THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of March 20,
1997,  by and between  Covol  Technologies,  Inc., a Delaware  corporation  (the
"Company"),  and  PacifiCorp  Financial  Services,  Inc., an Oregon  corporation
("PFS").

     WHEREAS  this  Agreement  is made  pursuant  to the  Convertible  Loan  and
Security Agreement,  dated as of the date hereof (the "Loan Agreement"),  by and
between the Company and PFS, whereby the Company has agreed, among other things,
to issue  shares of its Common  Stock,  par value  $.001 per share (the  "Common
Stock"), to PFS upon conversion of indebtedness outstanding thereunder.

     WHEREAS to induce PFS to enter into the Loan  Agreement,  the  Company  has
agreed to provide the registration rights set forth in this Agreement.

     NOW,  THEREFORE,  in  consideration of the foregoing  premises,  the mutual
covenants  and  agreements  hereinafter  set forth,  and other good and valuable
consideration,  the receipt and sufficiency of which is hereby acknowledged, the
Company and PFS agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

     1.1 Certain Definitions. In  this  Agreement,  capitalized  terms and other
defined   terms   described   below  shall  have  the   meanings  set  forth  or
cross-referenced below:

          "Blue Sky Filing" has the meaning set forth in  Section 2.7(a) of this
Agreement.

          "Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.

          "Common Stock" has  the meaning  set forth in the introduction to this
Agreement.

          "Company" has  the meaning  set  forth  in  the  introduction  to this
Agreement.

          "Exchange Act" means the Securities  Exchange Act of 1934, as amended,
or  any  successor  federal  statute,  and  the  rules  and  regulations  of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular  section  therein  shall  include a reference to the  comparable
section, if any, of any such successor federal statute.

<PAGE>
                                                                               2

          "Holder"  means  any  Person  owning  or  having  a right  to  acquire
Registrable  Securities,  including  any  assignee  thereof in  accordance  with
Article VII hereof.

          "Initiating Holders" has  the meaning  set forth  in Section 2.1(a) of
this Agreement.

          "Loan Agreement" has the meaning set forth in the introduction to this
Agreement.

          "Person"  means a  corporation,  an  association,  a  partnership,  an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

          "Registrable  Securities"  means any  shares of  Common  Stock  issued
pursuant to the Loan Agreement, or issued, with respect to such Common Stock, as
a stock  dividend,  stock split or other  distribution  or in connection  with a
combination  of  shares,   recapitalization,   merger,  consolidation  or  other
reorganization or otherwise. As to any particular Registrable  Securities,  once
issued such  securities  shall  cease to be  Registrable  Securities  when (i) a
registration  statement with respect to the sale of such  securities  shall have
become  effective under the Securities Act and such  securities  shall have been
disposed of in accordance with such registration statement, (ii) they shall have
been sold pursuant to Rule 144 (or any successor provision) under the Securities
Act,  (iii)  they  represent  less  than  one  percent  (1%) of the  issued  and
outstanding  Common Stock and they shall be eligible  for sale  pursuant to Rule
144 (or any successor  provision) under the Securities Act, (iv) they shall have
been  otherwise  transferred,  new  certificates  for them not  bearing a legend
restricting  further  transfer  shall have been  delivered  by the  Company  and
subsequent  public  distribution  of them  shall  not  require  registration  or
qualification  of them under the Securities Act or any similar state law then in
force, or (v) they shall have ceased to be outstanding. Calculations of required
percentages of Registrable  Securities  herein shall be determined by the number
of shares of Common Stock  included in, and the number of shares of Common Stock
issuable  with respect to, the  Registrable  Securities  that are the subject of
such calculation.

          "Registration  Expenses" has  the  meaning set forth in Section 2.9 of
this Agreement.

          "Securities Act" means the Securities  Act of 1933, as amended, or any
successor  federal  statute,  and the rules and  regulations  of the  Commission


<PAGE>
                                                                               3

thereunder,  all as the same  shall be in effect at the  time.  References  to a
particular section therein shall include a reference to the comparable  section,
if any, of any such successor federal statute.


                                   ARTICLE II
                     REGISTRATION UNDER SECURITIES ACT, ETC.

     2.1 Demand Registration.

          (a) Request. At any time on or after the date of this Agreement,  upon
the  written  request of the Holder or Holders of at least  twenty-five  percent
(25%) of the Registrable  Securities then outstanding (the "Initiating Holders")
that the Company effect the registration under the Securities Act of all or part
of such Holders'  Registrable  Securities  specifying  the types of  Registrable
Securities to be registered and the intended method of disposition  thereof, the
Company  will give  prompt  written  notice of such  request  to all  registered
Holders of Registrable  Securities,  and thereupon the Company will use its best
efforts to effect the registration under the Securities Act of:

          (i) Registrable  Securities  which the  Company has  been requested to
register by the Initiating Holders, and

          (ii) all  other  Registrable  Securities  which the  Company  has been
requested  to register by written  request of the Holders  thereof  given to the
Company within thirty (30) days after the giving of the aforesaid written notice
by  the  Company   (specifying  the  intended  method  of  disposition  of  such
Registrable  Securities),  all to the extent  requisite  to permit the  intended
disposition of the Registrable Securities to be so registered.

          (b)  Registration  of Other  Securities.  Whenever  the Company  shall
effect  a  registration  pursuant  to this  Section  2.1 in  connection  with an
underwritten  offering,  securities  other than  Registrable  Securities  may be
included among the securities  covered by such registration  unless the managing
underwriter  of such offering  shall in writing have advised the Company and the
Holders  requesting  registration  that the  inclusion of such other  securities
would adversely affect such offering.

          (c) Registration Statement Form. Registrations under this Section 2.1
shall be  o  such appropriate  registration  form of the Commission (i) as shall

<PAGE>
                                                                               4

be  selected  by the  Company  and as  shall  be  reasonably  acceptable  to the
Initiating  Holders and (ii) as shall permit the disposition of such Registrable
Securities  in  accordance  with the intended  method or methods of  disposition
specified in the requests for such  registration.  The Company agrees to include
in any such registration statement all information which, in the opinion of both
counsel to the Initiating Holders and counsel to the Company,  is required to be
included.

