COVOL TECHNOLOGIES, INC.

                          SECURITIES PURCHASE AGREEMENT

                          Dated as of December 7, 1999

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                                TABLE OF CONTENTS

                                                                          Page

Article I - DEFINITIONS.....................................................1
         1.1  Definitions; Interpretation...................................1

Article II - ISSUANCE AND SALE OF THE SECURITIES............................7
         2.1  Authorization of the Securities...............................7
         2.2  Issuance and Sale of the Securities...........................8
         2.3  Additional Issuances and Sales of the Securities..............8
         2.4  Option to Acquire Additional Securities.......................9

Article III - CLOSING; CLOSING DELIVERIES...................................9
         3.1  Closing.......................................................9
         3.2  Payment for and Delivery of the Securities....................9

Article IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................10
         4.1  Existence; Qualification; Subsidiaries.......................10
         4.2  Authorization and Enforceability;  Issuance of the
              Securities,  the Conversion Shares and the Warrant Shares....10
         4.3  Capitalization...............................................11
         4.4  Private Sale.................................................11
         4.5  Financial Statements; Disclosure.............................12
         4.6  Absence of Certain Changes...................................12
         4.7  Litigation...................................................14
         4.8  Licenses,  Compliance with Law, Other Agreements,  Etc.......14
         4.9  Third-Party Approvals........................................15
         4.10  No Undisclosed Liabilities..................................15
         4.11  Tangible Assets.............................................15
         4.12  Inventory...................................................15
         4.13  Owned Real Property.........................................15
         4.14  Real Property Leases........................................15
         4.15  Agreements..................................................16
         4.16  Intellectual Property.......................................16
         4.17  Employees...................................................16
         4.18  ERISA; Employee Benefits....................................17
         4.19  Environmental Laws..........................................17
         4.20  Transactions  With  Affiliates..............................18
         4.21  Taxes.......................................................18
         4.22  Other Investors.............................................19
         4.23  Year 2000  Representations..................................19
         4.24  Investment  Company.........................................19

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         4.25  Certain Fees................................................19
         4.26  Solicitation  Materials.....................................19
         4.27  Form  S-3 Filing............................................20
         4.28  Listing and Maintenance Requirements Compliance.............20
         4.29  Registration Rights; Rights of Participation................20
         4.30  Synthetic Fuel Facilities...................................20

Article V - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................21
         5.1  Authorization and Enforceability.............................21
         5.2  Purchaser's Ability to Perform...............................21
         5.3  Restrictions on Sale.........................................21

Article VI - COMPLIANCE WITH SECURITIES LAWS...............................22
         6.1  Investment  Intent of the Purchaser..........................22
         6.2  Status of  Securities........................................22
         6.3  Accredited  Investor Status..................................22
         6.4  Access to  Information.......................................22
         6.5  Transfer of Securities, Conversion Shares and
                Warrant Shares.............................................22

Article VII - CONDITIONS PRECEDENT.........................................23
         7.1  Conditions  Precedent........................................23

Article VIII - COVENANTS OF THE COMPANY....................................25
         8.1  Restricted  Actions..........................................25
         8.2  Required  Actions............................................27
         8.3  Reservation of Common Stock..................................29
         8.4  Payments Free of Withholding.................................29

Article IX - REGISTRATION RIGHTS...........................................29
         9.1  Registration Rights..........................................29
         9.2  Piggyback Registration Rights................................30

Article X - SURVIVAL.......................................................30
         10.1  Survival....................................................30

Article XI - INDEMNIFICATION...............................................30
         11.1  Indemnification.............................................31

Article XII - GENERAL PROVISIONS...........................................31
         12.1  Successors and Assigns......................................31
         12.2  Entire  Agreement...........................................31
         12.3  Notices.....................................................31
         12.4  Purchaser Fees and Expenses.................................32

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         12.5  Amendment  and Waiver.......................................33
         12.6  Counterparts................................................33
         12.7  Headings....................................................34
         12.8  Remedies  Cumulative........................................34
         12.9  GOVERNING LAW...............................................34
         12.10  CONSENT TO JURISDICTION;  SERVICE OF PROCESS AND VENUE.....34
         12.11  No Third Party Beneficiaries...............................34
         12.12  Severability...............................................34

EXHIBITS

Exhibit A     Security Agreement
Exhibit B     Form of Convertible Secured Debenture
Exhibit C     Form of Warrant

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                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "Agreement"),  dated as of December
7, 1999,  by and between COVOL  TECHNOLOGIES,  INC.(the  "Company"),  a Delaware
corporation  with an address at 3280 North Frontage Road,  Lehi, Utah 84043; and
DH FINANCIAL,  L.C. or its assigns (the  "Purchaser"),  a Utah limited liability
company with an address at 5478 Green Street, Murray, Utah 84123.

         The Company desires to issue to the Purchaser and the Purchaser desires
to purchase from the Company,  upon the terms and subject to the  conditions set
forth herein (i) the Convertible  Secured  Debenture of the Company and (ii) the
Warrants.

         In consideration of the mutual promises,  representations,  warranties,
covenants and conditions set forth in this  Agreement,  the parties hereto agree
as follows:

                             Article I - DEFINITIONS

         1.1 Definitions;  Interpretation.  For purposes of this Agreement,  the
following terms have the indicated meanings:

         "Affiliate" of a Person means any officer,  director or employee of the
Company and any other Person that  directly,  or indirectly  through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person. For purposes of this definition,  "control" of a Person means the power,
directly  or  indirectly,  either to (i) vote 10% or more of the  Capital  Stock
having  ordinary  voting  power for the  election of directors of such Person or
(ii) direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

         "Capital Stock" of any Person shall mean any and all shares,  interests
(including  membership and economic  interests in a limited liability  company),
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however  designated) equity of such Person, but excluding any debt
securities convertible into such equity prior to such conversion.

         "Capitalized  Lease" means any lease which is required under GAAP to be
capitalized on the balance sheet of the lessee.

         "Capitalized  Lease  Obligation"  means  obligations for the payment of
rent for any  Capitalized  Lease;  for purposes  hereof,  the amount of any such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP.

Covol Securities Purchase Agreement   - 1 -                     December 7, 1999
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         "CERCLA" shall mean the federal Comprehensive  Environmental  Response,
Compensation, and Liability Act of 1980, as amended.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Common Stock" means,  collectively,  the Company's Common Stock, $.001
par value per share, and any Capital Stock of any class of the Company hereafter
authorized  which is not limited to a fixed sum or  percentage  of par or stated
value in  respect  to the  rights  of the  holders  thereof  to  participate  in
dividends or in the distribution of assets upon any liquidation,  dissolution or
winding up of the Company.

         "Confidential Information" means any proprietary information concerning
the Company's  business other than information that (i) was already known to the
Person having a duty to keep  confidential such information on a nonconfidential
basis prior to the time of disclosure, (ii) is or becomes generally available to
the public through no act or omission of such Person or (iii) becomes  available
to such  Person on a  nonconfidential  basis from a source  other than any party
hereto (or any agent or  representative  thereof) if such source was not under a
prohibition   against  disclosing  the  information  or  otherwise  bound  by  a
confidentiality agreement with respect thereto.

         "Conversion  Shares"  means  shares of Common  Stock issued or issuable
upon  conversion  of the  Debenture,  whether or not a  Debenture  is  presently
convertible;  provided,  that if  there  is a change  such  that the  securities
issuable upon conversion of the Debenture are issued by an entity other than the
Company  or there is a  change  in the  securities  so  issuable,  then the term
"Conversion  Shares" shall mean shares or the security  issuable upon conversion
of the Debenture if such  securities  are issuable in shares,  or shall mean the
equivalent  units in which such  security is  issuable  if such  security is not
issuable in shares.

         "Current  Balance  Sheet"  means  the  unaudited  balance  sheet of the
Company as at June 30, 1999.

         "Debenture" has the meaning set forth in Section 2.1.

         "Employee   Plan"  means  an  employee   benefit  plan  (other  than  a
Multiemployer  Plan) covered by Title IV of ERISA and any employee  benefit plan
as  defined  in  Section  3(3) of ERISA,  maintained  or  contributed  to by the
Company,  or any  predecessor  or Subsidiary or any ERISA  Affiliate at any time
during the 5-calendar years immediately preceding the date of this Agreement.

         "Environmental  Actions"  refers to any complaint,  summons,  citation,
notice,  directive,  order,  claim,  litigation,   investigation,   judicial  or
administrative  proceeding,  judgment,  letter or other  communication  from any
governmental agency, department, bureau, office or other authority, or any third
party involving violations of Environmental Laws or Releases of

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Hazardous Materials (i) from any assets, properties or businesses of the Company
or any of its  Subsidiaries,  licensees or predecessors  in interest;  (ii) from
adjoining  properties or business;  or (iii) from or onto any  facilities  which
received   Hazardous   Materials   generated  by  the  Company  or  any  of  its
Subsidiaries, licensees or predecessors in interest.

         "Environmental  Law" means the  Comprehensive  Environmental  Response,
Compensation  and  Liability Act (42 U.S.C.  ss. 9601,  et seq.),  the Hazardous
Materials  Transpiration  Act (49 U.S.C.  42 ss.  1801,  et seq.),  the Resource
Conservation  and Recovery Act (42 U.S.C.  ss. 6901, et seq.), the Federal Water
Pollution  Control  Act (33 U.S.C.  ss.  1251,  et seq.),  the Clean Air Act (42
U.S.C. ss. 7401, et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601,
et seq.) and the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.),
as such laws may be amended  or  supplemented  from time to time,  and any other
present or future federal (United States or Canada), state, provincial, local or
foreign statute,  ordinance, rule, regulation,  order, judgment, decree, permit,
license or other  binding  determination  of any  Governmental  Agency  imposing
liability  or   establishing   standards  of  conduct  for   protection  of  the
environment.

         "Environmental  Liabilities and Costs" means all liabilities (including
strict liabilities),  monetary obligations,  Remedial Actions,  losses, damages,
punitive  damages,  consequential  damages,  treble damages,  costs and expenses
(including  all reasonable  out-of-pocket  fees,  disbursements  and expenses of
counsel,  out-of-pocket  expert and consulting fees, and out-of-pocket costs for
environmental   site  assessments,   remedial   investigations  and  feasibility
studies),  fines, penalties,  sanctions and interest incurred as a result of any
Environmental  Action filed by any Governmental Agency or any third party, which
relate to any violations of Environmental  Laws,  Remedial Actions,  Releases or
threatened  Releases  of  Hazardous  Materials  from  or onto  (i) any  property
presently or formerly owned by the Company or any of its Subsidiaries, licensees
or  predecessors  in  interest or (ii) any  facility  which  received  Hazardous
Materials  generated  by the Company or any of its  Subsidiaries,  licensees  or
predecessors in interest.

         "Environmental Lien" means any Lien in favor of any Governmental Agency
for Environmental Liabilities and Costs.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended, and any successor statute of similar import, and regulations thereunder
in each case as in effect  from time to time.  References  to  sections of ERISA
shall be construed also to refer to any successor sections.

         "Exchange Act" means the  Securities  Exchange Act of 1934, as amended.

         "Existing  Indebtedness"  has the meaning set forth in Section 4.2.

         "Facilities" has the meaning set forth in Section 4.30.

Covol Securities Purchase Agreement   - 3 -                     December 7, 1999
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         "Fair  Market  Value"  means the closing bid price of a share of Common
Stock quoted on the NASDAQ Stock Market System.

