Note:  This  Exhibit  was  executed in  substantially  the same form for PC West
Virginia  Synthetic  Fuel #1, L.L.C.,  PC West Virginia Fuel #2, L.L.C.,  and PC
West Virginia #3, L.L.C., each a Delaware Limited Liability Company.

                          FORM OF AMENDED AND RESTATED
                      LICENSE AND BINDER PURCHASE AGREEMENT

         THIS AMENDED AND RESTATED  LICENSE AND BINDER  PURCHASE  AGREEMENT (the
"Agreement"),  is made and entered into as of February 3, 1998 by and between PC
Virginia  Synthetic Fuel #1, L.L.C., a  Delaware Limited  Liability Company (the
"Licensee"),   and  Covol  Technologies,   Inc.,  a  Delaware  corporation  (the
"Licensor").


         WHEREAS  Licensor has  represented  that it has developed a proprietary
process to produce synthetic coal fuel extrusions,  pellets, and briquettes from
waste coal dust,  coal fines and other coal  derivatives,  and that Licensor has
sufficient  rights to such  proprietary  process  pursuant to which  Licensor is
entitled to license the coal extruding,  pelletizing, and briquetting technology
to Licensee;

         WHEREAS Licensee has entered into a form of agreement (referred to as a
"Facility  Agreement")  between  itself  as  Owner  and  a  Contractor  for  the
construction of one (1)  agglomeration  facility located near Eckman in McDowell
County,  West Virginia and having  production  design capacity of  approximately
600,000  tons  per  year  (referred  to as the  "Project"  or  "Facility"),  the
reference to production  design  capacity not being intended to limit the actual
production capacity of each Project.

         WHEREAS  Licensor and  Licensee  entered into that Amended and Restated
License and Binder  Purchase  Agreement (the "January  Agreement"),  dated as of
January 21, 1998,  pursuant to which Licensor  granted to Licensee a license for
the coal extruding and briquetting technology in connection with the Project and
agreed to sell to Licensee the  Proprietary  Binder  Material (as defined below)
manufactured by Licensor for use in the operation of the Project.


         WHEREAS  Licensor  and  Licensee  now desire to amend and  restate  the
January Agreement.


* 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>

         NOW, THEREFORE,  in consideration of the foregoing premises, the mutual
covenants  and  agreements  hereinafter  set forth,  and other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Licensor and Licensee  each agree that from and after date hereof,  the Original
License  Agreement and the January  Agreement are hereby amended and restated in
its entirety as follows:

         Section 1.  Definitions.

                  "Applicable  Percentage"  means the Licensor's  Earned Royalty
rate per MM btu as set forth in Section  3.3 divided by the amount of Section 29
Tax Credit per MM btu.

                  "Coal Briquetting Technology" means all intellectual property,
patents   (including  but  not  limited  to  United  States  Patent  Numbers  *,
trademarks,   inventor  certificates  and  applications  therefor,  printed  and
unprinted  technical  data,  know-how,  trade  secrets,   copyrights  and  other
intellectual  property  rights,  inventions,  discoveries,   techniques,  works,
processes,   methods,   plans,   software,   designs,   drawings,    schematics,
specifications,   communications   protocols,   source  and   object   code  and
modifications,  test procedures, program cards, tapes, disks, algorithms and all
other scientific or technical information in whatever form relating to, embodied
in or used in the proprietary process to produce synthetic coal fuel extrusions,
pellets and briquettes  from waste coal dust,  coal fines and other similar coal
derivatives, including all such information in existence as of December 31, 1996
as well as related information later developed by Licensor;  provided,  however,
that the  defined  term "Coal  Briquetting  Technology"  shall not  include  the
proprietary  process developed by Licensor to produce synthetic coke extrusions,
pellets  and  briquettes  from  coke  breeze,  iron  revert  materials,  or  any
technology  for other than the  processing and production of synthetic coal fuel
extrusions,  pellets,  and briquettes.  Nothing in this Agreement is intended to
grant to Licensee the right to apply the Coal Briquetting  Technology to produce
anything  other than  synthetic coal fuel  extrusions,  pellets,  and briquettes
intended to qualify for Tax Credits  under  Section  29(c)1(C)  of the  Internal
Revenue Code,  but the failure of the synthetic coal fuel  extrusions,  pellets,
and briquettes to so qualify  (including  without  limitation as a result of the
repeal of Section 29) shall not affect the grant of the license hereby.

                  "CoBon" means CoBon Energy, L.L.C.


* 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>


                  "Contractor" has the meaning set forth in the preamble.