          (d)  Effective   Registration   Statement.  A  registration  requested
pursuant to this Section 2.1 shall not be deemed to have been  effected and will
not be  considered  one of the  three  (3)  demand  registrations  which  may be
requested pursuant to this Section 2.1 (i) unless a registration  statement with
respect thereto has become effective,  (ii) if after it has become effective, it
does not remain  effective  for a period of at least sixty (60) days (unless the
Registrable Securities registered thereunder have been sold or disposed of prior
to the  expiration  of such  sixty  (60) day  period)  or such  registration  is
interfered  with by any stop order,  injunction or other order or requirement of
the Commission or other governmental  agency or court for any reason and has not
thereafter become effective,  or (iii) if the conditions to closing specified in
the underwriting agreement entered into in connection with such registration are
not  satisfied  or waived  other  than by reason of the  failure or refusal of a
Holder of  Registrable  Securities  to satisfy or  perform a  condition  to such
closing.

          (e)  Priority  in  Demand  Registrations.  If  a  demand  registration
pursuant to this Section 2.1 involves an underwritten offering, and the managing
underwriter shall advise the Company in writing (with a copy sent to each Holder
of the  Registrable  Securities  requesting  registration)  that the  number  of
securities  requested  to be  included in such  registration  exceeds the number
which  can be sold in such  offering  within  a price  range  acceptable  to the
Initiating  Holders,  such  registration  will  include  only that number of the
Registrable  Securities  which the  Company  is so  advised  can be sold in such
offering,  drawn  pro  rata  from  the  Holders  of the  Registrable  Securities
requesting  such  registration  on the basis of the  percentage  of  Registrable
Securities  held by the Holders of Registrable  Securities  which have requested
that such securities be included.  In connection with any such registration,  no
securities  other  than the  Registrable  Securities  shall be  covered  by such
registration.

<PAGE>
                                                                               5

          (f)  Three  Demand  Registrations.  Demand  registrations  may only be
requested by one or more Holders,  and notwithstanding  anything in this Section
2.1 to the contrary, the Company shall not be required to effect (i) more than a
total of three (3) registrations  pursuant to this Section 2.1 or (ii) more than
one  registration  pursuant to this Section 2.1 in any  consecutive  twelve (12)
month period.

     2.2 Incidental Registration.

          (a) Right to Include the Registrable Securities. Each time the Company
proposes  to  register  any  of  its  securities  under  the  Securities  Act by
registration  on Forms  S-1,  S-2 or S-3 or any  successor  or  similar  form(s)
(except  registrations  on such  Forms  solely  for  registration  of  shares in
connection  with  any  employee  benefit  plan  on Form  S-8 or an  acquisition,
exchange,  merger or consolidation on Form S-4), whether or not for sale for its
own  account,  it  will  give  prompt  written  notice  to  all  Holders  of the
Registrable  Securities of its  intention to do so and of such  Holders'  rights
under this Section 2.2. Upon the written request of any such Holder  (specifying
the  Registrable  Securities  intended  to be disposed of by such Holder and the
intended  method of  disposition  thereof),  made within ten (10) days after the
receipt of any such notice,  the Company will use its best efforts to effect the
registration  under the Securities Act of all Registrable  Securities  which the
Company has been so requested to register by the Holders thereof,  to the extent
requisite to permit the  disposition  (in accordance  with the intended  methods
thereof as aforesaid) of such Registrable Securities to be so registered. If the
Company  thereafter  determines  for any  reason  not to  register  or to  delay
registration of such securities,  the Company may, at its election, give written
notice of such  determination to each Holder of the Registrable  Securities and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of the  obligation to register such  Registrable  Securities in connection  with
such  registration  (but not  from  any  obligation  of the  Company  to pay the
Registration Expenses in connection therewith),  without prejudice,  however, to
the rights (if any) of Holders to request that such  registration be effected as
a  registration  under Section 2.1, and (ii) in the case of a  determination  to
delay  registration,  shall be permitted to delay  registering  any  Registrable
Securities,  for the same  period as the  delay in  registration  of such  other
securities.  No  registration  effected under this Section 2.2 shall relieve the
Company of its obligation to effect any registration  upon request under Section
2.1.

<PAGE>
                                                                               6

          (b) Priority in Incidental  Registrations.  In a registration pursuant
to this Section 2.2  involving an  underwritten  offering of the  securities  so
being registered,  whether or not for sale for the account of the Company, by or
through  one or  more  underwriters  of  recognized  standing,  if the  managing
underwriter  of such  underwritten  offering  shall  inform the  Company and the
Holders of the Registrable  Securities requesting  registration in such offering
by letter of its belief that the number or type of  securities to be included in
such registration  would materially  adversely affect its ability to effect such
offering, then the Company will be required to include in such registration only
that  number and type of  Registrable  Securities  which it is so advised can be
sold in such  offering,  drawn  pro rata  from the  Holders  of the  Registrable
Securities  requesting  such  registration on the basis of the percentage of the
Registrable  Securities held by the Holders of Registrable Securities which have
requested that such securities be included,  without prejudice,  however, to the
rights (if any) of Holders to request  that such  registration  be effected as a
registration under Section 2.1.

     2.3 Registration  Procedures.  In connection with the Company's obligations
pursuant to Sections  2.1 and 2.2 hereof,  the Company  will use best efforts to
effect  such  registrations  to permit  the sale of  Registrable  Securities  in
accordance  with the  intended  method or methods of  disposition  thereof,  and
pursuant thereto the Company will as expeditiously as reasonably possible:

          (a) prepare and file with the Commission,  a registration statement or
registration  statements on any appropriate form under the Securities Act, which
form  shall be  available  for the  sale of the  Registrable  Securities  by the
Holders   thereof  in  accordance   with  the  intended  method  or  methods  of
distribution  thereof,  and use its  best  efforts  to cause  such  registration
statement to become effective and to remain continuously  effective for a period
of sixty (60) days  following the date on which such  registration  statement is
declared effective; provided, however, that the Company shall have no obligation
to maintain the effectiveness of such  registration  statement after the sale of
all Registrable Securities registered thereunder;

          (b)  prepare  and  file  with  the  Commission   such  amendments  and
post-effective  amendments  to a  registration  statement as may be necessary to
keep such registration  statement effective for the applicable period; and cause


<PAGE>
                                                                               7

the related prospectus to be supplemented by any required prospectus supplement,
and as so  supplemented  to be filed  pursuant to Rule 424 under the  Securities
Act;

