusions, pellets and briquettes. Nothing in this Agreement is intended to grant to Licensee the right to apply the Coal Briquetting Technology to

produce anything other than synthetic coal fuel extrusions, pellets and briquettes intended to qualify for tax credits under Section 29(c)(1)(C) of the 1986 Internal Revenue Code. This definition is intended to cover only information and documents which are proprietary and confidential to Licensor and otherwise covered by Section 7.3(i) hereof. "Code" means the Internal Revenue Code of 1986, as amended. "Developed Technology" means any inventions, "Improvement," or new technology that Licensor may conceive, make or invent in connection with Licensor's disclosure to Licensee of the Coal Briquetting Technology, or Licensee's efforts to market products manufactured using the Coal Briquetting Technology under this Agreement or which are conceived by Licensor as a consequence of opportunity or knowledge afforded to Licensee by this Agreement. "Developed Technology" also means any inventions, "Improvement, " or new technology directly related to the Coal Briquetting Technology that Licensor may conceive, make or invent relating to the Coal Briquetting Technology during the Term of this Agreement. "Improvement" means an alteration or addition to an invention or discovery which (i) directly relates to the Coal Briquetting Technology, (ii) is conceived, made or

produce anything other than synthetic coal fuel extrusions, pellets and briquettes intended to qualify for tax credits under Section 29(c)(1)(C) of the 1986 Internal Revenue Code. This definition is intended to cover only information and documents which are proprietary and confidential to Licensor and otherwise covered by Section 7.3(i) hereof. "Code" means the Internal Revenue Code of 1986, as amended. "Developed Technology" means any inventions, "Improvement," or new technology that Licensor may conceive, make or invent in connection with Licensor's disclosure to Licensee of the Coal Briquetting Technology, or Licensee's efforts to market products manufactured using the Coal Briquetting Technology under this Agreement or which are conceived by Licensor as a consequence of opportunity or knowledge afforded to Licensee by this Agreement. "Developed Technology" also means any inventions, "Improvement, " or new technology directly related to the Coal Briquetting Technology that Licensor may conceive, make or invent relating to the Coal Briquetting Technology during the Term of this Agreement. "Improvement" means an alteration or addition to an invention or discovery which (i) directly relates to the Coal Briquetting Technology, (ii) is conceived, made or invented by Licensor and (iii) enhances, to some extent, performance or economics without changing or destroying a product's, device's, or method's basic identity and essential character. An Improvement may comprise alterations or additions to either patented or unpatented inventions, discoveries, technology, or devices, and may or may not be patentable. "Earned License Fee" has the meaning set forth in Section 3.3. "Elective Date" means the date of this Agreement set forth above. "Initial License Fee" has the meaning set forth in Section 3.2. "License Fee" means the Initial License Fee and the Earned License Fee. "Licensee" has the meaning set forth in the preamble. "License has the meaning set forth in the preamble. "Net Cash Flow" means, with respect to any calendar quarter, all cash receipts of Licensee (excluding any capital contributions made by the equity owners of Licensee and any loan proceeds from any source) less (a) all cash disbursements of Licensee during such quarter and all such cash disbursements during any prior quarter which have not previously been offset by cash receipts, and (b) such amounts as are set aside to maintain reasonable working capital and contingency reserves, from time to time, in an amount to be mutually agreed upon but in no event less than the projected reasonable operating costs and expenses for the immediately succeeding calendar quarter for all Projects developed. Cash disbursements may include payments at market rates to Licensor or affiliates of Licensee or Licensor for the furnishing of goods and services or the lending of funds to Licensee, including without limitation, the Proprietary Binder Material at the price agreed upon pursuant to Section 4.2 2

below, the operation and maintenance of each Project, and the management and administration of Licensee with respect to each Project. The calculation and distribution of "Net Cash Flow" shall not take into account and shall be made after the payment of the Initial License Fee, and (y) the reimbursement of all capital contributions made, from time to time, by the current four equity owners of Licensee. The calculation of "Net Cash Flow" shall include as a "cash receipt of Licensee" the pre-tax equivalent of any credits under Section 29 of the Code which the four current equity owners of Licensee shall claim directly and currently for Federal income tax purposes as a result of the production from the Projects, provided, however, that such credits shall not be included for the purpose of such calculation to the extent they arise from an equity ownership which, in the aggregate, is not in excess of five percent (5%) of the total equity ownership of Licensee or its assignee(s), as the case may be. However, if Licensee is not taxed as a partnership for Federal income tax purposes, any credits under Section 29 of the Code which Licensee shall claim directly and currently for Federal income tax purposes shall be included in "cash receipts of Licensee" but only on a basis to be mutually agreed upon as reflecting in a fair and reasonable manner the purposes of this Agreement.

below, the operation and maintenance of each Project, and the management and administration of Licensee with respect to each Project. The calculation and distribution of "Net Cash Flow" shall not take into account and shall be made after the payment of the Initial License Fee, and (y) the reimbursement of all capital contributions made, from time to time, by the current four equity owners of Licensee. The calculation of "Net Cash Flow" shall include as a "cash receipt of Licensee" the pre-tax equivalent of any credits under Section 29 of the Code which the four current equity owners of Licensee shall claim directly and currently for Federal income tax purposes as a result of the production from the Projects, provided, however, that such credits shall not be included for the purpose of such calculation to the extent they arise from an equity ownership which, in the aggregate, is not in excess of five percent (5%) of the total equity ownership of Licensee or its assignee(s), as the case may be. However, if Licensee is not taxed as a partnership for Federal income tax purposes, any credits under Section 29 of the Code which Licensee shall claim directly and currently for Federal income tax purposes shall be included in "cash receipts of Licensee" but only on a basis to be mutually agreed upon as reflecting in a fair and reasonable manner the purposes of this Agreement. "Project' has the meaning set forth in the preamble, provided however, a facility located at one of the sites listed on Exhibit A hereto shall be included within the definition of ~Projects" for the purposes of this Agreement and this Agreement shall apply to such Project, in each case only when (i) Licensee has given Licensor written notice of its intention to have this Agreement apply to such facility, and (ii) in the case of the first five (5) sites listed on Exhibit A hereto, such notice, if given, is given within 120 days of the execution and delivery of this Agreement. "Proprietary Binder Materials means and refers to the binder compound developed by Licensor and necessary for the production, by Licensee, of synthetic coal extrusions, pellets and briquettes and which extrusions, pellets and briquettes satisfy the chemical change and other conditions of IRS Private Letter Rulings No. 9701041 and No. 9549025 in order to constitute requalified feels" pursuant to the terms of Section 29(c)(1)(C) of the 1986 Internal Revenue Code and with respect to which Section 29 is applicable pursuant to Section 29(f) and 29(g) of the 1986 Code. The parties acknowledge that the Proprietary Binder Material is not a staple article of commerce suitable for substantial non-infringing uses, but rather is an integral and inseparable part of the Coal Briquetting Technology. Section 2. License Grant. 2.1 General. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee, for the full and entire term hereof, a non-exclusive license to use the Coal Briquetting Technology for commercial exploitation (and not for research development purposes), including the non-exclusive right to make, have made or use at each Project and to sell or otherwise transfer products which have been manufactured with the Coal Briquetting Technology. Licensee hereby accepts the license on the terms hereof and agrees to make and have made products using the Coal Briquetting Technology only at each Project under this License Agreement. Licensee shall not make or have made products using the Coal Briquetting Technology or 3

similar technology except at each Project, but Licensee may use, sell and otherwise transfer products, which have been manufactured at each Project with the Coal Briquetting Technology, at or to any location. Licensee shall not have the right to sublicense the Coal Briquetting Technology, except as provided in Section 17 hereof. 2.2 Developed Technology. Licensee shall have the right and is hereby granted a non-exclusive license to use all Developed Technology relating to the Coal Briquetting Technology without payment of any additional compensation to Licensor, throughout the Term of this Agreement, subject to the restrictions and limitations in this Section 2. All Developed Technology shall become Licensor's absolute property. Licensee shall at any time during the Term of this Agreement, at Licensor's reasonable request, execute any patent papers covering such Developed Technology as well as any other documents that Licensor may consider necessary or helpful in the prosecution of applications for a patent thereon or in connection with any litigation or controversy related thereto; provided, however, that all expenses incident to the filing of such applications and the production thereof and the conduct of such litigation shall be borne by Licensor. 2.3 Exclusive Technology. As long as the Coal Briquetting Technology, the equipment necessary for its

similar technology except at each Project, but Licensee may use, sell and otherwise transfer products, which have been manufactured at each Project with the Coal Briquetting Technology, at or to any location. Licensee shall not have the right to sublicense the Coal Briquetting Technology, except as provided in Section 17 hereof. 2.2 Developed Technology. Licensee shall have the right and is hereby granted a non-exclusive license to use all Developed Technology relating to the Coal Briquetting Technology without payment of any additional compensation to Licensor, throughout the Term of this Agreement, subject to the restrictions and limitations in this Section 2. All Developed Technology shall become Licensor's absolute property. Licensee shall at any time during the Term of this Agreement, at Licensor's reasonable request, execute any patent papers covering such Developed Technology as well as any other documents that Licensor may consider necessary or helpful in the prosecution of applications for a patent thereon or in connection with any litigation or controversy related thereto; provided, however, that all expenses incident to the filing of such applications and the production thereof and the conduct of such litigation shall be borne by Licensor. 2.3 Exclusive Technology. As long as the Coal Briquetting Technology, the equipment necessary for its implementation and continued use at each Project, and the Proprietary Binder Material are readily available to Licensee, Licensee agrees to use the Coal Briquetting Technology for the production at each Project of solid synthetic fuel intended to qualify for tax credits under Section 29(c)(1)(C) of the Code. However, subject always to the foregoing sentence, Licensee shall be permitted at any Project to use any other technology or equipment for such production in addition to (or as a substitute for a portion of) the Coal Briquetting Technology, and in the case of such additional or partial substitute use at a Project where Licensee continues to use the Coal Briquetting Technology and the Proprietary Binder Material, Licensee shall continue to pay to Licensor the License Fee set forth in Section 3 below in respect of such Project. Licensee agrees to use the Coal Briquetting Technology only under authority of this License Agreement with Licensor. Licensee will not engage in any action which could reasonably be construed as competitive to Licensor's interest in this Agreement. Licensor agrees that neither it nor any of its affiliates shall (i) use for development purposes independent of Licensee, or disclose to any third party, including any existing or future licensee, developer, or joint venturer, the name or location of any of the Projects identified on Exhibit A hereto or any other information concerning the Projects learned by Licensor from Licensee without the written consent of Licensee, or (ii) subsequent to the date hereof, knowingly license lo any party the Coal Briquetting Technology or the Proprietary Binder Material with respect to any of the Projects listed, from time to time, on Exhibit A hereto. 2.4 Non-licensed Technology. Licensor retains the absolute right to fully exploit its proprietary technology and processes, including but not limited to the application of such technology embodied in the Coal Briquetting Technology together with any Improvements thereto, to produce, market and use synthetic coke extrusions and briquettes from coke breeze, iron revert materials, and any other materials to which Licensor's technology can be applied. 4

2.5 Confidentiality. Each of the parties hereby agree to maintain the Coal Briquetting Technology confidential and not to disclose the Coal Briquetting Technology, or any aspect thereof, or the Improvements, or any aspect thereof (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, or (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), shall not be subject to the terms of this Section 2.5. At the termination of this Agreement, all copies of any Confidential Information (including without limitation any reports or memoranda) shall be returned by the party receiving disclosure. Nothing in this Agreement shall prohibit Licensee from disclosing the Confidential Information to others as may be reasonably necessary for Licensee to exploit Licensee's rights under this Agreement; provided that the recipient of any such Confidential Information executes a Confidentiality Agreement restricting further disclosure of the Confidential Information.

2.5 Confidentiality. Each of the parties hereby agree to maintain the Coal Briquetting Technology confidential and not to disclose the Coal Briquetting Technology, or any aspect thereof, or the Improvements, or any aspect thereof (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, or (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), shall not be subject to the terms of this Section 2.5. At the termination of this Agreement, all copies of any Confidential Information (including without limitation any reports or memoranda) shall be returned by the party receiving disclosure. Nothing in this Agreement shall prohibit Licensee from disclosing the Confidential Information to others as may be reasonably necessary for Licensee to exploit Licensee's rights under this Agreement; provided that the recipient of any such Confidential Information executes a Confidentiality Agreement restricting further disclosure of the Confidential Information. 2.6 Know-How and Assistance. To enable Licensee to benefit fully from the license of the Coal Briquetting Technology, Licensor shall provide (i) reasonable access to technical information, relevant documentation, drawings, engineering specifications and other know-how in Licensor's possession relating to the Coal Briquetting Technology and the Proprietary Binder Material, ~'ii) reasonable access to Licensor's employees or agents who are familiar with the Coal Briquetting Technology or the Proprietary Binder Material, and (iii) technical advice necessary to exploit the Coal Briquetting Technology or the Proprietary Binder Material, in each case, as is reasonably requested by Licensee and relevant to the purposes of this Agreement, including without limitation, advice and assistance in connection with any applications for a Private Letter Ruling with respect to Section 29 of the Code. No such access shall be required to be provided by Licensor to Licensee if such access would be harmful to Licensor's business, except as may be otherwise required for Licensor to meet its other obligations under this Agreement. Section 3. License Fee. 3.1 License Fee. Licensee shall pay the Initial License Fee and Earned License Fee as a license fee to Licensor in consideration of Licensor granting a license of the Coal Briquetting Technology hereunder. 3.2 Initial License Fee. Licensee shall pay * to Licensor in immediately available funds (the "Initial License Fee") within twenty (20) business days after the later of (a) the commencement of construction of a Project, and (b) the obtaining of third-party construction financing in respect of such Project. An Initial License Fee is payable in respect of each Project. 5 * Confidential material omitted and filed separately with the Commission.

