ALABAMA PROJECT PURCHASE AGREEMENT

                           Dated as of March 20, 1997



                            Covol Technologies, Inc.
                                       and
                             Alabama Synfuel #1 Ltd.

                                     SELLERS



                           Birmingham Syn Fuel, L.L.C.

                                      BUYER

ARTICLE I
    DEFINITIONS............................................................... 1
    1.1    Certain Definitions................................................ 1

ARTICLE II
    AGREEMENT TO PURCHASE AND SELL; PURCHASE PRICE............................ 7
    2.1    Agreement to Purchase and Sell..................................... 7
    2.2    Purchase Price..................................................... 7

ARTICLE III
    ASSETS AND LIABILITIES TO BE SOLD AND RETAINED............................ 8
    3.1    Assets to be Sold.................................................. 8
    3.2    Assets to be Retained.............................................. 8
    3.3    Liabilities to be Assumed by Buyer................................. 8
    3.4    Liabilities to be Retained by Sellers.............................. 8

ARTICLE IV
    REPRESENTATIONS AND WARRANTIES............................................ 9
    4.1    Representations and Warranties of Sellers.......................... 9
    4.2    Changes Prior to Closing...........................................15
    4.3    Representations and Warranties of Buyer............................15
    4.4    Changes Prior to Closing...........................................16
    4.5    Joint Obligations..................................................16

ARTICLE V
    CONDUCT OF BUSINESS ......................................................17
    5.1    Operations by Sellers..............................................17
    5.2    Negative Covenants.................................................18
    5.3    Additional Covenants...............................................18

ARTICLE VI
    DESTRUCTION OF ASSETS.....................................................20

ARTICLE VII
    CONDITIONS PRECEDENT TO CLOSING; TERMINATION..............................20
    7.1    Conditions Precedent to the Obligations
           of Buyer...........................................................20
    7.2    Conditions Precedent to the Obligations
           of Sellers.........................................................22
    7.3    Termination........................................................23

ARTICLE VIII
    CLOSING...................................................................24
    8.1    Time and Place of Closing..........................................24
    8.2    Actions at Closing.................................................25

ARTICLE IX
    APPROVALS AND CONSENTS....................................................26


<PAGE>

ARTICLE X
    CROSS INDEMNIFICATION.....................................................26
    10.1   Obligations of Sellers.............................................26
    10.2   Obligations of Buyer...............................................27
    10.3   Indemnity Procedures...............................................27

ARTICLE XI
    REMEDIES AND SURVIVAL.....................................................28
    11.1   Survival of Representations, etc...................................28
    11.2   Procedure..........................................................29

ARTICLE XII
    MISCELLANEOUS.............................................................30
    12.1   Books, Records and Assistance by Personnel.........................30
    12.2   Assignment.........................................................31
    12.3   Notices............................................................31
    12.4   Expenses and Fees..................................................32
    12.5   Successors and Assigns.............................................32
    12.6   Waiver.............................................................32
    12.7   Entire Agreement...................................................33
    12.8   Amendments, Supplements and Etc....................................33
    12.9   Applicable Law.....................................................33
    12.10  Execution and Counterparts.........................................33
    12.11  Titles and Headings................................................33
    12.12  Third Parties......................................................33
    12.13  Further Assurances.................................................34


<PAGE>

     THIS  ALABAMA  PROJECT  PURCHASE  AGREEMENT  is made as of March  20,  1997
between Covol Technologies,  Inc., a Utah corporation ("Covol"), Alabama Synfuel
#1 Ltd., a Delaware limited  partnership  ("Alabama  Synfuel," and together with
Covol,  "Sellers");  Birmingham Syn Fuel, L.L.C.,   an Oregon  limited liability
company ("Buyer").

     WHEREAS  Covol  has  assigned  to  Alabama  Synfuel  ownership  of  a  coal
briquetting  facility  to  be  located  in  Birmingham,  Alabama  (the  "Alabama
Project"),  including  certain  contracts  entered  into by  Covol  and  certain
third-parties  in connection with the conduct of the  construction,  maintenance
and operation thereof.

