Note:  Executed in substantially  the same form between Carbon Resources, Inc. a
Delaware  Corporation (the "Borrower") by Frederick J. Murrell,  President,  and
Covol Technologies, Inc. (the "Secured Party")

                                                                  Execution Copy

                                 LOAN AGREEMENT

                  This LOAN AGREEMENT (this "Agreement"),  dated as of April 21,
1998, is by and between C.C. Pace Capital,  L.L.C., a Delaware limited liability
company ("Pace Capital" or the "Borrower") and Covol Technologies, Inc. ("Covol"
or the
"Lender").


                              W I T N E S S E T H :

                  WHEREAS, each  of Pace  Capital  and  Carbon  Resources,  Inc.
("Carbon  Resources")  is a member of Pace  Carbon  Fuels,  L.L.C.,  a  Delaware
limited  liability  company which is the General Partner of Pace Carbon Synfuels
Investors, L.P., a Delaware limited partnership (the "Partnership"); and

                  WHEREAS,  the Partnership operates pursuant to the terms of an
Amended and Restated  Agreement of Limited  Partnership  dated as of February 5,
1998 (the "Partnership Agreement"); and

                  WHEREAS,  the Partnership owns 100% of the membership interest
in,  among  other  entities,  PC Virginia  Synthetic  Fuel #1,  L.L.C.,  PC West
Virginia  Synthetic Fuel #1, L.L.C., PC West Virginia  Synthetic Fuel #2, L.L.C.
and PC West Virginia  Synthetic Fuel #3, L.L.C.  (each a "Project  Company" and,
collectively, the "Project Companies"); and

                  WHEREAS,  the Lender has entered  into  Amended  and  Restated
License and Binder Purchase Agreements with each Project Company,  each of which
agreements  was made and  entered  into as of February 3, 1998 and each of which
agreements is herein referred to as a "Licensing Agreement;" and

                  WHEREAS, pursuant to each such Licensing Agreement, the Lender
is  entitled  to  receive  royalties  under the terms  and as  described  in the
Licensing Agreement (the "Royalties"); and

                  WHEREAS,  as a condition to the  execution and delivery of the
Licensing  Agreements,  the Lender  agreed to lend funds to the  Borrower and to
Carbon  Resources to enable the  Borrower  and Carbon  Resources to make capital
contributions to the General Partner; and

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

                  WHEREAS, by a Loan Agreement of even date herewith, the Lender
has agreed to lend funds to Carbon  Resources  on terms  identical  to those set
forth herein (the "Carbon Resources Loan Agreement").

<PAGE>


                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants and agreements herein set forth and for other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
Borrower  and the Lender,  intending  to be legally  bound,  do hereby  agree as
follows:

         Section 1.  Definitions and Terms

         1.1  Definitions.  In addition to the terms defined in the preamble and
recitals  above,  the following  capitalized  terms shall have their  respective
meanings as set forth below:

         "Advance" means each loan to the Borrower made by the Lender under this
Agreement.

         "Commitment" means the sum of $ * as provided in Section 2.1 hereof.

         "Escrow  Account" means the escrow account  described in Section 3.6 of
each of the Licensing Agreements.

         "Event of Default" has the meaning set forth in Section 5.1 hereof.

         "General  Partner" means Pace Carbon Fuels,  L.L.C., a Delaware limited
liability company, the general partner of Pace Carbon Synfuels Investors, L.P.

         "GP's Special Reserve" means the "GP's Special Reserve" as described in
Section 5.12 of the Partnership Agreement.

         "Loan" means,  as of any date,  the  aggregate  amount of Advances made
hereunder on or prior to such date less amounts which have been repaid.

         "Loan Advance Date" has the meaning set forth in Section 2.2 hereof.

         "Loan  Commitment Period"  has the  meaning set  forth in  Section  2.1
hereof.

         "Loan Termination Date" means  June 30, 2008.

         "Maximum Available  Advance" has the  meaning set forth in  Section 2.2
hereof.

         "Note" means the promissory note described in Section 2.5 hereof.

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>

         "Received Royalties" means Royalties paid to or at the direction of the
Lender under any one or more of the  Licensing  Agreements  and, with respect to
Royalties  paid into the Escrow  Account,  such  amounts as are  released to the
Lender.

         "Released  Amounts"  shall have the meaning set forth in Section 2.6(a)
hereof.

         "Royalties"  means  any and  all  Royalty  as such  term is used in the
Licensing Agreements.