3.3 Earned License Fee. Licensee shall pay to Licensor quarterly earned license fee payments ("Earned License Fee") in an amount equal to * of Licensee's "Net Cash Flow" for the immediately preceding quarter. No License Fee shall be payable in respect of a calendar quarter during which Licensor was unwilling to supply Licensee with Proprietary Binder Material in accordance with this Agreement or was otherwise in breach of this Agreement. 3.4 Payment Terms. Earned License Fee payments shall be due within twenty (20) business days after the end of each calendar quarter. Payments shall be made by Licensee to Licensor and shall be deemed to be: paid upon receipt by Licensor. Payments after the due dates above shall accrue interest at the rate of one percent per month. Section 4. Sales of Binder. 4.1 Sale and Purchase. Licensor shall sell to Licensee, and Licensee shall purchase from Licensor, Licensee's requirements of Proprietary Binder Material required to operate each Project developed by Licensee. Licensor shall deliver the Proprietary Binder Material at such times and in such amounts as requested by Licensee.

3.3 Earned License Fee. Licensee shall pay to Licensor quarterly earned license fee payments ("Earned License Fee") in an amount equal to * of Licensee's "Net Cash Flow" for the immediately preceding quarter. No License Fee shall be payable in respect of a calendar quarter during which Licensor was unwilling to supply Licensee with Proprietary Binder Material in accordance with this Agreement or was otherwise in breach of this Agreement. 3.4 Payment Terms. Earned License Fee payments shall be due within twenty (20) business days after the end of each calendar quarter. Payments shall be made by Licensee to Licensor and shall be deemed to be: paid upon receipt by Licensor. Payments after the due dates above shall accrue interest at the rate of one percent per month. Section 4. Sales of Binder. 4.1 Sale and Purchase. Licensor shall sell to Licensee, and Licensee shall purchase from Licensor, Licensee's requirements of Proprietary Binder Material required to operate each Project developed by Licensee. Licensor shall deliver the Proprietary Binder Material at such times and in such amounts as requested by Licensee. Payments for Proprietary Binder Material delivered by Licensor during any calendar month shall be due and payable to Licensor on the tenth business day of the immediately succeeding month. Payments after the applicable due dates shall accrue interest at the rate of one percent per month. 4.2 Price. The price which Licensee shall pay for the Proprietary Binder Material delivered by Licensor during any calendar year shall be an amount equal to (i) Covol's reasonable direct and actual costs (direct material, labor, and transportation costs) and a percentage of the total overhead costs of Covol reasonably reflecting the ratio of the administrative costs incurred in connection with the manufacture and sale of the Proprietary Binder Material to Licensee to Covol's aggregate administrative costs, plus (ii) * of the amount determined pursuant to clause (i). For the purposes of this Section 4.2, if Covol incurs any capital expenditures to construct a facility at or near any Project for the purpose of producing and storing its Proprietary Binder Material to be used specifically at such Project, then such capital expenditures shall be included in the term "Covol's reasonable direct and actual costs" in the amount of 2.5% of such expenditures for each of the first 40 months of the Project's operations. 4.3 Representations and Warranties. Licensor represents, warrants, covenants and agrees as follows: (a) Licensor shall convey to Licensee good title to all Proprietary Binder Material purchased by Licensee from Licensor hereunder, free and clear of any and all liens, claims and encumbrances of any type whatsoever. (b) No Proprietary Binder Material shall contain any hazardous material to an extent or in a manner which would cause its production, 6 * Confidential material omitted and filed separately with the Commission.

delivery or storage by Licensor or its intended use by Licensee for the purposes of this Agreement to be in violation of applicable laws and governmental regulations. (c) At Licensee's option, Licensor shall replace, or refund the purchase of, all non-conforming Proprietary Binder Material. (d) All Proprietary Binder Material delivered to Licensee hereunder shall satisfy the binder requirements and effects set forth in the various IRS Private Letter Rulings and Revenue Procedures issued, from time to time, with respect to Licensor's Proprietary Binder Material in respect of Section 29 of the Code. 4.4 Order Procedure. Licensee shad deliver all purchase orders for Proprietary Binder Materials at least thirty (30) days in advance of the first day of the month in which delivery of such Proprietary Binder Material is required under such purchase order, and all such purchase orders received by Licensor during the term of this Agreement shad be deemed to have been accepted by Licensor. (For example, Licensee shall deliver a purchase

delivery or storage by Licensor or its intended use by Licensee for the purposes of this Agreement to be in violation of applicable laws and governmental regulations. (c) At Licensee's option, Licensor shall replace, or refund the purchase of, all non-conforming Proprietary Binder Material. (d) All Proprietary Binder Material delivered to Licensee hereunder shall satisfy the binder requirements and effects set forth in the various IRS Private Letter Rulings and Revenue Procedures issued, from time to time, with respect to Licensor's Proprietary Binder Material in respect of Section 29 of the Code. 4.4 Order Procedure. Licensee shad deliver all purchase orders for Proprietary Binder Materials at least thirty (30) days in advance of the first day of the month in which delivery of such Proprietary Binder Material is required under such purchase order, and all such purchase orders received by Licensor during the term of this Agreement shad be deemed to have been accepted by Licensor. (For example, Licensee shall deliver a purchase order for December delivery by no later than November 1st). Each such purchase order shad be delivered either (i) in writing, 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 24 hours). Such purchase orders shad be sent to Licensor at such address as Licensor shall direct. 4.5 Delivery and Acceptance. All Proprietary Binder Material purchased hereunder shall be delivered F.O.B. the Project. Licensor shad arrange for transportation of the Proprietary Binder Material to the designated Project. Licensee shall bear the expense of unloading the trucks. The weight of Proprietary Binder Material in each delivery shall be determined by a comparison of the weight, on Licensee's scales, of the delivery truck immediately prior to unloading and its weight, on Licensee's scales, immediately following unloading, as reflected in customary weighing certificates. At Licensor's request and expense from: time to time, Licensor shall have the right to inspect Licensee's scales for accuracy. Licensee shall have a reasonable opportunity to sample Proprietary Binder Material delivered to it hereunder to confirm that such Proprietary Binder Material conforms to the teems and requirements hereof, and Licensee shall not be deemed or required to accept any such Proprietary Binder Material prior to the completion of such sampling. 4.6 Binder Technology License. If Licensor's ability to deliver the Proprietary Binder Material to Licensee (in the amounts required by Licensee or otherwise in accordance with the terms of this Agreement), will be interrupted or terminated for any reason, Licensor shall give not less than ninety (90) days prior notice to Licensee. Subject to giving notice of its inability to deliver the Proprietary Binder Material to Licensee (or, in the absence of such notice, the actual failure to deliver the Proprietary Binder Material for at least twenty days after Licensee gives written notice of non-delivery to Licensor), 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 7

Proprietary Binder Material to manufacture the Proprietary Binder Material in sufficient quantities to operate each Project up to full capacity, and such technology shall be deemed "Coal Briquetting Technology" for the purposes of this Agreement; provided, however, that the license granted to Licensee under this Section 4.6 shall cease (subject to reinstatement upon the reoccurrence of the events contemplated above) and sales of Proprietary Binder 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 with evidence reasonably satisfactory to Licensee that Licensor is able to deliver the Proprietary Binder Material 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 4.6 and Licensee shall be responsible for its own direct out-of-pocket operating costs incurred in connection with the production of Proprietary Binder Material pursuant to this Section. Licensor represents and warrants that, simultaneously with the execution and delivery of this Agreement, Licensor has delivered to a safety deposit box designated and owned by Licensee a written copy of the formula used by Licensor to manufacture the Proprietary Binder Material in sufficient quantities to operate each Project to full capacity, and an officer of Licensor shall deliver to Licensee a sworn affidavit stating that such delivery by Licensor has been made. Licensor covenants to notify Licensee of any improvements, variations or modifications made on or to the formula used by Licensor to manufacture the Proprietary Binder Material promptly after such improvements, variations or

Proprietary Binder Material to manufacture the Proprietary Binder Material in sufficient quantities to operate each Project up to full capacity, and such technology shall be deemed "Coal Briquetting Technology" for the purposes of this Agreement; provided, however, that the license granted to Licensee under this Section 4.6 shall cease (subject to reinstatement upon the reoccurrence of the events contemplated above) and sales of Proprietary Binder 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 with evidence reasonably satisfactory to Licensee that Licensor is able to deliver the Proprietary Binder Material 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 4.6 and Licensee shall be responsible for its own direct out-of-pocket operating costs incurred in connection with the production of Proprietary Binder Material pursuant to this Section. Licensor represents and warrants that, simultaneously with the execution and delivery of this Agreement, Licensor has delivered to a safety deposit box designated and owned by Licensee a written copy of the formula used by Licensor to manufacture the Proprietary Binder Material in sufficient quantities to operate each Project to full capacity, and an officer of Licensor shall deliver to Licensee a sworn affidavit stating that such delivery by Licensor has been made. Licensor covenants to notify Licensee of any improvements, variations or modifications made on or to the formula used by Licensor to manufacture the Proprietary Binder Material promptly after such improvements, variations or modifications are made by Licensor and to provide a copy of any such improved, varied or modified formula for placement in the safety deposit box. Licensee covenants to hold the formula delivered to it by Licensor pursuant to the immediately preceding sentence as confidential and not to utilize the formula except in accordance with the license granted to Licensee pursuant to this Section 4.6. In addition, in the event Licensee uses the license granted pursuant to this Section 4.6, Licensor hereby covenants to lease to Licensee for no additional fee or royalty any binder manufacturing facility of Licensor adjacent to such Project. 4.7 Certification. At Licensee's request and at Licensee's reasonable expense, Licensor shall conduct periodic field audits of each Project and its operations, and (a) shall certify in writing, from time to time, that the Proprietary Binder Material delivered to Licensee hereunder satisfies the binder requirements and effects set forth in the various IRS Private Letter Rulings and Revenue Procedures issued, from time to time, with respect to Licensor's Proprietary Binder Material in respect of Section 29 of the Code, and (b) shall cause periodic testing of the production from each Project by a reputable independent third party to determine the occurrence of a chemical change satisfying the chemical change and other conditions of IRS Private Letter Rulings No. 9549025 and No. 9701041 dated September 8, 1995 and October 4, 1996, respectively, in order to constitute "qualified fuels" pursuant to the terms of Section 29(c)(1)(C) of the Code. Such binder certification shall be based upon independent, random sample testing conducted at the time of binder production. Section 5. Records: Inspection: Confidentiality.. 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, and shall permit each other party or an independent accounting firm designated by such other party to inspect and/or audit 8

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. 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. Section 6. Infringement. If during the term of this Agreement a third party has infringed any intellectual property rights associated with the Coal Briquetting Technology or otherwise misappropriated any Coal Briquetting Technology, Licensor may, 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 from third parties. If Licensor does not take any action, Licensee shall have the right to take action as a plaintiff in the prosecution of any infringement or misappropriation action affecting any Project, and Licensee shall be entitled to any sums recovered from the third party. 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 from the third party shall be distributed to Licensee and Licensor based on the proportionate amount of damages suffered by Licensee and Licensor as a result of the actions by the third party from whom damages were recovered. Licensee shall always

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. 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. Section 6. Infringement. If during the term of this Agreement a third party has infringed any intellectual property rights associated with the Coal Briquetting Technology or otherwise misappropriated any Coal Briquetting Technology, Licensor may, 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 from third parties. If Licensor does not take any action, Licensee shall have the right to take action as a plaintiff in the prosecution of any infringement or misappropriation action affecting any Project, and Licensee shall be entitled to any sums recovered from the third party. 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 from the third party shall be distributed to Licensee and Licensor based on the proportionate amount of damages suffered by Licensee and Licensor as a result of the actions by the third party from whom damages were recovered. 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. Section 7. Representations and Warranties. 7.1 Authority. Each of Licensee and Licensor represents and warrants that (i) the execution, delivery and performance of this Agreements and the consummation of the transactions contemplated hereby have been duly authorized on its behalf by all requisite action, corporate or otherwise, (ii) it has the full right, power and authority to enter into this Agreement and to carry out the terms of this Agreement, (iii) it has duly executed and delivered this Agreement, and (iv) this Agreement is a valid and binding obligation of it enforceable in accordance with its terms. 7.2 No Consent. Each of Licensee and Licensor represents and warrants 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. 7.3 Intellectual Property Matters. Licensor warrants and covenants that it (i) owns, free and clear of all liens and encumbrances, intellectual property, patents (including but not limited to United States Patent Numbers 5,487,764 and 5,453,103) and applications therefor, printed and unprinted 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 proprietary process to produce synthetic coal fuel extrusions, pellets and briquettes from waste coal dust, coal fines and other similar coal derivatives, and, the right to freely use, sell and exploit Proprietary Binder Material used in manufacturing synthetic coal fuel extrusions, pellets and briquettes from waste coal dust, coal fines and other 9

similar coal derivatives, (ii) has the right and power to grant to Licensee the licenses granted herein, (iii) has not made and will not make any agreement with another in conflict with the rights granted herein, and (iv) has no knowledge that the sale or use of the rights, Proprietary Binder Material and/or licenses granted herein as contemplated by this Agreement would infringe any third-party's intellectual property rights. Licensor agrees that it is a "licenser" Section 365(n) of the United States Bankruptcy Code. 7.4 Indemnification. Licensor shall indemnify, defend and hold harmless Licensee and its partners, directors, officers, 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, payments, costs and expenses (including the costs and expenses of 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 breach by Licensor of any of the representations, warranties and/or covenants contained in this Agreement.