                  "Developed Technology" means any inventions, or new technology
that  Licensor or  Licensee  may make,  invent,  or suggest  utilizing  the Coal
Briquetting  Technology.  "Developed  Technology"  also means any  "Improvement"
directly  related to the Coal  Briquetting  Technology that Licensor or Licensee
may make, invent or suggest during the term of this Agreement.

                  "Earned Royalty" has the meaning set forth in Section 3.3.

                  "Effective  Date" means the  date of  this Agreement set forth
above.

                  "Facility"  has the  meaning  set forth in the  preamble,  and
includes  any  replacement  facility so long as the facility  being  replaced no
longer produces the Product.

                  "Facility  Agreement"  has  the   meaning  set  forth  in  the
preamble.

                  "Improvement"  means an alteration or addition to an invention
or discovery which enhances,  to some extent,  performance or economics  without
changing or destroying a product's,  device's,  or method's  basic  identity and
essential  character.  An Improvement  may comprise  alterations or additions to
either patented or unpatented inventions,  discoveries,  technology, or devices,
and may or may not be patentable.

                  "Initial Royalty" has the meaning set forth in Section 3.2.

                  "IRS" means the Internal Revenue Service.

                  "Licensee" has the meaning set forth in the preamble. The term
"Licensee"  shall  also apply to any  successor  entity or  permitted  assign of
Licensee.

                  "Licensor" has the meaning set forth in the preamble. The term
"Licensor"  shall  also apply to any  successor  entity or  permitted  assign of
Licensor.

                  "Partnership" means  Pace Carbon Synfuels  Investors,  L.P., a
Delaware limited partnership, which is the parent of Licensee 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.

<PAGE>


is comprised of a general partner and multiple  limited  partners,  individually
"Partner" or collectively the "Partners."

                  "Product"  means  coal-based  synthetic  fuel  produced at the
Facility utilizing the Coal Briquetting Technology.

                  "Project" has the meaning set forth in the preamble.

                  "Proprietary  Binder  Material" means and refers to the binder
compound  necessary  for  the  production,   by  Licensee,   of  synthetic  coal
extrusions,  pellets and briquettes,  which extrusions,  pellets, and briquettes
are reasonably expected to constitute "qualified fuels" pursuant to the terms of
Section  29(c)(1)(C)  of the  Internal  Revenue  Code and with  respect to which
Section 29 is  applicable  pursuant to Section  29(f) and 29(g) of the  Internal
Revenue  Code.  The  binder  material  shall  conform  in  quality to the binder
described  in  Licensor's  Section 29 Tax Credit  Private  Letter  Ruling  dated
September 6, 1995,  subject to any improvement in the binder material that still
satisfies  the  Section 29 Tax Credit  qualification  requirements.  The parties
acknowledge  that the  Proprietary  Binder  Material is not a staple  article of
commerce suitable for substantial non-infringing uses, but rather is an integral
and inseparable part of the Coal Briquetting Technology.

                  "Royalty" means the Initial Royalty and the Earned Royalty.

                  "Tax Credit" means tax credit for federal  income tax purposes
pursuant to Section 29 of the Internal Revenue Code, as amended.

                  "Yearly  Period"  means the twelve month  period  beginning on
October 15th of each calendar year.

         Section 2.  License Grant.

                  2.1.  General.  Subject  to the terms and  conditions  of this
Agreement,  Licensor  hereby  grants to  Licensee,  for the full and entire term
hereof,  a  non-exclusive  license to use the Coal  Briquetting  Technology  for
commercial  exploitation (and not for research development purposes),  including
the  non-exclusive  right to make, have made, or use at the Facility and to sell
or  otherwise  transfer  products  which  have been  manufactured  with the Coal
Briquetting  Technology.  The  license  granted  hereunder  applies  only to the
Facility, but Licensee may use, sell and otherwise transfer

* 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>


products which have been  manufactured at the Facility with the Coal Briquetting
Technology at any other  facility.  Licensee hereby agrees to make and have made
products using the Coal  Briquetting  Technology at the Facility only under this
License Agreement.  Licensee shall not make or have made products using the Coal
Briquetting Technology except at the Facility. Licensee shall not have the right
to sublicense the Coal Briquetting Technology.  Licensee may propose the general
location for additional facilities to use the Coal Briquetting  Technology,  and
Licensor will then have thirty (30) days to approve or disapprove of the general
area of each such additional facility,  which approval shall not unreasonably be
withheld,  taking into account other facilities in the area utilizing Licensor's
technology,  any noncompetition  agreements, and like factors; provided that the
following  sites are  approved  and not  subject  to the  30-day  review of this
Section 2.1; location near Eckman in McDowell County, West Virginia.