         "Family  Group" means,  with respect to an individual  Purchaser,  such
Purchaser,  such  Purchaser's  spouse,  siblings,  descendants  and/or ancestors
(whether  natural,  by marriage or adopted) and any trust solely for the benefit
of such Purchaser and/or such  Purchaser's  spouse,  siblings,  their respective
ancestors and/or descendants (whether natural, by marriage or adopted).

         "Financial  Statements"  means (i) the unaudited  balance sheets of the
Company as at December 31, 1998 and 1997,  March 31, 1999 and 1998, and June 30,
1999 and 1998, and the related  unaudited  statements of income and consolidated
cash flow for the  quarterly  periods then ended,  and (ii) the audited  balance
sheets of the Company as at September 30, 1998 and 1997, and the related audited
statements of income and consolidated cash flow for the fiscal year periods then
ended,  all as filed with the Securities and Exchange  Commission on the date of
this Agreement.

         "GAAP" means United States generally accepted accounting  principles as
in effect from time to time, consistently applied.

         "Governmental Agency" means any federal, state, local, foreign or other
governmental agency, instrumentality,  commission,  authority, board or body and
the National Association of Securities Dealers.

         "Hazardous  Materials"  includes (a) any element,  compound or chemical
that is defined,  listed or otherwise  classified as a  contaminant,  pollutant,
toxic pollutant, toxic or hazardous substance,  extremely hazardous substance or
chemical,  hazardous  waste,  special waste, or solid waste under  Environmental
Laws; (b) petroleum and its refined products;  (c)  poly-chlorinated  biphenyls;
(d) any substance exhibiting a hazardous waste characteristic, including but not
limited to  corrosivity,  ignitability,  toxicity or  reactivity  as well as any
radioactive  or  explosive  materials;  and  (e)  any  raw  materials,  building
components,  including  but not  limited to  asbestos-containing  materials  and
manufactured products containing hazardous substances.

         "Hedging Agreement" means any interest rate swap, collar, cap, floor or
forward rate agreement or other agreement regarding the hedging of interest rate
risk exposure  executed in connection with hedging the interest rate exposure of
the Company, and any confirming letter executed pursuant to such agreement,  all
as amended, supplemented, restated or otherwise modified from time to time.

         "includes"  and  "including"  mean  includes  and  including,   without
limitation.

         "Indebtedness"  means,  without  duplication,  as  to  any  Person  (i)
indebtedness for borrowed money;  (ii)  indebtedness  for the deferred  purchase
price of property or services (other than current trade payables incurred in the
ordinary course of business and payable in accordance

Covol Securities Purchase Agreement   - 4 -                     December 7, 1999
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with  customary  practices);  (iii)  indebtedness  evidenced  by  bonds,  notes,
debentures  or other similar  instruments  (other than  performance,  surety and
appeal or other similar bonds arising in the ordinary course of business);  (iv)
obligations  and  liabilities  secured  by a Lien  upon  property  owned by such
Person,  whether or not owing by such Person and even though such Person has not
assumed  or  become  liable  for  the  payment  thereof;   (v)  obligations  and
liabilities  directly or indirectly  guaranteed by such Person; (vi) obligations
or liabilities  created or arising under any conditional sales contract or other
title retention  agreement with respect to property used and/or acquired by such
Person, even though the rights and remedies of the lessor,  seller and/or lender
thereunder are limited to repossession of such property; (vii) Capitalized Lease
Obligations; (viii) all liabilities in respect of letters of credit, acceptances
and  similar  obligations  created  for the  account  of such  Person;  (ix) net
liabilities  of such  Person  under  Hedging  Agreements  and  foreign  currency
exchange agreements,  as calculated on a basis satisfactory to the Purchaser and
in accordance with accepted  practice;  and (x) the Debenture  issued  hereunder
valued at the  Optional  Redemption  Price (as  defined  in the  Debenture)  for
purposes hereof.

         "Initial Closing" has the meaning set forth in Section 3.1.

         "Initial Closing Date" has the meaning set forth in Section 3.1.

         "Intellectual  Property" means all domestic and foreign patents, patent
applications,  disclosures,  industrial  designs,  discoveries  and  inventions;
trademarks,  service marks, trade dress, trade names,  d/b/a's,  Internet domain
names and corporate names and all goodwill associated  therewith;  published and
unpublished  works of authorship,  copyrights;  registrations,  applications and
renewals for any of the  foregoing;  trade  secrets,  Confidential  Information,
know-how,  technical  and computer  data,  databases,  proprietary  information,
documentation and software,  financial,  business and marketing plans,  customer
and supplier lists and all other intellectual  property and proprietary  rights;
and all copies and tangible embodiments of the foregoing.

         "IRS" means the Internal Revenue Service.

         "knowledge"  or "know" when used with respect to the Company  means the
knowledge of the senior management (vice president or senior) of the Company, or
any other  management  personnel  that has had  significant  involvement  in the
business and affairs of the Company.

         "Liability"  means any  liability or  obligation  (whether  absolute or
contingent, liquidated or unliquidated or due or to become due).

         "Lien"  means any  mortgage,  deed of  trust,  pledge,  lien,  security
interest,  charge,  encumbrance,  security arrangement,  restriction,  covenant,
encroachment or other title imperfection of any nature whatsoever, including but
not limited to any conditional sale or

Covol Securities Purchase Agreement   - 5 -                     December 7, 1999
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title retention  arrangement,  and any assignment,  deposit arrangement or lease
intended as, or having the effect of, security.

         "Material  Adverse  Change"  means any material  adverse  change in the
business, condition (financial or otherwise), prospects or results of operations
of the Company and its Subsidiaries taken as a whole.

         "Material  Adverse Effect" means any material adverse effect on (i) the
business, condition (financial or otherwise), prospects or results of operations
of the  Company  and its  Subsidiaries  taken  as a  whole,  or (ii)  any of the
transactions contemplated hereby or by the Related Documents.

         "ordinary  course of business" means the ordinary course of business of
the Company  consistent with past practice  (including with respect to quantity,
quality and frequency).

         "Permitted Liens" has the meaning set forth in Section 8.1(l).

         "Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other entity.

         "RCRA" shall mean the federal  Resource  Conservation and Recovery Act,
as amended.

         "Related  Documents" means all documents and instruments to be executed
or adopted by the Company in connection  herewith,  including without limitation
the  Debenture,  the  Security  Agreement,  each of the  Warrants  and all other
documents  and  instruments  to be executed  or adopted by the Company  pursuant
thereto.

         "Release"  means any spilling,  leaking,  pumping,  pouring,  emitting,
emptying,  discharging,   injecting,  escaping,  leaching,  seeping,  migrating,
dumping or disposing of any Hazardous  Material  (including  the  abandonment or
discarding  of  barrels,  containers  and other  closed  receptacles  containing
Hazardous Materials) into the indoor or outdoor  environment,  including ambient
air, soil, surface or ground water.

         "Remedial  Action"  means all  actions  taken to (i) clean up,  remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous  Materials  in the  indoor or  outdoor  environment;  (ii)  prevent or
minimize a Release or threatened  Release of Hazardous  Materials so they do not
migrate or endanger or  threaten  to  endanger  public  health or welfare or the
indoor  or  outdoor   environment;   (iii)  perform   pre-remedial  studies  and
investigations and post-remedial operation and maintenance  activities;  or (iv)
any other actions authorized by 42 U.S.C. 9601.

         "SEC" means the Securities and Exchange Commission.

Covol Securities Purchase Agreement   - 6 -                     December 7, 1999
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         "Securities" has the meaning given that term in Section 2.1.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Security  Agreement"  means the Security  Agreement by and between the
Company and the  Purchaser,  substantially  in the form  attached as Exhibit "A"
hereto.

         "Subsidiary" means any corporation,  partnership,  association or other
business  entity of which (i) if a  corporation,  a majority of the total voting
power of shares of stock  entitled  (without  regard  to the  occurrence  of any
contingency) to vote in the election of directors,  managers or trustees thereof
is at the time owned or controlled,  directly or  indirectly,  by the Company or
(ii) if a partnership,  association or other business  entity, a majority of the
partnership or other similar ownership  interest thereof is at the time owned or
controlled,  directly or indirectly,  by the Company.  For purposes hereof,  the
Company shall be deemed to have a majority  ownership interest in a partnership,
association or other business entity if the Company,  directly or indirectly, is
allocated a majority of partnership,  association or other business entity gains
or losses,  or is or controls the managing  director or general  partner of such
partnership, association or other business entity.

         "Tax"  means any  federal,  state,  local,  or  foreign  income,  gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall profits,  environmental  (including taxes under Code ss.59A),
customs duties, Capital Stock, franchise, profits, withholding,  social security
(or similar), unemployment, disability, real property, personal property, sales,
use,  transfer,  registration,  value  added,  alternative  or  add-on  minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.

         "Tax Returns" means any return, declaration,  report, claim for refund,
or information return or statement relating to Taxes,  including any schedule or
attachment thereto, and including any amendment thereof.

         "Warrant   Shares"  means  shares  of  the  Common  Stock  obtained  or
obtainable upon exercise of the Warrants,  whether or not a Warrant is presently
exercisable;  provided,  that if  there  is a change  such  that the  securities
issuable  upon  exercise of the  Warrants are issued by an entity other than the
Company or there is a change in the class of  securities  so issuable,  then the
term "Warrant  Shares" shall mean shares of the security  issuable upon exercise
of the  Warrants  if such  security  is  issuable  in shares,  or shall mean the
equivalent  units in which such  security is  issuable  if such  security is not
issuable in shares.

                Article II - ISSUANCE AND SALE OF THE SECURITIES

         2.1  Authorization  of the  Securities.  The Company has authorized the
issuance and sale to the  Purchaser,  on the terms and subject to the conditions
of this Agreement, of (a) its Convertible

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<PAGE>

Secured Debenture in an aggregate  principal amount of $1,500,000 and containing
the terms and  conditions  and in the form of the Debenture set forth in Exhibit
"B" attached hereto (the "Debenture"), and (b) its Warrants containing the terms
and  conditions and in the form of the Warrant set forth in Exhibit "C" attached
hereto (the "Warrants and, together with the Debenture,  the "Securities").  The
Debenture is convertible into and the Warrants are exercisable for shares of the
Company's Common Stock and the Debenture is secured by a first priority security
interest in the collateral described in the Security Agreement.

         2.2 Issuance and Sale of the Securities. At the Initial Closing, on the
terms and subject to the conditions of this  Agreement,  the Company shall issue
to the  Purchaser  (a)  the  Debenture  in the  aggregate  principal  amount  of
$1,500,000.00,  and (b)  Warrants  initially  exercisable  for an  aggregate  of
934,725  Warrant  Shares.  For federal income tax purposes,  the Company and the
Purchaser  agree that the  aggregate  amount paid by the  Purchaser  for (i) the
Debenture is $1,500,000.00, and (ii) the Warrants is $0. Neither the Company nor
the  Purchaser  shall file any Tax Return or take any  position  with any taxing
authority inconsistent with the preceding sentence.

                    Article III - CLOSING; CLOSING DELIVERIES

         3.1 Closing.  The closing of the  transactions  contemplated by Section
2.2 of this Agreement (the "Initial  Closing")  shall take place at 4:00 p.m. on
December 7, 1999,  at the offices of Corbridge  Baird &  Christensen,  Salt Lake
City,  Utah or at such other time,  place and/or date as shall be agreed upon by
the parties  hereto.  The date upon which the Initial Closing occurs is referred
to herein as the "Initial Closing Date."