     WHEREAS Sellers desire to sell to Buyer, and Buyer desires to purchase from
Sellers,  the Alabama  Project,  all subject to the terms and conditions of 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,
Sellers and Buyer 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:

          "Affiliate" means any person, partnership,  joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under  common  control  with,  a party  hereto.  For  purposes  of the
preceding sentence,  "control" means possession,  directly or indirectly, of the
power to direct or cause direction of management and policies through  ownership
of voting securities, contract rights, voting trust, or otherwise.

          "Agreement"  means  this  Alabama  Project  Purchase  Agreement,   the
Exhibits, and the Schedules attached hereto (all of which Exhibits and Schedules
shall be deemed to be incorporated herein by reference and made a part hereof as


<PAGE>
                                                                               2

if set out in full  herein),  and all  agreements  or  instruments  executed  in
connection herewith or delivered pursuant hereto.

          "Alabama  Project" has  the  meaning  given  in  the  preamble of this
Agreement.

          "Buyer" has the meaning given in the preamble of this Agreement.

          "Buyer's Disclosure List" has the meaning given in Section 4.4.

          "Closing" means the closing of this transaction  which is described in
more detail in Section 8.1.

          "Closing Date" has the meaning given in Section 8.1.

          "Construction  Contract" means the  Standard For  of Agreement between
Owner  and  Contractor,  dated as of  December 26, 1996,  by  an  between  Covol
Technologies, Inc. and TIC The Industrial Company.

          "Contracts" means the contracts,  leases,  purchase orders,  and other
agreements  pertaining  to the  conduct  of the  construction,  maintenance  and
operation of the Alabama Project as described on Schedule 4.1(m),  including the
Construction Contract.

          "Effective Time" means 12:01 a.m., Mountain Time, on the Closing Date.

          "ERISA" means the Employee  Retirement Income Security Act of 1974, as
amended from time to time.

          "ERISA Plan" means, for any Person,  an employee benefit plan or other
plan maintained for employees of such Person and covered by Title IV of ERISA.

          "Files  and  Records"  means  all  files,  reports,  data and  records
relating  to  the  Purchased  Assets  and  the  conduct  of  the   construction,
maintenance  and operation of the Alabama  Project,  including those relating to
engineering,  permitting, maintenance, inventory and supply, property and excise
taxes, title, corporate accounting,  market studies, coal fines purchases,  coal
sales,  income tax,  Sellers'  general  files  relating to the Alabama  Project,


<PAGE>
                                                                               3

economic analyses, and documents related to general  policies and  procedures of
Sellers  with  respect  to  the   Purchased   Assets  and  the  conduct  of  the
construction, maintenance and operation of the Alabama Project.

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

          "Governmental Entity" means any Federal,  state or local government or
any court, administrative or regulatory agency, whether domestic or foreign.

          "Hazardous  Materials"  means  any  (a)  asbestos  in any  form,  urea
formaldehyde  foam  insulation,  transformers  or other  equipment which contain
dielectric fluid containing  levels of  polychlorinated  byphenyls or radon gas;
(c) any chemical, material or substance defined as or included in the definition
of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste",  "restricted  hazardous waste", "toxic substances" or words of
similar import under any applicable Hazardous Materials Laws.

          "Hazardous Materials Claims" means any enforcement,  cleanup, removal,
remedial or other  governmental  or regulatory  demand,  actions,  agreements or
orders threatened,  instituted,  pending or completed by any Governmental Entity
pursuant  to any  Hazardous  Materials  Laws,  together  with any claims made or
threatened  by any third party  against  either of the Sellers or any  Purchased
Assets or in connection  with the conduct of the  construction,  maintenance and
operation  of  the  Alabama  Project  relating  to  damage,  contribution,  cost
recovery,  compensation,  loss or injury resulting from the presence, release or
discharge of any Hazardous Materials.