                  2.2.  Know-How and  Assistance.  To enable Licensee to benefit
fully  from the  license  of the Coal  Briquetting  Technology,  Licensor  shall
provide    reasonable   access   to   documentation,    drawings,    engineering
specifications,  operating  facilities under its control,  and other know-how in
its possession  that Licensee  reasonably  requires to carry out the purposes of
this  Agreement;  reasonable  access to its employees or agents who are familiar
with the Coal  Briquetting  Technology and  Improvements to the Coal Briquetting
Technology;  technical advice with regard to the Coal Briquetting  Technology as
is reasonably  requested by Licensee;  and assistance in accumulating  the data,
technical  descriptions,  test results,  etc.,  necessary to apply for a Private
Letter Ruling from the Internal Revenue Service regarding the production for the
Facility  as  qualifying  for  Section  29 Tax  Credit.  Licensor  shall  not be
obligated to provide Licensee with  documentation and other forms of information
Licensor  reasonably  deems  unnecessary  to  carry  out  the  purposes  of this
Agreement.

                  2.3. Developed  Technology.  Licensee shall have the right and
is hereby  granted  a  non-exclusive  license  to use all  Developed  Technology
relating to the Coal  Briquetting  Technology  without payment of any additional
compensation to Licensor,  throughout the term of this Agreement, subject to the
restrictions  and limitations in this Section 2. All Developed  Technology shall
become Licensor's absolute property.  Licensee shall at any time during the term
of this Agreement and thereafter,  at Licensor's reasonable request, execute any
patent papers covering such Developed  Technology as well as any other documents
that Licensor may consider necessary or helpful in the prosecution of

* 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>



applications  for a patent  thereon  or in  connection  with any  litigation  or
controversy related thereto;  provided,  however,  that all expenses incident to
the filing of such  applications and the prosecution  thereof and the conduct of
such litigation shall be borne by Licensor.

                  2.4.  Exclusive  Technology.  Licensee  agrees to use only the
Coal Briquetting  Technology at the Facility and not to use any other technology
for the  production of solid  synthetic fuel intended to qualify for Tax Credits
under  Section  29(c)(1)(C)  of the  Internal  Revenue  Code  at  the  Facility;
provided,  however, that if notwithstanding  Licensee's  commercially reasonable
efforts to use the Coal  Briquetting  Technology  or Developed  Technology,  the
Facility fails to produce qualifying synthetic fuel under Section 29(c)(1)(C) of
the Internal Revenue Code that can be sold to unrelated  parties as set forth in
Licensor's  Private  Letter  Ruling  dated  September  8,  1995 and Pace  Carbon
Synfuels  Investors,  L.P.  Private Letter Ruling dated  November 7, 1997,  then
Licensee may use an alternative technology at the Facility to produce qualifying
synthetic fuel under Section 29. In the event of any federal income tax audit of
the Licensee or its parent, or subsequent contest thereof, the Licensee's parent
will (i) keep the Licensor and, if requested in writing by Licensor, tax counsel
to  Licensor  (whose  expense  shall be borne  solely by  Licensor),  reasonably
informed  as to the  progress of such audit or  contest;  (ii) give  Licensor an
opportunity  to review and  comment in advance on all  written  submissions  and
filings  relevant to issues raised in such audit or contest;  and (iii) consider
in good faith any suggestions  made by Licensor or its counsel about the conduct
of such audit or contest; provided, however, that Licensee's parent shall retain
full control over the conduct of such audit  including  whether and in what form
to contest any proposed adjustment.

                  2.5.  Non-licensed  Technology.  Licensor retains the absolute
right to fully exploit its proprietary  technology and processes,  including but
not  limited  to the  application  of  such  technology  embodied  in  the  Coal
Briquetting  Technology  together  with any  improvements  thereto,  to produce,
market and use synthetic coke  extrusions,  pellets,  and  briquettes  from coke
breeze,  iron revert  materials,  and any other  materials  to which  Licensor's
technology can be applied.

