Certificate of Designation, Number, Voting Powers,
           Preferences and Rights of the Series of the Preferred Stock
                                       of
                            COVOL TECHNOLOGIES, INC.
                                To be Designated
                     Series C 7% Convertible Preferred Stock

         Covol Technologies,  Inc., a Delaware  corporation (the "Corporation"),
pursuant to authority  conferred on the Board of Directors of the Corporation by
its  Certificate  of  Incorporation,  as  amended,  and in  accordance  with the
provisions of Section 151 of the General  Corporation Law of Delaware  ("DGCL"),
certifies  that the Board of  Directors  of the  Corporation,  at a meeting duly
called and held pursuant to Section 141 of the DGCL,  duly adopted the following
resolution providing for the establishment and issuance of a series of Preferred
Stock to be  designated  as  "Series C 7%  Convertible  Preferred  Stock" and to
consist of 1,500 shares as follows:

         RESOLVED,  that, pursuant to the authority expressly granted and vested
in the Board of Directors of this  Corporation in accordance with the provisions
of its Certificate of Incorporation,  as amended, a series of Preferred Stock of
the Corporation be and hereby is established,  consisting of 1,500 shares, to be
designated  as  "Series C 7%  Convertible  Preferred  Stock"  (the  "Series C 7%
Preferred");  the Board of Directors be and hereby is  authorized  to issue such
shares  of  Series  C 7%  Preferred  Stock  from  time  to  time  and  for  such
consideration  and on such terms as the Board of Directors shall determine;  and
subject  to  the  limitations   provided  by  law  and  by  the  Certificate  of
Incorporation,  as amended, the powers, designations,  preferences and relative,
participating,  option  or other  special  rights  of,  and the  qualifications,
limitations or restrictions upon, the Series C 7% Preferred shall be as follows:

         Section 1.        Definitions.

         "Common Stock" means, collectively, the Corporation's common stock, par
value $.001 per share.

         "Conversion  Stock" means  shares of the  Corporation's  Common  Stock;
provided  that if there is a change  such  that  the  securities  issuable  upon
conversion  of the Series C 7% Preferred  are issued by an entity other than the
Corporation  or there is a change in the class of securities  so issuable,  then
the term "Conversion  Stock" shall mean one share of the security  issuable upon
conversion of the Series C 7% Preferred if such security is issuable in

<PAGE>

shares,  or shall mean the smallest  unit in which such  security is issuable if
such security is not issuable in shares.

         "Junior Securities" means any of the Corporation's Common Stock.

         "Liquidation  Value" of any Share (as  defined in Section 2A hereof) as
of any particular date shall be equal to One Thousand Dollars ($1,000.00).

         "Market  Price" of any  security  means (i) the  average of the closing
prices  of such  security's  sales on all  securities  exchanges  on which  such
security  may at the time be listed,  or, if there has been no sales on any such
exchange on any day,  the average of the highest bid and lowest  asked prices on
all such  exchanges at the end of such day, or, (ii) if on any day such security
is not so listed,  the  reported  closing  price on the Nasdaq  National  Market
("NNM"), or, if the security is listed on the NNM but there has been no sales on
such market on any day,  the average of the highest bid and lowest  asked prices
on the NNM at the end of such day,  or (iii) the  average of the  representative
bid and asked prices quoted in the Nasdaq  Smallcap  Market as of 4:00 P.M., New
York time, or, if on any day such security is not quoted in the Nasdaq  SmallCap
Market,  the average of the highest bid and lowest  asked  prices on such day in
the  domestic  over-the-counter  market as  reported by the  National  Quotation
Bureau, Incorporated, or any similar successor organization. If at any time such
security  is not listed on any  securities  exchange,  the NNM, or quoted in the
Nasdaq Smallcap Market or the over-the-counter  market, the "Market Price" shall
be the fair value thereof  determined jointly by the Corporation and the holders
of a majority of the Series C 7% Preferred.  If such parties are unable to reach
agreement  within  a  reasonable  period  of  time,  such  fair  value  shall be
determined by an independent appraiser experienced in valuing securities jointly
selected  by the  Corporation  and the  holders of a majority of the Series C 7%
Preferred.  The  determination of such appraiser shall be final and binding upon
the  parties,  and the  Corporation  shall  pay the  fees and  expenses  of such
appraiser.

         "Person"  means  an  individual,  a  partnership,  a  corporation,   an
association,  a joint stock company, a trust, a joint venture, an unincorporated
organization  and a governmental  entity or any department,  agency or political
subdivision thereof.