         3.2 Payment for and Delivery of the Securities. At the Initial Closing,
the Company  shall issue and deliver to the  Purchaser,  (a) a Debenture  in the
aggregate  principal amount of $1,500,000.00,  against payment by the Purchaser,
by cash,  check or wire transfer of  immediately-available  funds to the account
designated  by the  Company  not less  than two (2)  days  prior to the  Initial
Closing  Date,  of $675,000  (net of 10%  placement fee payable to DH Financial,
L.C.  pursuant to Section 12.4) on the date of this  Agreement and $675,000 (net
of 10% placement fee payable to DH Financial,  L.C. pursuant to Section 12.4) on
or before December 20, 1999, and (b) duly issued Warrants initially  exercisable
for an aggregate of 934,725 Warrant Shares.

           Article IV - REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby represents and warrants to Purchaser as follows:

         4.1 Existence; Qualification; Subsidiaries. Each of the Company and its
Subsidiaries is a corporation,  partnership or limited liability company, as the
case may be, duly  organized,  validly  existing and in good standing  under the
laws of the state of its  incorporation  or formation and has full  corporate or
partnership power and authority, as the case may be, to conduct its business

Covol Securities Purchase Agreement   - 8 -                     December 7, 1999
<PAGE>

and own and operate its  properties as now  conducted,  owned and operated.  The
copies of the  Certificate  of  Incorporation,  as  amended,  and By-Laws of the
Company and all  amendments  thereto  previously  delivered to the Purchaser are
true,  correct  and  complete  copies of such  documents.  The  Company and each
Subsidiary  is licensed or qualified as a foreign  corporation,  partnership  or
limited  liability  company and is in good standing in all  jurisdictions  where
such person is required to be so licensed or qualified, except where the failure
to be so  licensed,  qualified  or in good  standing  would not have a  Material
Adverse  Effect.  Except  as set  forth on  Schedule  4.1,  the  Company  has no
Subsidiaries  and owns no Capital Stock or other securities of, and has not made
any other  investment in, any other entity.  All of the issued shares of Capital
Stock,  partnership  interests or membership  interests,  as the case may be, of
each Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or adverse claims.

         4.2 Authorization and Enforceability;  Issuance of the Securities,  the
Conversion Shares and the Warrant Shares.

                  (a) The Company has full power and authority and has taken all
required  corporate  and other  action  necessary  to permit it to  execute  and
deliver  this  Agreement  and the Related  Documents  and to carry out the terms
hereof and  thereof  and to issue and deliver  the  Securities,  the  Conversion
Shares  and the  Warrant  Shares,  and none of such  actions  will  violate  any
provision of the Certificate of Incorporation of the Company, the By-Laws of the
Company or of any applicable law, regulation,  order, judgment or decree or rule
of any stock  exchange  where the Company's  Common Stock is listed or market in
which the  Company's  Common  Stock is  quoted,  or  result in the  breach of or
constitute  a default (or an event  which,  with notice or lapse of time or both
would  constitute  a  default)  under  any  material  agreement  (including  the
Company's  current  secured  debt  instruments  set forth on  Schedule  4.2 (the
"Existing Indebtedness")), instrument or understanding to which the Company is a
party or by which it is bound or by which it will  become  bound as a result  of
the  transactions  contemplated by this Agreement.  This Agreement,  each of the
Related Documents and all other agreements and instruments  contemplated  hereby
to which the Company is a party,  have been duly  executed and  delivered by the
Company  and each  constitutes  a legal,  valid and  binding  obligation  of the
Company, enforceable against the Company in accordance with its terms, except to
the extent  that  enforceability  may be limited by (i)  applicable  bankruptcy,
insolvency,  reorganization,  moratorium and similar laws of general application
related to the  enforcement  of  creditor's  rights  generally  and (ii) general
principles of equity.

                  (b) The execution, delivery and performance of this Agreement,
each  of  the  Related  Documents  and  all  other  agreements  and  instruments
contemplated hereby to which the Company is a party have been duly authorized by
the Company.  The Conversion  Shares and the Warrant Shares,  will be fully paid
and  nonassessable.  The Conversion Shares and the Warrant Shares have been duly
reserved for  issuance  upon  conversion  of the  Debenture  and exercise of the
Warrants,  as the case may be,  and,  when so issued,  will be duly  authorized,
validly issued and

Covol Securities Purchase Agreement   - 9 -                     December 7, 1999
<PAGE>

outstanding,  fully paid and nonassessable  shares of Common Stock.  Neither the
issuance and delivery of any Conversion  Shares upon conversion of the Debenture
nor the  issuance  and  delivery  of any  Warrant  Shares  upon  exercise of the
Warrants is subject to any preemptive right of any stockholder of the Company or
to any right of first refusal or other similar right in favor of any Person.

         4.3  Capitalization.  The  authorized  Capital  Stock  of  the  Company
consists of (a) 25,000,000 shares of Common Stock, par value $.001 per share, of
which,  as of September 3, 1999,  12,744,009  shares were  outstanding,  439,699
shares are reserved for  issuance  upon  conversion  of the  Debenture,  175,880
shares are reserved for issuance upon  exercise of the  Warrants,  and 6,250,756
shares are reserved for issuance  upon the exercise of certain stock options and
warrants,  and (b)  10,000,000  shares of preferred  stock,  par value $.001 per
share, of which (i) 3,000 shares have been designated  Series A Preferred Stock,
of which 3,000 shares are issued and outstanding,  (ii) 312,882 shares have been
designated  Series B  Preferred  Stock,  of which  14,310  shares are issued and
outstanding,  (iii) 1,500 shares have been designated  Series C Preferred Stock,
of which 200 shares are issued and  outstanding,  (iv)  80,000  shares have been
designated  Series D  Preferred  Stock,  of which  60,000  shares are issued and
outstanding;  and (v)  3,000,000  are reserved for issuance  upon  conversion of
certain  convertible secured debt. All of the outstanding Capital Stock has been
validly  issued  and is fully  paid and  nonassessable  and has been  issued  in
compliance with all applicable  securities laws (including the provisions of the
Securities Act and the rules and regulations promulgated thereunder).  Except as
set  forth in  Schedule  4.3,  there  are no  options,  convertible  securities,
warrants,  calls, pledges, transfer restrictions (except restrictions imposed by
federal and state securities laws), voting restrictions,  liens, rights of first
offer,  rights of first refusal,  antidilution  provisions or commitments of any
character  relating  to any issued or  unissued  shares of Capital  Stock of the
Company  other  than  as  contemplated  in  the  Related  Documents.  Except  as
contemplated  by this  Agreement  and the Related  Documents  or as set forth in
Schedule 4.3, there are no  preferential  rights  applicable to the issuance and
sale of the Securities, the Conversion Shares and the Warrant Shares.

         4.4 Private  Sale.  Assuming  the accuracy of the  representations  and
warranties made by recipients of the Company's  Capital Stock in connection with
the  acquisition  of such  Capital  Stock,  the  Company  has not  violated  any
applicable  federal or state securities laws in connection with the offer,  sale
and  issuance  of any of its  Capital  Stock.  Subject  to the  accuracy  of the
Purchaser's  representations  contained  herein,  neither  the  offer,  sale and
issuance  of the  Securities  hereunder  nor the  issuance  and  delivery of any
Conversion  Shares upon  conversion of the Debenture or any Warrant  Shares upon
exercise of any Warrants requires  registration  under the Securities Act or any
state securities laws.

         4.5  Financial Statements; Disclosure.

                  (a) The Financial Statements (together with the notes thereto,
as applicable),  subject to modifications  required by the current SEC review of
the Company's Registration

Covol Securities Purchase Agreement  - 10 -                     December 7, 1999
<PAGE>

Statement  on Form S-3,  (i) are true,  correct  and  complete  in all  material
respects,  (ii) are in accordance  with the books and records of the Company and
(iii) fairly  present the  financial  condition and results of operations of the
Company as of the dates and for the periods  indicated in accordance  with GAAP,
except that the unaudited balance sheets and related financial statements do not
contain an  auditors'  opinion and do not contain  footnotes  and are subject to
normal, recurring year-end audit adjustments which are not material.

                  (b) This Agreement  together with the schedules,  attachments,
exhibits, written statements and certificates supplied to the Purchaser by or on
behalf of the Company with respect to the transactions  contemplated hereby does
not contain any untrue  statement of a material fact or omit to state a material
fact necessary to make the statements  contained herein or therein,  in light of
the  circumstances  in which they were made,  not  misleading.  There is no fact
which  has not  been  disclosed  to the  Purchaser  of  which  the  Company  has
knowledge,  and  which  has had or could  reasonably  be  anticipated  to have a
Material Adverse Effect.

                  (c) As of its filing date, each document filed with the SEC by
the Company, as amended or supplemented prior to the Initial Closing Date or any
Additional  Closing Date, if  applicable,  pursuant to the Securities Act and/or
the  Exchange  Act,  true and  correct  copies of which  have been  given to the
Purchaser,  subject to  modifications  required by the current SEC review of the
Company's  Registration  Statement  on Form S-3,  (i)  complied in all  material
respects with the applicable  requirements of the Securities Act and/or Exchange
Act and (ii) did not contain any untrue  statement of a material fact or omit to
state any material fact necessary in order to make the statements  made therein,
in the light of the  circumstances  under which they were made, not  misleading.
Each final registration  statement filed with the SEC by the Company pursuant to
the Securities Act, as of the date such statement  became effective (i) complied
in all material respects with the applicable  requirements of the Securities Act
and (ii) did not  contain  any untrue  statement  of a material  fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements  therein not misleading (in the case of any  prospectus,  in light of
the circumstances under which they were made).

         4.6  Absence of Certain Changes.

                  (a) Except as set forth on Schedule  4.6(a)  since the date of
the Current Balance Sheet, neither the Company nor any Subsidiary has:

                           (i)  incurred  any  Liabilities  other  than  current
         Liabilities  incurred,  or obligations under contracts entered into, in
         the ordinary course of business and for individual  amounts not greater
         than $250,000;

                           (ii) paid, discharged or satisfied any claim, Lien or
         Liability,  other than any claim,  Lien or Liability  (A)  reflected or
         reserved  against on the Current Balance Sheet and paid,  discharged or
         satisfied in the ordinary course of business since the date of the

Covol Securities Purchase Agreement  - 11 -                     December 7, 1999
<PAGE>

         Current Balance Sheet or (B) incurred and paid, discharged or satisfied
         since  the  date of the  Current  Balance  Sheet,  in each  case in the
         ordinary course of business;

                           (iii) sold, leased, assigned or otherwise transferred
         any  of its  assets,  tangible  or  intangible  (other  than  sales  of
         inventory in the ordinary course of business and use of supplies in the
         ordinary course of business);

                           (iv)  permitted  any  of  its  assets,   tangible  or
         intangible,  to become  subject to any Lien (other  than any  Permitted
         Lien);

                           (v)  written  off  as   uncollectible   any  accounts
         receivable other than (A) in the ordinary course of business or (B) for
         amounts not greater than $50,000 in the aggregate;

                           (vi)   terminated   or   amended  or   suffered   the
         termination  or amendment  of, or other than in the ordinary  course of
         business,  failed  to  perform  in  all  material  respects  all of its
         obligations  or suffered or  permitted  any  material  default to exist
         under, any material agreement,  license or permit (except the agreement
         as disclosed  between the Company and EARTHCO relating to a preparation
         plant and fines ponds lease in Wellington, Utah);