          "Hazardous Materials Laws" means the following Federal laws, and their
implementing regulations,  as well as any amendments to such laws, and all State
and local laws and ordinances  which regulate the same subject  matter:  (a) the
Comprehensive  Environmental Response,  Compensation and Liability Act (CERCLA),
42 USC 9601 et seq.;  (b) the Solid  Waste  Disposal  Act,  42 USC 6901 et seq.,
including  the  Resource  Conservation  and  Recovery  Act  (RCRA)  and the laws
governing  Underground  Storage  Tanks;  (c) the Toxic  Substances  Control  Act
(TSCA),  15 USC 2601 et  seq.,  including  those  provisions  governing  use and
disposal  of  Polychlorinated  Biphenyls  (PCBs);  (d) the  Hazardous  Materials


<PAGE>
                                                                               4

Transportation  Act (HMTA),  49 USC 1801,  et seq.;(e) the Federal  Insecticide,
Fungicide and Rodenticide Act (FIFRA),  7 USC 136 et seq.; (f) those portions of
the Clean Air Act governing toxic air emissions,  42 USC 7401 et seq.; (g) those
portions of the Clean Water Act governing toxic water pollutants and oil spills,
33 USC 1251 et seq.; (h) the Emergency Planning and Community  Right-to-know Act
(EPCRA,  SARA Title III),  42 USC 11001 et seq.;  and (i) those  portions of the
Occupational  Safety and Health Act (OSHA)  governing worker safety with respect
to hazards from chemical substances,  including requirements for Material Safety
Data Sheets, 29 USC 651, et seq.

          "Indemnitee" has the meaning given in Section 10.3(b).

          "Indemnitor" has the meaning given in Section 10.3(b).

          "Inventory"  means all  inventory  (as  defined in the UCC) of Sellers
held for sale,  lease or  demonstration,  or to be furnished  under contracts of
sale or service in connection with the Alabama Project,  in all forms,  wherever
located, now or hereafter existing,  including (i) all inventory, raw materials,
work in process,  finished goods,  materials and supplies used or to be consumed
in connection with the conduct of the construction, maintenance and operation of
the Alabama  Project,  and all additions and accessions to such  property,  (ii)
goods in which Sellers have an interest in mass or a joint or other  interest or
right of any kind,  and (iii) goods  which are  returned  to or  repossessed  by
Sellers, and all accessions thereto and products thereof.

          "Letter Ruling" has the meaning given in Section 7.1(i).

          "Lien" means any interest in property securing an obligation,  whether
such  interest is based on common law,  statute or contract,  and  including any
restriction on the use, voting, transfer, receipt of income or other exercise of
any  attributes  of  ownership,  any  security  interest or lien  arising from a
mortgage, claims,  encumbrance,  pledge, charge, easement,  servitude,  security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for  security  purposes.  The  term  "Lien"  shall  also  include  reservations,
exceptions,  covenants, conditions,  restrictions,  leases, subleases, licenses,
occupancy  agreements,  pledges,  equities,  charges,  assessments,   covenants,
reservations, defects in title, encroachments and other burdens, and other title



<PAGE>
                                                                               5

exceptions and encumbrances affecting property of any nature, whether accrued or
unaccrued, or absolute or contingent.

          "Loan Documents"  means the Convertible  Loan and Security  Agreement,
dated as of the date  hereof,  by and  between  Covol and  PacifiCorp  Financial
Services,  Inc.,  and the other Loan  Documents (as such term are defined in the
Convertible  Loan  and  Security  Agreement),  and any and all  other  documents
executed  pursuant  thereto,  or  contemplated  thereby (other than the Purchase
Agreement Documents), as the same may be modified, extended, renewed, amended or
replaced from time to time.

          "1986 Code" has the meaning given in Section 7.1(i).

          "Party" or "Parties" means Buyer and Sellers and their successors,  as
parties to this Agreement.