         1.2  Other Defined Terms; Rules of Interpretation.

                  (a) For  purposes  of this  Agreement,  all other  capitalized
terms used herein and not otherwise  defined shall have the meanings assigned to
them in the Partnership  Agreement (such definitions to be equally applicable to
both the singular and plural forms of the terms defined).

                  (b) Except as otherwise  provided herein,  any term defined by
reference to an agreement,  instrument or other  document shall have the meaning
so assigned to it as such agreement, instrument or other document may be amended
in accordance  with its terms,  whether or not such document is in effect at the
time of  reference  to such  document.  A reference  to any Person  includes its
permitted  successors and permitted  assigns.  The words "hereof,"  "herein" and
"hereunder"  and words of similar import when used in this Agreement shall refer
to this  Agreement  as a  whole  and not to any  particular  provisions  of this
Agreement,  and section,  schedule and exhibit  references are to this Agreement
unless  otherwise  specified.  Except as otherwise  defined or provided  herein,
accounting  terms shall be construed,  and all financial  computations  shall be
made, in accordance with generally accepted accounting  principles  consistently
applied.

         Section 2.  The Loan

         2.1  Agreement  to Lend.  Subject to the terms and  conditions  of this
Agreement, the Lender agrees to lend to the Borrower, in quarterly installments,
an  aggregate  principal  amount  (excluding  capitalized  interest as described
below) not to exceed * dollars ($ * ) (the "Commitment")  during the period from
and  including  November  1, 1998 to and  including  February 1, 2008 (the "Loan
Commitment Period").

         2.2 Advances.  The Lender agrees that it will, subject to the terms and
limitations set forth below,  make an Advance to the Borrower in the amount of $
* (or such  lesser  amount as the  Borrower  shall  request  or, if the  Maximum
Available Advance, as defined below, is greater than $ *, such greater amount as
the  Borrower  may  request)  on  November  1, 1998 and on the first day of each
February,  May, August and November thereafter during the Loan Commitment Period
(each a "Loan Advance Date").


* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>

         The  Lender's  obligation  to make an Advance on any Loan  Advance Date
shall be subject to the following:

         (a) No  Advance  shall be  required  to the  extent  the amount of such
Advance  would cause the amount of all  Advances  made under this  Agreement  to
exceed  the  lesser  of (i) the  Commitment,  and (ii) the  aggregate  amount of
Received Royalties received by the Lender as of such Loan Advance Date; and

         (b) The Borrower shall have  delivered to the Lender a written  request
for such  Advance at least three (3) days prior to the Loan  Advance  Date,  and
such request shall have stated the amount of the Advance thereby requested.

         If, on any Loan Advance Date, the amount  advanced by the Lender to the
Borrower is less than the Maximum  Available  Advance  (as defined  below),  the
difference  between the Maximum Available Advance and the actual Advance made on
such date  shall be  carried  forward  and shall be  available  on the next Loan
Advance Date. The "Maximum Available Advance" on each Loan Advance Date shall be
amount equal to (i) $ * multiplied by the number of Loan Advance Dates occurring
on or  prior to such  date,  less  (ii) the  aggregate  amount  of all  previous
Advances.

         2.3 Purpose.  Subject to the terms hereof, the proceeds of each Advance
shall  be used by the  Borrower  solely  to make  capital  contributions  to the
General Partner.

         2.4 Interest. Interest shall accrue on the principal amount of the Loan
outstanding  from time to time at a simple annual rate equal to six percent (6%)
per annum.  Interest  shall  compound on the first day of each calendar year and
shall be due and  payable  on the date on which the  principal  amount  advanced
hereunder  becomes due and  payable.  The amount of interest  accrued and unpaid
shall not be  considered  principal  for purposes of  determining  the amount of
Advances made hereunder.

         2.5  Note.

                  (a) The Loan shall be evidenced  by a  promissory  note of the
Borrower  substantially  in the  form of  Exhibit  A  hereto,  with  appropriate
insertions as to date and principal  amount,  payable to the order of the Lender
and in a principal  amount equal to the lesser of (i) the  Commitment,  and (ii)
the aggregate unpaid principal amount of all Advances.

                  (b) The  Lender  is  authorized  to  record,  on the  schedule
annexed to and constituting a part of the Note, or on other appropriate  records
of the Lender,  the date and amount of each Advance,  and the date and amount of
each payment or prepayment of principal  thereof,  and any  recordation  thereof
shall  constitute  prima facie  evidence of the accuracy of the  information  so
recorded;  provided, however, that failure by the Lender to make any recordation
or other error therein shall not

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



limit or otherwise  affect the obligations of the Borrower  hereunder.  The Note
shall be dated the date hereof,  be entitled to the benefits of this  Agreement,
be stated to mature on the Loan Termination Date and provide for the accrual and
payment of interest in accordance with Section 2.4 hereof.