          (c) notify the  selling  Holders of  Registrable  Securities,  and the
managing  underwriters,  if any, promptly, and (if requested by any such Person)
confirm  such  advice  in  writing,  (i)  when a  prospectus  or any  prospectus
supplement or  post-effective  amendment has been filed,  and, with respect to a
registration statement or any post-effective  amendment when the same has become
effective,  (ii) of any request by the  Commission for amendments or supplements
to a registration statement or related prospectus or for additional information,
(iii) of the  issuance  by the  Commission  of any  stop  order  suspending  the
effectiveness  of a registration  statement or the initiation of any proceedings
for that purpose,  (iv) if at any time the representations and warranties of the
Company  made as  contemplated  by  paragraph  (l)  below  cease  to be true and
correct,  (v) of the receipt by the Company of any notification  with respect to
the suspension of the  qualification  of any of the  Registrable  Securities for
sale in any  jurisdiction or the initiation or threatening of any proceeding for
such purpose,  (vi) of the  happening of any event which  requires the making of
any  changes in a  registration  statement  or related  prospectus  so that such
documents  will not contain any untrue  statement of a material  fact or omit to
state any material fact  required to be stated  therein or necessary to make the
statements  therein  not  misleading  and  (vii)  of  the  Company's  reasonable
determination that a post-effective  amendment to a registration statement would
be appropriate;

          (d) make  every  best  effort to obtain  the  withdrawal  of any order
suspending the effectiveness of a registration  statement, or the lifting of any
suspension of the qualification of any of the Registrable Securities for sale in
any jurisdiction, at the earliest possible moment;

          (e) if  requested  by the  managing  underwriters  or  any  Holder  of
Registrable  Securities being sold in connection with an underwritten  offering,
immediately  incorporate in a prospectus supplement or post-effective  amendment
such  information as the managing  underwriters  and such Holder agree should be
included   therein   relating  to  the  sale  and  distribution  of  Registrable
Securities,  including  information  with  respect to the number of  Registrable
Securities  being  sold to such  underwriters,  the  purchase  price  being paid
therefor  by such  underwriters  and any other terms of the  offering;  make all
required filings of such prospectus  supplement or  post-effective  amendment as
soon as notified of the matters to be incorporated in such prospectus supplement


<PAGE>
                                                                               8

or  post-effective   amendment;   and  supplement  or  make  amendments  to  any
registration  statement relating to the sale and distribution of the Registrable
Securities if requested by any Holder of Registrable  Securities covered by such
registration statement or any underwriter of such Registrable Securities;

          (f) furnish to each selling Holder of Registrable  Securities and each
managing  underwriter,   without  charge,  at  least  one  signed  copy  of  the
registration  statement or statements and any post-effective  amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);

          (g)  deliver  to  each  Holder  of  Registrable   Securities  and  the
underwriters,  if any,  without  charge,  as many  copies of the  prospectus  or
prospectuses  (including  each  preliminary  prospectus)  and any  amendment  or
supplement thereto as such Persons may reasonably request;  the Company consents
to the use of such prospectus or any amendment or supplement  thereto by each of
the selling Holders of Registrable  Securities and the underwriters,  if any, in
connection with the offering and sale of the Registrable  Securities  covered by
such prospectus or any amendment or supplement thereto;

          (h) prior to any public  offering of Registrable  Securities,  use its
best  efforts to register or qualify or  cooperate  with the selling  Holders of
Registrable Securities,  the underwriters,  if any, and their respective counsel
in  connection  with  the  registration  or  qualification  of such  Registrable
Securities  for offer and sale  under  the  securities  or Blue Sky laws of such
jurisdictions  as the  managing  underwriter,  in the  case  of an  underwritten
offering,  or the selling Holder, in the case of any other offering,  reasonably
requests in writing;  keep each such  registration  or  qualification  effective
during the period such  registration  statement is required to be kept effective
and do any and all other  reasonable  acts or things  necessary  or advisable to
enable the  disposition  in such  jurisdictions  of the  Registrable  Securities
covered by the applicable  registration statement;  provided,  however, that the
Company  will  not be  required  to  qualify  generally  to do  business  in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general  service of process in any such  jurisdiction  where it is
not then so subject;

          (i) cooperate with the selling Holders of Registrable Securities and
the managing  underwriters,  if any, to facilitate  the timely  preparation  and
delivery of certificates  representing Registrable Securities to be sold and not


<PAGE>
                                                                               9


bearing any  restrictive  legends unless  required by applicable law; and enable
such Registrable  Securities to be in such  denominations and registered in such
names as the managing  underwriters may request at least two business days prior
to any sale of Registrable Securities to the underwriters;

          (j) use its best efforts to cause the Registrable  Securities  covered
by the applicable  registration  statement to be registered  with or approved by
such other  governmental  agencies or  authorities as may be necessary to enable
the seller or sellers  thereof or the  underwriters,  if any, to consummate  the
disposition of such Registrable Securities;

          (k) upon the occurrence of any event contemplated by paragraph (c)(vi)
above,  prepare a  supplement  or  post-effective  amendment  to the  applicable
registration  statement  or  related  prospectus  or any  document  incorporated
therein by reference or file any other required  document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder,
such prospectus will not contain any untrue statement of a material fact or omit
to state  any  material  fact  necessary  to make  the  statements  therein  not
misleading;

          (l) enter  into such  agreements  and take all such  other  reasonable
actions  in  connection  therewith  in  order  to  expedite  or  facilitate  the
disposition of such Registrable  Securities and in such  connection,  whether or
not  an  underwriting   agreement  is  entered  into  and  whether  or  not  the
registration is an underwritten registration,  (i) make such representations and
warranties  to the Holders of such  Registrable  Securities  with respect to the
registration  statement,  prospectus and documents incorporated by reference, if
any,  in  form,  substance  and  scope as are  customarily  made by  issuers  to
underwriters  in  underwritten  offerings,  and  confirm  the  same if and  when
requested;  (ii)  obtain the  opinions  of counsel to the  Company  and  updates
thereof with respect to the  registration  statement  and the  prospectus in the
form, scope and substance which are customarily made in underwritten  offerings;
(iii)  in the  case of an  underwritten  offering,  enter  into an  underwriting
agreement in form, scope and substance as is customary in underwritten offerings
and obtain opinions of counsel to the Company and updates  thereof  addressed to
each  selling  Holder  and  the  underwriters,  if  any,  covering  the  matters
customarily  covered in opinions  requested in  underwritten  offerings and such
other matters as may be reasonably  requested by such Holders and  underwriters;
(iv)  furnish to each seller of  Registrable  Securities  a signed  counterpart,