similar coal derivatives, (ii) has the right and power to grant to Licensee the licenses granted herein, (iii) has not made and will not make any agreement with another in conflict with the rights granted herein, and (iv) has no knowledge that the sale or use of the rights, Proprietary Binder Material and/or licenses granted herein as contemplated by this Agreement would infringe any third-party's intellectual property rights. Licensor agrees that it is a "licenser" Section 365(n) of the United States Bankruptcy Code. 7.4 Indemnification. Licensor shall indemnify, defend and hold harmless Licensee and its partners, directors, officers, 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, payments, costs and expenses (including the costs and expenses of 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 breach by Licensor of any of the representations, warranties and/or covenants contained in this Agreement. Section 8. Term. The Term of this Agreement is (a) for the period commencing on the effective date of this Agreement and ending on 31 December 2015 or (b) for the full life of the last U.S. Patents to expire which disclose and claim Covol's proprietary Coal Briquetting Technology, defined above, whichever date is earlier. Any extension of this Agreement must be in writing, signed by both parties. Section 9. Termination. This Agreement shall terminate upon the termination date set forth in Section 8, unless the Agreement is terminated sooner pursuant to this Section 9. 9.1 Termination for Cause. Either party may terminate this Agreement for cause (i.e., in the event either party commits a material breach of any provision of this Agreement) at any time by giving the other party at least sixty (60) days prior written notice of such termination unless such default or breach is cured within said sixty (60) days. If either party terminates this Agreement pursuant to this Section 9, Licensee shall promptly return and cause all agents of Licensee to promptly return to Licensor all Confidential Information and all Coal Briquetting 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 Briquetting Technology during the period ending three (3) years from the date of such termination. 9.2 Automatic Termination. This Agreement shall automatically terminate if: (a) Licensee 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 reorganization with a view to continuing the business as a going concern under relevant bankruptcy or insolvency proceedings) or enters into a 10

general assignment or arrangement or a composition with or for the benefit of its creditors; or (b) Licensee 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 Licensee and/or the whole or any part of the business, undertaking, property, assets, receiver or uncalled capital of Licensee or any such person is appointed; or (c) Licensee ceases to carter on its business relating to the Coal Briquetting Technology. 9.3 Effect of Termination. Upon termination of this Agreement, all rights granted and obligations to the parties shall immediately cease; however termination shall not relieve either party of its obligations accrued during the Term of this Agreement (including any pre-termination obligation Licensee may have to pay Licensor) which has not been fulfilled, and all representations, warranties, and confidentiality agreements made herein shall survive termination of this Agreement.

general assignment or arrangement or a composition with or for the benefit of its creditors; or (b) Licensee 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 Licensee and/or the whole or any part of the business, undertaking, property, assets, receiver or uncalled capital of Licensee or any such person is appointed; or (c) Licensee ceases to carter on its business relating to the Coal Briquetting Technology. 9.3 Effect of Termination. Upon termination of this Agreement, all rights granted and obligations to the parties shall immediately cease; however termination shall not relieve either party of its obligations accrued during the Term of this Agreement (including any pre-termination obligation Licensee may have to pay Licensor) which has not been fulfilled, and all representations, warranties, and confidentiality agreements made herein shall survive termination of this Agreement. Section 10. Set-Off. If at any time any compensation under Section 5 of Restated Exclusive Financial Advisor Agreement made as of December 13, 1996 between Licensor and Coalco Corporation ("Coalco"), an affiliate of Licensee (the "Restated Agreement") or under any provision of First Amendment to Restated Exclusive Financial Advisor Agreement made as of even date herewith between Licensor and Coalco (the "Amendment") is due and payable by Licensor or any affiliate thereof to Coalco or any affiliate thereof, Licensee shall be entitled, upon giving Licensor seven (7) business days' notice thereof, to set off such amount (the "Set Off Amount") against any and all payments due under this Agreement. If Licensee exercises such right of set off, then the Set Off Amount shall be applied, until exhausted, first against any and all payments due to Licensor by Coalco under the Amendment, and then once no such payments are then due, against any and all payments due to Licensor under this Agreement. If at any time any amounts under the Amendment or any provision of this Agreement are due and payable by Coalco or Licensee to Licensor, Licensor shall be entitled, upon giving Coalco and Licensee seven (7) business days' notice thereof) to set off such amount against any and all compensation payments due to Coalco under any provision of the Restated Agreement or the Amendment. Section 11. 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 12. 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 11

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 13. Notices. All notices required or authorized by this Agreement shall be given to the parties hereto at the addresses, and in accordance with the procedures, set forth in Section 11 of the Restated Financial Advisor Agreement made as of December 13, 1996 between Licensor and Coalco Corporation an affiliate of Licensee as if Licensee, instead of Coalco Corporation was referenced in such provision. Section 14. Remedies Cumulative. Remedies provided under this Agreement shall be cumulative and in addition to other remedies provided by law or in equity. Section 15. Entire Agreement. This 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. This Agreement supersedes all prior communications, representations, or agreements, verbal or written among the parties relating to the subject matter hereof This Agreement may not be amended except in writing signed by the parties hereto.

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 13. Notices. All notices required or authorized by this Agreement shall be given to the parties hereto at the addresses, and in accordance with the procedures, set forth in Section 11 of the Restated Financial Advisor Agreement made as of December 13, 1996 between Licensor and Coalco Corporation an affiliate of Licensee as if Licensee, instead of Coalco Corporation was referenced in such provision. Section 14. Remedies Cumulative. Remedies provided under this Agreement shall be cumulative and in addition to other remedies provided by law or in equity. Section 15. Entire Agreement. This 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. This Agreement supersedes all prior communications, representations, or agreements, verbal or written among the parties relating to the subject matter hereof This Agreement may not be amended except in writing signed by the parties hereto. Section 16. Governing Law. This Agreement shall be governed in accordance with the laws of the State of Utah, exclusive of its conflict of laws rules. Section 17. Assignment. This Agreement may not be assigned, in whole or in part, by any party without the written consent of the other party, which consent may be withheld by any party for any reason or for no reason in its sole discretion except that (i) each party shall have the right to assign its rights and obligations under this Agreement to any entity which is controlled by, or is in common control with, such party or in which such party owns, directly or indirectly, at least fifty percent (50%) of each class of its outstanding securities, provided that no such assignment shall release the assigning party from its obligations hereunder, and (ii) Licensee shall have the right to assign its rights and obligations to Licensor in connection with any sale by Licensee to Licensor of substantially all of the assets of any Project. Notwithstanding the foregoing exceptions set forth in clause (i) and (ii) above, Licensee shall not be entitled to assign any of its rights or obligations hereunder to any entity in which Cotton Energy, L.L.C. or an affiliate thereof has any ownership interest. Executed by the duly authorized representative of the parties on the date and year firs above written.
COVOL TECHNOLOGIES, INC. By: /s/ Brent M. Cook ------------------Name: Brent M. Cook Title: President PELLETCO CORPORATION By: /s/ Gordon L. Deane --------------------Name: Gordon L. Deane Title: President

12
EXHIBIT A PROJECTS 1. Homer City (OPT Energy), Line 1 - Homer City, PA Homer City (GPU Energy), Line 2 - Homer City, PA Keystone Coal Mining (Rochester & Pittsburgh Coal Company) - Elderton, PA Eighty-Four Mining (Rochester & Pittsburgh Coal Company) - Eighty-Four, PA Buckeye Industrial Mining Kensington Prep Plant PROJECTED CAPACITY 360,000 tons per year

2.

360,000 tons per year

3.

360,000 tons per year

4.

360,000 tons per year

5.

360,000 tons per year

EXHIBIT A PROJECTS 1. Homer City (OPT Energy), Line 1 - Homer City, PA Homer City (GPU Energy), Line 2 - Homer City, PA Keystone Coal Mining (Rochester & Pittsburgh Coal Company) - Elderton, PA Eighty-Four Mining (Rochester & Pittsburgh Coal Company) - Eighty-Four, PA Buckeye Industrial Mining Kensington Prep Plant Columbia County, Lisbon, OH Site Location to be designated by Licensee at a later date PROJECTED CAPACITY 360,000 tons per year

2.

360,000 tons per year

3.

360,000 tons per year

4.

360,000 tons per year

5.

360,000 tons per year

6.

360,000 tons per year

13

PREPARATION PLANT AND FINES PONDS LEASE WELLINGTON UTAH THIS PREPARATION PLANT AND FINES PONDS LEASE AGREEMENT ("Lease") is made and entered into as of the 21 day of February, 1997, by and between EARTHCO, a Nevada corporation/ and Covol Technologies, Inc., a Delaware corporation, ("Covol"). RECITALS A. EARTHCO owns the real property located in Carbon County, Utah, as further identified on Exhibit A (the "Property"). B. Covol desires to lease the Property from EARTHCO and to conduct coal fines extraction, screening, washing, handling and other recovery, processing, and preparation operations (collectively "Preparation Operations") on the Property C. EARTHCO wishes to grant to Covol the exclusive right (1) to occupy the Property, and (2) to conduct Preparation Operations on the Property, all in accordance with the terms hereof. AGREEMENT NOW, THEREFORE, in consideration of the recitals set forth above and the mutual benefits and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, EARTHCO and Covol covenant and agree as follows: 1. Grant of Lease. EARTHCO hereby leases the Property, together with all coal fines and refuse located on, in or under the Property, to Covol for the purpose of conducting coal fines and refuse removal, extraction, mixing, processing, storage, handling, screening, washing, and other coal fines and refuse Preparation Operations on the Property, and EARTHCO hereby grants to Covol for the term hereof the exclusive right to occupy the Property, remove or extract coal fines and refuse, and to conduct Preparation Operations from and on the Property, subject to and in accordance with the terms hereof. 2. Property. The leased property shall consist of two (2) parcels. Parcel A shall be referred to as the Preparation Plant Site ("PPS") and shall contain approximately thirty (30) acres (more or less) and shall be located adjacent to the fines ponds. Parcel ]L is more fully defined by the drawing and legal description attached hereto and made

PREPARATION PLANT AND FINES PONDS LEASE WELLINGTON UTAH THIS PREPARATION PLANT AND FINES PONDS LEASE AGREEMENT ("Lease") is made and entered into as of the 21 day of February, 1997, by and between EARTHCO, a Nevada corporation/ and Covol Technologies, Inc., a Delaware corporation, ("Covol"). RECITALS A. EARTHCO owns the real property located in Carbon County, Utah, as further identified on Exhibit A (the "Property"). B. Covol desires to lease the Property from EARTHCO and to conduct coal fines extraction, screening, washing, handling and other recovery, processing, and preparation operations (collectively "Preparation Operations") on the Property C. EARTHCO wishes to grant to Covol the exclusive right (1) to occupy the Property, and (2) to conduct Preparation Operations on the Property, all in accordance with the terms hereof. AGREEMENT NOW, THEREFORE, in consideration of the recitals set forth above and the mutual benefits and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, EARTHCO and Covol covenant and agree as follows: 1. Grant of Lease. EARTHCO hereby leases the Property, together with all coal fines and refuse located on, in or under the Property, to Covol for the purpose of conducting coal fines and refuse removal, extraction, mixing, processing, storage, handling, screening, washing, and other coal fines and refuse Preparation Operations on the Property, and EARTHCO hereby grants to Covol for the term hereof the exclusive right to occupy the Property, remove or extract coal fines and refuse, and to conduct Preparation Operations from and on the Property, subject to and in accordance with the terms hereof. 2. Property. The leased property shall consist of two (2) parcels. Parcel A shall be referred to as the Preparation Plant Site ("PPS") and shall contain approximately thirty (30) acres (more or less) and shall be located adjacent to the fines ponds. Parcel ]L is more fully defined by the drawing and legal description attached hereto and made a part hereof as Exhibit A. *Confidential material has been omitted from the Exhibit and filed separately with the Securities and Exchange Commission (the "Commission").