                           (vii)  suffered  any damage,  destruction  or loss of
         tangible  property  (whether or not covered by insurance)  which in the
         aggregate exceeds $100,000;

                           (viii)  made  any  loan   (other  than   intercompany
         advances) to any other Person  (other than advances to employees in the
         ordinary course of business which do not exceed $10,000 individually or
         $50,000 in the aggregate);

                           (ix) canceled,  waived or released any debt, claim or
         right in an amount or having a value exceeding $100,000;

                           (x) paid any amount to or entered into any agreement,
         arrangement  or   transaction   with,  or  any  series  of  agreements,
         arrangements  or  transactions  with,  any  Affiliate   (including  its
         officers,  directors  and  employees)  having a value of in  excess  of
         $50,000 in the aggregate (other than as Company-wide  employee benefits
         or termination benefits paid in the ordinary course of business);

                           (xi)  declared,  set aside,  or paid any  dividend or
         distribution  with respect to its Capital Stock or redeemed,  purchased
         or otherwise acquired any of its Capital Stock;

                           (xii) other than in the  ordinary  course of business
         or  under  existing  contractual  terms  or  obligations,  granted  any
         increase in the compensation of any officer

Covol Securities Purchase Agreement  - 12 -                     December 7, 1999
<PAGE>

         or employee or made any other change in employment terms of any officer
         or employee (except the  arrangements as disclosed  between the Company
         and Messrs. Kimball, Fraley, Thompson, Madden and Cook);

                           (xiii) made any change in any method of accounting or
         accounting practice;

                           (xiv) suffered or caused any other occurrence,  event
         or transaction  outside the ordinary  course of business or which could
         have a Material Adverse Effect; or

                           (xv) agreed,  in writing or otherwise,  to any of the
         foregoing.

                  (b) Since the date of the  Current  Balance  Sheet,  there has
been no Material Adverse Change.

                  (c) Schedule  4.6(c) hereto sets forth a complete and accurate
list as of the date hereof of (i) each place of business of the Company and each
of its  Subsidiaries and (ii) the chief executive office of the Company and each
of its Subsidiaries.

         4.7  Litigation.  Except as set forth in Schedule 4.7, no claim,  suit,
proceeding or investigation  is proceeding,  pending or, to the knowledge of the
Company,  threatened  against or affecting  the Company,  any  Subsidiary or any
licensee or any officer or director thereof or the Company's,  the Subsidiaries'
or the licensee's  business which if decided  adversely to any such person could
have a Material Adverse Effect.

         4.8 Licenses,  Compliance with Law, Other Agreements,  Etc. Each of the
Company and its Subsidiaries has all material franchises,  permits, licenses and
other rights to allow it to conduct its business and is not in violation, in any
material  respects of any order or decree of any court,  or of any law, order or
regulation of any Governmental  Agency,  or of the provisions of any contract or
agreement to which it is a party or by which it is bound  (except the  agreement
as disclosed  between the Company and EARTHCO and the financing  arrangement  as
disclosed  for the  Mountaineer  Facility),  and neither this  Agreement nor the
Related  Documents  nor the  transactions  contemplated  hereby or thereby  will
result  in any  such  violation.  Each of the  Company's  and  its  Subsidiary's
business has been  conducted  in  compliance  with all federal,  state and local
laws,  ordinances,  rules and  regulations,  in all  material  respects.  To the
knowledge of the Company, conditions or events of non-compliance with respect to
the Company's licensees that would have a Material Adverse Effect on the Company
or its contractual relationships with its licensees.

         4.9 Third-Party Approvals. Assuming the accuracy of the representations
and warranties of the Purchaser contained in this Agreement,  the Company is not
required to obtain any order, consent,  approval or authorization of, or to make
any  declaration  or filing with, any  Governmental  Agency or other third party
(including under any state securities or "blue sky" laws) in connection with the
execution  and  delivery  of this  Agreement  or the Related  Documents,  or the
consummation of the transactions  contemplated hereby or thereby to occur on the
Initial Closing

Covol Securities Purchase Agreement  - 13 -                     December 7, 1999
<PAGE>

Date or any Additional  Closing Date,  except for the consent and approval of OZ
Master Fund, Ltd.

         4.10 No  Undisclosed  Liabilities.  Neither  the Company nor any of its
Subsidiaries has any material Liabilities except (i) as and to the extent of the
amounts  reflected  or reserved  against on the Current  Balance  Sheet and (ii)
liabilities  and  obligations  incurred in the ordinary course of business since
the date thereof that in the  aggregate  could not result in a Material  Adverse
Effect.

         4.11 Tangible Assets. Each of the Company and its Subsidiaries has good
and marketable title to, or valid leasehold  interests in, all material tangible
assets  used or  reasonably  necessary  in  connection  with the  conduct of its
business.

         4.12  Inventory.   All  inventory  of  each  of  the  Company  and  its
Subsidiaries,  whether  reflected  on the Current  Balance  Sheet or  otherwise,
consists of a quality and quantity  usable or salable in the ordinary  course of
business,  subject  to  defect or  obsolescence  consistent  with the  Company's
historical experience.

         4.13  Owned Real  Property.  Set forth on  Schedule  4.13 is a true and
correct  description  of  all  real  property  owned  by  the  Company  and  its
Subsidiaries.  The Company and each of its  Subsidiaries has good and marketable
title in fee  simple,  free and clear of all  Liens  (other  than any  Permitted
Lien),  to all of the  real  property  owned  by the  Company  and  each  of its
Subsidiaries.

         4.14 Real  Property  Leases.  There exists no event of default (nor any
event which with notice or lapse of time would  constitute  an event of default)
with respect to the Company,  any  Subsidiary  and, to the Company's  knowledge,
with respect to any other party thereto  under any  agreement  pursuant to which
the  Company  is the  lessee  or lessor of any real  property,  except  for such
defaults and defects in enforceability as could not in the aggregate be expected
to have a Material Adverse Effect, and all such agreements are in full force and
effect and  enforceable  against the lessor or lessee in  accordance  with their
terms except for such defaults and defects in enforceability as could not in the
aggregate be expected to have a Material Adverse Effect (except the agreement as
disclosed  between the Company and EARTHCO  relating to a preparation  plant and
fines ponds lease in Wellington, Utah).

         4.15  Agreements.  None  of the  Company,  any  Subsidiary  or,  to the
knowledge of the Company,  any licensee is in default,  nor to the  knowledge of
the  Company  is  there  any  basis  for a valid  claim of  default,  and to the
Company's  knowledge no event has occurred which,  with notice or lapse of time,
would constitute a default, under any agreement, arrangement or understanding to
which  the  Company,  any  Subsidiary  or any  licensee  is a party,  and to the
knowledge of the Company,  no Person other than the Company is in default  under
any such  agreement,  in each case other than  defaults  which in the  aggregate
could not be expected to have a Material Adverse Effect (except the agreement as
disclosed  between the Company and EARTHCO  relating to a preparation  plant and
fines ponds lease in Wellington, Utah). Additionally, none of the Company,

Covol Securities Purchase Agreement  - 14 -                     December 7, 1999
<PAGE>

any Subsidiary or, to the knowledge of the Company, any licensee is party to any
agreement the performance of which in accordance  with its terms  (including any
termination  provision  thereof)  could be expected  to have a Material  Adverse
Effect.

         4.16 Intellectual Property. Schedule 4.16 sets forth a complete list of
(i) all patented,  registered,  applied for or otherwise  material  Intellectual
Property  owned,  filed or used by the  Company;  and (ii) all  trade  names and
material  unregistered  trademarks and other designations used by the Company in
connection  with its business.  The Company owns and possesses all right,  title
and  interest  in and to, or has a valid and  enforceable  license  to use,  all
Intellectual Property used by the Company in its business as currently conducted
and  as  currently  proposed  to be  conducted.  No  claim  by any  third  party
contesting  the  validity,  enforceability,  use or  ownership  of  Intellectual
Property  owned,  held or used by the Company has been made or, to the knowledge
of the Company, is threatened.  To the knowledge of the Company,  neither it nor
its indemnitees has violated or misappropriated the Intellectual Property of any
third party and no third  party has  violated  or  misappropriated  Intellectual
Property  owned,  held or used by the  Company.  No claim by any third party has
been asserted,  or to the knowledge of the Company threatened,  that the Company
or its indemnitees is violating or misappropriating  Intellectual  Property.  To
the knowledge of the Company,  all  Intellectual  Property  owned or held by the
Company is valid, subsisting and enforceable, and all such Intellectual Property
is free of all  Liens,  and,  except as set  forth on  Schedule  4.16,  is fully
assignable by the Company to any Person, without payment,  consent of any Person
or other condition or restriction. The Company has taken all reasonable measures
to  protect  the  secrecy,   confidentiality   and  value  of  all  Confidential
Information,  proprietary  information and trade secrets owned,  held or used by
the  Company   (including,   without   limitation,   entering  into  appropriate
confidentiality  agreements with all officers,  directors,  employees, and other
Persons with access to such information and trade secrets).  To the knowledge of
the Company,  such  information and trade secrets have not been disclosed to any
Persons other than Company  employees or Company  contractors  who had a need to
know and use such  information  and  trade  secrets  in the  ordinary  course of
employment or contract performance and who executed appropriate  confidentiality
agreements.

         4.17  Employees.  The  Company  is  not a  party  to or  bound  by  any
collective  bargaining  agreement,  nor has it experienced any strike,  material
grievance,   material  claim  of  unfair  labor  practice  or  other  collective
bargaining  dispute.  To the knowledge of the Company there is no organizational
effort being made or  threatened by or on behalf of any labor union with respect
to its  employees.  To the  knowledge of the Company,  it has not  committed any
unfair labor practice or violated any federal,  state or local law or regulation
regulating  employers or the terms and conditions of its employees'  employment,
including laws regulating employee wages and hours,  employment  discrimination,
employee civil rights,  equal  employment  opportunity and employment of foreign
nationals,  except  for such  violations  as  could  not be  expected  to have a
Material Adverse Effect.

         4.18 ERISA; Employee Benefits. The Company has no Plans and agrees that
it will not adopt any Plan, other than a defined  contribution 401(k) plan while
the Debenture is outstanding.

Covol Securities Purchase Agreement  - 15 -                     December 7, 1999
<PAGE>

         4.19  Environmental Laws. Except as set forth on Schedule 4.19:

                  (a) Each of the Company (as used in this Section 4.19, Company
shall  include  any  predecessor  and the  Company's  Subsidiaries)  and, to the
knowledge of the Company,  its licensees has complied and is in compliance  with
all Environmental Laws.

                  (b) The Company  and, to the  knowledge  of the  Company,  its
licensees  have  obtained and complied  with,  and are in compliance  with,  all
permits,  licenses  and  other  authorizations  that are  required  pursuant  to
Environmental Laws to operate its facilities, assets, and its businesses.

                  (c) No  Environmental  Actions have been asserted  against the
Company or, to the  knowledge of the  Company,  against any licensee or facility
that may have  received  Hazardous  Materials  generated  by the  Company or any
licensee,   regarding   any  actual,   threatened,   or  alleged   violation  of
Environmental  Laws,  or  any  liabilities  or  potential  liabilities  (whether
accrued,  absolute,  contingent,  unliquidated,  or  otherwise),  including  any
investigatory,  remedial,  or  corrective  obligations,  relating  to it or  its
operations under Environmental Laws.