<PAGE>
                                                                              10

addressed  to such  seller (and the  underwriters,  if any) of (x) an opinion of
counsel for the Company, dated the effective date of such registration statement
(or, if such registration  includes an underwritten  public offering,  dated the
date of the  closing  under the  underwriting  agreement),  and (y) a  "comfort"
letter,  dated the effective date of such  registration  statement (and, if such
registration  includes an underwritten  public  offering,  dated the date of the
closing under the  underwriting  agreement),  signed by the  independent  public
accountants who have audited the Company's financial statements included in such
registration statement,  covering substantially the same matters with respect to
such  registration  statement (and the prospectus  included  therein) and in the
case of the accountants'  letter,  with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel  and  in  accountants'   letters   delivered  to  the   underwriters  in
underwritten public offerings of securities and, in the case of the accountants'
letter,  such other  financial  matters,  and, in the case of the legal opinion,
such other  legal  matters,  as such  seller (or the  underwriters,  if any) may
reasonably request;  (v) if an underwriting  agreement is entered into, the same
shall set forth in full the  indemnification  and  contribution  provisions  and
procedures  of Section 2.7 hereof with respect to all parties to be  indemnified
pursuant to said section,  with such other provisions regarding  indemnification
and  contribution  as are customary  and  acceptable  to the  underwriters,  the
Holders of a majority of the Registrable  Securities to be sold and the Company;
and (vi) the Company shall deliver such  certificates  of its officers as may be
reasonably requested by the Holders of a majority of the Registrable  Securities
to be sold and the managing  underwriters,  if any, to evidence  compliance with
this clause (l) and with any customary  conditions contained in the underwriting
agreement or other  agreement  entered  into by the Company.  The above shall be
done at each closing under such  underwriting or similar  agreement or as and to
the extent required thereunder;

          (m) otherwise use its best efforts to comply with all applicable rules
and  regulations of the Commission and make generally  available to its security
holders  earnings  statements  satisfying the provisions of Section 11(a) of the
Securities  Act, no later than ninety (90) days after the end of any twelve (12)
month  period  (i)  commencing  at the  end  of  any  fiscal  quarter  in  which
Registrable  Securities  are  sold to  underwriters  in a firm  or best  efforts
underwriting  offering and (ii)  beginning  with the first day of the  Company's
first fiscal quarter next succeeding each sale of Registrable  Securities  after
the effective date of a registration  statement,  which  statements  shall cover
said twelve (12) month periods;

<PAGE>
                                                                              11

          (n) use its best efforts to cause all such  Registrable  Securities to
be listed on each securities  exchange  (including for this purpose the National
Association of Securities Dealers Automated  Quotation System), if any, on which
Registrable Securities of the type then being registered are listed;

          (o) provide and cause to be maintained a transfer  agent and registrar
for all Registrable  Securities covered by such registration  statement from and
after a date not later than the effective date of such  registration  statement;
and

          (p)  cause  its  officers  to  participate  in  such  information  and
marketing  meetings  as the  managing  underwriter,  in case of an  underwritten
offering, or the selling Holders, in the case of any other offering,  reasonably
request.

     Each Holder of Registrable Securities as to which any registration is being
effected shall furnish to the Company in writing such information regarding such
Holder and the  distribution of such  Registrable  Securities as the Company may
from time to time  reasonably  request in  writing  in order to comply  with the
Securities  Act,  which  writing  shall  state  that such  information  is being
provided  specifically  for use in the  preparation of the related  registration
statement. Each Holder of Registrable Securities as to which any registration is
being  effected  agrees to notify the Company as promptly as  practicable of any
inaccuracy or change in information  previously  furnished by such Holder to the
Company or of the happening of any event in either case as a result of which any
prospectus  relating  to such  registration  contains an untrue  statement  of a
material fact  regarding  such Holder or the  distribution  of such  Registrable
Securities  or omits to state any  material  fact  regarding  such Holder or the
distribution  of such  Registrable  Securities  required to be stated therein or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances  then  existing,  and  to  promptly  furnish  to the  Company  any
additional  information  required to correct and update any previously furnished
information  or  required  such that such  prospectus  shall not  contain,  with
respect to such Holder or the  distribution of such Registrable  Securities,  an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements  therein not misleading in
light of the circumstances then existing.

<PAGE>
                                                                              12

     Each Holder of  Registrable  Securities  agrees  that,  upon receipt of any
notice from the Company of the  happening of any event of the kind  described in
Section 2.3(c)(ii), (iii), (v), (vi) or (vii) hereof, such Holder will forthwith
discontinue   disposition  of  such  Registrable   Securities  covered  by  such
registration  statement or prospectus  until such Holder's receipt of the copies
of  the  supplemented  or  amended  prospectus  relating  to  such  registration
statement or  prospectus,  or until it is advised in writing by the Company that
the use of the applicable  prospectus may be resumed, and has received copies of
any additional or  supplemental  filings which are  incorporated by reference in
such Prospectus, and, if so directed by the Company, such Holder will deliver to
the Company (at the Company's  expense) all copies,  other than  permanent  file
copies  then  in  such  Holder's  possession,  of the  prospectus  covering  the
Registrable Securities current at the time of receipt of such notice.

     2.4 Underwritten Offerings.

          (a) Demand  Underwritten  Offerings.  In the event that a registration
pursuant  to  Section  2.1 is for a  registered  public  offering  involving  an
underwriting,  the Company shall so advise each Holder of Registrable Securities
as part of the notice given pursuant to Section 2.1(a). In such event, the right
of any such  Holder  pursuant  to  Section  2.1 shall be  conditioned  upon such
Holder's participation in the underwriting arrangements required by this Section
2.4.