Parcel B shall be referred to as the Fines Pond Site ("FPs't) and shall contain approximately three hundred fiftyseven (357) acres (more or less) and shall include the property upon which is located the "upper fines pond" and the "lower fines pond" and the property immediately surrounding these ponds. Parcel B is more fully defined by the drawing and legal description attached hereto and made a part hereof as Exhibit A. 3. Lease Payments. a. Base Lease Payments. Covol agrees to pay EARTHCO *. The Base Lease Payments shall be paid by Covol as follows: i. * paid on February 12,1997, and receipt thereof is hereby acknowledged by EARTHCO; ii. * paid concurrent with the execution of this Lease which shall be on or before February 21, 1997; and iii. * shall be paid on August 21, 1997, and the same amount shall be paid on the 21st day of every third month thereafter until a total of twelve (12) payments of * have been made, (i.e., twelve (12) quarterly payments of *

Parcel B shall be referred to as the Fines Pond Site ("FPs't) and shall contain approximately three hundred fiftyseven (357) acres (more or less) and shall include the property upon which is located the "upper fines pond" and the "lower fines pond" and the property immediately surrounding these ponds. Parcel B is more fully defined by the drawing and legal description attached hereto and made a part hereof as Exhibit A. 3. Lease Payments. a. Base Lease Payments. Covol agrees to pay EARTHCO *. The Base Lease Payments shall be paid by Covol as follows: i. * paid on February 12,1997, and receipt thereof is hereby acknowledged by EARTHCO; ii. * paid concurrent with the execution of this Lease which shall be on or before February 21, 1997; and iii. * shall be paid on August 21, 1997, and the same amount shall be paid on the 21st day of every third month thereafter until a total of twelve (12) payments of * have been made, (i.e., twelve (12) quarterly payments of * each for a total of *. b. Adjustment for Excess Fines Recovery. Covol agrees to pay EARTHCO * for each net saleable ton of coal fines from the fines ponds in excess of two (2) million tons, up to two and one half (2.5) million tons. Any tonnage in excess of two and one half (2.5) million net saleable tons shall be at no additional price to Covol. Payments due under this provision, if any, shall be paid by Covol on the last day of the month immediately following the calendar qlarter in which the coal fines are removed from the Property. The requirement to make payments pursuant to this paragraph shall remain in full force and effect, even if Covol extends the Lease term or exercises its option to purchase Parcel B. 2 * Confidential material has been omitted from this Exhibit and filed separately with the Commission.

4. Term of Lease and Options to Extend. The term of the Lease on Parcel A shall be fifteen (15) years from the date hereof, expiring on February 21, 2012. All Lease Payments for the fifteen tl5) year lease term are included in the total Base Lease Payments paragraph defined herein (Section 3. a.). Covol may extend the term of the Lease on Parcel A by two (2) five (5) year periods by notifying EARTHCO, in writing at least six (6) months prior to the expiration of the existing term, of its intention to extend and tendering payment of Five Thousand Dollars ($5,000.00) as prepayment for the next five (5) year term. The term of the Lease on Parcel B shall be five (5) years from the date hereof, expiring on Fe} wary 21, 2002. All Lease Payments for the five (5) year base term are included in the Base Lease Payments and the Adjustment for Excess Fines Recovery paragraphs defined herein (Section 3 a. and b.). Covol may extend the term of the Lease on Parcel B by one (1) five (5) year term period by: a. Notifying EARTHCO, in writing prior to August 21, 2001, of its intention to extend the term of the Lease; b. Tendering payment to EARTHCO in the amount of Ten Thousand Dollars ($10,000.00) which shall constitute full prepayment for the next five (5) years; and c. Assuming the portion of reclamation permit (ACT/007/012) which pertains to Parcel B and the posting of a bond which is acceptable in form, substance and amount to DOGM relative to Parcel B and assuming the reclamation responsibilities for Parcel B. 5. Option to Purchase. Covol shall have the option to purchase Parcel A and/or Parcel B at any time during the Base Lease term of either parcel by:

4. Term of Lease and Options to Extend. The term of the Lease on Parcel A shall be fifteen (15) years from the date hereof, expiring on February 21, 2012. All Lease Payments for the fifteen tl5) year lease term are included in the total Base Lease Payments paragraph defined herein (Section 3. a.). Covol may extend the term of the Lease on Parcel A by two (2) five (5) year periods by notifying EARTHCO, in writing at least six (6) months prior to the expiration of the existing term, of its intention to extend and tendering payment of Five Thousand Dollars ($5,000.00) as prepayment for the next five (5) year term. The term of the Lease on Parcel B shall be five (5) years from the date hereof, expiring on Fe} wary 21, 2002. All Lease Payments for the five (5) year base term are included in the Base Lease Payments and the Adjustment for Excess Fines Recovery paragraphs defined herein (Section 3 a. and b.). Covol may extend the term of the Lease on Parcel B by one (1) five (5) year term period by: a. Notifying EARTHCO, in writing prior to August 21, 2001, of its intention to extend the term of the Lease; b. Tendering payment to EARTHCO in the amount of Ten Thousand Dollars ($10,000.00) which shall constitute full prepayment for the next five (5) years; and c. Assuming the portion of reclamation permit (ACT/007/012) which pertains to Parcel B and the posting of a bond which is acceptable in form, substance and amount to DOGM relative to Parcel B and assuming the reclamation responsibilities for Parcel B. 5. Option to Purchase. Covol shall have the option to purchase Parcel A and/or Parcel B at any time during the Base Lease term of either parcel by: a. Giving EARTHCO thirty (30) days written notice of its intent to purchase at any time after all of the payments pursuant to Section 3. a. herein have been fully paid; and b. Assuming the portion of the reclamation permit (ACT/007/012) which pertains to the parcel being purchased, assuming the reclamation responsibility for the parcel(s) being purchased and the posting of a bond which is acceptable in form, substance and amount to DOGM relative to the purchased parcel, at or prior to the closing of the purchase. Said assumption and activities shall be the total consideration for the purchase. 6. Access Easements. EARTHCO further leases and grants to Covol for the term hereof non-exclusive easements upon 3

EARTHCO's surrounding lands for ingress, egress, water andother utility access to the Property. Covol shall have the right to improve, pave, and maintain any roads used by Covo1. 7. Water Rights. EARTHCO shall provide Covol with water rights of ____ acre feet to be used by Covol in its processing operations. If Covol exercises its right to purchase Parcel A as described in Section 5 herein, EARTHCO shall deed ___________ acre feet of water rights to Covol without additional consideration. 8. Warranty of Title. EARTHCO hereby, warrants and agrees to defend title to the Property and further covenants that EARTHCO has the lawful right, power and authority to lease and utilize the Property in the manner herein provided. Covol, at its option, may discharge any tax, mortgage or other lien upon the Property and, in the event Covol does so, it shall be subrogated to such lien with the right to enforce the same and apply Lease Payments accruing to EARTHCO hereunder toward satisfying the same. 9. Liens and Encumbrances. Covol shall keep the Property free from all mechanics' liens and other encumbrances arising from Covol's possession and operations provided that Covol shall have the right voluntarily to mortgage, pledge or otherwise encumber its equipment, improvements and leasehold estate hereunder and provided further that Covol shall not be required prematurely to discharge any lien which it disputes in good faith.

EARTHCO's surrounding lands for ingress, egress, water andother utility access to the Property. Covol shall have the right to improve, pave, and maintain any roads used by Covo1. 7. Water Rights. EARTHCO shall provide Covol with water rights of ____ acre feet to be used by Covol in its processing operations. If Covol exercises its right to purchase Parcel A as described in Section 5 herein, EARTHCO shall deed ___________ acre feet of water rights to Covol without additional consideration. 8. Warranty of Title. EARTHCO hereby, warrants and agrees to defend title to the Property and further covenants that EARTHCO has the lawful right, power and authority to lease and utilize the Property in the manner herein provided. Covol, at its option, may discharge any tax, mortgage or other lien upon the Property and, in the event Covol does so, it shall be subrogated to such lien with the right to enforce the same and apply Lease Payments accruing to EARTHCO hereunder toward satisfying the same. 9. Liens and Encumbrances. Covol shall keep the Property free from all mechanics' liens and other encumbrances arising from Covol's possession and operations provided that Covol shall have the right voluntarily to mortgage, pledge or otherwise encumber its equipment, improvements and leasehold estate hereunder and provided further that Covol shall not be required prematurely to discharge any lien which it disputes in good faith. 10. Commingling Measurement and Records.. Covol shall have the right to transport, store, mix, process and sell on the Property coal fines produced or removed from other lands, and to commingle such materials with materials produced or removed from the Property; provided, however, that Covol shall measure and record the amounts of materials produced from the Property and the amounts which are produced from other lands. No Lease Payment shall be payable hereunder on materials produced from lands other than the Property. Covol shall keep accurate records of the coal fines processed from the Property and make such records available for inspection and copying by EARTHCO upon request during normal business hours. 11. Covol's Equipment. Fixtures and Improvements. Covol shall have the right, in Covol's discretion and at its sole risk, to place, use, maintain and remove such equipment, fixtures and improvements upon the Property as Covol may reasonably require to conduct its operations on the Property from time to time. All such equipment, fixtures and improvements shall be and remain the exclusive property and responsibility of Covol, and shall be removed by Covol upon the termination of this Lease. 4

12. Permits. Laws and Regulations. Covol shall obtain all necessary permits required for the conduct of its operations hereunder, and Covol shall conduct all operations on or relating to the Property in full compliance with all applicable federal, state and local laws, regulations, permits and ordinances. Notwithstanding the preceding paragraph, EARTHCO will allow Covol to operate its Preparation Operations on Parcel A under the existing mining permit until September 1, 1998. EARTHCO and Covol shall cooperate to apply for any mining permit modifications necessary for Covol's operations. Covol will be responsible for the payment of any incremental increase in bond costs, if any, caused by Covol's operations on Parcel A. Covol further agrees to apply to DOGM to have the portion of the mining permit relative to Parcel A and Covol's operations on Parcel A transferred to Covol on or before September 1, 1998. Covol shall also be responsible to post its bond with DOGM relating to Parcel A on or before September 1, 1998, thereby releasing the bond of EARTHCO relative to Parcel A. Notwithstanding the first paragraph of Section 12 above, EARTHCO will allow Covol to operate its fines recovery and removal operations on Parcel B under the existing permit until February 21, 2002. EARTHCO and Covol shall cooperate to apply for any permit modifications necessary for Covol's operations on Parcel B. Covol will be responsible for the payment of any incremental increase in bond costs, if any, caused by Covol's operations on Parcel B. Covol further agrees to apply to DOGM to have the portion of the permit relative to Parcel B transferred to Covol and Covol agrees to post its bond relative to Parcel B (releasing and replacing EARTHCO's bond on Parcel

12. Permits. Laws and Regulations. Covol shall obtain all necessary permits required for the conduct of its operations hereunder, and Covol shall conduct all operations on or relating to the Property in full compliance with all applicable federal, state and local laws, regulations, permits and ordinances. Notwithstanding the preceding paragraph, EARTHCO will allow Covol to operate its Preparation Operations on Parcel A under the existing mining permit until September 1, 1998. EARTHCO and Covol shall cooperate to apply for any mining permit modifications necessary for Covol's operations. Covol will be responsible for the payment of any incremental increase in bond costs, if any, caused by Covol's operations on Parcel A. Covol further agrees to apply to DOGM to have the portion of the mining permit relative to Parcel A and Covol's operations on Parcel A transferred to Covol on or before September 1, 1998. Covol shall also be responsible to post its bond with DOGM relating to Parcel A on or before September 1, 1998, thereby releasing the bond of EARTHCO relative to Parcel A. Notwithstanding the first paragraph of Section 12 above, EARTHCO will allow Covol to operate its fines recovery and removal operations on Parcel B under the existing permit until February 21, 2002. EARTHCO and Covol shall cooperate to apply for any permit modifications necessary for Covol's operations on Parcel B. Covol will be responsible for the payment of any incremental increase in bond costs, if any, caused by Covol's operations on Parcel B. Covol further agrees to apply to DOGM to have the portion of the permit relative to Parcel B transferred to Covol and Covol agrees to post its bond relative to Parcel B (releasing and replacing EARTHCO's bond on Parcel B) upon the occurrence of any of the following events: i. Covol notifies EARTHCO of its intent to purchase Parcel B. or ii. Covol has not removed all of the economically recoverable coal fines from Parcel B by February 21, 2002, or iii. Covol notifies EARTHCO of its intent to extend the Lease on Parcel B. 13. Reclamation. Upon the termination of this Lease, Covol shall reclaim those areas of Parcel A disturbed, from and after the date hereof, by Covol's operations only to the 5

extent required by the mining permit then in force. EARTHCO shall be responsible for any required reclamation arising from use of, or operations on, the Property before the date of this Lease. EARTHCO expressly acknowledges and agrees that the use of the Property consistent with the terms hereof shall not constitute waste or other degradation of the Property, even though such may change the appearance, terrain or condition of the Property. Covol may expand its reclamation responsibilities to include Parcel B pursuant to Section 12 above. 14. Environmental Issues. Covol shall not conduct activities upon the Property or bring materials or substances onto the Property which require remediation or removal according to the federal Environmental Protection Agency or the State of Utah Department of Environmental Protection rules, regulations or statutes (the "Environmental Laws"). If Covol shall violate any of the Environmental Laws during its occupancy and use of the Property, then Covol shall be solely liable for the costs of correcting and abating such violations and shall indemnify EARTHCO and hold EARTHCO harmless against any and all claims arising therefrom. 15. Indemnitv and Insurance. Covol agrees to indemnify EARTHCO and hold it harmless against any and all claims of any nature arising from or related to Covol's activities, from and after the date hereof, on the Property, other than claims arising out of EARTHCO's reclamation responsibilities or other EARTHCO activities. EARTHCO agrees to indemnify Covol and hold it harmless against any and all claims arising from or related to pre-existing conditions, including environmental and reclamation liabilities and ongoing EARTHCO activities. Covol shall maintain comprehensive general liability insurance covering il:s operations hereunder, and EARTHCO shall be named as an additional insured under such policy.