                  (d) To the  knowledge  of the Company,  none of the  following
exists at any property or facility  currently  or formerly  owned or operated by
either the  Company or, to the  knowledge  of the  Company,  any  licensee:  (i)
underground  storage  tanks,  (ii)  asbestos-containing  material in any form or
condition, (iii) materials or equipment containing polychlorinated biphenyls, or
(iv)  landfills,  surface  impoundments,  or waste  disposal  areas,  except for
feed-stock properties for Company facilities.

                  (e) Except as disclosed on Schedule 4.19,  neither the Company
nor, to the knowledge of the Company, any licensee has treated, stored, disposed
of, arranged for or permitted the disposal of, transported, handled, or Released
any substance,  including without limitation any Hazardous Material, or owned or
operated  any  property  or  facility  (and  no such  property  or  facility  is
contaminated  by any such  substance)  in a manner  that has given or would give
rise to Environmental Liabilities and Costs. There has been no Release at any of
the  properties  owned or operated by the  Company or, to the  knowledge  of the
Company,  at any of the properties owned or operated by its licensees or, to the
knowledge of the Company,  at any disposal  treatment  facility  which  received
Hazardous Materials generated by the Company or any licensee which is reasonably
likely to result in Environmental Liabilities and Costs.

                  (f)  Except  as  disclosed  on  Schedule  4.19,  neither  this
Agreement nor the consummation of the transactions that are contemplated by this
Agreement  will result in any  obligations  for site  investigation,  cleanup or
notification pursuant to any so-called  "transaction-triggered"  or "responsible
property transfer" Environmental Laws.

                  (g) Neither the Company nor, to the  knowledge of the Company,
any licensee has, either expressly or by operation of law, assumed or undertaken
any liability, including without

Covol Securities Purchase Agreement  - 16 -                     December 7, 1999
<PAGE>

limitation any obligation for corrective or Remedial Action, of any other Person
relating to Environmental Laws.

         4.20  Transactions  With  Affiliates.  Except as set forth on  Schedule
4.20,  neither  the  Company  nor any  Subsidiary  is  party  to any  agreement,
arrangement or transaction or series of agreements, arrangements or transactions
with any Affiliate which  agreements,  arrangements,  transactions and series of
transactions  in  the  aggregate  have a  value  over  $50,000  (other  than  as
Company-wide employee benefits paid in the ordinary course of business).

         4.21  Taxes.

                  (a) Except as disclosed on Schedule 4.21,  each of the Company
and its Subsidiaries has filed all Tax Returns that it was required to file, and
has paid all Taxes due with respect to the periods covered by such Tax Returns.

                  (b)None of the  Company  and its  Subsidiaries  (i) has been a
member of an affiliated  group filing a  consolidated  federal Tax Return (other
than a group  the  common  parent  of  which  was the  Company)  or (ii) has any
Liability  for the Taxes of any Person  (other  than any of the  Company and its
Subsidiaries) under Treas. Reg.  ss.1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.

                  (c) Each of the Company and its  Subsidiaries has withheld and
paid all  taxes  required  to have been  withheld  and paid in  connection  with
amounts  paid  or  owing  to any  employee,  independent  contractor,  creditor,
stockholder, or other third party.

                  (d) Except as set forth on Schedule 4.21,  there is no dispute
or claim concerning any Tax Liability of any of the Company and its Subsidiaries
either (i) claimed or raised by any authority in writing or (ii) as to which any
of the directors and officers (and employees responsible for Tax matters) of the
Company and its  Subsidiaries has knowledge based upon personal contact with any
agent of such authority.

         4.22  Other  Investors.  Set  forth on  Schedule  4.22 is a list of all
shareholders  (including option and convertible security holders) of the Company
who as of the date  hereof,  based on SEC  filings of such  shareholders,  after
giving effect to the terms hereof,  own more than 5% of the fully diluted common
equity of the Company and sets forth such percentage ownership.

         4.23 Year 2000  Representations.  The Company  represents  and warrants
that:

                  (a) The Company does not have any computer  applications  that
it believes are mission  critical to the operation of synthetic fuel  facilities
that it  operates.  While  the  Company  has not  formally  verified  Year  2000
compliance  with  licensees  that  utilize  the  Company's  technology  in their
synthetic fuel facilities,  the Company believes that the computer  applications
used  in  the  operations  of  these   facilities  are  not  mission   critical.
Accordingly, the Company

Covol Securities Purchase Agreement  - 17 -                     December 7, 1999
<PAGE>

believes  that  Year  2000  issues  will not be  significant  to these  computer
applications and therefore,  upgrading or modifications to these applications to
make them Year 2000 compliant will not be significant.

                  (b) During 1998 the  Company  upgraded  its network  operating
system and believes that system is Year 2000  compliant and that any  additional
upgrading to that system will not be significant.  The Company utilizes computer
applications  in the finance and  accounting  departments  and in the  corporate
office that need to be upgraded in order to be Year 2000 compliant.  The Company
expects to complete the upgrade of its corporate computer  applications for Year
2000 compliance by September 30, 1999.

         4.24 Investment  Company.  The Company is not, and is not controlled by
or under common control with an affiliate of, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.

         4.25 Certain Fees.  Other than fees and expenses due and payable to the
Purchaser  pursuant to Section 12.4, no fees or  commissions  will be payable by
the Company to any broker, financial advisor, finder, investment banker, or bank
with respect to the transactions  contemplated by this Agreement.  The Purchaser
shall not have any  obligation  with  respect to any fees or with respect to any
claims made by or on behalf of any Persons  for fees of a type  contemplated  in
this section that may be due in connection with the transactions contemplated by
this Agreement. The Company shall indemnify and hold harmless the Purchaser, its
employees,  officers,  directors,  agents  and  partners,  and their  respective
Affiliates  from and against  all  claims,  losses,  damages,  costs  (including
attorney's  fees) and  expenses  suffered  in  respect  to any such  claimed  or
existing fees.

         4.26  Solicitation  Materials.  The Company has not (i) distributed any
offering  materials to the Purchaser in connection with the offering and sale of
the Securities other than its public filings with the SEC, or (ii) solicited any
offer to buy or sell the Securities by means of any form of general solicitation
or general  advertising  within the meaning of Regulation D under the Securities
Act.  None of the  information  provided to the Purchaser by or on behalf of the
Company  contain  any  untrue  statement  of  material  fact or omit to  state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading.

         4.27 Form S-3 Filing.  The Company has filed a  registration  statement
with  the SEC on Form  S-3  promulgated  under  the  Securities  Act,  File  No.
33-385753,  to register the resale of the Conversion  Shares, the Warrant Shares
and shares otherwise issuable pursuant to this Agreement.

         4.28  Listing and Maintenance Requirements Compliance.

                  (a) The Company has not received notice (written or oral) from
the  National  Association  of  Securities  Dealers  that the  Company is not in
compliance with its listing or maintenance requirements.

Covol Securities Purchase Agreement  - 18 -                     December 7, 1999
<PAGE>

                  (b) Upon conversion of the Debenture into Conversion Shares or
the exercise of the Warrants for the Warrant Shares,  all such Conversion Shares
and Warrant Shares shall be listed on the NASDAQ National Market System.

         4.29 Registration Rights; Rights of Participation.  Except as described
on Schedule  4.29 hereto,  (a) the Company has not granted or agreed to grant to
any Person any rights (including  "piggy-back"  registration rights) to have any
securities  of the  Company  registered  with the SEC or any other  Governmental
Agency  which  has not  expired  or been  satisfied  in full and (b) no  Person,
including,  but not limited to, current or former  shareholders  of the Company,
underwriters,  brokers or  agents,  has any right of first  refusal,  preemptive
right,  right of  participation,  or any  similar  right to  participate  in the
transactions  contemplated by this Agreement or any other related document which
has not been waived.  None of the rights granted to the Purchaser  hereunder and
under the Related Documents conflicts with or would cause a default under any of
the agreements or arrangements listed on Schedule 4.29 hereto.

         4.30  Synthetic Fuel Facilities.

                  (a) The Company shall take all reasonably  necessary action to
ensure that the credit for producing fuel from a nonconventional source provided
under Section 29 of the Code is available and is maintained with respect to each
of the Company's and its  licensee's  facilities for producing  synthetic  fuels
("Facilities")  including,  without  limitation,  ensuring  that the  Facilities
produce  "qualified  fuels" (as  defined in Section  29(c) of the Code) and such
qualified  fuels are sold to persons that are not "related  persons" (as defined
in Section  29(d)(7) of the Code).  Each of the Facilities was placed in service
before  July 1, 1998,  in each case  pursuant to a binding  written  contract in
effect on or before  December 31, 1996. For purposes of this Section 4.30,  each
representation made by the Company is made to the knowledge of the Company.

                  (b) Each of the  representations and warranties made by any of
the Company,  its  Subsidiaries or its licensees in obtaining any private letter
ruling from the  Internal  Revenue  Service was true and correct in all material
respects when made and as of the date the ruling was issued.

                  (c) Set forth on Schedule  4.30 is each private  letter ruling
obtained from the Internal  Revenue  Service  regarding the Facilities  which is
addressed  to the Company or any of its  licensees  or is  otherwise  able to be
relied upon by the Company.  To the Company's  knowledge,  (i) no private letter
ruling listed on Schedule 4.30 has been amended,  rescinded or revoked since the
date of  issuance,  and (ii) there  exists no reason that the  Internal  Revenue
Service would deny a request by the Company or any owner of the Facilities for a
private letter ruling with regard to the Facilities  owned by the Company or any
of its licensees.

           Article V - REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         The Purchaser hereby represents and warrants to the Company as follows:

Covol Securities Purchase Agreement  - 19 -                     December 7, 1999
<PAGE>

         5.1 Authorization and Enforceability.  The Purchaser has full power and
authority and has taken all action necessary to permit it to execute and deliver
this  Agreement  and the other  documents and  instruments  to be executed by it
pursuant  hereto and to carry out the terms hereof and thereof.  This  Agreement
and each such other document and instrument, when duly executed and delivered by
the Purchaser,  will constitute a valid and binding obligation of the Purchaser,
enforceable  against the Purchaser in accordance  with its terms,  except to the
extent  limited  by  (i)  applicable  bankruptcy,  insolvency,   reorganization,
moratorium and similar laws of general application related to the enforcement of
creditors' rights generally and (ii) general principles of equity.

         5.2  Purchaser's  Ability to Perform.  As of the Initial  Closing,  the
Purchaser  has the financial  resources to perform  fully its total  obligations
under this Agreement.

                  Article VI - COMPLIANCE WITH SECURITIES LAWS

         6.1 Investment  Intent of the Purchaser.  The Purchaser  represents and
warrants to the Company that it is acquiring the Securities for its own account,
with no  present  intention  of selling or  otherwise  distributing  the same in
violation of the Securities Act.

         6.2  Status of  Securities.  The  Purchaser  has been  informed  by the
Company that the Securities have not been registered under the Securities Act or
under any state  securities laws and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering.

         6.3 Accredited  Investor Status. The Purchaser  represents and warrants
to the Company that it is an  "Accredited  Investor" as defined in  Regulation D
under the Securities Act.

         6.4 Access to  Information.  The Purchaser has had access to management
of the Company and has been able to ask questions of  management  related to the
Company and has reviewed the  Company's  filings  pursuant to the Exchange  Act.
Notwithstanding  any due diligence  investigations  conducted by or on behalf of
the  Purchaser,  it is understood  and agreed by each of the parties hereto that
the Purchaser is entitled to rely, and is relying,  on the  representations  and
warranties made by the Company herein and in the Related Documents.