     In any such underwritten offering, sales shall be made through a nationally
recognized  investment banking firm (or syndicate managed by such firm) selected
by the  Initiating  Holders  pursuant to Section 2.1 and approved by the Company
and the  Company  shall  enter into an  underwriting  agreement  as  provided in
Section 2.3(l). The Holders of Registrable  Securities to be distributed by such
underwriters  shall be parties to such underwriting  agreement and may, at their
option,  require that any or all of the  representations  and warranties by, and
the other  agreements on the part of, the Company to and for the benefit of such
underwriters  shall  also be made to and for  the  benefit  of such  Holders  of
Registrable  Securities and that any or all of the  conditions  precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holders of Registrable Securities. Any such
Holder of Registrable  Securities shall be required to make  representations and
warranties to and  agreements  with the Company and the  underwriters  regarding
only  such  Holder,  such  Holder's  Registrable  Securities  and such  Holder's
intended method of distribution and any other representation required by law.

<PAGE>
                                                                              13

          (b)  Incidental  Underwritten  Offerings.  If the  Company at any time
proposes  to  register  any  of  its  securities  under  the  Securities  Act as
contemplated  by Section 2.2 and such  securities  are to be  distributed  by or
through one or more  underwriters,  the Company will, if requested by any Holder
of  Registrable  Securities  as  provided  in  Section  2.2 and  subject  to the
provisions of Section 2.2(b),  use best efforts to arrange for such underwriters
to include all the Registrable  Securities to be offered and sold by such Holder
among the  securities to be  distributed  by such  underwriters.  The Holders of
Registrable  Securities to be distributed by such underwriters  shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option,  require that any or all of the  representations and warranties
by, and the other  agreements on the part of, the Company to and for the benefit
of such  underwriters  shall also be made to and for the benefit of such Holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such Holders of Registrable Securities. Any such
Holder of Registrable  Securities shall be required to make  representations and
warranties to and  agreements  with the Company and the  underwriters  regarding
only  such  Holder,  such  Holder's  Registrable  Securities  and such  Holder's
intended method of distribution and any other representation required by law.

     2.5  Preparation;   Reasonable   Investigation.   In  connection  with  the
preparation and filing of each  registration  statement under the Securities Act
pursuant to this  Agreement,  and upon the request of the Holders of Registrable
Securities  to be  registered  under such  registration  statement  after notice
thereof  by the  Company,  the  Company  will give the  Holders  of  Registrable
Securities  to  be  registered   under  such   registration   statement,   their
underwriters,  and their  respective  counsel and accountants the opportunity to
participate in the preparation of such registration  statement,  each prospectus
included  therein or filed with the  Commission,  and each amendment  thereof or
supplement  thereto,  and will give each of them such  reasonable  access to its
books and records and such  opportunities to discuss the business of the Company
with its officers and the independent  public accountants who have certified its
financial  statements as shall be necessary,  in the reasonable  opinion of such
Holders'  and such  underwriters'  respective  counsel,  to conduct a reasonable
investigation within the meaning of the Securities Act.

<PAGE>
                                                                              14



     2.6  Limitations,   Conditions  and  Qualifications  to  Obligations  Under
Registration  Covenants.  The obligations of the Company to use its best efforts
to cause the  Registrable  Securities to be registered  under the Securities Act
are subject to each of the following limitations, conditions and qualifications:

          (a) The Company shall be entitled to postpone for a reasonable  period
of time (but not exceeding  ninety (90) days) the filing or effectiveness of any
registration  statement  otherwise  required  to be  prepared  and  filed  by it
pursuant to Section 2.1 if the Company determines,  in its reasonable  judgment,
that (i) the Company is in possession of material  information that has not been
disclosed to the public and the Company  reasonably deems it to be advisable not
to disclose such  information at such time in a  registration  statement or (ii)
such  registration  and  offering  would  materially  and  adversely  affect any
financing,  acquisition,  corporate reorganization or other material transaction
involving  the  Company or any of its  Affiliates  (as  defined in the rules and
regulations  adopted under the Exchange Act) and, in any such case,  the Company
promptly gives the requesting  Holders of Registrable  Securities written notice
of such  determination,  containing a general  statement of the reasons for such
postponement and an  approximation of the anticipated  delay or (iii) such other
cause as the Company  shall have been advised by its  investment  banker make it
undesirable or unpracticable to proceed with the offering.  If the Company shall
so postpone the filing of a registration  statement,  the requesting  Holders of
Registrable  Securities  shall  have  the  right to  withdraw  the  request  for
registration  by giving  written  notice to the Company  within thirty (30) days
after  receipt  of the  notice  of  postponement  and,  in  the  event  of  such
withdrawal,  such request  shall not be counted for purposes of the requests for
registration to which Holders are entitled pursuant to Section 2.1 hereof.

          (b) Holders of Registrable Securities shall use all reasonable efforts
to effect as wide a  distribution  of the  Registrable  Securities as reasonably
practicable,  including,  if such  distribution is pursuant to any  underwritten
offering,  using reasonable  efforts to secure the agreement of the underwriters
to the same effect.

          (c) No  Holder  of  Registrable  Securities  may  participate  in  any
underwritten  offering  hereunder  unless  such  Holder  (i) agrees to sell such


<PAGE>
                                                                              15

Holder's  Registrable  Securities  on the  basis  provided  in any  underwriting
arrangements  approved  by  the  persons  entitled  hereunder  to  approve  such
arrangements,  (ii) agrees not to sell  Common  Stock of the Company in a public
offering  for a period of  ninety  (90)  days  after  the date of the  offering,
without the prior consent of the managing underwriter of the offering, and (iii)
completes  and  executes  all  questionnaires,  custody  agreements,  powers  of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements.

     2.7 Indemnification and Contribution.

          (a)  Indemnification by the Company. In the event of a registration of
any Registrable  Securities  under the Securities Act pursuant to this Agreement
at a time that the Holders  own in the  aggregate  (prior to such  registration)
less than twenty-five  (25) percent of outstanding  Common Stock of the Company,
the Company will, and hereby does,  indemnify and hold harmless,  to the fullest
extent  permitted  by  law,  the  Holder  of any  Registrable  Securities  whose
Registrable Securities are covered by such registration statement, its directors
and  officers,  each other  Person who  participates  as an  underwriter  in the
offering or sale of such securities and each other Person,  if any, who controls
such seller or any such  underwriter  within the meaning of the Securities  Act,
against any and all losses, claims, damages,  liabilities and expenses, joint or
several, (or actions or proceedings, whether commenced or threatened, in respect
thereof) to which they or any of them may become  subject  under the  Securities
Act or any other statute or common law,  including any amount paid in settlement
of any litigation,  commenced or threatened, and to reimburse them for any legal
or other expenses  incurred by them in connection with  investigating any claims
and  defending  any  actions,  insofar  as any  such  losses,  claims,  damages,
liabilities,  expenses or actions  arise out of or are based upon (i) any untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in the
registration   statement  relating  to  the  sale  of  such  securities  or  any
post-effective  amendment  thereto or in any filing made in connection  with the
qualification  of the  offering  under  Blue  Sky or  other  securities  laws of
jurisdictions  in which  the  Registrable  Securities  are  offered  ("Blue  Sky
Filing"),  or the omission or alleged  omission to state therein a material fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading  or (ii) any  untrue  statement  or  alleged  untrue  statement  of a
material  fact  contained in any  preliminary  prospectus,  if used prior to the