extent required by the mining permit then in force. EARTHCO shall be responsible for any required reclamation arising from use of, or operations on, the Property before the date of this Lease. EARTHCO expressly acknowledges and agrees that the use of the Property consistent with the terms hereof shall not constitute waste or other degradation of the Property, even though such may change the appearance, terrain or condition of the Property. Covol may expand its reclamation responsibilities to include Parcel B pursuant to Section 12 above. 14. Environmental Issues. Covol shall not conduct activities upon the Property or bring materials or substances onto the Property which require remediation or removal according to the federal Environmental Protection Agency or the State of Utah Department of Environmental Protection rules, regulations or statutes (the "Environmental Laws"). If Covol shall violate any of the Environmental Laws during its occupancy and use of the Property, then Covol shall be solely liable for the costs of correcting and abating such violations and shall indemnify EARTHCO and hold EARTHCO harmless against any and all claims arising therefrom. 15. Indemnitv and Insurance. Covol agrees to indemnify EARTHCO and hold it harmless against any and all claims of any nature arising from or related to Covol's activities, from and after the date hereof, on the Property, other than claims arising out of EARTHCO's reclamation responsibilities or other EARTHCO activities. EARTHCO agrees to indemnify Covol and hold it harmless against any and all claims arising from or related to pre-existing conditions, including environmental and reclamation liabilities and ongoing EARTHCO activities. Covol shall maintain comprehensive general liability insurance covering il:s operations hereunder, and EARTHCO shall be named as an additional insured under such policy. 16. Taxes. From and after the date hereof, Covol shall pay when due real property taxes for the Property and all taxes on Covol's equipment and improvements on the Property. 17. Default. In the event of any material default by either party, in addition to any other remedy available to the non-defaulting party, if such default is not cured within thirty (30) days following written notice ore such default, the non-defaulting party may terminate the Lease; provided that in the event of a default which cannon reasonably be cured within thirty (30) days, the defaulting party shall have a reasonable time to cure, provided that immediate actions to cure such default are initiated within said thirty (30) days and diligently prosecuted to completion. 6

In the event of a default by Covol in tendering a payment in the amount or upon the due date according to Sections 3. a. and b. herein, in addition to any other available legal remedies, EARTHCO, at its option, shall have the right to select one of the following remedies after giving Covol fifteen (IS) days written notice specifying the default and describing EARTHCO's intention to exercise its rights under this Section: a. EARTHCO shall charge a late fee equal to five percent (5%) of the defaulted payment. b. EARTHCO may terminate this Lease and commence an action for damages. Covol shall immediately vacate and relinquish possession and occupancy of the Property. Any waiver of a default in payment by Covol must be in writing. 18. Assignment. Each party reserves the right to assign its rights and obligations under this Lease to an unaffiliated entity upon the consent of the non-assigning party, which consent shall not be unreasonably withheld. In the event that a party desires to assign its rights and obligations to an entity affiliated with that party, it may do so without the consent of the non-assigning party. EARTHCO shall have the right to assign the proceeds of this Lease to third parties as collateral for any financing that EARTHCO may arrange for its own corporate purposes. Covol will consent in writing to such assignment. 19. Notices. Any notices or other communications required or permitted hereunder will be in writing and will be delivered by hand or sent by prepaid telecopy or sent by postage paid registered, certified, or express mail, or by overnight courier service and shall be deemed given when so delivered by hand or telecopy, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service) as follows:
To Covol: Brent M. Cook, President

In the event of a default by Covol in tendering a payment in the amount or upon the due date according to Sections 3. a. and b. herein, in addition to any other available legal remedies, EARTHCO, at its option, shall have the right to select one of the following remedies after giving Covol fifteen (IS) days written notice specifying the default and describing EARTHCO's intention to exercise its rights under this Section: a. EARTHCO shall charge a late fee equal to five percent (5%) of the defaulted payment. b. EARTHCO may terminate this Lease and commence an action for damages. Covol shall immediately vacate and relinquish possession and occupancy of the Property. Any waiver of a default in payment by Covol must be in writing. 18. Assignment. Each party reserves the right to assign its rights and obligations under this Lease to an unaffiliated entity upon the consent of the non-assigning party, which consent shall not be unreasonably withheld. In the event that a party desires to assign its rights and obligations to an entity affiliated with that party, it may do so without the consent of the non-assigning party. EARTHCO shall have the right to assign the proceeds of this Lease to third parties as collateral for any financing that EARTHCO may arrange for its own corporate purposes. Covol will consent in writing to such assignment. 19. Notices. Any notices or other communications required or permitted hereunder will be in writing and will be delivered by hand or sent by prepaid telecopy or sent by postage paid registered, certified, or express mail, or by overnight courier service and shall be deemed given when so delivered by hand or telecopy, or if mailed, three days after mailing (one business day in the case of express mail or overnight courier service) as follows:
To Covol: Brent M. Cook, President Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84043 Phone: 801/768-4481 Fax: 801/768-4483 James W. Scott, President EARTHCO 4118 North Meridian Street Indianapolis, Indiana 46208 Phone: 317/283-4631 Fax: 317/283-4866

To EARTHCO:

7

Or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. 20. Effect of Headings. The subject headings of the sections of this Lease are included for convenience only and shall not affect the construction or interpretation of any of its provisions. 21. Force Mature. The obligations of each party shall be suspended to the extent and for the period that performance is prevented by any cause beyoncL its reasonable control; however, any such suspension shall not apply to payments required by Section 3. a. and b. herein. The affected party shall promptly give notice to the other party of the suspension of performance, stating therein the nature of the suspension, the reasons thereof, and the expected duration thereof. Abatement shall end as soon as it is reasonably practicable for the affected party to resume performance. 22. Governing Law. This Lease shall be governed by and interpreted in accordance with the laws of the State of Utah. 23. Specific Performance. The terms and obligations contained herein may be specifically enforced.

Or to such other address as the addressee may have specified in a notice duly given to the sender as provided herein. 20. Effect of Headings. The subject headings of the sections of this Lease are included for convenience only and shall not affect the construction or interpretation of any of its provisions. 21. Force Mature. The obligations of each party shall be suspended to the extent and for the period that performance is prevented by any cause beyoncL its reasonable control; however, any such suspension shall not apply to payments required by Section 3. a. and b. herein. The affected party shall promptly give notice to the other party of the suspension of performance, stating therein the nature of the suspension, the reasons thereof, and the expected duration thereof. Abatement shall end as soon as it is reasonably practicable for the affected party to resume performance. 22. Governing Law. This Lease shall be governed by and interpreted in accordance with the laws of the State of Utah. 23. Specific Performance. The terms and obligations contained herein may be specifically enforced. 24. Construction. This Lease shall be deemed to have been drafted jointly by the parties. Any uncertainty or ambiguity shall not be construed for or against any party based on attribution of drafting to that party. 25. Severability. Provided that no party is deprived of a material right under this Lease, if any provision of this Lease is held invalid or unenforceable, it is the intent of the parties that all other provisions be construed to remain binding on the parties. 26. Counterparts. This Lease may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Lease. A telecopy or reproduction of this Lease may be executed by one or more parties hereto, and a copy of this Lease may be delivered by one or more parties hereto by telecopy or similar instantaneous electronic transmission device pursuant to which the signature of, or on behalf of, such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties agree to execute an original of this Lease as well as any telecopy or other reproduction thereof. 8

27. Entire Agreement. This Lease constitutes the entire understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to the subject matter hereof. No amendment or modification of the terms of this Lease shall be binding or effective unless expressed in writing and signed by each party. 28. Non-waiver. No election or failure to exercise, delay in exercising, or waiver of any right or remedy hereunder on any occasion by either party shall be deemed to be an election or waiver of the same or of any other remedy on the same or any other occasion. 29. Confidentiality. This Lease, its terms and all communications, documents, data or other information generated as a part of this transaction are strictly confidential. Neither party shall disclose such information to a third person or entity without the consent of the other, except (1) as is essential for bona fide business purposes of which this Lease is a part, or (2) as compelled by legal proceedings. 30. Successors and Assigns. This Lease shall be binding on the parties hereto and upon their respective heirs, representatives, successors and permitted assigns. IN WITNESS WHEREOF, EARTHCO and Covol have executed this Lease as of the day and year first above written. EARTHCO

27. Entire Agreement. This Lease constitutes the entire understanding of the parties relating to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether oral or written, relating to the subject matter hereof. No amendment or modification of the terms of this Lease shall be binding or effective unless expressed in writing and signed by each party. 28. Non-waiver. No election or failure to exercise, delay in exercising, or waiver of any right or remedy hereunder on any occasion by either party shall be deemed to be an election or waiver of the same or of any other remedy on the same or any other occasion. 29. Confidentiality. This Lease, its terms and all communications, documents, data or other information generated as a part of this transaction are strictly confidential. Neither party shall disclose such information to a third person or entity without the consent of the other, except (1) as is essential for bona fide business purposes of which this Lease is a part, or (2) as compelled by legal proceedings. 30. Successors and Assigns. This Lease shall be binding on the parties hereto and upon their respective heirs, representatives, successors and permitted assigns. IN WITNESS WHEREOF, EARTHCO and Covol have executed this Lease as of the day and year first above written. EARTHCO
By: /s/ James W. Scott -----------------James W. Scott Title: President

COVOL TECHNOLOGIES, INC.
By: /s/ Brent M. Cook ----------------Brent M. Cook Title: President

9

AGREEMENT CONCERNING ADDITIONAL FACILITIES This Agreement concerning additional facilities ("the Agreement"), is made and entered into as of December 27, 1996 by and between AJG Financial Services, Inc., a Delaware corporation ("AJG"), and Covol Technologies, Inc., a Delaware corporation ("Covol"). Whereas, Covol has represented that it has developed a proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other coal derivatives. Whereas, AJG proposes to enter into four (4) separate standard Form of Agreements (individually referred to as a "Facility Agreement" and collectively referred to as the "Facility Agreements") between Owner and Design/Builder with Gencor Industries, Inc. ("Contractor") for the construction of four (4) agglomeration facilities within the United States, each to have a production capacity of approximately 30,000 tons per month (individually referred to as a "Facility" and collectively referred to as the "Facilities"). Now, therefore, in consideration of the foregoing premises, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AJG and Covol agree as follows: Section 1 Definitions.

AGREEMENT CONCERNING ADDITIONAL FACILITIES This Agreement concerning additional facilities ("the Agreement"), is made and entered into as of December 27, 1996 by and between AJG Financial Services, Inc., a Delaware corporation ("AJG"), and Covol Technologies, Inc., a Delaware corporation ("Covol"). Whereas, Covol has represented that it has developed a proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other coal derivatives. Whereas, AJG proposes to enter into four (4) separate standard Form of Agreements (individually referred to as a "Facility Agreement" and collectively referred to as the "Facility Agreements") between Owner and Design/Builder with Gencor Industries, Inc. ("Contractor") for the construction of four (4) agglomeration facilities within the United States, each to have a production capacity of approximately 30,000 tons per month (individually referred to as a "Facility" and collectively referred to as the "Facilities"). Now, therefore, in consideration of the foregoing premises, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, AJG and Covol agree as follows: Section 1 Definitions. "Coal Briquetting Technology" means intellectual property, inventor's certificates and applications therefor, printed and unprinted 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 other scientific or technical information relating to or used in the proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other similar coal derivatives, and the proprietary binder material used in manufacturing synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines and other similar coal derivatives, in each case owned or controlled by Covol; provided, however, that the defined term "Coal Briquetting Technology" shall not include the proprietary process developed by Covol to produce synthetic coke extrusions and briquettes from coke breeze or any technology other than the processing and production of synthetic coal fuel extrusions or briquettes. "Commercial Use" means any usage of the Coal Briquetting Technology for commercial exploitation and any other usage to which Covol grants prior written consent. "Covol" has the meaning set forth in the preamble. "Contractor" has the meaning set forth in the preamble. "Facility" and "Facilities" have the meanings set forth in the preamble. "Facility Agreement" and "Facility Agreements" have the meanings set forth in the preamble. "Facility Assignment" has the meaning set forth in section 12 hereof. "Improvements" has the meaning set forth in section 2.3 hereof. "AJG" has the meaning set forth in the preamble. 1 * Confidential material has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission (the "Commission").

"Royalty" has the meaning set forth in section 3.2 hereof.