                  2.6.  Confidentiality.  Each of the  parties  hereby  agree to
maintain  the Coal  Briquetting  Technology  confidential  and not to  disclose,
publish,  or disseminate in any manner the Coal Briquetting  Technology,  or any
aspect thereof, or the Improvements,  or any aspect thereof  (collectively,  the
"Confidential

* 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>



Information").  Notwithstanding  the  foregoing,  information  which  (i)  is or
becomes  generally  available  to  the  public  other  than  as a  result  of an
unauthorized  disclosure by the parties or their respective  agents,  employees,
directors  or  representatives,  (ii)  was  available  to  the  party  receiving
disclosure  on a  non-confidential  basis  prior  to  its  receiving  disclosure
hereunder, (iii) lawfully becomes available to the party receiving disclosure on
a non-confidential basis from a third party source (provided that such source is
not known by the party receiving disclosure or its agents, employees,  directors
or representatives to be prohibited from transmitting the information),  or (iv)
is disclosed  under  requirement  of law,  provided  that all  reasonable  legal
remedies  are  pursued  to  maintain  the  confidentiality  of the  Confidential
Information,  shall not be subject to the terms of this  Section 2.6. Any breach
of this Section 2.6 will be subject to all legal remedies, and in addition, this
Section 2.6 is specifically  enforceable by temporary restraining order or other
injunctive  relief.  At the  termination  of this  Agreement,  all copies of any
Confidential Information (including without limitation any reports or memoranda)
shall be returned by the party receiving  disclosure.  Nothing in this Agreement
shall prohibit  Licensee from disclosing the Confidential  Information to others
as may be reasonably  necessary for Licensee to exploit  Licensee's rights under
this Agreement, provided that the recipient of any such Confidential Information
executes a  Confidentiality  Agreement  restricting  further  disclosure  of the
Confidential Information.

         Section 3.  License Fee and Royalty.

                  3.1. License Fee.  Licensee shall pay the Initial Royalty  and
Earned Royalty as a license fee to Licensor.

                  3.2.  Initial  Royalty.  Licensee shall pay a one-time advance
license fee equal to $ * per ton for each ton of annual production capacity or $
* . Payment of the advance  license fee  described  in this Section 3.2 shall be
due and payable on or before December 31, 1997. If the equity  investor  funding
contemplated  by Licensee occurs after that date, the monies due will be paid at
financial closing for such funding, but not later than February 6, 1998.

                  3.3. Earned Royalty.  Licensee shall pay to Licensor quarterly
earned royalty payments ("Earned  Royalty") in an amount equal to the product of
(a)(i) $ * , for each ton of Product  qualifying  for the  Section 29 Tax Credit
that was sold by Licensee during the immediately preceding quarter up to a total
of * tons

* 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 the then current Yearly Period,  and (ii) after * tons of Product  qualifying
for the Section 29 Tax Credit have been sold in the then-current  Yearly Period,
$ * for each ton of such Product  qualifying  for the Section 29 Tax Credit that
was sold by Licensee during the immediately preceding quarter, multiplied by (b)
the MM btu content per ton of such  Product.  Beginning on January 1, 1997,  and
each year  thereafter,  the amounts in clause (a) above shall be adjusted by the
percentage increase or decrease in the dollar amount of the inflation adjustment
as provided in Section 29 of the Internal Revenue Code.

                  3.4.  Payment  Terms.  Earned  Royalty  payments  shall be due
within * days after  Licensee  (or its  parent)  receives  its  payment  for the
corresponding  period,  but no later than * days after the end of the quarter to
which payment  relates;  provided,  however,  that such payment shall not be due
until any disputes  among the partners of  Licensee's  parent (or of  Licensee's
parent and Pace Carbon  Synfuels  L.L.C.) have been  resolved as provided in the
agreements  among such parties.  Payments  shall be made by Licensee to Licensor
and shall be deemed to be paid upon receipt by Licensor.  Payments after the due
date shall accrue interest at the rate of one percent per month.

                  3.5 *



         Section 4.  Sales of Binder.

                  4.1. Sale and Purchase.  Licensor shall sell to Licensee,  and
Licensee shall purchase from Licensor,  Licensee's  requirements  of Proprietary
Binder  Material  required to operate the Project.  Licensor  shall  deliver the
Proprietary  Binder  Material at such times and in such  amounts as requested by
Licensee.  Payments for Proprietary Binder Material delivered by Licensor during
any  calendar  month  shall be due and  payable  to  Licensor  on the  fifteenth
Business Day of the immediately  succeeding month. Payments after the applicable
due dates shall accrue interest at the rate of one percent per month.