<PAGE>
                                                                              16

effective  date  of  such  registration  statement  (unless  such  statement  is
corrected  in the final  prospectus  and the  Company has  previously  furnished
copies   thereof  to  the  Holder  of   Registrable   Securities   seeking  such
indemnification and the underwriters),  or contained in the final prospectus (as
amended or  supplemented if the Company shall have filed with the Commission any
amendment thereof or supplement  thereto) if used within the period during which
the  Company  is  required  to keep the  registration  statement  to which  such
prospectus relates current, or the omission or alleged omission to state therein
(if so used) a material fact necessary in order to make the statements  therein,
in light of the  circumstances  under  which  they were  made,  not  misleading;
provided, however, that the indemnification agreement contained herein shall not
(i) apply to such  losses,  claims,  damages,  liabilities,  expenses or actions
arising  out of, or based  upon,  any such untrue  statement  or alleged  untrue
statement,  or any such  omission  or alleged  omission,  if such  statement  or
omission was made in reliance  upon and in conformity  with written  information
furnished to the Company by such seller or such underwriter specifically stating
that it is for use in connection with preparation of the registration statement,
any preliminary  prospectus or final  prospectus  contained in the  registration
statement,  any such  amendment or supplement  thereto or any Blue Sky Filing or
(ii) inure to the  benefit of any  underwriter  or any person  controlling  such
underwriter,  to the extent that any such loss,  claim,  damage,  liability  (or
action or proceeding in respect  thereof) or expense arises out of such person's
failure to send or give a copy of the final prospectus,  as the same may be then
supplemented or amended,  to the person asserting an untrue statement or alleged
untrue  statement  or  omission  or alleged  omission at or prior to the written
confirmation  of the  sale of  Registrable  Securities  to such  person  if such
statement or omission was corrected in such final prospectus.

     Such  indemnity  shall  remain in full force and effect  regardless  of any
investigation made by or on behalf of such seller or any such director, officer,
controlling  person  or  underwriter  and shall  survive  the  transfer  of such
securities by such seller.

          (b)  Indemnification  by the Company of Costs and Expenses of Defense.
In the  event  of any  registration  of any  Registrable  Securities  under  the
Securities  Act  pursuant to this  Agreement,  the Company  will and hereby does
indemnify and hold harmless,  to the fullest extent permitted by law, the Holder
of any Registrable  Securities whose Registrable  Securities are covered by such
registration  statement,  its  directors  and  officers,  each other  Person who


<PAGE>
                                                                              17

participates  as an underwriter  in the offering or sale of such  securities and
each other  Person,  if any,  who controls  such seller or any such  underwriter
within the meaning of the  Securities  Act,  against  the costs and  expenses of
defending  any claims,  joint or several,  (or actions or  proceedings,  whether
commenced or  threatened,  in respect  thereof) to which they or any of them may
become  subject under the Securities Act or any other statute or common law, and
to reimburse them for any legal or other expenses incurred by them in connection
with  investigating  any claims and defending  any actions,  insofar as any such
claims,  expenses or actions  arise out of or are based upon matters of the type
indemnified  for in subdivision  (a) of this Section 2.7 (without  regard to the
percentage  ownership  by the  Holders of the  outstanding  Common  Stock of the
Company).

          (c)  Indemnification by the Sellers.  Each Holder selling  Registrable
Securities in any  registration  statement  filed pursuant to Section 2.1 or 2.2
will,  and hereby does,  indemnify  and hold harmless (in the same manner and to
the same extent as set forth in Section  2.7(a)) the Company,  each  director of
the  Company,  each  officer of the Company and each other  Person,  if any, who
controls the Company within the meaning of the  Securities  Act, with respect to
any untrue  statement  or alleged  untrue  statement  in, or omission or alleged
omission from, such registration statement,  any preliminary prospectus or final
prospectus  contained therein,  or any amendment or supplement  thereto, if such
statement or omission was made in reliance upon and in  conformity  with written
information furnished to the Company by such seller specifically stating that it
is for  use in the  preparation  of  such  registration  statement,  preliminary
prospectus,  final  prospectus,  amendment or supplement.  Such indemnity  shall
remain in full force and effect,  regardless of any investigation  made by or on
behalf of the Company or any such director,  officer or  controlling  person and
shall survive the transfer of such securities by such seller.  In no event shall
any indemnity paid by a Holder to the Company  pursuant to this Section  2.7(c),
or otherwise, exceed the proceeds received by such Holder in such offering.

          (d) Notices of Claims,  etc.  Promptly after receipt by an indemnified
party of notice of the  commencement  of any action or  proceeding  involving  a
claim  referred to in the  preceding  subdivisions  of this  Section  2.7,  such
indemnified  party will, if a claim in respect  thereof is to be made against an
indemnifying  party,  give written notice to the latter of the  commencement  of
such action,  provided that the failure of any indemnified  party to give notice
as provided herein shall not relieve the  indemnifying  party of its obligations