         2.6  Repayment of the Loan.

                  (a) Nonrecourse Obligation. The Lender and the Borrower hereby
agree that any and all amounts due  hereunder or under the Note shall be payable
solely from amounts, if any,  distributed to the Borrower by the General Partner
in respect of amounts  released to the  General  Partner  from the GP's  Special
Reserve as provided in the Partnership  Agreement (amounts so distributed to the
Borrower, "Released Amounts"). The Lender's sole recourse for payment of amounts
due  hereunder  shall be to the Released  Amounts,  if any, and the Lender shall
have no right or  recourse  to payment  from any other  source or from any other
assets of the Borrower or any affiliate of the Borrower,  and the Borrower shall
have no obligation to repay amounts  advanced  hereunder or the interest thereon
from any source of funds other than from the Released Amounts,  if any. Borrower
shall  create  and  maintain  in favor of the Lender a first  priority  security
interest in the Released Amounts.

                  (b) Repayment.  The principal  amount of all amounts  advanced
hereunder  (except to the extent  previously  repaid),  together  with  interest
accrued  and  compounded  but  unpaid,  shall be due and payable on the first to
occur of (i) the Loan  Termination Date and (ii) the next business day following
the date on which the Borrower receives the Released Amounts.

                  (c) Optional  Prepayment.  The  Borrower,  at its option,  may
prepay the loan in whole or in part at any time together with accrued but unpaid
interest  on the  portion  being  prepaid  to the date of such  prepayment,  all
without premium or penalty or other charges.

         2.7 Payment Procedures. All Advances made hereunder shall be payable to
the Borrower in United States dollars by wire transfer of immediately  available
funds no later than 2:00 p.m.  prevailing New York City time on the Loan Advance
Date to such  account as the  Borrower  may from time to time,  by notice to the
Lender, direct, and all sums payable to the Lender hereunder shall be payable in
United States dollars by wire transfer of immediately  available  funds no later
than 2:00  p.m.  prevailing  New York City time on the day on which  such sum is
due,  to such  account  as the  Lender  may from time to time,  by notice to the
Borrower, direct.


* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



         Section 3.  Representations and Warranties of the Borrower

         Borrower hereby represents and warrants to the Lender as follows:

                  (a)  Organization;  Qualification.  The  Borrower is a limited
liability  company duly  organized  and validly  existing  under the laws of the
State of Delaware.  The Borrower is duly  qualified  or  authorized  to transact
business and is in good standing under the laws of all jurisdictions in which it
conducts  business or owns property,  except for  jurisdictions  as to which the
failure to be so qualified or  authorized  could not  reasonably  be expected to
have a material  adverse  effect on the  Borrower  or its ability to perform its
obligations hereunder.

                  (b) Authority;  Enforceability. The Borrower has all requisite
power and authority to own its property and assets,  and to conduct its business
as presently conducted, and has full power and authority to execute, deliver and
perform this Agreement and every other agreement and document to be delivered in
connection  herewith  and  to  perform  all  of its  obligations  hereunder  and
thereunder.  This  Agreement  and  all  other  instruments  to be  delivered  in
connection  herewith by the Borrower  constitute,  or, upon execution thereof by
the Borrower and the other parties  thereto (if any),  will  constitute,  valid,
legal and binding obligations of the Borrower,  enforceable against the Borrower
in  accordance  with the  respective  terms  hereof and  thereof,  except as the
enforceability  hereof or  thereof  may be limited  by  bankruptcy,  insolvency,
reorganization,  moratorium  or other  similar laws relating to or affecting the
rights  of  creditors  generally  or by the  application  of  general  equitable
principles.

         Section 4.  Conditions Precedent

         The obligation of the Lender to make each Advance  hereunder is subject
to (a) the  receipt  by the Lender  from the  Borrower  of a written  request as
provided in Section  2.03  hereof,  and (b) there not then  existing an Event of
Default described below.