         "Redemption  Date" as to any  Share  means  the date  specified  in the
notice of any  redemption at the  Corporation's  option or the  applicable  date
specified herein in the case of any other redemption; provided that no such date
shall be a Redemption Date unless the Liquidation  Value of such Share (plus all
accrued and unpaid dividends thereon) is actually paid in full on such date, and
if not so paid in full,  the  Redemption  Date  shall be the date on which  such
amount is fully paid.

         Section 2.        Dividends.

         2A. General Obligation. When and as declared by the Corporation's Board
of Directors and to the extent  permitted  under the General  Corporation Law of
Delaware,  the  Corporation  shall pay  preferential  dividends  monthly  to the
holders of the Series C 7% Preferred  Stock as provided in this Section.  Except
as  otherwise  provided  herein,  dividends  on each  share  of the  Series C 7%
Preferred (a "Share")  shall accrue on a daily basis at the rate of 7% per annum
of the sum of the  Liquidation  Value  thereof,  from and  including the date of
issuance of such Share to and including the date on which the Liquidation  Value
of

                                        2
<PAGE>

such Share is paid or the date on which such Share is  converted  into shares of
Conversion  Stock  hereunder;  provided,  however,  that no  compounding of such
dividends  shall be authorized  thereon.  Such dividends shall accrue whether or
not they have been  declared  and whether or not there are  profits,  surplus or
other funds of the Corporation  legally  available for the payment of dividends.
Such dividends  shall be cumulative  such that all accrued and unpaid  dividends
shall be fully paid or  declared  with funds  irrevocably  set apart for payment
before any  dividend,  distribution  or payment may be made with  respect to any
Junior Securities.  The date on which the Corporation initially issues any Share
shall be deemed to be its "date of issuance"  regardless  of the number of times
transfer  of such Share is made on the stock  records  maintained  by or for the
Corporation and regardless of the number of certificates  which may be issued to
evidence such Share.

         2B. Dividend  Reference Date. To the extent not paid monthly on the 22d
day of the calendar  month,  commencing  February 22, 1999, all dividends  which
have accrued on each Share outstanding  during the month (or other period in the
case of the initial  Dividend  Reference  Date)  ending upon each such  Dividend
Reference Date shall be accumulated and shall remain accumulated  dividends with
respect to such Share until paid.

         2C.  Distribution  of Partial  Dividend  Payments.  Except as otherwise
provided herein,  if at any time the Corporation pays less than the total amount
of  dividends  then  accrued  with  respect to the Series C 7%  Preferred,  such
payment shall be  distributed  ratably among the holders  thereof based upon the
number of Shares held by each such holder.

         2D.  Payment  of  Stock  Dividends.  In  the  sole  discretion  of  the
Corporation,  any  dividends  accruing on Shares of Series C 7% Preferred may be
paid in lieu of cash dividends by the issuance of additional  Shares of Series C
7% Preferred (including fractional Shares) having an aggregate Liquidation Value
at the time of such  payment  equal to the  amount of the  dividend  to be paid;
provided  that if the  Corporation  pays less than the total amount of dividends
then accrued on the Series C 7% Preferred in the form of additional Shares, such
payment in Shares shall be made pro rata to the holders of Series C 7% Preferred
based upon the aggregate  accrued but unpaid dividends on the Shares of Series C
7% Preferred held by each such holder.

         Section 3.        Liquidation.

         Upon any  liquidation,  dissolution  or winding up of the  Corporation,
each holder of Series C 7%  Preferred  shall be entitled to be paid,  before any
distribution  or payment is made upon any Junior  Securities,  an amount in cash
equal to the aggregate Liquidation Value (plus all accrued and unpaid dividends)
of all Shares  held by such  holder,  and the  holders of Series C 7%  Preferred
shall  not  be  entitled  to  any  further  payment.  If at  the  time  of  such
liquidation,  dissolution  or  winding  up,  other  series of the  Corporation's
preferred stock are outstanding, the Series C 7% Preferred will be considered to
have the same priority to receive  payments,  pari passu, as all other series of
preferred stock which are, by their terms,  senior to the Junior  Securities and
which do not  provide by their  terms that they are senior to, or junior to, the
Series C 7% Preferred.  If upon any such liquidation,  dissolution or winding up
of the Corporation, the Corporation's assets to be distributed among the holders
of the Series C 7% Preferred are  insufficient to permit payment to such holders
of the  aggregate  amount  which they are  entitled to be paid,  then the entire
assets to be so  distributed  shall be  distributed  ratably  among such holders
based upon the aggregate