          "Permitted Liens" means:

          (i) Liens (but only to the extent not yet  delinquent or (a) which are
being  contested  in  good  faith  by  appropriate   proceedings  with  reserves
acceptable to Buyer having been set aside and maintained and (b) with respect to
tax liens on the  Purchased  Assets,  as to which  Sellers  shall  have paid the
undisputed  amount)  securing  taxes,  assessments  or  governmental  charges or
levies,  or arising  in  connection  with  workers'  compensation,  unemployment
insurance or social security  obligations,  or securing the claims or demands of
materialmen,  mechanics,  carriers,  warehousemen,   landlords  and  other  like
Persons;

          (ii) Attachment,  judgment or similar liens arising in connection with
court  proceedings  (a) which are  discharged  or stayed  pending  appeal within
thirty (30) days of attachment or levy,  and, if so stayed,  the stay remains in
effect or (b) payment of which is covered in full (subject only to customary and
reasonable deductibles) by insurance or surety bonds;

          (iii) Liens in favor of  PacifiCorp Financial Services, Inc. under the
Loan Documents; and

          (iv) Existing Liens  disclosed on Schedule  4.1(q) attached hereto and
Liens affecting real property  interests  consisting of (a) zoning  regulations,
(b) easements, (c) set-back lines, or (d) covenants, conditions or restrictions,


<PAGE>
                                                                               6

now  existing or  hereafter  arising,  which  do  not in  the  aggregate  have a
material  adverse  effect on  the  construction, operation or maintenance of the
Alabama Project.

          "Permits"   means   any   existing   permit,    license,    franchise,
authorization,  variance,  exemption,  concession,  lease, instrument,  order or
approval of any Governmental Entity and any applications therefor appurtenant or
relating to the Purchased Assets or otherwise held by Sellers in connection with
the  conduct of the  construction,  maintenance  and  operation  of the  Alabama
Project as described on Schedule 4.1(n).

          "Person"  means any natural  person,  corporation,  partnership,  sole
proprietorship,  firm, association, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.

          "Personal   Property"  means  all  tangible  and  intangible  personal
property owned by Sellers and used or held in connection with the conduct of the
construction,  maintenance  and operation of the Alabama Project Alabama Project
as described on Schedule 4.1(q).

          "Promissory Note" has the meaning given in Section 2.2.

          "Property  Leases"  means  the real  property  leases,  rights-of-way,
easements,  licenses  and  agreements  held by  Sellers in  connection  with the
conduct of the construction, maintenance and operation of the Alabama Project as
described on Schedule 4.1(o).

          "Purchase Agreement  Documents" means this Agreement,  and any and all
other documents executed pursuant hereto, or contemplated hereby (other than the
Loan  Documents),  as the same may be modified,  extended,  renewed,  amended or
replaced from time to time.

          "Purchase Price" has the meaning given in Section 2.2.

          "Purchased Assets" means all of Sellers' right, title, and interest in
the assets set forth on Schedule 2.1.

          "Related  Person" means (i) any  shareholder who owns or controls more
than five  percent  (5%) of the voting  securities  of either  Seller,  (ii) any
officer or director of either Seller, and (iii) any other Person that,  directly


<PAGE>
                                                                               7

or indirectly,  controls, is controlled by or is under common control with or is
related to, by blood or  marriage,  either  Seller or any Person  identified  in
clauses (i) or (ii).

          "Retained  Assets"  means  those  assets  retained  by the  Sellers as
described in Section 3.2.

          "Retained  Liabilities" means those liabilities retained by Sellers as
described in Section 3.4.

          "Section 29 Credits" has the meaning given in Section 7.1(i).

          "Sellers" has the meaning given in the preamble of the Agreement.

          "Sellers' Disclosure List" has the meaning given in Section 4.2.

          "Transaction  Documents"  means  the  Loan  Documents and the Purchase
Agreement Documents.

          "UCC" means the  Uniform  Commercial Code  as  enacted in the State of
Alabama.


                                   ARTICLE II
                 AGREEMENT TO PURCHASE AND SELL; PURCHASE PRICE

     2.1 Agreement to Purchase and Sell.  Subject to the terms and conditions of
this Agreement, Sellers agree to sell to Buyer and Buyer agrees to purchase from
Sellers, the Purchased Assets, free and clear of all Liens.

     2.2 Purchase Price. The total  consideration for the Purchased Assets shall
be a  promissory  note in the  principal  amount of Three  Million  Four Hundred
Thousand Dollars ($4,800,000)(the "Purchase Price"), in the form attached hereto
as Exhibit A-1 (the "Promissory  Note"). The Promissory Note shall be secured by
a Security Agreement and Collateral  Assignment of Sublease in the form attached
hereto as Exhibit A-2 and Exhibit A-3, respectively.