         Section 5.  Default and Remedies

         5.1 Events of Default.  The occurrence and  continuation of one or more
of the following  events  (whatever the reason for such event) shall be an event
of default hereunder (each, an "Event of Default"):

                           (a) the  Borrower  shall (i) apply for or  consent to
         the  appointment  of,  or the  taking  of  possession  by, a  receiver,
         custodian,  trustee or  liquidator of itself or of all or a substantial
         part of its property, (ii) make a general assignment for the benefit of
         its creditors, (iii) commence a voluntary case under federal bankruptcy
         laws (as now or hereafter in effect), or (iv) file a

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



         petition  seeking  to take  advantage  of any  other  law  relating  to
         bankruptcy, insolvency,  reorganization,  winding-up, or composition or
         readjustment of debts; or

                           (b) a proceeding or case shall be commenced,  without
         the  application  or consent of the  Borrower in any court of competent
         jurisdiction, seeking (i) its liquidation, reorganization,  dissolution
         or winding-up,  or the composition or  readjustment of its debts,  (ii)
         the appointment of a trustee,  receiver,  custodian,  liquidator or the
         like of the Borrower or of all or any substantial part of its assets or
         (iii) similar  relief in respect of the Borrower under any law relating
         to bankruptcy, insolvency,  reorganization,  winding-up, or composition
         or adjustment  of debts,  and such  proceeding  or case shall  continue
         undismissed,  or an order, judgment or decree approving or ordering any
         of the foregoing shall be entered and continue  unstayed and in effect,
         for a period of 60 or more  days;  or an order for relief  against  the
         Borrower  shall  be  entered  in  an  involuntary  case  under  federal
         bankruptcy laws (as now or hereafter in effect); or

                           (c)      all of the Licensing  Agreements  shall have
         been terminated as a result of the default of the Project Companies; or

                           (d) the Borrower does not apply the Released  Amounts
         to repay the Loan and interest thereon.

         5.2      Remedies.

                  (a) If any Event of Default as  described in Section 5.1 above
has  occurred  and is  continuing  the  Lender's  obligation  to  make  Advances
hereunder shall be suspended until such Event of Default is cured.

                  (b) If, at any time,  an Event of Default  shall have occurred
and be continuing, then the Lender may, without accelerating the maturity of the
loan or taking  any  action to  realize  payment  from any  sources  other  than
Released  Amounts,  take such actions and seek such remedies as may be available
at law or in equity to enforce the Borrower's obligations hereunder.

         Section 6.  Certain Covenants.

         6.1 Covenant of  Borrower.  The  Borrower  covenants  that it will not,
without the prior written  consent of the Lender,  permit the General Partner to
agree to amend Section 5.12 of the  Partnership  Agreement if the effect thereof
would be to expand the  purposes to which  amounts in the G P's Special  Reserve
would be applied.

         6.2      Covenant of Lender.  The  Lender  covenants  that  it will not
without the prior written consent of the Borrower, amend the

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



Carbon  Resources  Loan  Agreement or grant any waivers  thereunder  unless this
Agreement is being  amended  contemporaneously  in the same manner or unless the
same waiver is contemporaneously granted hereunder.

         Section 7.  Amendments and Miscellaneous.

         7.1 Amendments in Writing.  The provisions of this Agreement may not be
waived,  altered,  modified,  amended,  supplemented or terminated in any manner
whatsoever except by written instrument signed by the parties hereto.

         7.2 Notices. All notices,  requests,  consents,  approvals,  elections,
demands  and other  communications  required  or  permitted  under the terms and
provisions hereof shall, unless otherwise specified, be in writing, and shall be
given in person or by means of  registered or certified  mail or by courier,  in
each case  addressed to the parties at the following  addresses or at such other
address as each party may  specify in writing to the other  parties  hereto from
time to time:

Borrower:         C.C. Pace Capital, L.L.C.
                  4401 Fair Lakes Court, Suite 400
                  Fairfax, Virginia  22033
                  Telephone: (703) 818-0022
                  Telecopier: (703) 818-2448

Lender:           Covol Technologies, Inc.
                  3280 North Frontage Road
                  Lehi, Utah  84043
                  Telephone:  (801) 768-4481
                  Telecopier: (801) 768-4483

Any such communication shall become effective upon receipt.

         7.3 Entire Agreement.  This Agreement  constitutes the entire agreement
of the parties  hereto with respect to the subject  matter hereof and supersedes
any prior expressions of intent or  understandings  with respect to such subject
matter.  This  Agreement  may not be altered,  amended,  modified  or  otherwise
changed in any manner whatsoever except by a writing duly executed and delivered
by each of the parties hereto.