                                        3
<PAGE>

Liquidation  Value (plus all accrued  and unpaid  dividends)  of the Series C 7%
Preferred  held by each such holder.  Prior to the  liquidation,  dissolution or
winding up of the  Corporation,  the  Corporation  shall declare for payment all
accrued and unpaid  dividends  with  respect to the Series C 7%  Preferred.  The
Corporation  shall  mail  written  notice of such  liquidation,  dissolution  or
winding up, not less than 60 days prior to the payment date stated  therein,  to
each record holder of Series C 7% Preferred. Neither the consolidation or merger
of the  Corporation  into or with any other entity or entities,  nor the sale or
transfer by the Corporation of less than  substantially  all of its assets,  nor
the reduction of the capital stock of the  Corporation,  shall be deemed to be a
liquidation,  dissolution or winding up of the Corporation within the meaning of
this Section.

         Section 4.        Redemption.

         4A.  Optional  Redemptions.  The Corporation may at any time within 180
days after the date of initial issuance (as defined in Section 2A) redeem all or
any portion of Series C 7% Preferred then  outstanding.  On any such redemption,
the  Corporation  shall pay a price per Share  equal to 125% of the  Liquidation
Value thereof, plus 100% of all accrued and unpaid dividends thereon.

         4B.  Redemption  Payment.  For each Share which is to be redeemed,  the
Corporation  shall be  obligated  on the  Redemption  Date to pay to the  holder
thereof (upon surrender by such holder at the Corporation's  principal office of
the  certificate  representing  such Share) an amount in  immediately  available
funds  equal to 125% of the  Liquidation  Value of such Share  (plus 100% of all
accrued and unpaid dividends  thereon).  If the funds of the Corporation legally
available for redemption of Shares on any Redemption  Date are  insufficient  to
redeem the total number of Shares to be redeemed on such date, those funds which
are legally  available  shall be used to redeem the maximum  possible  number of
Shares  ratably  among the holders of the Shares to be  redeemed  based upon the
aggregate  Liquidation  Value  of such  Shares  (plus  all  accrued  and  unpaid
dividends  thereon)  held by each  such  holder.  At any  time  thereafter  when
additional funds of the Corporation are legally  available for the redemption of
Shares, such funds shall immediately be used to redeem the balance of the Shares
which the Corporation has become  obligated to redeem on any Redemption Date but
which it has not redeemed.

         4C. Notice of Redemption.  The Corporation shall mail written notice of
each  redemption of any Series C 7% Preferred to each record holder  thereof not
less than 10 days prior to the date on which such  redemption  is to be made. If
on the redemption date specified in the notice, the Corporation fails to pay the
redemption payment on any Shares properly tendered for redemption,  then as sole
remedy  to the  holder  whose  redemption  price  was not paid  (the  "Defaulted
Holder") the  Corporation  agrees that (i) the  redemption  notice shall be void
with respect to such unpaid Shares of the Defaulted Holder,  (ii) the Conversion
Price of the Shares for which the redemption  notice is void shall be reduced by
5%, (iii) the limitations on conversion  contained in subparagraph  6A(ii) shall
no longer apply to any Shares held by the Defaulted Holder,  and (iv) any of the
Corporation's  warrants  issued in connection  with the initial  issuance of the
Series  C 7%  Preferred  held  by the  Defaulted  Holder  shall  be  and  become
exercisable  notwithstanding  provisions  therein  restricting  exercise thereof
prior to stated dates. In case fewer than the total number of Shares represented
by any certificate are redeemed, a new certificate representing the number of

                                        4
<PAGE>

unredeemed  Shares  shall be issued to the holder  thereof  without cost to such
holder  within  ten  (10)  business  days  after  surrender  of the  certificate
representing the redeemed Shares.

         4D. Determination of the Number of Each Holder's Shares to be Redeemed.
Except  as  otherwise  provided  herein,  the  number  of  Shares of Series C 7%
Preferred to be redeemed from each holder thereof in redemptions hereunder shall
be the number of Shares  determined by multiplying the total number of Shares to
be redeemed  times a fraction,  the numerator of which shall be the total number
of Shares  then held by such  holder and the  denominator  of which shall be the
total number of Shares then outstanding.