"Royalty" has the meaning set forth in section 3.2 hereof. Section 2 License Grant. 2.1 General. Subject to the terms and conditions of this Agreement, Covol hereby grants to AJG a license to use the Coal Briquetting Technology for Commercial Use with each Facility, including a license to make, have made, use, and sell or otherwise transfer products which embody, use, or have been developed or manufactured with the Coal Briquetting Technology. AJG may propose the general location for each Facility, and Covol will then have thirty (30) days to approve or disapprove of the general area for each Facility, which approval shall not unreasonably be withheld, taking into account other facilities in the area utilizing Covol's technology, any noncompetition agreements, and like factors. 2.2 Know-How and Assistance. To enable AJG to benefit fully from the license of the Coal Briquetting Technology, Covol shall provide reasonable access to documentation, drawings, engineering specifications, and other know-how in its possession that Covol determines is necessary to carry out the purposes of this Agreement; reasonable access to its employees or agents who are familiar with the Coal Briquetting Technology and Improvements to the Coal Briquetting Technology, as defined in section 2.3; and technical advice with regard to the Coal Briquetting Technology as is reasonably requested by AJG. Covol reserves the right to deny access to documentation and other forms of information it deems unnecessary to carry out the purposes of this Agreement. 2.3 Improvements. Covol may develop improvements, variations, or modifications ("Improvements") to the Coal Briquetting Technology. The term "Improvements" shall include changes that reduce production costs, improve performance, or increase marketability. Covol hereby grants to AJG a license to utilize the Improvements made by it for Commercial Use, including to make, have made, use, and sell or otherwise transfer products that utilize any such Improvements subject to the terms of this Agreement. It is mutually understood and agreed that all Improvements provided to AJG by Covol shall remain the sole and exclusive property of Covol. 2.4 Confidentiality. AJG hereby agrees not to disclose the Coal Briquetting Technology except to its agents, employees, directors, or representatives that have a need to know about the Coal Briquetting Technology in connection with the operation and maintenance of the Facilities and the sale of coal briquettes or extrusions produced by the Facilities. Section 3 License Fees and Royalty. 3.1 License Fees. AJG shall pay a base license fee to Covol equal to * for each Facility at the commencement of construction of each Facility. 3.2 Royalty Amount. As to each Facility, on or before the 15th of the month following the end of each fiscal quarter, AJG shall pay to Covol royalty payments ("Royalty") in an amount equal to the product of (i) * multiplied by (ii) the MM Btu of the extrusions and briquettes sold by AJG during the immediately preceding quarter. If unpaid by the date due, the Royalty shall accrue simple interest at the rate of one (1) percent per month. Beginning on January 1, 1997 and each year thereafter, the Royalty shall be adjusted by * of the increase or decrease in the inflation adjustment provided in Section 29 of the Internal Revenue Code. Section 4 Binder. 4.1 Sales of Binder. 4.1.1 Sale and Purchase. Upon the request of AJG, from time-to-time, Covol shall sell to AJG a sufficient quantity of proprietary binder material manufactured by Covol as is required to operate 2 * Confidential material omitted and filed separately with the Commission.

each Facility. Covol shall deliver the proprietary binder material to each Facility, at such times and in such amounts as reasonably requested by AJG. Payments for proprietary binder material delivered by Covol during any calender month shall be due and payable to Covol on the 10th business day of the immediately succeeding month. If unpaid by the due date, the payment shall accrue simple interest at the rate of one (1) percent per month. 4.1.2 Price. The price which AJG shall pay for the proprietary binder material delivered by Covol during any calender year shall be an amount equal to (i) Covol's direct and actual costs (direct material and labor costs and a percentage of the total overhead costs of Covol reasonably reflecting the ratio of the administrative costs incurred in connection with the manufacture and sale of the proprietary binder material to the total overhead costs of Covol) reasonably incurred to manufacture the proprietary binder material plus (ii) * of the amount determined pursuant to clause (i). Section 5 Records; Inspection; Confidentiality. 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, 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. 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. Section 6 Development and Construction of Facilities. 6.1 Assistance from Covol. Upon the reasonable request of AJG, Covol agrees to provide assistance from time to time in the development and construction of each of the Facilities. Covol shall also provide, from time to time upon the reasonable request of AJG, assistance to AJG in connection with presentations to potential investors in any of the Facilities. 6.2 Reimbursement of Expenses. AJG shall reimburse, on demand, the travel and other similar out-of-pocket expenses of Covol in performing services requested under Section 6.1; provided, however, that Covol shall obtain the prior written approval of AJG for any expenditures in excess of $5,000. Section 7 Representations and Warranties. 7.1 Authority. Each of Covol and AJG represents and warrants that (i) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been or will be duly authorized on its behalf by all requested action, corporate or otherwise, (ii) it has the full right, power and authority to enter into this Agreement and to carry out the terms of this Agreement, (iii) it has duly executed and delivered this Agreement, and (iv) this Agreement is a valid and binding obligation of it enforceable in accordance with its terms. 7.2 No Consent. Each of Covol and AJG represents and warrants 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. 7.3 Intellectual Property Matters. Covol warrants that it (i) owns intellectual property, inventor's certificates and applications therefor, printed and unprinted 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 other scientific or technical information relating to or used in the proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other similar coal derivatives, and, the proprietary binder material used 3 * Confidential material omitted and filed separately with the Commission.

in manufacturing synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines and other similar coal derivatives, and (ii) has the right and power to grant to AJG the licenses granted herein. Section 8 Term. This Agreement and the license granted hereunder shall be for the period from the Closing Date to and including January 1, 2008, or the corresponding date under Section 29 of the 1986 Code in the event of an extension of the tax credits available under Section 29 of the 1986 Code. Section 9 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 10 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 11 Notices. All notices required or permitted to be given under this Agreement shall be in writing. Notices may be served by certified or registered mail, postage paid with return receipt requested; by private courier, prepaid; by telex, facsimile, or other telecommunication device capable of transmitting or creating a written record; or personally. Mailed notices shall be deemed delivered five days after mailing, property addressed. Couriered notices shall be deemed delivered when delivered as addressed, or if the addressee refuses delivery, when presented for delivery notwithstanding such refusal. Telex or telecommunicated notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be effective when accomplished. Unless a party changes its address by giving notice to the other party as provided herein, notices shall be delivered to the parties at the following address:
Covol: Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84084 Telephone: (801) 768-4481 Telecopier: (801) 768-4483 Attn.: Mr. Brent M. Cook Ballard Spahr Andrews & Ingersoll 201 South Main Street, Suite 1200 Salt Lake City, Utah 84111-2215 Telephone: (801) 531-3000 Telecopier: (801) 531-3001 Attn.: Mr. William Marsh AJG Financial Services, Inc. The Gallagher Centre Two Pierce Place Itasca, IL 60143-3141 Telephone: (312) 285-3500 Telecopier: (312) 285-3483 Attn.: Mr. David R. Long Rudnick & Wolfe 203 North LaSalle Street Chicago, IL 60601-1293 4

With a copy to:

Buyer:

With a copy to:

Telephone: (312) 368-4000 Telecopier: (312) 236-7516 Attn.: Mr. John R. Mannix, Jr.

Section 12 Assignment; Sublicenses. This Agreement may be assigned by Covol to any of its wholly-owned subsidiaries. After the payment of the base license fee contemplated under section 3.1 for a Facility, AJG may

in manufacturing synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines and other similar coal derivatives, and (ii) has the right and power to grant to AJG the licenses granted herein. Section 8 Term. This Agreement and the license granted hereunder shall be for the period from the Closing Date to and including January 1, 2008, or the corresponding date under Section 29 of the 1986 Code in the event of an extension of the tax credits available under Section 29 of the 1986 Code. Section 9 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 10 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 11 Notices. All notices required or permitted to be given under this Agreement shall be in writing. Notices may be served by certified or registered mail, postage paid with return receipt requested; by private courier, prepaid; by telex, facsimile, or other telecommunication device capable of transmitting or creating a written record; or personally. Mailed notices shall be deemed delivered five days after mailing, property addressed. Couriered notices shall be deemed delivered when delivered as addressed, or if the addressee refuses delivery, when presented for delivery notwithstanding such refusal. Telex or telecommunicated notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be effective when accomplished. Unless a party changes its address by giving notice to the other party as provided herein, notices shall be delivered to the parties at the following address:
Covol: Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84084 Telephone: (801) 768-4481 Telecopier: (801) 768-4483 Attn.: Mr. Brent M. Cook Ballard Spahr Andrews & Ingersoll 201 South Main Street, Suite 1200 Salt Lake City, Utah 84111-2215 Telephone: (801) 531-3000 Telecopier: (801) 531-3001 Attn.: Mr. William Marsh AJG Financial Services, Inc. The Gallagher Centre Two Pierce Place Itasca, IL 60143-3141 Telephone: (312) 285-3500 Telecopier: (312) 285-3483 Attn.: Mr. David R. Long Rudnick & Wolfe 203 North LaSalle Street Chicago, IL 60601-1293 4

With a copy to:

Buyer:

With a copy to:

Telephone: (312) 368-4000 Telecopier: (312) 236-7516 Attn.: Mr. John R. Mannix, Jr.

Section 12 Assignment; Sublicenses. This Agreement may be assigned by Covol to any of its wholly-owned subsidiaries. After the payment of the base license fee contemplated under section 3.1 for a Facility, AJG may assign its rights under this Agreement relating to that Facility to persons or entities approved by Covol (a "Facility

Telephone: (312) 368-4000 Telecopier: (312) 236-7516 Attn.: Mr. John R. Mannix, Jr.

Section 12 Assignment; Sublicenses. This Agreement may be assigned by Covol to any of its wholly-owned subsidiaries. After the payment of the base license fee contemplated under section 3.1 for a Facility, AJG may assign its rights under this Agreement relating to that Facility to persons or entities approved by Covol (a "Facility Assignment"). Section 13 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 forbear from all such action, as may be reasonably necessary or appropriate in order more effectively to carry out the provisions of this Agreement. Section 14 Entire Agreement. This 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. This Agreement supersedes all prior communications, representations, or agreements, verbal or written, among the parties relating to the subject matter hereof. This Agreement may not be amended except in writing signed by the parties hereto. Section 15 Governing Law. This Agreement shall be governed in accordance with the laws of the State of Utah. Section 16 Counterparts. This Agreement may be executed in two or more counterparts, each which shall be deemed an original, but all of which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized representatives the day and year first above written. COVOL TECHNOLOGIES, INC.
By: /s/ Brent M. Cook ------------------------Name: Brent M. Cook Title: President

AJG FINANCIAL SERVICES, INC.
By: /s/ Mark Strauch ---------------------Name: Mark Strauch Title: Treasurer

5

FORM OF AGREEMENT FOR TECHNOLOGY LICENSING OF FACILITIES This Agreement For Technology Licensing Of Facilities ("this Agreement") is made and entered into as of December 31st, 1996 by and between PC West Virginia Synthetic Fuel #1, L.L.C., a Delaware limited liability company ("Licensee"), and Covol Technologies, Inc., a Delaware corporation ("Covol"). Licensee and Covol are sometimes hereinafter referred to as, individually "Party" and, collectively "Parties". Whereas, Covol has represented that it has developed a proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other coal derivatives. Whereas, Licensee proposes to enter into a form of agreement (referred to as a "Facility Agreement") between itself as Owner and with a Contractor for the construction of one (1) agglomeration facility within the United

FORM OF AGREEMENT FOR TECHNOLOGY LICENSING OF FACILITIES This Agreement For Technology Licensing Of Facilities ("this Agreement") is made and entered into as of December 31st, 1996 by and between PC West Virginia Synthetic Fuel #1, L.L.C., a Delaware limited liability company ("Licensee"), and Covol Technologies, Inc., a Delaware corporation ("Covol"). Licensee and Covol are sometimes hereinafter referred to as, individually "Party" and, collectively "Parties". Whereas, Covol has represented that it has developed a proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other coal derivatives. Whereas, Licensee proposes to enter into a form of agreement (referred to as a "Facility Agreement") between itself as Owner and with a Contractor for the construction of one (1) agglomeration facility within the United States, to have a production design capacity of approximately 500,000 tons per year (referred to as a "Facility"), the reference to production design capacity not being intended to limit the actual production capacity of each Facility. Now, therefore, in consideration of the foregoing premises, the mutual covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Licensee and Covol agree as follows: Section 1 Definitions. "Coal Briquetting Technology" means the intellectual property (including patents and trademarks), inventor's certificates and applications therefor, printed and unprinted 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 other scientific or technical information relating to or used in the proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other similar coal derivatives, and the proprietary binder material used in manufacturing synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines and other similar coal derivatives, in each case owned or controlled by Covol; provided, however, that the defined term "Coal Briquetting Technology" shall not include the proprietary process developed by Covol to produce synthetic coke extrusions and briquettes from coke breeze or any technology other than technology for the processing and production of synthetic coal fuel extrusions or briquettes. "Commercial Use" means any usage of the Coal Briquetting Technology for (1) commercial exploitation and (2) any other usage to which Covol grants prior written consent which consent shall not be unreasonably withheld. "Covol" has the meaning set forth in the preamble. "Contractor" has the meaning set forth in the preamble. "Facility" has the meaning set forth in the preamble. "Facility Agreement" has the meaning set forth in the preamble. "Improvements" has the meaning set forth in section 2.3 hereof. "Licensee" has the meaning set forth in the preamble. Page 1 * Confidential material has been omitted from this Exhibit and filed separately with the Securities and Exchange Commission (the "Commission").