         7.4  Severability  of Provisions.  Any provision of this Agreement that
may be determined by competent  authority to be prohibited or  unenforceable  in
any jurisdiction shall not invalidate or render  unenforceable such provision in
any other  jurisdiction.  To the extent permitted by Applicable Law, each of the
parties  hereto  hereby  waives any  provision of law that renders any provision
hereof prohibited or unenforceable in any respect.

         7.5 Limitation of Interest.  Notwithstanding anything in this Agreement
to the contrary, the obligation of the Borrower

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



hereunder to pay interest on the Loan shall be subject to the limitation that no
payment of such  interest  shall be required to the extent that  receipt of such
payment would be contrary to applicable usury laws.

         7.6 GOVERNING LAW;  JURISDICTION.  THIS AGREEMENT  SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA, OTHER
THAN ANY PROVISION  THEREOF THAT WOULD PERMIT OR REQUIRE THE  APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

         THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR  PROCEEDING  RELATING
TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF VIRGINIA,  THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE EASTERN DISTRICT OF VIRGINIA, AND
APPELLATE COURTS FROM ANY THEREOF. EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY
SUCH ACTION OR ANY CLAIM IT MAY HAVE TO FORUM NON CONVENIENS.  EACH PARTY HERETO
AGREES  THAT  SERVICE OF PROCESS IN ANY SUCH ACTION MAY BE EFFECTED BY MAILING A
COPY THEREOF,  REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,  IN THE MANNER SET
FORTH IN SECTION 7.2 HEREOF AND THAT  NOTHING  HEREIN  SHALL AFFECT THE RIGHT OF
EITHER PARTY TO EFFECT  SERVICE OF PROCESS IN ANY OTHER MANNER  PERMITTED BY LAW
OR SHALL LIMIT THE RIGHT OF ANY PARTY TO SUCH IN ANY OTHER JURISDICTION.

         7.7  Successors  and Assigns.  This  Agreement  shall be binding on and
inure  to the  benefit  of each  of the  parties  hereto  and  their  respective
successors and permitted  assigns.  No party hereto may assign any of its rights
or delegate any of its obligations  hereunder  without the prior written consent
of the non-assigning  party,  which consent shall not be unreasonably  withheld,
except that, with notice to but without need for the consent of the other party,
(a) if the Lender assigns all of its rights and obligations  under the Licensing
Agreements,  the Lender shall assign its rights and  obligations  hereunder (and
under the Note) to the entity  that  assumes  all of its rights and  obligations
under the Licensing  Agreements,  and (b) if the Borrower sells or transfers its
membership interest in the General Partner, the Borrower shall assign all of its
rights and obligations  hereunder to the person assuming its membership interest
in the General Partner,  and any such assignee of the Borrower shall (i) execute
and  deliver  to the  Lender a Note in the form of  Exhibit  A hereto  (and upon
receipt  of such Note,  the Lender  shall  cancel the Note of the  Borrower  and
deliver the cancelled Note to the  Borrower),  and (ii) such assignee shall take
such  measures  as may be  necessary  or  appropriate  (or  as  the  Lender  may
reasonably  request)  to  maintain  for the  benefit of the Lender the  security
interest in the Released Amounts.

         7.8  Headings.  The division of this  Agreement  into  sections and the
insertion of headings are for convenience of reference

* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



only and shall not affect the construction or interpretation of this Agreement.

         7.9 Counterpart Execution. This Agreement may be executed in any number
of counterparts and by each of the parties hereto in separate counterparts,  all
such counterparts  together  constituting but one and the same instrument.  This
Agreement shall be effective,  and shall be binding on any party hereto,  on the
date first above written.

         7.10  Limitation of  Liability.  The repayment of the Loan and interest
thereon shall be payable  solely from Released  Amounts and from no other source
and,  in  addition,  in no event  shall  any  member  in the  Borrower,  nor any
Affiliate thereof, nor any officer, director,  employee or agent of any thereof,
nor any holder of any equity interest in the Borrower or any member or Affiliate
thereof,  be personally liable or obligated for such liabilities and obligations
of the Borrower.



                          [REMAINDER OF PAGE IS BLANK]



* This Exhibit contains confidential material which has been omitted pursuant to
a  Confidential  Treatment  Request  and  replaced  by  asterisks.  The  omitted
information  has  been  filed   separately  with  the  Securities  and  Exchange
Commission.

<PAGE>



                  IN  WITNESS  WHEREOF,  each of the  Borrower  and the  Lender,
intending to be legally bound,  has caused this Agreement to be duly executed by
its representative thereunto duly authorized as of the date and year first above
written.