         4E.  Dividends  After  Redemption  Date.  No Share is  entitled  to any
dividends accruing after the date on which 125% of the Liquidation Value of such
Share  (plus 100% of all accrued  and unpaid  dividends  thereon) is paid to the
holder thereof. On such date all rights of the holder of such Share shall cease,
and such Share shall not be deemed to be outstanding.

         4F.  Redeemed  or  Otherwise  Acquired  Shares.  Any  Shares  which are
redeemed or otherwise  acquired by the Corporation  shall be cancelled and shall
be deemed to be undesignated authorized and unissued preferred shares.

         4G. Other Redemptions or Acquisitions. The Corporation shall not redeem
or otherwise acquire any Series C 7% Preferred,  except as expressly  authorized
herein or pursuant to a purchase  offer made pro-rata to all holders of Series C
7% Preferred on the basis of the number of Shares owned by each such holder.

         Section 5.        Voting Rights.            The Series  C 7%  Preferred
shall have no voting rights unless specifically authorized by the DGCL.

         Section 6.        Conversion.

         6A.      Conversion Procedure.

                  (i) Subject to and in compliance  with the  provisions of this
Certificate of Designation,  any holder of Series C 7% Preferred may convert all
or any portion of the Series C 7% Preferred held by such holder into a number of
shares of Conversion  Stock computed by  multiplying  the number of Shares to be
converted  by $1,000 and  dividing  the result by the  Conversion  Price then in
effect.

                  (ii) The  right of the  holders  to  convert  the  Series C 7%
Preferred shall be subject to the following limitations:

                           (a)      No Series C 7% Preferred may be converted on
or before April 15, 1999.

                           (b)  Commencing  April 16,  1999,  each holder of the
Series C 7%  Preferred  may convert up to 10% of the Shares held by him at April
15, 1999, plus any Shares or fractional Shares issued in payment of dividends.

                                        5
<PAGE>

                           (c)  Commencing  May 16,  1999,  each  holder  of the
Series C 7% Preferred may convert up to an additional  10% of the Shares held by
him at April 15, 1999 (i.e.  up to a total of 20% on a cumulative  basis),  plus
any Shares or fractional Shares issued in payment of dividends.

                           (d)  Commencing  June 16,  1999,  each  holder of the
Series C 7% Preferred may convert up to an additional  10% of the Shares held by
him at April 15, 1999 (i.e.  up to a total of 30% on a cumulative  basis),  plus
any Shares or fractional Shares issued in payment of dividends.

                           (e)  Commencing  July 16,  1999,  each  holder of the
Series C 7% Preferred may convert his Shares without regard to limitations under
this subparagraph (ii).

                  (iii) Each conversion of Series C 7% Preferred shall be deemed
to have  been  effected  as of the  close of  business  on the date on which the
certificate  or  certificates  representing  the  Series  C 7%  Preferred  to be
converted have been  surrendered at the principal office of the Corporation (the
"Conversion  Date").  At such time as such  conversion  has been  effected,  the
rights of the holder of such Series C 7%  Preferred  as such holder  shall cease
and the Person or Persons in whose name or names any certificate or certificates
for shares of Conversion  Stock are to be issued upon such  conversion  shall be
deemed  to have  become  the  holder  or  holders  of  record  of the  shares of
Conversion Stock represented thereby.

                  (iv) The conversion  rights of any Share subject to redemption
hereunder  shall  terminate  on the  Redemption  Date for such Share  unless the
Corporation  has failed to pay to the holder thereof 125% of  Liquidation  Value
thereof (plus 100% of all accrued and unpaid dividends thereon).

                  (v)  Within two  business  days  after a  conversion  has been
effected,  the Corporation  shall make available to the converting holder at the
Corporation's transfer agent:

                           (a) a certificate or  certificates  representing  the
         number  of  shares  of  Conversion  Stock  issuable  by  reason of such
         conversion in such name or names and such denomination or denominations
         as the converting holder has specified;

                           (b)  payment  in  an  amount  equal  to  all  accrued
         dividends  with  respect to each Share  converted,  which have not been
         paid prior  thereto,  plus the amount payable under  subparagraph  (ix)
         below with respect to such  conversion;  provided,  however,  that such
         accrued dividends may, at the  Corporation's  option, be converted into
         an  additional  number of shares of  Conversion  Stock by dividing  the
         amount of unpaid dividends by the Conversion Price; and

                           (c) a certificate representing any Shares of Series C
         7% Preferred which were  represented by the certificate or certificates
         delivered to the  Corporation  in connection  with such  conversion but
         which were not converted.