         6.5  Transfer of Securities, Conversion Shares and Warrant Shares.

                  (a)  Securities,  Conversion  Shares and Warrant Shares may be
transferred  (i) pursuant to public  offerings  registered  under the Securities
Act,  (ii)  pursuant to Rule 144 of the SEC (or any similar rule then in force),
(iii) to an Affiliate or member of the Family Group of the transferor  (provided
that the subsequent  transfer of the  Securities,  Conversion  Shares or Warrant
Shares is  restricted),  or (iv) subject to the  conditions set forth in Section
6.5(b), any other legally available means of transfer.

Covol Securities Purchase Agreement  - 20 -                     December 7, 1999
<PAGE>

                  (b)  In  connection  with  any  transfer  of  any  Securities,
Conversion Shares or Warrant Shares (other than a transfer  described in Section
6.5(a)(i),  (ii) or (iii)),  the holder of such  shares  shall  deliver  written
notice to the Company  describing  in reasonable  detail the proposed  transfer,
together  with  an  opinion  of  counsel  (which,  to the  Company's  reasonable
satisfaction,  is knowledgeable  in securities law matters),  to the effect that
such  transfer  may be effected  without  registration  of such shares under the
Securities Act.

                  (c) Until transferred pursuant to clauses (a)(i) or (ii) above
or  pursuant  to clause  (a)(i)  above with an opinion  of counsel  pursuant  to
paragraph (b) above that such legend is not required,  each Debenture,  Warrant,
Conversion   Shares  and  Warrant  Shares  shall  be  imprinted  with  a  legend
substantially in the following form:

         THE  SECURITIES  REPRESENTED BY THIS  [DEBENTURE/CERTIFICATE/  WARRANT]
         WERE ORIGINALLY  ISSUED ON ________,  1999 AND HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR ANY APPLICABLE  STATE
         SECURITIES  LAW. THE  TRANSFER OF THE  SECURITIES  REPRESENTED  BY THIS
         [DEBENTURE/CERTIFICATE/WARRANT]  IS SUBJECT TO THE CONDITIONS SET FORTH
         IN THE  SECURITIES  PURCHASE  AGREEMENT,  DATED AS OF DECEMBER 7, 1999,
         BETWEEN THE ISSUER (THE "COMPANY") AND THE PURCHASER NAMED THEREIN. THE
         COMPANY  RESERVES THE RIGHT TO REFUSE ANY  TRANSFER OF SUCH  SECURITIES
         UNTIL  SUCH  CONDITIONS  HAVE  BEEN  FULFILLED  WITH  RESPECT  TO  SUCH
         TRANSFER.  A COPY OF SUCH CONDITIONS SHALL BE FURNISHED  WITHOUT CHARGE
         TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE COMPANY.

                       Article VII - CONDITIONS PRECEDENT

         7.1 Conditions  Precedent.  The obligation of the Purchaser to purchase
any Securities hereunder is subject to the satisfaction of each of the following
conditions precedent:

                  (a)  The  issuance  and  sale  of  the  Securities  shall  not
contravene  any law,  rule or  regulation  applicable  to the  Purchaser  or the
Company or any of its Subsidiaries;

                  (b) The  following  conditions  have been  satisfied as of the
Initial Closing Date and each Additional Closing Date,

                           (i) The representations and warranties of the Company
         contained  herein  and  in any  Related  Document  and  in any  writing
         delivered  pursuant  hereto or thereto  shall be true and correct  when
         made and  materially  true and  correct  as of the time of the  Initial
         Closing and each Additional Closing;

Covol Securities Purchase Agreement  - 21 -                     December 7, 1999
<PAGE>

                           (ii) No action,  suit,  investigation  or  proceeding
         shall be pending or threatened before any court or Governmental  Agency
         to  restrain,  prohibit,  collect  damages as a result of or  otherwise
         challenge  this  Agreement or any Related  Document or any  transaction
         contemplated hereby or thereby;

                           (iii) All acts or covenants  required hereunder to be
         performed  by  the  Company  prior  to the  Initial  Closing  and  each
         Additional Closing shall have been fully performed by it; and

                           (iv) No Material  Adverse  Change shall have occurred
         between the date of the Current  Balance Sheet and the Initial  Closing
         Date or Additional  Closing Date and no event or occurrence  shall have
         occurred that could have a Material Adverse Effect.

                  (c) The  following  documents  and items shall be delivered to
the Purchaser at or prior to the Initial Closing and each Additional Closing:

                           (i) A fully  executed  counterpart  of this Agreement
         (at the Initial Closing only),  and the fully executed  Debenture,  the
         Security Agreement and the UCC-1 financing  statements related thereto,
         the  Warrants  and  the  certificates  (in  such  denominations  as the
         Purchaser  shall  request)  for the  Warrants  being  delivered  by the
         Company at the Initial Closing and each Additional Closing.

                           (ii) Certificates of a duly authorized officer of the
         Company  dated as of the  Initial  Closing  Date  and  each  Additional
         Closing Date:

                                    (A) Stating  that the  following  conditions
                  have been  satisfied  as of the Initial  Closing Date and each
                  Additional Closing Date:

                                            (1)    The    representations    and
                           warranties of the Company contained herein and in any
                           writing  delivered  pursuant  hereto  were  true  and
                           correct when made and are materially true and correct
                           as of  the  time  of the  Initial  Closing  and  each
                           Additional Closing;

                                            (2) No action,  suit,  investigation
                           or  proceeding  is pending or  threatened  before any
                           court or Governmental  Agency to restrain,  prohibit,
                           collect damages as a result of or otherwise challenge
                           this  Agreement  or  any  Related   Document  or  any
                           transaction contemplated hereby or thereby;

                                            (3) All acts or  covenants  required
                           hereunder to be performed by the Company prior to the
                           Initial Closing and each Additional Closing have been
                           fully performed by it; and

Covol Securities Purchase Agreement  - 22 -                     December 7, 1999
<PAGE>

                                            (4) No Material Adverse Change shall
                           have occurred between the date of the Current Balance
                           Sheet  and  the   Initial   Closing   Date  and  each
                           Additional  Closing Date and there shall have been no
                           event or  occurrence  that could result in a Material
                           Adverse Effect; and

                                    (B)  Setting  forth the  resolutions  of the
                  Board of Directors  authorizing  the execution and delivery of
                  this Agreement and the Related  Documents and the consummation
                  of the  transactions  contemplated  hereby  and  thereby,  and
                  certifying  that such  resolutions  were duly adopted and have
                  not been rescinded or amended;

                           (iii)  The  Company  shall  have  paid  fees  payable
         pursuant to Section 12.4 hereof;

                           (iv)  A copy  of a  certificate  of  the  appropriate
         official(s)  of the state of  organization  and each  state of  foreign
         qualification of the Company and each of its Subsidiaries certifying as
         of the date of the  certificate  to the  existence in good standing of,
         and the payment of taxes by, such Person in such states;

                           (v) A true and complete  copy of the  Certificate  of
         Incorporation,  as amended, of the Company,  certified as of a date not
         more  than  six  months  prior  to  the  Initial  Closing  Date  by  an
         appropriate  official of the state of organization of each such Person,
         a true and complete copy of the Bylaws of the Company,  certified as of
         the  Initial  Closing  Date  by the  Secretary  of the  Company,  and a
         certificate as of each Additional  Closing Date by the Secretary of the
         Company  that  there  has  been  no  change  to  the   Certificate   of
         Incorporation  or Bylaws of the Company since the Initial Closing Date;
         and

                           (vi)   Such   other   documents   relating   to   the
         transactions  contemplated  hereby  as  the  Purchaser  may  reasonably
         request.

         7.2 Closing  Deliveries to the Company.  The Purchaser  will deliver to
the Company the aggregate  purchase  price for the  Securities to be acquired by
the Purchaser, net of a 10% placement fee payable to DH Financial, L.C..

                     Article VIII - COVENANTS OF THE COMPANY

         8.1  Restricted  Actions.  Without  the prior  written  consent  of the
Purchaser,  and for so long as the Debenture  remains  outstanding,  the Company
shall not, and shall not permit any Subsidiary to:

                  (a) become subject to any agreement or instrument which by its
terms would (under any circumstances)  restrict or impair the Company's right to
comply with or fulfill its obligations  under the terms of this Agreement or any
of the Related Documents;

Covol Securities Purchase Agreement  - 23 -                     December 7, 1999
<PAGE>

                  (b) use the  proceeds  from the sale of the  Securities  other
than for repayment of indebtedness,  working capital and other general corporate
purposes; provided, that the Company will in no event use the proceeds to invest
in any securities other than short-term, interest-bearing government securities;

                  (c) enter into any transaction or series of transactions  with
any stockholder,  director, officer, employee or Affiliate,  including,  without
limitation, the purchase, sale, lease or exchange of any property, the rendering
of any service or any investment,  loan or advance,  unless such transaction (i)
is consummated by the Company in good faith on an  arm's-length  basis,  (ii) is
less than  $100,000 per  occurrence or $250,000 in the  aggregate,  and (iii) is
approved by the Board of  Directors,  including  by a majority of the  Company's
disinterested directors;

                  (d)  declare  or pay  any  dividends,  purchase  or  otherwise
acquire for value any of its membership  interests or other Capital Stock now or
hereafter  outstanding,  return any capital to its members as such,  or make any
other payment or distribution  of assets to its  stockholders as such, or permit
any of its  Subsidiaries  to do any of the foregoing or to purchase or otherwise
acquire for value any Capital Stock of the Company or its Subsidiaries,  or make
any payment or prepayment of principal of,  premium,  if any, or interest on, or
redeem,  decrease or otherwise retire, any Indebtedness before its scheduled due
date;

                  (e) materially alter or change the business of the Company;

                  (f) issue any stock  option or  warrant  at less than the Fair
Market Value at the time of grant;

                  (g) unless the  Company has issued and sold  $4,000,000.00  of
the  Debentures  to  the  Purchaser,  create,  incur  or  suffer  to  exist  any
Indebtedness, other than:

                           (i)  Indebtedness  created  hereunder  and under  the
         Debenture; and

                           (ii)  Indebtedness  existing on the date hereof,  and
         any extension of maturity,  refinancing  or  modification  of the terms
         there  of  provided,  however,  that  such  extension,  refinancing  or
         modification  (A) is  pursuant  to terms that are not  materially  less
         favorable to the  purchaser  than the terms of the  Indebtedness  being
         extended,  refinanced  or modified and (B) after  giving  effect to the
         extension,  refinancing  or  modification,  such  Indebtedness  is  not
         greater than the amount of Indebtedness  outstanding  immediately prior
         to such extension, refinancing or modification.

                  (h)  alter  the  rights,  preferences  and  privileges  of the
Securities, the Conversion Shares or the Warrant Shares;

                  (i) allow the use, handling,  generation,  storage, treatment,
release or disposal of Hazardous  Materials  at any property  owned or leased by
the Company or any of its Subsidiaries

Covol Securities Purchase Agreement  - 24 -                     December 7, 1999
<PAGE>

except in compliance with  Environmental Laws and so long as such use, handling,
generation,  storage, treatment, release or disposal of Hazardous Materials does
not result in a violation of Environmental  Law which would result in a Material
Adverse Change; and

                  (j) grant any rights of registration  under the Securities Act
relating to any of its shares of Capital Stock or other securities to any Person
other  than  pursuant  to this  Agreement,  unless  (i) the rights so granted to
another  Person do not limit,  restrict  or impair  the rights of the  Purchaser
under this  Agreement  and under the Related  Documents  and (ii) such rights so
granted to another Person do not grant priority in  registration  rights to such
other Person over rights granted to Purchaser under this Agreement and under the
Related Documents.