                  4.2.  Price.  The  price  which  Licensee  shall  pay  for the
Proprietary Binder Material delivered by Licensor during any calendar year shall
be an amount equal to (i) Licensor's  direct and actual costs (direct  material,
labor, and transportation costs) and a percentage of the total overhead costs of
Licensor reasonably

* 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>



reflecting the ratio of the administrative costs incurred in connection with the
manufacture and sale of the Proprietary Binder Material plus (ii) $ * per ton of
synthetic fuel product  (assuming a 2% Proprietary  Binder  Material) or $ * per
ton of  synthetic  fuel product  (assuming a 4%  Proprietary  Binder  Material).
Exclusive  of  transportation  costs  which may vary  because of  distances  and
available  rates,  in no event  shall the amount in clause (i) above  exceed the
costs charged to third parties by Licensor for the Proprietary  Binder Material,
except Savage  Industries.  As of the date first above written,  the total price
based upon the information  known to Licensor is estimated to be $ * per ton for
the 2% Proprietary  Binder  Material and $ * per ton for 4%  Proprietary  Binder
Material produced at the Facility.

                  4.3.  Representations  and  Warranties,  Certain  Covenants of
Licensor.  Licensor represents, warrants and covenants to Licensee as follows:

                  (a)  Licensor  shall  convey  to  Licensee  good  title to all
         Proprietary   Binder  Material  purchased  by  Licensee  from  Licensor
         hereunder, free and clear of any and all liens, claims and encumbrances
         of any type whatsoever.

                  (b) No Proprietary Binder Material shall contain any hazardous
         material in  violation of currently  applicable  laws and  governmental
         regulations.

                  (c) At Licensee's  option,  Licensor shall replace,  or refund
         the purchase of, all non-conforming Proprietary Binder Material.

                  (d) There will be available at the Facility  from time to time
         as  reasonably  requested  by  Licensee  sufficient  quantities  of the
         Proprietary  Binder Material to supply the requirements of the Licensee
         for the  production  of up to * tons of Product  per year from the date
         hereof until at least December 31, 2007.

                  (e) The  Proprietary  Binder  Material  may be  produced  from
         acrylonitrile and polyvinyl alcohol; other monomers, including, but not
         limited  to,  the  ETG-400  mix of  monomers,  may be  substituted  for
         acrylonitrile  and polyvinyl  alcohol,  to produce  Proprietary  Binder
         Material   that  will   achieve  the  same   reaction   and   resulting
         polymerization   pursuant  to  Licensor's   patented  Coal  Briquetting
         Technology, that will achieve the same significant chemical change, and
         that will result in an

* 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>



         end  product   chemically   indistinguishable   other  than  for  trace
         substances  that have an immaterial  effect on the net change,  in each
         case compared to an end product that is produced using the  Proprietary
         Binder  Material  incorporating  acrylonitrile  and polyvinyl  alcohol.
         Prior to and as a condition to substituting  other monomers (except for
         ETG 400) for  acrylonitrile  and polyvinyl  alcohol,  the Licensor will
         provide to the Licensee a written report of Craig N. Eatough, Ph.D., or
         another third party fuels expert reasonably  acceptable to the Licensor
         and  Licensee  to the effect that (in such third  party's  professional
         judgment)  the monomers so to be  substituted  will achieve the results
         set forth in the first sentence of this Section 4.3(e).

                  4.4.  Order  Procedure.  Licensee  shall  deliver all purchase
orders for Proprietary  Binder Materials at least thirty (30) days in advance of
the first day of the month in which delivery of such Proprietary Binder Material
is required under such purchase order,  and all such purchase orders received by
Licensor during the term of this Agreement shall be deemed to have been accepted
by Licensor. (For example,  Licensee shall deliver a purchase order for December
delivery  by no later than  November  1st).  Each such  purchase  order shall be
delivered  either (i) in writing,  or (ii) orally by telephone by an  authorized
agent of  Licensee  (subject to the  condition  that it is followed by a written
purchase order within 24 hours).  Such purchase orders shall be sent to Licensor
at such address as Licensor shall direct.

                  4.5. Delivery and Acceptance.  All Proprietary Binder Material
purchased  hereunder  shall be delivered  F.O.B.  the Facility.  Licensor  shall
arrange for  transportation of the Proprietary  Binder Material to the Facility.
Licensee  shall  bear the  expense  of  unloading  the  trucks.  The  weight  of
Proprietary Binder Material in each delivery shall be determined by a comparison
of the weight, on Licensee's  scales, of the delivery truck immediately prior to
unloading and its weight, on Licensee's scales, immediately following unloading,
as reflected in  customary  weighing  certificates.  At  Licensor's  request and
expense from time to time,  Licensor shall have the right to inspect  Licensee's
scales for  accuracy.  Licensee  shall have a reasonable  opportunity  to sample
Proprietary  Binder  Material  delivered  to it  hereunder  to confirm that such
Proprietary  Binder Material conforms to the terms and requirements  hereof, and
Licensee shall not be deemed or required to accept any such  Proprietary  Binder
Material prior to the completion of such sampling.