                  (vi)  Upon  conversion,  the  Corporation  shall  convert  all
accrued and unpaid  dividends on the Series C 7% Preferred  being converted into
an  additional  number of shares of  Conversion  Stock  (which will be delivered
within ten (10) business days) determined by

                                        6
<PAGE>

dividing the amount of the unpaid  dividends to be applied for such purpose,  by
the Conversion Price.

                  (vii) The issuance of  certificates  for shares of  Conversion
Stock upon  conversion of Series C 7% Preferred  shall be made without charge to
the  holders  of such  Series C 7%  Preferred  for any  issuance  tax in respect
thereof  or other cost  incurred  by the  Corporation  in  connection  with such
conversion  and the  related  issuance  of  shares  of  Conversion  Stock.  Upon
conversion of each Share of Series C 7% Preferred,  the  Corporation  shall take
all such actions as are necessary in order to insure that the  Conversion  Stock
issuable with respect to such conversion shall be validly issued, fully paid and
nonassessable.

                  (viii) The  Corporation  shall assist and  cooperate  with any
holder  of Shares  required  to make any  governmental  filings  or  obtain  any
governmental  approval  prior to or in connection  with any conversion of Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).

                  (ix) If any fractional interest in a share of Conversion Stock
would,  except for the provisions of this subparagraph,  be deliverable upon any
conversion of the Series C 7% Preferred, the Corporation,  in lieu of delivering
the fractional  share therefor,  shall pay an amount to the holder thereof equal
to the Market Price of such fractional interest as of the date of conversion.

                  (x) The  Corporation  shall  at all  times  reserve  and  keep
available out of its authorized but unissued shares of Conversion Stock,  solely
for the purpose of issuance  upon the  conversion  of the Series C 7% Preferred,
such number of shares of Conversion  Stock  issuable upon the  conversion of all
outstanding  Series C 7% Preferred.  All shares of Conversion 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 Corporation shall
take all such  actions as may be  necessary  to assure  that all such  shares of
Conversion  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 Conversion  Stock may be listed (except for official notice
of issuance which shall be immediately  delivered by the  Corporation  upon each
such issuance).

                  (xi) If the shares of Conversion  Stock  issuable by reason of
such  conversion of Series C 7% Preferred are  convertible  into or exchangeable
for any other stock or securities of the Corporation,  the Corporation shall, at
the converting  holder's option, upon surrender of the Shares to be converted by
such holder as provided  above  together  with any notice,  statement or payment
required to effect such conversion or exchange of Conversion  Stock,  deliver to
such  holder  or  as  otherwise  specified  by  such  holder  a  certificate  or
certificates  representing  the stock or  securities  into  which the  shares of
Conversion  Stock  issuable by reason of such  conversion  are so convertible or
exchangeable,  registered  in such  name or names  and in such  denomination  or
denominations as such holder has specified.

         6B.      Conversion Price.         The Conversion Price shall be $5.50,
which price shall be subject to adjustment as set forth in Section 6D.

                                        7
<PAGE>

         6C.  Limitation on  Conversion.  Notwithstanding  any other  provisions
hereof,  no holder of Shares shall be entitled to exercise the conversion rights
under  this  Section  to  acquire  any share or shares of Common  Stock if, as a
result  of  such  conversion,  such  holder  and  its  affiliates,  directly  or
indirectly,  would  own,  control or have  power to vote a greater  quantity  of
securities  of any kind  issued  by the  Corporation  than such  holder  and its
affiliates  would be permitted  to own,  control or have power to vote under any
law or under any  regulation,  rules or other  requirement  of any  governmental
authority at any time applicable to such holder and its affiliates. For purposes
of this paragraph,  a written  statement of the holder  involved,  to the effect
that such holder is legally  entitled to exercise  its  conversion  rights under
this  Section to acquire  shares of Common  Stock and that such holder shall not
violate  the  prohibitions  set  forth  in  the  preceding  sentence,  shall  be
sufficient  evidence of the legality  thereof and shall obligate the Corporation
to deliver certificates  representing the shares of Common Stock so purchased in
accordance with the other provisions hereof.

         6D.      Anti-Dilution Provisions.

                  (a) If on the trading day immediately preceding the Conversion
Date,  the Market  Price of the Common Stock is less than $5.50 per share (or an
equivalent  amount for  Conversion  Stock  other than  Common  Stock),  then the
Conversion  Price for  conversions on such  Conversion Date shall be adjusted to
equal the average of the three lowest closing bid prices of the Conversion Stock
(or the closing prices if the Conversion  Stock is listed on an exchange) during
the 15 trading days immediately preceding the Conversion Date.