"Royalty" has the meaning set forth in section 3.2 hereof. Section 2 License Grant. 2.1 General. Subject to the terms and conditions of this Agreement, Covol hereby grants to Licensee a licensee to use the Coal Briquetting Technology for Commercial Use with the Facility, including a license to make, have made, use, and sell or otherwise transfer products which embody, use, or have been developed or manufactured with the Coal Briquetting Technology. Licensee may propose the general location for additional facilities to use the Coal Briquetting Technology, and Covol will then have thirty (30) days to approve or disapprove of the general area for each such additional facility, which approval shall not unreasonably be withheld, taking into account other facilities in the area utilizing Covol's technology, any noncompetition agreements, and like factors; provided that the following sites are approved and not subject to the 30-day review of this Section 2.1: Marmet Pool, near Chesapeake, Kanawha County, WV. 2.2 Know-How and Assistance. To enable Licensee to benefit fully from the license of the Coal Briquetting Technology, Covol shall provide reasonable access to documentation, drawings, engineering specifications, operating facilities under its control, and other know-how in its possession that Licensee reasonably requires to carry out the purposes of this Agreement; reasonable access to its employees or agents who are familiar with the Coal Briquetting Technology and Improvements to the Coal Briquetting Technology, as defined in section 2.3 hereof; technical advice with regard to the Coal Briquetting Technology as is reasonably requested by Licensee; and assistance in accumulating the data, technical descriptions, test results, etc. necessary to apply for a Private Letter Ruling from the Internal Revenue Service regarding the production for the Facilities as qualifying for Section 29 tax credit. Covol shall not be obligated to provide Licensee with documentation and other forms of information Covol reasonably deems unnecessary to carry out the purposes of this Agreement. 2.3 Improvements. Covol may develop improvements, variations, or modifications ("Improvements") to the Coal Briquetting Technology. The term "Improvements" shall include changes that reduce production costs, improve performance, or increase marketability. Covol hereby grants to Licensee a license to utilize the Improvements made by it for Commercial Use, including to make, have made, use, and sell or otherwise transfer products that utilize any such Improvements subject to the terms of this Agreement. It is mutually understood and agreed that all Improvements provided to Licensee by Covol shall remain the sole and exclusive property of Covol. 2.4 Confidentiality. Licensee hereby agrees not to disclose the Coal Briquetting Technology except to its affiliates, agents, employees, directors, vendors, suppliers, contractors or representatives that have a need to know about the Coal Briquetting Technology in connection with the operation and maintenance of the Facility and the sale of coal briquettes or extrusions produced by the Facility. Section 3 License Fees and Royalty. 3.1 License Fees. Licensee shall pay a one time advance license fee equal to * per ton for each ton of annual production capacity. Payment of the advance license fee described in this Section 3.1 shall be due and payable at the commencement of actual on-site construction of the Facility. 3.2 Royalty Amount. On or before the 15th of the month following the end of each fiscal quarter, Licensee shall pay to Covol royalty payments ("Royalty") in an amount equal to the product of (i) * multiplied by (ii) the total MM Btu of the extrusions and briquettes produced from the Facility and sold by Licensee during the immediately preceding quarter that qualify for the Section 29 tax credit. If unpaid by the date due, the Royalty shall accrue simple interest at the rate of one (1) percent per month. Beginning on January 1, 1997 and each year thereafter, the Royalty shall be adjusted by the increase or decrease in the dollar amount of the inflation adjustment as provided in Section 29 of the Internal Revenue Code. Page 2 * Confidential material has been omitted from this Exhibit and filed separately with the Commission.

Section 4 Sales of Binder.

Section 4 Sales of Binder. 4.1 Sale and Purchase. Upon the request of Licensee, from time-to-time, Covol shall sell to Licensee a sufficient quantity of proprietary binder material manufactured by Covol as is required to operate the Facility. The binder material shall conform in quality to the binder described in Covol's Section 29 tax credit Private Letter Ruling dated September 6, 1995, subject to any improvement in the binder material that still satisfies the Section 29 tax credit qualification requirements. Covol shall deliver the proprietary binder material to the Facility, at such times and in such amounts as reasonably requested by Licensee. Payments for proprietary binder material delivered by Covol during any calender month shall be due and payable to Covol on or before the 15th of the immediately succeeding month. If unpaid by the due date, the payment shall accrue simple interest at the rate of one (1) percent per month. 4.2 Price. The price which Licensee shall pay for the proprietary binder material delivered by Covol during any calender year shall be an amount equal to (i) Covol's direct and actual costs (direct material and labor costs and a percentage of the total overhead costs of Covol reasonably reflecting the ratio of the administrative costs incurred in connection with the manufacture and sale of the proprietary binder material to the total overhead costs of Covol) reasonably incurred to manufacture the proprietary binder material plus (ii) * of the amount determined pursuant to *. 4.3 Licensee Production of Binder. If Covol's ability to deliver the proprietary binder material to Licensee is interrupted for at least twenty days or terminated, Covol 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 Covol's technology to manufacture the proprietary binder material in sufficient quantities to operate the Facility up to full capacity for the purposes of this Agreement; provided however, that the license granted to Licensee under this section 4.3 shall cease and sales of the proprietary binder material shall be reinstated at any time after Covol is able to deliver the proprietary binder material in accordance with section 4. Covol will deliver to a safety deposit box owned jointly by Covol and Licensee at the Bank of American Fork, Main Branch, a written copy of the formula used by Covol to manufacture the proprietary binder material. Except to the extent required by law, Licensee covenants to hold the formula delivered to it by Covol pursuant to the preceding sentence strictly confidential, and not to study, utilize, remove, or access the formula except in accordance with the license granted to Licensee pursuant to this section 4.3. Section 5 Records; Inspection; Confidentiality. Each Party shall keep accurate records containing all data reasonably required for the computation and verification of the amounts to be paid by the Parties under this Agreement, and shall permit the other Party or an independent accounting firm designated by the 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. Except to the extent required by law, 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. Section 6 Development and Construction of Facilities. 6.1 Assistance from Covol. Upon the reasonable request of Licensee, Covol agrees to provide assistance from time to time in the development and construction of the Facility. 6.2 Reimbursement of Expenses. Licensee shall reimburse the travel and other similar out-of-pocket expenses of Covol in performing services requested under section 6.1 hereof; provided, however, that Covol shall obtain the prior written approval of Licensee for any expenditures in excess of $5,000. Section 7 Representations and Warranties. Page 3 * Confidential material has been omitted from this Exhibit and filed separately with the Commission.

7.1 Authority. Each of Covol and Licensee represents and warrants that (i) the execution, delivery and

7.1 Authority. Each of Covol and Licensee represents and warrants that (i) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been or will be duly authorized on its behalf by all requested action, corporate or otherwise, (ii) it has the full right, power and authority to enter into this Agreement and to carry out the terms of this Agreement, (iii) it has duly executed and delivered this Agreement, and (iv) this Agreement is a valid and binding obligation of it enforceable in accordance with its terms. 7.2 No Consent. Each of Covol and Licensee represents and warrants 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. 7.3 Intellectual Property Matters. Covol warrants that it (i) owns intellectual property, inventor's certificates and applications therefor, printed and unprinted 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 other scientific or technical information relating to or used in the proprietary process to produce synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines, and other similar coal derivatives, and, the proprietary binder material used in manufacturing synthetic coal fuel extrusions and briquettes from waste coal dust, coal fines and other similar coal derivatives, as defined in section 1 hereof, and (ii) has the right and power to grant to Licensee the licenses granted herein. *. 7.4 Indemnification. Each Party agrees and shall indemnify, defend and hold harmless the other Party, its members, officers, agents, successors and permitted assigns from and against all claims, disputes, losses, damages, liabilities, costs and expenses (including attorneys' fees) of any kind arising from any claims or other actions relating to a breach by the first Party of its representations and warranties made in this Agreement. Section 8 Term. This Agreement and the license granted hereunder shall be for the primary term from the date first above written to and including January 1, 2008, or the corresponding date under Section 29 of the Internal Revenue Code, as amended, in the event of an extension of the tax credits available under Section 29 of the Internal Revenue Code, as amended, whichever is later. Licensee shall have the right to renew this Agreement upon terms that the Parties may later agree. Section 9 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 10 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 11 Notices. All notices required or permitted to be given under this Agreement shall be in writing. Notices may be served by certified or registered mail, postage paid with return receipt requested; by private courier, prepaid; by telex, facsimile, or other telecommunication device capable of transmitting or creating a written record; or personally. Mailed notices shall Page 4 * Confidential material has been omitted from this Exhibit and filed separately with the Commission.

be deemed delivered five days after mailing, property addressed. Couriered notices shall be deemed delivered when delivered as addressed, or if the addressee refuses delivery, when presented for delivery notwithstanding such refusal. Telex or telecommunicated notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be

be deemed delivered five days after mailing, property addressed. Couriered notices shall be deemed delivered when delivered as addressed, or if the addressee refuses delivery, when presented for delivery notwithstanding such refusal. Telex or telecommunicated notices shall be deemed delivered when receipt is either confirmed by confirming transmission equipment or acknowledged by the addressee or its office. Personal delivery shall be effective when accomplished. Unless a party changes its address by giving notice to the other party as provided herein, notices shall be delivered to the parties at the following address:
Covol: Covol Technologies, Inc. 3280 North Frontage Road Lehi, Utah 84084 Telephone: (801) 768-4481 Telecopier: (801) 768-4483 Attn.: Mr. Brent M. Cook Ballard Spahr Andrews & Ingersoll 201 South Main Street, Suite 1200 Salt Lake City, Utah 84111-2215 Telephone: (801) 531-3000 Telecopier: (801) 531-3001 Attn.: Mr. William Marsh PC West Virginia Synthetic Fuel #1, L.L.C. 4401 Fair Lakes Court Suite 400 Fairfax, VA 22033 Telephone: (703) 818-9100 Telecopier: (703) 818-9108 Attn.: Mr. James R. Treptow

With a copy to:

Licensee:

Section 12 Assignment. This Agreement may be assigned by Covol to any of its wholly-owned subsidiaries and by Licensee to any affiliate(s) owning a Facility; otherwise, this Agreement may not be assigned by either Party without the other Party's prior written consent, which consent shall not be unreasonably withheld. Section 13 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 forbear from all such action, as may be reasonably necessary or appropriate in order more effectively to carry out the provisions of this Agreement. Section 14 Entire Agreement. This 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. This Agreement supersedes all prior communications, representations, or agreements, verbal or written, among the Parties relating to the subject matter hereof. This Agreement may not be amended except in writing signed by the Parties. Section 15 Governing Law. This Agreement shall be governed in accordance with the laws of the State of Utah. Section 16 Counterparts. This Agreement may be executed in two or more counterparts, each which shall be deemed an original, but all of which together shall constitute one and the same agreement. Page 5

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives the day and year first above written. COVOL TECHNOLOGIES, INC.
By: /s/ Brent M. Cook ----------------------Name: Brent M. Cook Title: President

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives the day and year first above written. COVOL TECHNOLOGIES, INC.
By: /s/ Brent M. Cook ----------------------Name: Brent M. Cook Title: President

PC WEST VIRGINIA SYNTHETIC FUEL #1, L.L.C. by C.C. PACE CAPITAL, L.L.C., one of its members
By: /s/ James R. Treptow -------------------------Name: James R. Treptow Title: Managing Director

Page 6

Employment Agreement THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the 20 day of March, 1997 (the "Effective Date") by and between COVOL Technologies, Inc., a Delaware corporation (the "Company"), and Max E. Sorenson ("Employee"). The Company and Employee are sometimes later in this Agreement collectively referred to as the "Parties." RECITALS This Agreement is entered into with reference to the following facts, definitions and objectives: NOW, THEREFORE, in Consideration of this Agreement and of the covenants contained in this Agreement, the Parties agree as follows: 1. Employment and Positions. (a) Position. The Company employs Employee and the Employee accepts employment by the Company as Vice President of the Company for the Period of Employment specified in Paragraph 4 ("Period of Employment"). 2. Services to be Rendered. Employee shall, during the period of Employment, serve the Company in the position set forth in Paragraph 1 ("Employment") diligently, competently and in conformance with the corporate policies of the Company. Employee shall be free to conduct investment activities that do not conflict or interfere with the performance of his duties under this Agreement including but not limited to those contained in Paragraph 13. Performance of the required services will in no way require Employee to use confidential information obtained from his previous employer. In fulfilling his duties and responsibilities under this Agreement, Employee shall report to the President and Chief Executive Officer of the Company. 3. Period of Employment. Employee's employment by the Company pursuant to this Agreement shall, unless sooner terminated as provided in this Agreement, be for a term of three (3) years, commencing as of the 1 day of April 1997, and ending with the close of "business on the 1 day of April, 2000 (the "Period of Employment"). 1

Employment Agreement THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of the 20 day of March, 1997 (the "Effective Date") by and between COVOL Technologies, Inc., a Delaware corporation (the "Company"), and Max E. Sorenson ("Employee"). The Company and Employee are sometimes later in this Agreement collectively referred to as the "Parties." RECITALS This Agreement is entered into with reference to the following facts, definitions and objectives: NOW, THEREFORE, in Consideration of this Agreement and of the covenants contained in this Agreement, the Parties agree as follows: 1. Employment and Positions. (a) Position. The Company employs Employee and the Employee accepts employment by the Company as Vice President of the Company for the Period of Employment specified in Paragraph 4 ("Period of Employment"). 2. Services to be Rendered. Employee shall, during the period of Employment, serve the Company in the position set forth in Paragraph 1 ("Employment") diligently, competently and in conformance with the corporate policies of the Company. Employee shall be free to conduct investment activities that do not conflict or interfere with the performance of his duties under this Agreement including but not limited to those contained in Paragraph 13. Performance of the required services will in no way require Employee to use confidential information obtained from his previous employer. In fulfilling his duties and responsibilities under this Agreement, Employee shall report to the President and Chief Executive Officer of the Company. 3. Period of Employment. Employee's employment by the Company pursuant to this Agreement shall, unless sooner terminated as provided in this Agreement, be for a term of three (3) years, commencing as of the 1 day of April 1997, and ending with the close of "business on the 1 day of April, 2000 (the "Period of Employment"). 1