* 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>

                  4.6.  Binder  Technology  License.  If  Licensor's  ability to
deliver  the  Proprietary  Binder  Material to  Licensee  will or is  reasonably
expected by Licensor to be interrupted  or terminated  for any reason,  Licensor
shall give not less than ninety (90) days notice to Licensee.  Subject to giving
notice of its inability to deliver the  Proprietary  Binder Material to Licensee
(or,  in the  absence  of  such  notice,  the  actual  failure  to  deliver  the
Proprietary  Binder  Material for at least ten days after Licensee gives written
notice of  non-delivery  to  Licensor),  Licensor  hereby  grants to  Licensee a
nonexclusive  license for the term of this  Agreement (or such shorter period as
provided in the proviso  hereto) to use the technology  used to manufacture  the
Proprietary  Binder Material to manufacture  the Proprietary  Binder Material in
sufficient  quantities  to operate  the  Project up to full  capacity,  and such
technology  shall be deemed "Coal  Briquetting  Technology"  for the purposes of
this Agreement;  provided,  however,  that the license granted to Licensee under
this Section shall cease (subject to reinstatement  upon the reoccurrence of the
events  contemplated  above) and sales of Proprietary  Binder Material under the
terms of this Agreement  shall be  reinstated,  in each case, on a date not less
than ninety (90) days after  Licensor  gives notice to Licensee,  together  with
reasonably   satisfactory   evidence  that  Licensor  is  able  to  deliver  the
Proprietary Binder Material in accordance with this Agreement. No additional fee
or royalty shall be payable to Licensor in connection  with the license  granted
pursuant to this Section and Licensee  shall be  responsible  for its own direct
out-of-pocket  operating  costs  incurred in connection  with the  production of
Proprietary Binder Material pursuant to this Section.
 *. Such trustee shall agree to provide the formula to Licensee upon  Licensee's
certifying  to the trustee  that  Licensee has a right of access to such formula
pursuant to this  Section 4.  Licensor and  Licensee  shall  cooperate to put in
place any necessary  agreement  (including without limitation a trust agreement)
to effect the foregoing  safety deposit and trustee  arrangement.  Except to the
extent required by law,  Licensee  covenants to hold the formula delivered to it
by the trustee pursuant to the preceding sentence strictly confidential, and not
to study,  utilize,  remove,  or to access the formula except in accordance with
the license granted to Licensee pursuant to this Agreement.

         Section 5.  Records;  Inspection;  Confidentiality.  Each party  hereto
shall keep accurate  records  containing  all data  reasonably  required for the
computation and verification of the amounts to be paid by the respective parties
under  this  Agreement,  and shall  permit  each other  party or an  independent
accounting  firm  designated  by such other party to inspect  and/or  audit such
records

* 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>


during normal  business  hours upon  reasonable  advance  notice.  All costs and
expenses  incurred by a party in connection with such inspection  shall be borne
by it.  Each  party  agrees  to hold  confidential  from all third  parties  all
information contained in records examined by or on behalf of it pursuant to this
Section 5.

         Section 6.  Development and Construction of Facilities.

                  6.1. Assistance from Licensor.  Upon the reasonable request of
Licensee,  Licensor  agrees  to  provide  assistance  from  time  to time in the
development and construction of the Facility.

                  6.2.  Reimbursement of Expenses.  Licensee shall reimburse the
travel and other  similar  out-of-pocket  expenses  of  Licensor  in  performing
services requested under Section 6.1 hereof;  provided,  however,  that Licensor
shall  obtain the prior  written  approval of Licensee for any  expenditures  in
excess of $5,000.

         Section 7.  Infringement.  If during the term of this Agreement a third
party has infringed any  intellectual  property rights  associated with the Coal
Briquetting  Technology  or  otherwise   misappropriated  any  Coal  Briquetting
Technology,  Licensor  may, at Licensor's  expense,  institute and conduct legal
actions  against such third party or to enter into such  agreements or accord in
settlement as are deemed  appropriate by Licensor,  in which case Licensor shall
be entitled to any sums recovered from third parties.

         Section 8.  Representations and Warranties.