                  (b) If,  at any  time or from  time  to time  after  the  date
hereof,  the Corporation  shall distribute  property or assets to all holders of
Common  Stock  (excluding  (x)  dividends  paid in,  or  distributions  of,  the
Corporation's  capital stock for which the number of Conversion Stock receivable
hereunder  shall  have  been  adjusted  pursuant  to  Subsection  4(b),  and (y)
dividends  or  distributions  paid in  cash  if the  Series  C 7%  Preferred  is
converted into  Conversion  Stock prior to the record date therefor) (any of the
foregoing  being  hereinafter in this  Subsection  4(a) called the  "Property"),
then, in each such case, the Corporation shall reserve  sufficient  Property for
distribution  upon  conversion  of Series C 7% Preferred so that, in addition to
the Conversion  Stock to which a person owning Series C 7% Preferred  ("Holder")
is entitled, the Holder will receive upon such conversion the amount and kind of
such  Property  which  such  Holder  would  have  received  if the  Holder  had,
immediately  prior to the  record  date for the  distribution  of the  Property,
converted the Series C 7% Preferred to the Conversion Stock. Notice of each such
distribution shall be given to the Holder  concurrently with any notice given to
the holders of Common Stock regarding such distribution.

                  (c) In case the Corporation  shall hereafter i) pay a dividend
or make a  distribution  on its Common Stock payable in shares of capital stock,
ii) subdivide its  outstanding  shares of Common Stock into a greater  number of
shares,  iii)  combine  its  outstanding  shares of Common  Stock into a smaller
number of shares or iv) issue by reclassification of its Common Stock any shares
of capital stock of the  Corporation,  then, in any such event, the Holder shall
be entitled to receive the  aggregate  number and kind of shares  which,  if the
Holder  had  converted  the  Series  C 7%  Preferred  to  the  Conversion  Stock
immediately   prior  to  the  record  date  with  respect  to  the  dividend  or
distribution  or  the  effective  date  of  the   subdivision,   combination  or
reclassification,  he would  have been  entitled  to  receive  by virtue of such
dividend, distribution, subdivision, combination or

                                        8
<PAGE>

reclassification, and the Conversion Price shall be appropriately adjusted. Such
adjustment  shall be made  successively  whenever  any event  listed above shall
occur. An adjustment made pursuant to this subsection (b) shall become effective
immediately  after the record date in the case of a dividend or distribution and
shall become  effective  immediately  after the effective  date in the case of a
subdivision,  combination or reclassification.  If, as a result of an adjustment
made  pursuant to this  subsection  (b),  the Holder  shall  become  entitled to
receive shares of two or more classes of capital stock or shares of Common Stock
and other  capital  stock of the  Corporation,  then Series C 7%  Preferred  may
thereafter be converted to units  consisting  of whole number  multiples of each
such securities, as designated by the Board of Directors.

                  (d) In case of any of the  following  events  (each  of  which
shall be deemed a  "Reorganization  Event"):  (i) any consolidation or merger to
which the Corporation is a party,  other than a merger or consolidation in which
the  Corporation is the continuing  corporation,  (ii) any sale or conveyance to
another  entity of all or  substantially  all of the  assets of the  Corporation
(including a sale of all or  substantially  all of the assets of the Corporation
for a consideration  consisting  primarily of securities) or (iii) any statutory
exchange of securities with another corporation (including any exchange effected
in connection with a merger of a third party into the  Corporation),  the Holder
shall have the right  thereafter  to receive upon  conversion of the Series C 7%
Preferred the kind and amount of  securities,  cash or other  property  which he
would  have  owned or have been  entitled  to  receive  immediately  after  such
Reorganization  Event had such Series C 7% Preferred been converted  immediately
prior to the effective date of such  Reorganization  Event and in any such case,
if necessary,  appropriate  adjustment  shall be made in the  application of the
provisions  set forth in this Section  with respect to the rights and  interests
thereafter  of the  Holder  to the end that  the  provisions  set  forth in this
Section shall thereafter  correspondingly  be made applicable,  as nearly as may
reasonably  be,  in  relation  to any  shares  of stock or other  securities  or
property thereafter  deliverable on the exercise of this Warrant.  The foregoing
provisions of this Subsection shall similarly apply to successive Reorganization
Events. Notice of any Reorganization Event and of said provisions so proposed to
be made  shall  be  mailed  to the  Holder  not less  than 30 days  prior to the
effective date of such event.