<PAGE>
                                                                               8

                                   ARTICLE III
                 ASSETS AND LIABILITIES TO BE SOLD AND RETAINED

     3.1 Assets to be Sold. The assets to be sold are the Purchased Assets.

     3.2 Assets to be Retained. The assets to be retained  by  Sellers  are  all
assets of the Sellers other than the Purchased Assets.

     3.3  Liabilities  to be  Assumed  by  Buyer.  Subject  to the terms of this
Article III and upon  completion of the Closing,  Buyer  covenants and agrees to
assume,  fulfill,  perform  and in due course  discharge,  all  obligations  and
liabilities of any kind or character  whatsoever  resulting  from,  relating to,
arising out of, or incurred  in  connection  with the  Purchased  Assets,  which
obligations  and  liabilities  result  from,  relate  to,  arise  out of, or are
incurred in  connection  with  actions  taken after  completion  of the Closing;
provided,  however,  Buyer shall not assume any liability or obligation  arising
from or  relating  to a breach  by  Sellers  of a  representation,  warranty  or
covenant set forth in this Agreement;  provided, further, Buyer shall not assume
any  liability or obligation  retained by Sellers  under Section 3.4;  provided,
further,  Buyer shall not assume any liability or  obligation  incurred by Covol
under the Operation and Maintenance Agreement.

     3.4 Liabilities to be Retained by Sellers.  Subject to the terms of Article
III and upon  completion of the Closing,  Sellers  covenant and agree to assume,
fulfill,  perform,  and in due  course  discharge,  indemnify,  defend  and hold
harmless   Buyer  and  its   directors,   officers,   agents,   representatives,
subsidiaries and Affiliates from and against (i) all obligations and liabilities
of any kind or character whatsoever resulting from, relating to, arising out of,
or incurred in connection  with the Retained Assets and (ii) all obligations and
liabilities of any kind or character  whatsoever  resulting  from,  relating to,
arising out of, or  incurred  in  connection  with the  Purchased  Assets to the
extent such obligations and liabilities resulted from, related to, arose out of,
or were incurred in connection with actions prior to completion of the Closing.

<PAGE>
                                                                               9

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

     4.1  Representations  and  Warranties  of  Sellers.   Sellers  jointly  and
severally  represent and warrant to Buyer that as of the date of this Agreement,
the facts set forth below in this Section 4.1 are and shall be true:

          (a)  Corporate  Standing.  Covol is a corporation  duly  organized and
validly  existing and in good standing  under the laws of the State of Delaware.
Alabama Synfuel is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each Seller has corporate
power to own its property,  and to execute,  deliver and perform this  Agreement
and each of the Transaction Documents, and to carry on its business as now being
conducted.  Each  Seller  is duly  qualified  to do  business  in and is in good
standing as a foreign  corporation  authorized to do business  under the laws of
the State of Alabama.

          (b) Authorizations;  Binding Agreements.  The execution,  delivery and
performance of this Agreement and the other Transaction Documents by Sellers and
each conveyance,  assignment,  agreement, and other document herein contemplated
to be executed by Sellers,  has been duly authorized by all necessary  corporate
action. This Agreement and the other Transaction  Documents and the conveyances,
assignments, agreements, and other documents herein contemplated to be executed,
delivered and performed by Sellers are, or will be upon execution,  legal, valid
and  binding  obligations  of  Sellers,  duly  enforceable  against  Sellers  in
accordance  with their terms  (subject,  however,  to the effects of bankruptcy,
insolvency,  reorganization,  moratorium,  and similar laws from time to time in
effect  relating to the rights and  remedies of  creditors as well as to general
principles of equity),  do not and will not result in any violation of, conflict
with or default under the terms of Sellers'  organizational  documents  (nor, to
the best of each  Seller's  knowledge  after due  inquiry,  does there exist any
condition  which upon the  passage of time or the giving of notice  would  cause
such violation,  conflict or default), and, subject only to such consents as are
set forth on Schedule  4.1(c),  do not and will not result in any  violation of,
conflict with or default under any material permit,  lease,  venture,  mortgage,
agreement, contract, judgment, order or other obligation or restriction to which
Sellers,  the Purchased Assets or the conduct of the  construction,  maintenance


<PAGE>
                                                                              10

and  operation of the Alabama  Project may be bound or  encumbered  (nor, to the
best of each  Seller's  knowledge  after  due  inquiry,  does  there  exist  any
condition  which upon the  passage of time or the giving of notice  would  cause
such violation, conflict or default).