         8.2 Required Actions. For so long as the Debenture remains outstanding,
the Company shall, and shall cause each Subsidiary to:

                  (a) cause all  properties  owned by the  Company or any of its
Subsidiaries  or used or held  for use in the  conduct  of its  business  or the
business of any of its Subsidiaries to be maintained and kept in good condition,
repair and working order  (reasonable  wear and tear excepted) and supplied with
all  necessary  equipment  and  will  cause to be made  all  necessary  repairs,
renewals,  replacements,  betterments and  improvements  thereof,  all as in the
judgment of the Board of Directors may be necessary so that the business carried
on in connection  therewith may be properly and advantageously  conducted at all
times; provided,  however, that the foregoing shall not prevent the Company from
discontinuing  the  maintenance  or operation of any of such  properties if such
discontinuance  is, in the judgment of the management of the Company,  desirable
in the conduct of its business or the business of any of its Subsidiaries and is
not disadvantageous in any material respect to the holders of the Securities;

                  (b) preserve  and keep in full force and effect the  corporate
existence,  rights  (charter  and  statutory),  licenses and  franchises  of the
Company and each of its Subsidiaries;  provided, however, that the Company shall
not be required to preserve any such right, license or franchise if the Board of
Directors shall determine that the  preservation  thereof is no longer desirable
in the conduct of the  business of the Company and its  Subsidiaries  as a whole
and that the loss thereof is not  disadvantageous in any material respect to the
holders of Securities;

                  (c)  maintain  the books,  accounts and records of the Company
and its  Subsidiaries in accordance with past custom and practice as used in the
preparation  of the  Financial  Statements  except to the  extent  permitted  or
required by GAAP;

                  (d) keep all of its and its Subsidiaries' properties which are
of an insurable  nature insured with  insurers,  believed by the Company in good
faith to be  financially  sound and  responsible,  against loss or damage to the
extent that property of similar  character is usually so insured by corporations
similarly situated and owning like properties (which may include self-insurance,
if reasonable and in comparable form to that  maintained by companies  similarly
situated);

Covol Securities Purchase Agreement  - 25 -                     December 7, 1999
<PAGE>

                  (e) comply with all material legal  requirements  and material
contractual obligations applicable to the operations and business of the Company
and its  Subsidiaries  and pay  all  applicable  Taxes  as they  become  due and
payable;

                  (f) permit representatives of any holder of the Securities and
its agents (including their counsel,  accountants and  consultants),  subject to
the  execution of a reasonable  confidentiality  agreement,  to have  reasonable
access upon  reasonable  notice during  business  hours to the Company's  books,
records, facilities, key personnel, officers, directors, customers,  independent
accountants  and legal  counsel  so long as such  access  does not  violate  any
applicable  Federal  or  state  law or  cause  the  loss of the  attorney-client
privilege;

                  (g) at all  times  (i)  file  all  reports  (including  annual
reports, quarterly reports and the information, documentation and other reports)
required to be filed by the Company  under the  Exchange Act and Sections 13 and
15 of the rules and regulations  adopted by the SEC thereunder,  and the Company
shall use its best efforts to file each of such reports on a timely  basis,  and
take  such  further  action as any  holder or  holders  of the  Securities,  the
Conversion  Shares or the  Warrant  Shares  may  reasonably  request  (including
providing  copies  of  such  reports  to  the  holders  of the  Securities,  the
Conversion  Shares or the Warrant Shares),  all to the extent required to enable
such  holders to sell  Securities  pursuant to Rule 144 adopted by the SEC under
the  Securities  Act (as such  rule  may be  amended  from  time to time) or any
similar  rule or  regulation  hereafter  adopted  by the SEC and to  enable  the
Company  to  register  securities  with  the  SEC on  Form  S-3  or any  similar
short-form  registration  statement  and upon the  filing  of each  such  report
deliver a copy thereof to each holder of the Securities,  the Conversion  Shares
or the  Warrant  Shares,  (ii)  if  the  Company  is no  longer  subject  to the
requirements  of  the  Exchange  Act,  provide  reports  to the  holders  of the
Securities,  the Conversion  Shares or the Warrant Shares in  substantially  the
same form and at the same times as would be required if the Company were subject
to the Exchange Act, and (iii) provide to each initial holder of the Securities,
the  Conversion  Shares or the  Warrant  Shares  and each  other  holder who has
entered into a confidentiality  agreement with the Company, pursuant to mutually
agreeable terms, any material information distributed to the Board of Directors;

                  (h) maintain at all times a valid listing for the Common Stock
on a national  securities  exchange,  the NASDAQ  National  Market System or the
NASDAQ SmallCap Market;

                  (i)  maintain  all  material   Intellectual   Property  Rights
necessary to the conduct of its business and own or have a valid  license to use
all right,  title and interest in and to, such  material  Intellectual  Property
Rights;

                  (j) deliver Conversion Shares in accordance with the terms and
conditions, and time periods, set forth in the Debenture;

                  (k) (i) Keep any  property  either  owned or operated by it or
any of its Subsidiaries free of any  Environmental  Liens or post bonds or other
financial assurances

Covol Securities Purchase Agreement  - 26 -                     December 7, 1999
<PAGE>

sufficient  to  satisfy  the   obligations   or  liability   evidenced  by  such
Environmental  Liens; (ii) comply,  and cause its Subsidiaries to comply, in all
material  respects  with  Environmental  Laws and shall provide to the Purchaser
documentation of such compliance which the Purchaser reasonably requests;  (iii)
promptly  notify the Purchaser of any Release of a Hazardous  Material in excess
of any  reportable  quantity  from or onto  property  owned or  operated  by the
Company, any of its Subsidiaries or, to the knowledge of the Company, any of its
licensees  and take any  Remedial  Actions  required  to abate  said  Release or
otherwise to come into compliance with  applicable  Environmental  Law; and (iv)
promptly  provide the Purchaser  with written notice within ten (10) days of the
receipt of any of the following:  (a) notice that an Environmental Lien has been
filed  against any of the real or personal  property of the Company,  any of its
Subsidiaries  or, to the  knowledge of the Company,  any of its  licensees;  (b)
commencement of any Environmental  Action or notice that an Environmental Action
will be filed  against  the  Company  or any  Subsidiary;  and (c)  notice  of a
violation,  citation or other  administrative  order which would  reasonably  be
expected to cause a Material Adverse Effect; and

                  (m) Take such  actions and execute,  acknowledge  and deliver,
and cause each of the Subsidiaries to take such actions and execute, acknowledge
and deliver, at its sole cost and expense such agreements,  instruments or other
documents as the Purchaser may reasonably  require from time to time in order to
(i) carry out more  effectively  the purposes of this  Agreement and the Related
Documents,  (ii) maintain the validity and  effectiveness  of any of the Related
Documents,  and (iii) to better  assure,  convey,  grant,  assign,  transfer and
confirm unto the Purchaser the rights now or hereafter intended to be granted to
the Purchaser under this Agreement or any Related Document.

         8.3 Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its  authorized  but unissued  shares of Common Stock,
solely for the purposes of issuance  upon  conversion  of the  Debenture and the
exercise of the Warrants,  such number of shares of Common Stock as are issuable
upon the conversion or exercise of the Debenture and all Warrants. All shares of
Common  Stock  which are so issuable  shall,  when  issued,  be duly and validly
issued, fully paid and nonassessable and free from all Taxes, liens and charges.
The Company, at its sole cost and expense, shall take all such actions as may be
necessary  to  assure  that all such  shares  of  Common  Stock may be so issued
without  violation  of any  applicable  law or  governmental  regulation  or any
requirements  of any domestic  securities  exchange  upon which shares of Common
Stock may be listed  (except  for  official  notice of  issuance  which shall be
immediately transmitted by the Company upon issuance).

         8.4 Payments Free of Withholding. All payments by the Company hereunder
or under the  Debenture  or the  Warrants  shall be made free and clear of,  and
without any deduction for, any Tax imposed by any taxing jurisdiction,  domestic
or foreign.

Covol Securities Purchase Agreement  - 27 -                     December 7, 1999
<PAGE>

                        Article IX - REGISTRATION RIGHTS

         9.1  Registration  Rights.  The Company,  at its sole cost and expense,
covenants to register or qualify or cause to be  registered  or qualified  under
applicable  federal  and  state  securities  laws  the sale  and  resale  by the
Purchaser of (i) all of the Conversion  Shares,  as the same may be recalculated
from  time to  time,  (ii)  all of the  Warrant  Shares,  and  (iii)  all of the
additional shares of Common Stock issued,  issuable or which may become issuable
to  the  Purchaser  pursuant  to  this  Agreement,   if  any  (the  "Registrable
Securities"),  and to maintain such registration or qualification  effective for
all periods  during which any portion of any  Debenture  may be converted or any
Warrants may be exercised. The Company covenants to prepare and file or to cause
such  registration  or  qualification  to be prepared  and filed with the United
States Securities and Exchange Commission within 10 calendar days after the date
of this Agreement.  The Company  covenants to use its best efforts to cause such
registration  or  qualification  to become  effective  as soon  after  filing as
possible and to remain effective for all periods during which any portion of any
Debenture  may be  converted  or any  Warrants  may be  exercised.  The  Company
covenants to prepare and file with the Securities and Exchange  Commission  such
amendments  and  supplements  to  such  registration  or  qualification  and the
prospectus  used in  connection  therewith  as may be  necessary  to  keep  such
registration  or  qualification  effective,  to include  all of the  Registrable
Securities  as the  number  changes  from  time to time and to  comply  with the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
securities  covered by such registration or qualification in accordance with the
intended  methods  of  disposition  by the  sellers  thereof  set  forth in such
registration or qualification.  If such  registration or qualification  does not
become effective on or before January 21, 2000 or remain effective thereafter as
provided herein, the Purchaser may, at its sole option,  demand that the Company
redeem all or any portion of the Debenture as provided therein.

         If  such  registration  or   qualification,   registering  all  of  the
Registrable  Securities,  has not become effective on or before January 21, 2000
or at any time ceases to remain  effective  thereafter as provided  herein,  the
Company  hereby  covenants  and  agrees  to issue or cause to be  issued  to the
Purchaser on such date and on every date which is 30 days or a multiple  thereof
after  such  date,  until  such  registration  or  qualification   shall  become
effective,  additional  shares of Common Stock equal in number to 10% of (i) the
total number of shares of Common Stock issued or issuable upon conversion of all
of the Debenture or portions  thereof which are convertible by the Purchaser and
(ii) the  additional  shares of Common Stock issued or issuable to the Purchaser
pursuant to this Agreement, if any, and to cause the sale and resale of all such
additional shares to be included in the registration or qualification  described
herein.

         9.2 Piggyback Registration Rights. The Company covenants that if at any
time when any  Debenture  may be converted  or any Warrant may be exercised  the
Company  should  file a  non-underwritten  registration  statement  or  offering
statement  on behalf of the  Company  pursuant to  applicable  federal and state
securities  laws for a public  offering of securities,  the Company will provide
written notification to the Purchaser at least 30 days but not more than 60 days
prior to the filing date of such  registration  statement or offering  statement
and will register or qualify or

Covol Securities Purchase Agreement  - 28 -                     December 7, 1999
<PAGE>

cause to be registered or qualified, subject to the rights pursuant to which the
registration  or  qualification  is filed, at the option of the Purchaser and at
the sole cost and expense of the Company,  the sale and resale by the  Purchaser
of the  Registrable  Securities and the Company will maintain such  registration
statement  effective for all periods during which any Debenture may be converted
or any Warrants may be exercised.