                  (e)  Notwithstanding  any other provision of this Section,  no
adjustment  in the  Conversion  Price shall be required  unless such  adjustment
would  require an  increase  or  decrease  of at least $0.05 per share of Common
Stock and no  adjustment  in the number of Conversion  Stock  issuable  shall be
required if such adjustment  would represent less than one percent of the number
of Conversion Stock to be so delivered;  provided, however, that any adjustments
which by reason of this  Subsection  (d) are not  required  to be made  shall be
carried  forward  and taken  into  account  in any  subsequent  adjustment,  and
provided  further,  however,  that  adjustments  shall be  required  and made in
accordance  with the provisions of this Section (other than this Subsection (d))
not later than such time as may be required in order to  preserve  the  tax-free
nature of a  distribution  to the Holder.  All  calculations  under this Section
shall be made to the nearest cent or to the nearest  1/100th of a share,  as the
case may be.  Anything  in this  Section to the  contrary  notwithstanding,  the
Corporation  shall be entitled to make such reductions in the Conversion  Stock,
in addition to those  required by this Section,  as it in its  discretion  shall
deem to be advisable in order that any stock dividend, subdivision of shares, or
distribution   of  rights  to  purchase  stock  or  securities   convertible  or
exchangeable  for stock  hereafter made by the  Corporation to its  shareholders
shall not be taxable.

                                        9
<PAGE>

                  (f) Whenever the  Conversion  Price is adjusted as provided in
this Section and upon any modification of the rights of the Holder in accordance
with this Section,  the Corporation  shall promptly prepare a certificate of the
Corporation's  Chief Financial  Officer,  setting forth the Conversion Price and
the  number of  Conversion  Stock  after such  adjustment  or the effect or such
modification,  a brief  statement  of the facts  requiring  such  adjustment  or
modification  and the  manner  of  computing  the same and  cause a copy of such
certificate to be mailed to the Holder.

                  (g) If the Board of Directors of the Corporation shall declare
any dividend or other  distribution  in cash with  respect to the Common  Stock,
other than out of earned surplus,  the Corporation  shall mail notice thereof to
the Holder not less than 15 days prior to the record date fixed for  determining
shareholders entitled to participate in such dividend or other distribution.

                  (h) The  Corporation  will,  at its  sole  cost  and  expense,
(subject to the holder bearing the costs of commissions  and  independent  legal
review) covenants that if at any time during the period in which the Series C 7%
Preferred may be converted the Corporation should file a registration  statement
or offering  statement  pursuant to applicable federal and state securities laws
for a  public  offering  of  securities,  (except  on Form  S-4 or S- 8 or their
successor forms) the Corporation will provide written notification to the holder
at  least 10 days but not more  than 60 days  prior to the  filing  date of such
registration statement or offering statement and use its best efforts to seek to
register or qualify or cause to be registered or qualified, at the option of the
holder,  the sale and  resale of all,  or such  amounts as the  Corporation  may
legally and lawfully cause to be registered or on a pro-rata basis if limited by
the  firm  or  persons  underwriting  such  offering,  of the  Conversion  Stock
underlying the Series C 7% Preferred  (which are deliverable  upon conversion of
the Series C 7% Preferred) and the Corporation will use its best efforts to seek
to maintain such registration  statement or offering statement effective for all
periods during which the Series C 7% Preferred may be converted  until such time
as the  Corporation  receives  an opinion  of  counsel  to the  effect  that the
underlying Conversion Stock may be publicly resold without  registration.  If no
other  registration  statement is being filed  registering the Conversion  Stock
underlying the Series C 7% Preferred, the Corporation will, at its sole cost and
expense, (subject to the holder bearing the costs of commissions and independent
legal review)  cause a  registration  statement  covering the  Conversion  Stock
underlying  the  Series C 7%  Preferred  to be  effective  within 90 days  after
closing  of the  initial  issuance  of the  Series C 7%  Preferred.  If a holder
tenders Series C 7% Preferred for conversion at a time when the Conversion Stock
underlying  such Shares is not registered for sale, such failure of registration
is  hereinafter  referred  to as an  "Event",  and the date on which  such Event
occurs is hereinafter  referred to as an "Event Date".  If an Event has occurred
and not been cured, the converting  holder shall be entitled to receive from the
Corporation  on conversion  of the Series C 7% Preferred so  converted,  as sole
remedy for the failure to register, (i) on the Event Date, additional Conversion
Stock equal to 10% of the Conversion  Stock otherwise  issuable on conversion of
such tendered Shares based on the Conversion  Price in effect on the Event Date,
and (ii) every thirty  calendar days following the Event Date until the Event is
cured,  additional  Conversion  Stock  equal  to  10% of  the  Conversion  Stock
otherwise issuable on conversion of such tendered Shares based on the Conversion
Price in  effect  on the  Event  Date.  For  purposes  of this  paragraph,  each
determination of whether an Event has occurred will be independently  determined
for each conversion request.