                  8.1.  Authority.  Each of Licensee and Licensor represents and
warrants that (i) the execution,  delivery and performance of this Agreement and
the  consummation  of  the  transactions  contemplated  hereby  have  been  duly
authorized on its behalf by all requisite action,  corporate or otherwise,  (ii)
it has the full right,  power and authority to enter into this  Agreement and to
carry out the terms of this Agreement,  (iii) it has duly executed and delivered
this Agreement,  and (iv) this Agreement is a valid and binding obligation of it
enforceable in accordance with its terms.

                  8.2. No Consent.  Each of Licensee and Licensor represents and
warrants  that  no  approval,  consent,  authorization,  order,  designation  or
declaration  of any court or regulatory  authority or  governmental  body or any
third-party is required to be obtained by it, nor is any filing or  registration
required to be

* 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>


made therewith by it for the consummation by it of the transactions contemplated
under this Agreement.

                  8.3. Intellectual  Property Matters.  Licensor warrants to its
best knowledge and good faith belief that (i) Licensor  owns,  free and clear of
all liens and encumbrances,  intellectual  property,  patents (including but not
limited  to  United  States   Patent   Numbers  *  ),   trademarks,   inventor's
certificates,  and applications therefor,  printed and unprinted technical data,
know-how,  trade secrets,  copyrights  and other  intellectual  property  rights
inventions, discoveries, techniques, works, processes, methods, plans, software,
designs, drawings, schematics, specifications,  communications protocols, source
and object code and modifications, test procedures, program cards, tapes, disks,
algorithms  and all other  scientific or technical  information in whatever form
relating to, embodied in or used in the proprietary process to produce synthetic
coal fuel extrusions,  pellets,  and briquettes from waste coal dust, coal fines
and other  similar  coal  derivatives,  and,  the right to freely use,  sell and
exploit  Proprietary  Binder Material used in manufacturing  synthetic coal fuel
extrusions,  pellets,  and briquettes from waste coal dust, coal fines and other
similar  coal  derivatives,  (ii)  Licensor  has the right and power to grant to
Licensee the licenses  granted herein,  (iii) Licensor has not made and will not
make any agreement with another in conflict with the rights granted herein,  and
(iv) the  grant or sale to  Licensee,  and the use by  Licensee  of the  rights,
Proprietary  Binder Material  and/or licenses  granted herein as contemplated by
this Agreement will not infringe any third-party's intellectual property rights.
Licensor  represents  and  warrants  that  valid  technical  information  exists
establishing that the 2% Proprietary Binder Material works successfully with the
Coal Briquetting  Technology using Eastern sub-bituminous coal fines producing a
commercially  acceptable synthetic coal extrusion,  pellet or briquette and that
use of the 2% Proprietary  Binder Material with the Coal Briquetting  Technology
is consistent with the Private Letter Ruling,  dated September 6, 1995, received
by Licensor from the Internal Revenue Service that the production using the Coal
Briquetting Technology qualifies for the Section 29 Tax Credit.

                  8.4. Indemnification.  Each party shall indemnify,  defend and
hold harmless the other and its partners, members, directors,  officers, agents,
representatives,  subsidiaries  and  affiliates  from  and  against  any and all
claims,  demands or suits (by any party,  including  any  governmental  entity),
losses, liabilities, damages, obligations, payments, costs and expenses

* 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>



(including  the costs and  expenses of  defending  any and all  actions,  suits,
proceedings,  demands and assessments which shall include reasonable  attorneys'
fees and court costs)  resulting from,  relating to, arising out of, or incurred
in  connection  with  any  breach  by  the  indemnifying  party  of  any  of the
representations,  warranties  and/or  covenants  contained  in  this  Agreement.
Licensor  shall  take  all  reasonable  action  necessary  to  defend  the  Coal
Briquetting Technology against claims from third parties.

         Section 9. Term. This Agreement and the license granted hereunder shall
be for the primary term from December 31, 1996 to and including January 1, 2008,
or the  corresponding  date under  Section 29 of the Internal  Revenue  Code, as
amended,  in the event of an extension of the Tax Credit available under Section
29 of the Internal Revenue Code, as amended,  whichever is later. Licensee shall
have the right to renew this  Agreement  upon terms that the  Parties  may later
agree.

         Section 10. Waiver. The failure of any party to enforce at any time any
provision of this Agreement shall not be construed as a waiver of such provision
or the right  thereafter to enforce each and every  provision.  No waiver by any
party, either express or implied, of any breach of any of the provisions of this
Agreement  shall be  construed  as a waiver of any other  breach of such term or
condition.

         Section 11.  Severability.  If any provision of this Agreement shall be
held by a court of competent  jurisdiction to be invalid or unenforceable in any
respect for any reason, the validity and enforceability of any such provision in
any other respect and of the remaining provisions of this Agreement shall not be
in any way impaired.