                           C.C. PACE CAPITAL, L.L.C.,
                                                        as Borrower


                                              By:  /s/ James R. Treptow
                                                   -------------------------
                                                   Name:  James R. Treptow
                                                   Title: President



                            COVOL TECHNOLOGIES, INC.,
                                                        as Lender


                                              By: /s/ Alan D. Ayers
                                                 ------------------------- 
                                                 Name:  Alan D. Ayers
                                                 Title: V.P. Administration

<PAGE>



                                                                    EXHIBIT A TO
                                                                  LOAN AGREEMENT

                                 [FORM OF NOTE]

                                 PROMISSORY NOTE


$ *                                                            Fairfax, Virginia
                                                                  April 21, 1998


                  FOR  VALUE  RECEIVED,  the  undersigned,  C.C.  PACE  CAPITAL,
L.L.C.,  a  Delaware  limited  liability   company  (the   "Borrower"),   hereby
unconditionally  promises to pay to the order of COVOL  TECHNOLOGIES,  INC. (the
"Lender"),  located at 3280 North Frontage  Road,  Lehi,  Utah 84043,  in lawful
money of the United States and in  immediately  available  funds,  the principal
amount  of $ *, or,  if less,  the  aggregate  unpaid  principal  amount  of the
Advances in respect of Loan made by the Lender  pursuant  to the Loan  Agreement
(as hereinafter  defined),  which sum shall be due and payable from time to time
in the amounts and on the dates  specified in the Loan  Agreement.  The Borrower
further  agrees to pay  interest  in like money on the unpaid  principal  amount
hereof  from  time  to  time  outstanding  (including  capitalized  interest  as
specified  in  Section  2.6 of the  Loan  Agreement)  as  specified  in the Loan
Agreement.

                  Capitalized  terms used  herein  without  definition  have the
meanings assigned to them in the Loan Agreement.

         The  holder of this  Note is  authorized  to  record,  on the  schedule
annexed hereto and made a part hereof,  or on other  appropriate  records of the
Lender,  the date and amount of each Advance  pursuant to Loan Agreement and the
date and amount of each payment or  prepayment of principal  thereof;  provided,
however,  that  failure by the  Lender to make any  recordation  or other  error
therein  shall not limit or  otherwise  affect the  obligations  of the Borrower
hereunder.

                  This Note is the Note referred to in the Loan Agreement, dated
as of April 21,  1998,  by and between the Lender and the  Borrower (as the same
may  be  amended,  modified  or  supplemented  from  time  to  time,  the  "Loan
Agreement").  This Note is entitled to the benefits of the Loan Agreement.  This
Note is subject to prepayment as provided in the Loan Agreement.

                  The  obligation of the Borrower is absolute and  unconditional
to pay  the  principal  of and  interest  on  this  Note  at the  place,  at the
respective times, and in the currency herein prescribed. The Borrower waives any
and all right to assert any defense (other than performance hereunder), set-off,
counterclaim or crossclaim of any nature whatsoever with respect to this Note or
the obligations of the Borrower hereunder in any action of proceeding brought by
the Lender to collect this Note,  or any portion  hereof.  The  Borrower  waives
presentment,  demand,  notice,  protest  and all other  demands  and  notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.

<PAGE>


                  Recourse for the  liabilities  and obligations of the Borrower
under this Note and the Loan Agreement shall be limited to the Released  Amounts
received by Borrower,  and in no event shall any member in the Borrower, nor any
Affiliate thereof, nor any officer, director,  employee or agent of any thereof,
nor any holder of any equity interest in the Borrower or any member or Affiliate
thereof,  be personally liable or obligated for such liabilities and obligations
of the Borrower.

                  THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND  INTERPRETED
IN ACCORDANCE  WITH, THE LAWS OF THE  COMMONWEALTH  OF VIRGINIA,  WITHOUT GIVING
EFFECT TO ANY PROVISIONS  THEREOF THAT PERMIT OR REQUIRE THE  APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.

                                      C.C. PACE CAPITAL, L.L.C.



                                       By:
                                          ------------------------ 
                                          Name:  James R. Treptow
                                          Title: President

<PAGE>
                                                                   Scheduel 1 to
                                                                 Promissory Note

                       SCHEDULE OF ADVANCED AND REPAYMENTS

                                    Date of           Amount
Date of         Amount of           Repayment         of               Notations
Advance         Advance Made        of Advances       Repayment        Made by
-------         ------------        -----------       ---------        -------

-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----
-------         ------------        -----------       ---------        ---- ----