                              Article X - SURVIVAL

         10.1  Survival.   The   representations,   warranties,   covenants  and
agreements of the parties hereto contained  herein,  or in any writing delivered
pursuant hereto,  shall survive the Initial Closing and each Additional  Closing
of  the  transactions   contemplated   hereby  and  by  the  Related   Documents
notwithstanding  any due  diligence  investigation  conducted by or on behalf of
Purchaser and until such time as all of the  obligations  of the parties  hereto
have been satisfied.

                          Article XI - INDEMNIFICATION

         11.1 Indemnification. In consideration of the Purchaser's execution and
delivery  of this  Agreement  and  acquiring  the  Securities  hereunder  and in
addition to all of the Company's other  obligations  under this  Agreement,  the
Company shall defend,  protect,  indemnify  and hold  harmless,  on an after-tax
basis,  the Purchaser and each other holder of the  Securities and each of their
respective  officers,  directors,   employees  and  agents  (including,  without
limitation,  those retained in connection with the transactions  contemplated by
this Agreement)  (collectively,  the "Indemnitees") from and against any and all
actions, causes of action, suits, claims,  Environmental Actions, losses, costs,
penalties,  fees, liabilities,  Environmental Liabilities and Costs and damages,
and expenses (including,  without limitation,  costs of suit and attorneys' fees
and  expenses)  in  connection  therewith  (irrespective  of  whether  any  such
Indemnitee  is a party to the  action  for which  indemnification  hereunder  is
sought) (the "Indemnified  Liabilities"),  incurred by the Indemnitees or any of
them as a result of, or arising out of, or relating to (a) the  material  breach
or inaccuracy of any  representation or warranty  contained in this Agreement or
any Related Document or any other instrument, agreement or document delivered to
the Purchaser in accordance herewith or therewith, (b) the execution,  delivery,
performance or enforcement of this Agreement, any Related Document and any other
instrument,  document or agreement executed pursuant hereto or thereto by any of
the Indemnitees,  or (c) resulting from any material breach or inaccuracy of any
representation, warranty, covenant or agreement made by the Company herein or in
any Related  Document.  The Company  shall  reimburse  the  Indemnitees  for the
Indemnified  Liabilities as such  Indemnified  Liabilities are incurred.  To the
extent that the foregoing  undertaking by the Company may be  unenforceable  for
any reason,  the Company shall make the maximum  contribution to the payment and
satisfaction of each of the Indemnified  Liabilities  which is permissible under
applicable law.

Covol Securities Purchase Agreement  - 29 -                     December 7, 1999
<PAGE>

                        Article XII - GENERAL PROVISIONS

         12.1 Successors and Assigns. This Agreement shall bind and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns,
including each  subsequent  holder of Securities,  Conversion  Shares or Warrant
Shares.  Except as otherwise  specifically provided herein, this Agreement shall
not be  assignable  by the  Company  without  the prior  written  consent of the
Purchaser.

         12.2 Entire  Agreement.  This Agreement and the other writings referred
to herein or delivered pursuant hereto constitute the entire agreement among the
parties with respect to the subject  matter  hereof and supersede all prior oral
or written arrangements or understandings.

         12.3 Notices. All notices, requests,  consents and other communications
provided  for herein  shall be in writing and shall be (i)  delivered in person,
(ii)  transmitted  by telecopy,  (iii) sent by  registered  or  certified  mail,
postage  prepaid  with  return  receipt  requested,  or (iv)  sent by  reputable
overnight  courier  service,  fees  prepaid,  to the recipient at the address or
telecopy number set forth below, or such other address or telecopy number as may
hereafter be  designated in writing by such  recipient.  Notices shall be deemed
given upon  personal  delivery,  upon  receipt of return  receipt in the case of
delivery by mail,  upon  acknowledgment  by the receiving  telecopier or one day
following deposit with an overnight courier service.

                  (a)      If to the Company:

                           Covol Technologies, Inc.
                           3280 North Frontage Road
                           Lehi, Utah 84043
                           Telecopy:  (801) 768-4483
                           Attention: Steven G. Stewart

         with a copy to (which shall not constitute notice to the Company):

                           Callister, Nebeker & McCullough
                           Ten East South Temple
                           Salt Lake City, Utah 84133
                           Telecopy:  (801) 364-9127
                           Attention: Richard T. Beard, Esq.

                  (b)      If to the Purchaser:

                           DH Financial, L.C.
                           5478 Green Street
                           Murray, Utah 84123
                           Telecopy: (801) 501-9882
                           Attention: Corwin L. Hair or Brad Dennis

Covol Securities Purchase Agreement  - 30 -                     December 7, 1999
<PAGE>

         with a copy to (which shall not constitute notice to the Purchaser):

                           Corbridge Baird & Christensen
                           39 Exchange Place, Suite 100
                           Salt Lake City, Utah 84111
                           Telecopy: (801) 534-1948
                           Attention: James G. Swensen, Jr., Esq.

         12.4  Purchaser Fees and Expenses.

                  (a) The  Company  shall pay a placement  fee to DH  Financial,
L.C.  equal to 10% of the aggregate  principal  amount of the  Debenture  issued
pursuant to this Agreement, payable upon issuance of each Debenture.

                  (b) The Company shall  reimburse the Purchaser upon demand for
(i) the reasonable fees and expenses of counsel(s) to the Purchaser  incurred in
connection  with  the   documentation,   negotiation  and  consummation  of  the
transactions  contemplated by this Agreement and the Related  Documents and (ii)
reasonable due diligence expenses incurred by the Purchaser.

                  (c) The  Company  also  agrees to pay or cause to be paid,  on
demand,  and to save the Purchaser harmless against liability for the payment of
all reasonable  out-of-pocket expenses incurred by the Company from time to time
arising from or relating to: (i) the  preservation  and protection of any of the
Company's rights under this Agreement or the Related Documents, (ii) the defense
of any claim or action  asserted or brought  against the Purchaser by any Person
that  arises  from or relates  to this  Agreement,  any  Related  Document,  the
Purchaser's  claims  against the Company,  or any and all matters in  connection
therewith,  (iii) the  commencement or defense of, or intervention in, any court
proceeding  arising from or related to this  Agreement or any Related  Document,
(iv) the filing of any petition,  complaint, answer, motion or other pleading by
the Purchaser in connection with this Agreement or any Related Document, (v) any
attempt to collect  from the  Company,  or (vi) the  receipt of any advice  with
respect to any of the  foregoing.  Without  limitation  of the  foregoing or any
other  provision  of any Related  Document:  (A) the  Company  agrees to pay all
stamp,  document,  transfer,  recording  or  filing  taxes or fees  and  similar
impositions  now or  hereafter  determined  by the  Purchaser  to be  payable in
connection with this Agreement or any Related  Document,  and the Company agrees
to save the  Purchaser  harmless  from and against any and all present or future
claims,  liabilities or losses with respect to or resulting from any omission to
pay or delay in  paying  any such  taxes,  fees or  impositions,  and (B) if the
Company  fails to perform any covenant or agreement  contained  herein or in any
Related Document,  the Purchaser may itself perform or cause performance of such
covenant or agreement,  and the expenses of the Purchaser incurred in connection
therewith shall be reimbursed on demand by the Company.

Covol Securities Purchase Agreement  - 31 -                     December 7, 1999
<PAGE>

         12.5  Amendment  and Waiver.  No  amendment  of any  provision  of this
Agreement shall be effective,  unless the same shall be in writing and signed by
the  Company  and the  Purchaser.  Any failure of the Company to comply with any
provision hereof may only be waived in writing by the Purchaser, and any failure
of the Purchaser of the Securities,  the Conversion Shares or the Warrant Shares
to  comply  with any  provision  hereof  may only be waived  in  writing  by the
Company.  No such waiver shall  operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.  No failure by any party to take any action
against  any  breach of this  Agreement  or  default  by any other  party  shall
constitute a waiver of such party's right to enforce any provision  hereof or to
take any such action.

         12.6  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which shall be deemed to be an original, but all of which
together shall constitute one agreement.

         12.7 Headings.  The headings of the various  sections of this Agreement
have been  inserted for  reference  only and shall not be deemed to be a part of
this Agreement.

         12.8 Remedies  Cumulative.  Except as otherwise  provided  herein,  the
remedies  provided  herein  shall be  cumulative  and  shall  not  preclude  the
assertion  by any party  hereto of any other  rights or the seeking of any other
remedies against any other party hereto.

         12.9 GOVERNING  LAW. THIS AGREEMENT  SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE  WITH THE INTERNAL  SUBSTANTIVE  LAWS OF THE STATE OF UTAH WITHOUT
GIVING  EFFECT TO THE LAWS OF CONFLICT OR CHOICE OF LAWS OF THE STATE OF UTAH OF
ANY OTHER  JURISDICTION  THAT WOULD RESULT IN THE  APPLICATION OF ANY LAWS OTHER
THAN THOSE OF THE STATE OF UTAH.

         12.10 CONSENT TO JURISDICTION;  SERVICE OF PROCESS AND VENUE. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY RELATED  DOCUMENT MAY
BE  BROUGHT  IN THE COURTS OF THE STATE OF UTAH IN THE COUNTY OF SALT LAKE OR IN
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT,  THE PARTIES HEREBY IRREVOCABLY ACCEPT IN RESPECT OF
THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.

         12.11 No Third Party Beneficiaries. Except as specifically set forth or
referred to herein,  nothing  herein is intended or shall be construed to confer
upon any person or entity other than the parties hereto and their  successors or
assigns, any rights or remedies under or by reason of this Agreement.

Covol Securities Purchase Agreement  - 32 -                     December 7, 1999
<PAGE>

         12.12 Severability.  If any term, provision, covenant or restriction of
this Agreement is held by a court of competent  jurisdiction to be invalid, void
or  unenforceable,  the  remainder  of  the  terms,  provisions,  covenants  and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

         IN WITNESS  WHEREOF,  the  parties  have caused  their duly  authorized
officers to execute this Agreement as of the date first above written.

                                              COVOL TECHNOLOGIES, INC.

Attest

By: /s/ Harlan M. Hatfield                 By: /s/ Steven G. Stewart
   --------------------------------           ----------------------------------
Harlan M. Hatfield, General Counsel    &        Steven G. Stewart, Chief
Corporate Secretary                             Financial Officer


                                            DH FINANCIAL, L.C.


                                            By: /s/ Brad Dennis
                                                --------------------------------
                                                Its Manager

Covol Securities Purchase Agreement  - 33 -                     December 7, 1999
<PAGE>

SCHEDULES

Schedule 4.1               Subsidiaries
Schedule 4.2               Existing Indebtedness
Schedule 4.3               Capitalization
Schedule 4.6(a)            Certain Changes
Schedule 4.6(c)            Places of Business
Schedule 4.7               Litigation
Schedule 4.13              Owned Real Property
Schedule 4.16              Intellectual Property
Schedule 4.19              Environmental Laws
Schedule 4.20              Transactions with Affiliates
Schedule 4.21              Taxes
Schedule 4.22              Other Investors
Schedule 4.29              Registration Rights
Schedule 4.30              Synthetic Fuel Facilities

Covol Securities Purchase Agreement  - 34 -                     December 7, 1999