<PAGE>
                                                                              18

under the preceding  subdivisions of this Section 2.7, except to the extent that
the  indemnifying  party is actually  prejudiced in any material respect by such
failure  to give  notice.  In  case  any  such  action  is  brought  against  an
indemnified  party, the  indemnifying  party shall be entitled to participate in
and,  unless in such  indemnified  party's  reasonable  judgment a  conflict  of
interest between such indemnified and indemnifying  parties may exist in respect
of  such  claim,  to  assume  the  defense  thereof,   jointly  with  any  other
indemnifying  party  similarly  notified  to the extent  that it may wish,  with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying  party to such  indemnified  party of its election so to assume
the  defense  thereof,  the  indemnifying  party  shall  not be  liable  to such
indemnified party for any legal or other expenses  subsequently  incurred by the
latter in connection  with the defense  thereof other than  reasonable  costs of
reasonable  investigation.  In the event that the indemnifying  party advises an
indemnified party that it will contest a claim for indemnification hereunder, or
fails,  within  thirty  (30) days of  receipt of any  indemnification  notice to
notify, in writing, such person of its election to defend, settle or compromise,
at its sole cost and expense,  any action,  proceeding or claim (or discontinues
its defense at any time after it commences such defense),  then the  indemnified
party may, at its option,  defend,  settle or otherwise  compromise  or pay such
action or claim. In any event, unless and until the indemnifying party elects in
writing to assume and does so assume the defense of any such  claim,  proceeding
or  action,  the  indemnified  party's  costs and  expenses  arising  out of the
defense,  settlement or compromise of any such action, claim or proceeding shall
be losses subject to  indemnification  hereunder.  The  indemnified  party shall
cooperate fully with the  indemnifying  party in connection with any negotiation
or  defense  of any such  action  or claim by the  indemnifying  party and shall
furnish to the indemnifying  party all information  reasonably  available to the
indemnified party which relates to such action or claim. The indemnifying  party
shall keep the indemnified party fully informed at all times as to the status of
the  defense  or  any  settlement  negotiations  with  respect  thereto.  If the
indemnifying  party  elects  to  defend  any  such  action  or  claim,  then the
indemnified  party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense,  except that the indemnifying  party
shall be liable  for such costs and  expenses  if, in such  indemnified  party's
reasonable  judgment,  a conflict  of  interest  between  such  indemnified  and
indemnifying  parties may exist as described  above. If the  indemnifying  party
does not assume such defense,  the indemnified party shall keep the indemnifying
party informed at all times as to the status of the defense; provided,  however,


<PAGE>
                                                                              19

that the failure to keep the indemnifying party so informed shall not affect the
obligations of the indemnifying party hereunder.  No indemnifying party shall be
liable for any settlement of any action,  claim or proceeding  effected  without
its written consent;  provided,  however,  that the indemnifying party shall not
unreasonably  withhold,  delay or condition its consent.  No indemnifying  party
shall,  without the consent of the  indemnified  party,  consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such  indemnified  party
of a release from all liability in respect to such claim or litigation.

          (e) Indemnification  Payments.  The  indemnification  required by this
Section 2.7 shall be made by periodic  payments of the amount thereof during the
course of the  investigation  or  defense,  as and when  bills are  received  or
expense, loss, damage or liability is incurred.

          (f) Contribution. If the indemnification provided for in the preceding
subdivisions  of this  Section 2.7 is  unavailable  to or  insufficient  to hold
harmless a party otherwise  entitled to be indemnified  thereunder in respect to
any losses,  claims,  damages and expenses (or actions or  proceedings,  whether
commenced  or  threatened,  in respect  thereof)  referred to therein,  then the
Company and the Holders  selling  Registrable  Securities  in such  registration
statement  shall  contribute  to the  amount  paid or payable by such party as a
result of such losses, claims, damages, liabilities, expenses or actions in such
proportion as is  appropriate  to reflect the relative  fault of each of (i) the
Company and (ii) such sellers in  connection  with the  statements  or omissions
that resulted in such losses, claims, damages, liabilities, expenses or actions.
The  relative  fault of the  Company and such  sellers  shall be  determined  by
reference to whether the untrue or alleged  untrue  statement of a material fact
or the  omission  or  alleged  omission  to state a  material  fact  relates  to
information  supplied by the Company or such sellers and the  parties'  relative
intent,  knowledge,  access to information and opportunity to correct or prevent
such statement or omission. The Company and such sellers agree that it would not
be just and equitable if  contributions  pursuant to this  subdivision  (f) were
determined by pro rata  allocation  or by any other method of  allocation  which
does not take account of the equitable  considerations referred to above in this
subdivision (f). Notwithstanding the provisions of this subdivision (f), no such
seller  shall be  required to  contribute  any amount in excess of the amount by
which the proceeds  received by such seller from Registrable  Securities sold by
it pursuant to such  registration  statement  exceeds that amount of any damages


<PAGE>
                                                                              20

which such seller has  otherwise  paid or become  liable to pay by reason of any
untrue statement or alleged untrue statement or omission or alleged omission. No
person  guilty of  fraudulent  misrepresentation  (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any person
who is not guilty of such  fraudulent  misrepresentation.  For  purposes of this
subdivision  (f), each director of the Company,  each officer of the Company who
signed such  registration  statement,  and each person, if any, who controls the
Company  within  the  meaning  of  Section  15 of the  Securities  Act shall (in
addition  to  any  other  rights  of  contribution)  have  the  same  rights  to
contribution  as the  Company;  and each  person,  if any, who controls any such
seller within the meaning of Section 15 of the Securities Act shall (in addition
to any other rights of  contribution)  have the same rights to  contribution  as
such seller.

          (g) Other  Rights,  Liabilities.  The indemnity  agreements  contained
herein  shall be in addition to (i) any cause of action or similar  right of the
indemnified  party  against  the  indemnifying  party  or  others,  and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

     2.8  Adjustments  Affecting  Registrable  Securities.   During  any  period
commencing on either (i) the date a request for a demand  registration  has been
made  pursuant to Section  2.1(a) hereof or (ii) the date on which any Holder of
Registrable  Securities  makes written  request in accordance  with the terms of
Section 2.2(a) hereof to have its Registrable Shares  registered,  and in either
event,  terminating  on the date which is the  earlier of (i) 365 days after the
date on which the registration statement registering such Registrable Securities
becomes  effective  and  (ii)  the  date on  which  all  Registrable  Securities
registered under such registration  statement are sold,  transferred or disposed
of, the Company will not effect,  permit to occur or announce any future  intent
to effect or permit to occur,  any  combination  or  subdivision of shares which
would  materially  adversely  affect the ability of the  Holders of  Registrable
Securities to include  Registrable  Securities in any registration of securities
contemplated by this Section 2 or the  marketability  of Registrable  Securities
under any such registration.