4. Base Salary. During the first twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $6,667.00 per month payable bi-weekly. During the second twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $10,833.00 per month payable bi-weekly. During the last twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $10,833.00 per month payable bi-weekly. The car allowance and cost of term life insurance shall be added to the base salary. 5. Incentive Bonus. During the Period of Employment, Employee shall be entitled to receive a bonus pursuant to the Company's bonus plan as in effect from time to time. 6. Stock Options. Stock Options shall be issued pursuant and subject to the provisions outlined below or as otherwise mutually agreed to. (a) Purchase Price. The purchase price per share for the shares subject to the Stock Option will be One Dollar and Fifty Cents ($1.50) per share. (b) Number of Shares. The Stock Options will be for Fifty Thousand (50,000) shares of the Company's Common Stock (the "Optioned Shares"). (c) Exercise Periods. The Optioned Shares will vest and be exercisable as follows: (1) Twenty Five Thousand (25,000) Optioned Shares will be vested on April 1, 1997. Twelve Thousand Five Hundred (12,500) on the first anniversary date of Employment, and Twelve Thousand Five Hundred (12,500) on the second anniversary date

4. Base Salary. During the first twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $6,667.00 per month payable bi-weekly. During the second twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $10,833.00 per month payable bi-weekly. During the last twelve months of this Agreement, the Employee's regular salary, before all customary and proper taxes, shall be no less than $10,833.00 per month payable bi-weekly. The car allowance and cost of term life insurance shall be added to the base salary. 5. Incentive Bonus. During the Period of Employment, Employee shall be entitled to receive a bonus pursuant to the Company's bonus plan as in effect from time to time. 6. Stock Options. Stock Options shall be issued pursuant and subject to the provisions outlined below or as otherwise mutually agreed to. (a) Purchase Price. The purchase price per share for the shares subject to the Stock Option will be One Dollar and Fifty Cents ($1.50) per share. (b) Number of Shares. The Stock Options will be for Fifty Thousand (50,000) shares of the Company's Common Stock (the "Optioned Shares"). (c) Exercise Periods. The Optioned Shares will vest and be exercisable as follows: (1) Twenty Five Thousand (25,000) Optioned Shares will be vested on April 1, 1997. Twelve Thousand Five Hundred (12,500) on the first anniversary date of Employment, and Twelve Thousand Five Hundred (12,500) on the second anniversary date of Employment. Once vested, the Optioned Shares may be exercised in whole or in part at any time, subject to the limitations within which the exercise of the Options must occur. (d) Vesting of Options in Event of Disability or Death. In the event of disability or death of the employee any nonvested Stock Options shall vest effective as of the date of the disability or the death of employee. In the event of Employee's disability or death, the Employee, heirs or estate of Employee, as the case may be, may exercise any unexecuted options at any time subject to the time limitations within which exercise of options must occur. (e) Additional Stock Options. Employee shall also be eligible to receive additional stock options during the Period of Employment pursuant to a stock option bonus plan as may from time to time be in effect. 7. Other Benefits. In addition to the benefits previously set forth in this Agreement, Employee shall, during the Period of Employment, be entitled to the benefits described below, and as concerns all such benefit programs where years of service are a factor, to the extent permitted by law, Employee shall be given credit for his years of service with the Steel Industry. 2

(a) Car Allowance. Employee shall be paid a monthly car allowance in the amount of Five Hundred and Fifty Dollars ($550). (b) Vacation. During the Period of Employment, Employee shall be entitled to not less than Four (4) weeks of paid vacation during each calendar year occurring during the Period of Employment and that amount of vacation provided to other senior executive officers of the Company. Upon termination of Employee's employment under this Agreement, Employee shall be paid for any unused vacation in the year in which the termination occurred. (c) Sick Leave. Sick leave time that is reasonable under the circumstances and that is consistent with the Company's policies and procedures, as the same may be changed, modified or terminated for all participants from time to time. (d) Insurance. The Company shall pay the premium for and provide life, disability, medical, and dental benefits for the Employee and his family. Said insurance shall be provided with no lapse in coverage between the time Employee's insurance benefits with prior employer terminate and the time Employee's insurance benefits from the Company begin. All preexisting conditions are be covered to the extent that they are not covered by the prior employer. Life insurance \ Disability insurance will be provided as is typical for Officers in the Steel Industry.

(a) Car Allowance. Employee shall be paid a monthly car allowance in the amount of Five Hundred and Fifty Dollars ($550). (b) Vacation. During the Period of Employment, Employee shall be entitled to not less than Four (4) weeks of paid vacation during each calendar year occurring during the Period of Employment and that amount of vacation provided to other senior executive officers of the Company. Upon termination of Employee's employment under this Agreement, Employee shall be paid for any unused vacation in the year in which the termination occurred. (c) Sick Leave. Sick leave time that is reasonable under the circumstances and that is consistent with the Company's policies and procedures, as the same may be changed, modified or terminated for all participants from time to time. (d) Insurance. The Company shall pay the premium for and provide life, disability, medical, and dental benefits for the Employee and his family. Said insurance shall be provided with no lapse in coverage between the time Employee's insurance benefits with prior employer terminate and the time Employee's insurance benefits from the Company begin. All preexisting conditions are be covered to the extent that they are not covered by the prior employer. Life insurance \ Disability insurance will be provided as is typical for Officers in the Steel Industry. (e) Retirement Plan. Participation in the Company's Retirement Plans in accordance with the terms and provisions and applicable law, as the same may be implemented, changed, amended, or terminated from time to time. Employee shall become eligible to participate in the Company's Retirement Plans as of April 1, 1997 or as the effective date of implementation of such plans whichever as later. (f) Other Miscellaneous Benefits. The Company shall pay or reimburse Employee for the following miscellaneous benefits: (i) annual dues for association membership for relevant professional groups; and (ii) subscription and purchase of books, journals, and publications which relate to job duties and responsibilities. 8. Termination of Employment By the Company. Anytime in this Agreement to the contrary notwithstanding, the Company shall have the following rights with respect to termination of Employee's employment: (a) Cause. Employee's employment may be terminated for Cause. For purpose of this Agreement, "Cause" shall mean and refer to a determination made in good faith by the Company's Board of Directors that: 3

(i) Employee has been convicted of or has entered a plea of guilty or nolo contendere to a felony or to any other crime, which other crime is punishable by incarceration for a period of one (1) year or longer, or which is a crime involving moral turpitude: (ii) There has been a theft, embezzlement, or other criminal misappropriation of funds by Employee, whether from Company or any other person;

(i) Employee has been convicted of or has entered a plea of guilty or nolo contendere to a felony or to any other crime, which other crime is punishable by incarceration for a period of one (1) year or longer, or which is a crime involving moral turpitude: (ii) There has been a theft, embezzlement, or other criminal misappropriation of funds by Employee, whether from Company or any other person; (iii) Employee has willfully failed or refused to follow reasonable written policies or directives established by the Board of Directors or the Chief Executive Officer of the Company, or Employee has willfully failed to attend to material duties or obligations of his office (other than any such failure resulting from Employee's incapacity due to physical or mental illness which is a cause or manifestation of Employee's disability), which failure or refusal continues for thirty (30) days following delivery of a written demand from the Company's Chief Executive Officer for performance to Employee identifying the manner in which Employee has failed to follow such policies or directives or to preform such duties. Termination pursuant to this Paragraph 8(a) shall be effective as of the effective date of the notice by the Board of Directors to Employee that it has made the required determination, or at such other subsequent date, if any, specified in such notice. (b) Death. If Employee dies during the term of this Agreement, his personal representative or designated survivor shall be entitled to receive all of the salary and benefits provided hereunder for the remaining term of this Agreement. 9. Termination of Employment by Employee. (a) With Good Reason. Employee shall have the right to terminate his employment under this Agreement at any time for Good Reason, provided Employee has delivered written notice to the Company which briefly describes the facts underlying Employee's belief that "Good Reason" exists and the Company has failed to cure such situation within thirty (30) days after effective date of such notice. For purposes of this Agreement, "Good Reason" shall mean and consist of: (i) a material breach by the Company of its obligations under this Agreement; (ii) without Employee's prior written consent, the assignment to Employee of duties that are materially inconsistent with, or that constitute a material alteration in the status of his responsibilities set forth in this Agreement, as a Vice President of the Company; (iii) a reduction by the Company of Employee's Base Salary below the Base Salary set forth in Paragraph 4 ("Base Salary")' 4

(iv) without Employee's prior written consent, the transfer or relocation of Employee pace of employment to any place other than the Salt Lake City/Provo metropolitan area, except for reasonable travel on the business of the Company; or (v) upon the consummation of a sale of all or substantially all of the assets of the Company not in the usual or regular course of the business of the Company in which sale the acquiring company did not assume all of the obligations of the Company under this Agreement. (b) Without Good Reason. With not less than sixty (60) days prior written notice (which notice shall specify the date of termination), Employee shall have the right to terminate his employment under this Agreement without Good Reason. 10. Effect of Termination. Certain Insurance Benefits. If the employment of Employee is terminated by the Company without Cause, or due

(iv) without Employee's prior written consent, the transfer or relocation of Employee pace of employment to any place other than the Salt Lake City/Provo metropolitan area, except for reasonable travel on the business of the Company; or (v) upon the consummation of a sale of all or substantially all of the assets of the Company not in the usual or regular course of the business of the Company in which sale the acquiring company did not assume all of the obligations of the Company under this Agreement. (b) Without Good Reason. With not less than sixty (60) days prior written notice (which notice shall specify the date of termination), Employee shall have the right to terminate his employment under this Agreement without Good Reason. 10. Effect of Termination. Certain Insurance Benefits. If the employment of Employee is terminated by the Company without Cause, or due to the death or disability of Employee, or by Employee With Good Reason, the Company shall pay the insurance premium payable by Employee or his heirs, as the case may be, for continued insurance coverage under the insurance policies or programs of the Company pursuant to COBRA for or with respect to the first twelve (12) months of such COBRA coverage. 11. Severance Pay. If the Employee does not continue in the employ of the Company after the termination of this Agreement, whether or not the Employee is offered continued employment by the Company, Company shall pay to the Employee, no later than April 1, 2000, the sum of one years annual wages. The Employee shall not be required to mitigate the amount of the payment provided for in this section by seeking other employment or otherwise; nor shall the amount of the payment be reduced by any compensation earned by the Employee as the result of employment by another employer after termination or otherwise. 12. Signing Bonus. The Employee shall be entitled to a Signing Bonus at $50,000 to be paid in four (4) equal installments of $12,500 beginning with the first paycheck in April 1997. The remaining installments shall be paid in the first pay check in July, October and December 1997. 13. Outside Interests. It is recognized that the Employee has outside interests in Ferro Resources LLC which previously entered into joint venture agreements with Covol for two coal fines processing facilities. Employee is also involved in activities related to limestone and iron ore processing in Utah and processing of hot rolled coils . Covol is aware of these activities and does not wish to pursue them. Such activities will not materially detract from the Employee meeting his obligations sited in Paragraph 2. 5
Employee: COVOL TECHNOLOGIES,INC.

By:__________________ Max E. Sorenson

By:__________________ Brent M. Cook, President

6

COVOL TECHNOLOGIES, INC.
List of Subsidiaries Jurisdiction of Name ---Utah Synfuel #1, Ltd. Alabama Synfuel #1, Ltd. Flat Ridge Corporation Organization -----------Delaware limited partnership Delaware limited partnership Utah corporation

Employee:

COVOL TECHNOLOGIES,INC.

By:__________________ Max E. Sorenson

By:__________________ Brent M. Cook, President

6

COVOL TECHNOLOGIES, INC.
List of Subsidiaries Jurisdiction of Name ---Utah Synfuel #1, Ltd. Alabama Synfuel #1, Ltd. Flat Ridge Corporation Covol Australia, Ltd. Organization -----------Delaware limited partnership Delaware limited partnership Utah corporation Australian corporation

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR SEP 30 1997 SEP 30 1997 4,780,301 0 590,095 0 1,818,991 8,603,732 14,215,769 (596,498) 8,772,072 (11,799,152) 0 0 5,094,937 45,119,421 (44,286,081) 26,360,814 (250,677) (250,677) 335,216 (11,164,577) (81,180) 0 0 (10,913,900) 0 (10,995,080) 0 0 0 (10,995,080) (1.38) (1.38)

COVOL TECHNOLOGIES, INC.
List of Subsidiaries Jurisdiction of Name ---Utah Synfuel #1, Ltd. Alabama Synfuel #1, Ltd. Flat Ridge Corporation Covol Australia, Ltd. Organization -----------Delaware limited partnership Delaware limited partnership Utah corporation Australian corporation

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR SEP 30 1997 SEP 30 1997 4,780,301 0 590,095 0 1,818,991 8,603,732 14,215,769 (596,498) 8,772,072 (11,799,152) 0 0 5,094,937 45,119,421 (44,286,081) 26,360,814 (250,677) (250,677) 335,216 (11,164,577) (81,180) 0 0 (10,913,900) 0 (10,995,080) 0 0 0 (10,995,080) (1.38) (1.38)

ARTICLE 5

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR SEP 30 1997 SEP 30 1997 4,780,301 0 590,095 0 1,818,991 8,603,732 14,215,769 (596,498) 8,772,072 (11,799,152) 0 0 5,094,937 45,119,421 (44,286,081) 26,360,814 (250,677) (250,677) 335,216 (11,164,577) (81,180) 0 0 (10,913,900) 0 (10,995,080) 0 0 0 (10,995,080) (1.38) (1.38)


				
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