                                       10
<PAGE>

         Section 7.        Registration of Transfer.

         The Corporation  shall keep at its principal  office a register for the
registration  of Series C 7% Preferred.  Subject to compliance  with  applicable
securities laws, upon the surrender of any certificate  representing Series C 7%
Preferred at such place,  the  Corporation  shall,  at the request of the record
holder of such certificate,  execute and deliver (at the holder's expense) a new
certificate or certificates in exchange  therefor  representing in the aggregate
the number of Shares represented by the surrendered  certificate.  Each such new
certificate  shall be registered in such name and shall represent such number of
Shares as is requested by the holder of the surrendered certificate and shall be
substantially  identical in form to the surrendered  certificate,  and dividends
shall accrue on the Series C 7% Preferred  represented  by such new  certificate
from  the date to which  dividends  have  been  fully  paid on such  Series C 7%
Preferred  represented by the surrendered  certificate.  All transfers of Shares
shall be subject to any  restrictions  imposed by  applicable  federal and state
securities laws.

         Section 8.        Replacement.

         Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered  holder shall be  satisfactory) of the ownership and
the loss, theft,  destruction or mutilation of any certificate evidencing Shares
of any of the Series C 7% Preferred,  and in the case of any such loss, theft or
destruction,   upon  receipt  of  indemnity   reasonably   satisfactory  to  the
Corporation,  or,  in the case of any such  mutilation  upon  surrender  of such
certificate, the Corporation shall (at the holder's expense) execute and deliver
in lieu of such  certificate a new  certificate  of like kind  representing  the
number of Shares of such class  represented by such lost,  stolen,  destroyed or
mutilated  certificate  and dated the date of such lost,  stolen,  destroyed  or
mutilated  certificate,  and  dividends  shall  accrue  on the  Preferred  Stock
represented by such new  certificate  from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.

         Section 9.        Amendment and Waiver.

         No amendment, modification or waiver shall be binding or effective with
respect to any  provision of Sections 1 to 10 hereof  without the prior  written
consent of the holders of at least 51% of the Series C 7% Preferred  outstanding
at the time such action is taken;  provided that no such action shall change (a)
the rate at which or the manner in which  dividends on the Series C 7% Preferred
accrue or the times at which such dividends become payable or the amount payable
on redemption  of the Series C 7% Preferred or the times at which  redemption of
Series C 7%  Preferred  is to occur,  without the prior  written  consent of the
holders of at least 80% of the Series C 7% Preferred then  outstanding,  (b) the
Conversion  Price of the Series C 7%  Preferred or the number of shares or class
of stock into which the Series C 7% Preferred is convertible,  without the prior
written consent of at least 80% of the Series C 7% Preferred then outstanding or
(c) the percentage  required to approve any change  described in clauses (a) and
(b) above,  without the prior written  consent of the holders of at least 80% of
the  Series  C  7%  Preferred  then  outstanding.   Notwithstanding  the  above,
Corporation,  without  the consent or  approval  of the  holders,  may amend the
provisions  hereof solely for the purpose of increasing the number of authorized
Shares of Series C 7% Preferred.

                                       11
<PAGE>

         Section 10.       Notices.

         Except as otherwise expressly provided hereunder,  all notices referred
to herein shall be in writing and shall be delivered by  registered or certified
mail,  return receipt requested and postage prepaid,  or by reputable  overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation,  at its principal  executive  offices and
(ii) to any  stockholder,  at such  holder's  address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).

         IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed  hereto and this  Certificate  of  Designation to be signed by its Chief
Executive Officer and attested by its Secretary this 22d day of January, 1999.


------------------------------------
Brent M. Cook
President and Chief Executive Officer
Covol Technologies, Inc.


ATTEST:


------------------------------------
Secretary


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