     2.9  Registration   Expenses.   All  expenses  incident  to  the  Company's
performance  of or  compliance  with  Section 2.1 of this  Agreement,  including
without limitation all registration and filing fees, including fees with respect
to filings  required  to be made with the  National  Association  of  Securities


<PAGE>
                                                                              21

Dealers,  Inc., fees and expenses of compliance with securities or blue sky laws
(including  reasonable fees and disbursements of counsel for the  underwriters),
printing  expenses,  messenger,  telephone and delivery  expenses,  and fees and
disbursements  of  counsel  of  the  Company  and  of  all  independent   public
accountants  of the Company  (including  the  expenses of any special  audit and
"comfort"  letters  required by or incident to such  performance),  and fees and
expenses  of other  Persons  retained by the Company  (all such  expenses  being
herein called  "Registration  Expenses") will be borne by the Holders whether or
not any of the  registration  statements  becomes  effective.  All  Registration
Expenses incident to the Company's performance or compliance with Section 2.2 of
this Agreement (other than registration  filing fees for shares to be offered by
Holders)  will be borne by the  Company.  The Company  will in each case pay its
internal  expenses  (including  all  salaries  and  expenses of its officers and
employees  performing  legal or  accounting  duties),  the expense of any annual
audit,  the fees and  expenses  incurred in  connection  with the listing of the
securities to be registered on any securities  exchange,  rating agency fees and
the fees and expenses of any Person, including special experts,  retained by the
Company.

                                   ARTICLE III
                                    RULE 144

     The Company shall take all actions  reasonably  necessary to enable Holders
of Registrable Securities to sell such securities without registration under the
Securities Act within the limitation of the exemptions  provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation  hereafter  adopted by the  Commission  including
filing on a timely basis all reports  required to be filed by the Exchange  Act.
Upon the  request of any Holder of  Registrable  Securities,  the  Company  will
deliver to such Holder a written  statement as to whether it has  complied  with
such requirements.


                                   ARTICLE IV
                             AMENDMENTS AND WAIVERS

     This  Agreement  may be amended  with the  consent of the  Company  and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be  performed  by it, only if the Company  shall have  obtained  the
written consent to such  amendment,  action or omission to act, of the Holder or
Holders of a majority  of the  Registrable  Securities  then  outstanding.  Each


<PAGE>
                                                                              22

Holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any  consent  authorized  by this  Article  IV,  whether or not such
securities all have been marked to indicate such consent.


                                    ARTICLE V
                               REGISTRATION RIGHTS

     The  Company  covenants  that it will not grant  any right of  registration
under the Securities Act relating to any of its shares of capital stock or other
securities to any Person other than pursuant to this  Agreement,  unless (i) the
rights so granted to another  Person do not limit or  restrict  the right of the
Holders to request three (3) demand registrations as provided for in Section 2.1
hereof at such times and covering such amount of  Registrable  Securities as the
Holders  determine  in their sole  judgment  (except as such timing or amount of
Registrable  Securities  may  otherwise be limited by the express  terms of this
Agreement)  and (ii) the rights so  granted  to  another  Person do not limit or
restrict  the rights  granted  pursuant  to Section 2.2 hereof to any Holders of
Registrable  Securities  to have such  Registrable  Securities  included  in any
registration  by the Company under the  Securities  Act of any of its securities
for its own account (except as such rights of Holders of Registrable  Securities
are otherwise expressly limited by the terms of this Agreement).


                                   ARTICLE VI
                                     NOTICES

     All notices or other communications 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 (5) days after mailing,  properly addressed.  Couriered
notices  shall be  deemed  delivered  when  delivered  as  addressed,  or if the
addressee refuses  delivery,  when presented for delivery  notwithstanding  such
refusal.  Telex or  telecommunicated  notices  shall be  deemed  delivered  when
receipt is either confirmed by confirming transmission equipment or acknowledged
by the  addressee  or its office.  Personal  delivery  shall be  effective  when
accomplished.  Unless a party  change its address by giving  notice to the other
party as provided herein,  notices shall be delivered to the parties as follows:
(i) if addressed to PFS, at the address set forth in the Loan  Agreement,  or at


<PAGE>
                                                                              23

such other  address as PFS shall have  furnished  to the Company in writing,  or
(ii) if addressed to any other Holder of Registrable Securities,  at the address
that such Holder shall have  furnished to the Company in writing,  or, until any
such other  Holder so  furnishes  to the Company an address,  then to and at the
address of the last Holder of such  securities  who has  furnished an address to
the Company,  or (iii) if addressed to the Company,  at the address set forth in
the Loan Agreement,  or at such other address, or to the attention of such other
officer,  as the Company shall have furnished to PFS in accordance with the Loan
Agreement.


                                   ARTICLE VII
                                   ASSIGNMENT

     This  Agreement  shall be binding  upon and inure to the  benefit of and be
enforceable  by the  parties  hereto  and,  with  respect  to the  Company,  its
respective  successors and assigns and, with respect to the Holders,  any Holder
of any Registrable  Securities.  Furthermore,  the rights of a Holder under this
Agreement may be assigned by such Holder at its sole  discretion  (and thereupon
by such assignee) without the consent of the Company to any Person who purchases
or otherwise duly receives title to ten percent (10%) or more of the Registrable
Securities then outstanding, provided that such assignee agrees in writing to be
bound by the terms of this Agreement.


                                  ARTICLE VIII
                              DESCRIPTIVE HEADINGS

     The  descriptive  headings of the several  sections and  paragraphs of this
Agreement  are  inserted  for  reference  only and shall not limit or  otherwise
affect the meaning hereof.


                                   ARTICLE IX
                                  GOVERNING LAW

     THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE  WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF UTAH.

<PAGE>
                                                                              24

                                    ARTICLE X
                                  COUNTERPARTS

     This   Agreement   may  be  executed   simultaneously   in  any  number  of
counterparts,  each  of  which  shall  be  deemed  an  original,  but  all  such
counterparts shall together constitute one and the same instrument.

     IN WITNESS  WHEREOF,  the parties have caused this Agreement to be executed
and delivered by their respective  officers  thereunto duly authorized as of the
date first above written.


                                       COVOL TECHNOLOGIES, INC.


                                       By:
                                           -------------------------------------
                                           Name:
                                                 -------------------------------
                                           Title:
                                                  ------------------------------


                                       PACIFICORP FINANCIAL SERVICES, INC.


                                       By:
                                           -------------------------------------
                                           Name:
                                                 -------------------------------
                                           Title:
                                                  ------------------------------