         Section 12.  Notices.  All notices  required or  permitted  to be given
under this Agreement shall be in writing.  Notices may be served by certified or
registered mail, postage paid with return receipt requested; by private courier,
prepaid;  by telex,  facsimile,  or other  telecommunication  device  capable of
transmitting or creating a written record;  or personally.  Mailed notices shall
be deemed  delivered  five days after  mailing,  property  addressed.  Couriered
notices  shall be  deemed  delivered  when  delivered  as  addressed,  or if the
addressee refuses  delivery,  when presented for delivery  notwithstanding  such
refusal.  Telex or  telecommunicated  notices  shall be  deemed  delivered  when
receipt is either confirmed by confirming transmission equipment or acknowledged
by the addressee or its office. Personal delivery

* 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>



shall be  effective  when  accomplished.  Unless a party  changes its address by
giving notice to the other party as provided herein,  notices shall be delivered
to the parties at the following address:


         Licensor:                 Covol Technologies, Inc.
                                   3280 North Frontage Road
                                   Lehi, Utah  84043
                                   Telephone:  (801) 768-4481
                                   Telecopier:  (801) 768-4483
                                   Attn.:  Mr. Brent M. Cook

         With a copy to:           Ballard, Spahr, Andrews & Ingersoll
                                   201 South Main Street, Suite 1200
                                   Salt Lake City, Utah  84111-2215
                                   Telephone:  (801) 531-3000
                                   Telecopier:  (801) 531-3001
                                   Attn.:  Mr. Tom McGimpsey

         Licensee:                 PC West Virginia Synthetic Fuel #3, L.L.C.
                                   4401 Fair Lakes Court
                                   Suite 400
                                   Fairfax, VA  22033
                                   Telephone:  (703) 818-9100
                                   Telecopier:  (703) 818-9108
                                   Attn.:  Mr. James R. Treptow

         Section 13. Remedies Cumulative. Remedies provided under this Agreement
shall be  cumulative  and in  addition to other  remedies  provided by law or in
equity.

         Section 14. Further  Assurances.  Each party agrees,  at the request of
the other party,  at any time and from time to time,  to execute and deliver all
such further documents,  and to take and to forbear from all such action, as may
be reasonably  necessary or appropriate in order to more  effectively  carry out
the provisions of this Agreement.

         Section 15.  Entire Agreement.   This Agreement constitutes  the entire
agreement of the parties  relating to the subject  matter  hereof.  There are no
promises,  terms,  conditions,  obligations,  or  warranties  other  than  those
contained   herein.   This  Agreement   supersedes  all  prior   communications,
representations, or agreements, verbal or written, among the parties relating to
the subject matter hereof, including the January Agreement. This

* 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>



Agreement may not be amended except in writing signed by the parties.

         Section 16.  Governing  Law.  This  Agreement  shall  be  governed   in
accordance with the laws of the State of Utah, exclusive of its conflict of laws
rules.

         Section 17. Assignment. This Agreement may not be assigned, in whole or
in part, by any party without the written  consent of each of the other parties,
which consent will not be unreasonably  withheld except that (i) Licensor and/or
Licensee  shall have the right to assign its rights and  obligations  under this
Agreement to any entity which is controlled by Licensor or Licensee, as the case
may be, and of which Licensor or Licensee, as the case may be, owns, directly or
indirectly,  at  least  fifty  percent  (50%) of each  class of its  outstanding
securities,  provided  that no such  assignment  shall release  Licensor  and/or
Licensee from its obligations hereunder,  and (ii) Licensee shall have the right
to assign its rights and  obligations to Licensor in connection with any sale by
Licensee of substantially all of the assets of the Project.

         Section 18. Counterparts. This Agreement may be executed in two or more
counterparts,  each which shall be deemed an original, but all of which together
shall constitute one and the same agreement.


* 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>



         Executed by the duly  authorized  representative  of the parties on the
date and year first above written.


LICENSOR                                    WEST VIRGINIA SYNTHETIC FUEL
                                            #3, L.L.C.
                                            by PACE CARBON SYNFUELS, L.L.C.,
                                            a member
                                            by PACE CARBON FUELS, L.L.C.,
                                            its majority member


By:    /s/ Stanley M. Kimball               By: /s/ James R. Treptow
   ----------------------------                ---------------------------
Name:  Stanley M. Kimball                   Name:  James R. Treptow
Title: Chief Financial Officer              Title:    President

* 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.