          (c) No Actions  Affecting  Enforcement  of the Agreement and the other
Transaction Documents.  There are no actions, suits, or proceedings pending, or,
to the best of either Seller's knowledge after due inquiry, threatened,  against
either Seller in any court, or administrative  governmental body or agency which
will affect in any adverse manner the ability of Sellers to execute, deliver and
perform this Agreement and the other Transaction Documents. Subject only to such
consents  as are set  forth on  Schedule  4.1(c),  and such  consents  which the
failure to obtain could not  reasonably  be expected to have a material  adverse
effect on the Purchase Assets or the construction,  maintenance and operation of
the Alabama Project,  Sellers have obtained all permits,  licenses,  franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents or approvals of  Governmental  Entities and third parties  necessary to
execute, deliver and perform this Agreement and the other Transaction Documents.

          (d) Taxes.  All tax  returns and  reports  relating  to the  Purchased
Assets and the conduct of the  construction,  maintenance  and  operation of the
Alabama  Project  required  by law  (including  all  federal,  state,  and local
property tax,  severance and franchise tax laws) to be filed by Sellers prior to
the Closing have been timely filed or will be caused to be timely filed,  except
for such returns and reports  which the failure to file could not  reasonably be
expected  to have a  material  adverse  effect  on the  Purchase  Assets  or the
construction,  maintenance  and  operation  of the Alabama  Project.  All taxes,
assessments,  fees, interest,  penalties and other governmental charges relating
to the Purchased  Assets and the conduct of the  construction,  maintenance  and
operation of the Alabama  Project  which are due and payable have been paid when
due and payable, except for such taxes, assessments,  fees, interest,  penalties
and other governmental  charges which the failure to pay could not reasonably be
expected  to have a  material  adverse  effect  on the  Purchase  Assets  or the
construction, maintenance and operation of the Alabama Project.

          (e) Brokers or Finders Fees. Except as set forth on Schedule 4.1(e),
no obligation or liability, contingent or otherwise, for brokers or finders fees


<PAGE>
                                                                              11

created by Sellers with respect to  the matters  provided for  in this Agreement
and the other Transaction Documents shall be imposed upon Buyer or the Purchased
Assets.

          (f) No Imposition of Liens. The execution, delivery and performance of
this Agreement and the other  Transaction  Documents by Sellers shall not result
in the  imposition  of any Lien,  other than  Permitted  Liens,  upon any of the
Purchase Assets or by which the  construction,  maintenance and operation of the
Alabama Project may be bound or encumbered.

          (g)  Completeness  of  Schedules.  The  Schedules  made a part of this
Agreement are true,  correct and  complete.  No  information  furnished by or on
behalf of  Sellers  to Buyer in  connection  with this  Agreement  and the other
Transaction Documents or on any such Schedule contains any untrue statement of a
material  fact or  omits  to  state  a  material  fact  necessary  to make  such
statements accurate.

          (h) Title to Purchased Assets. Sellers  have marketable  title  to and
possession  of the  Purchased Assets  free and  clear of  all  Liens, other than
Permitted Liens.

          (i) Applicable Contracts and Permits.  The Contracts,  the Permits and
the  Property  Leases  set  forth  on  Schedules  4.1(m),  4.1(n)  and  4.1(o)),
respectively,  are the only material  agreements,  contracts,  leases,  purchase
orders, permits, licenses, franchises,  authorizations,  variances,  exemptions,
concessions, leases, instruments, orders or approvals of any Governmental Entity
to which the Purchased  Assets or the conduct of the  construction,  maintenance
and operation of the Alabama Project are bound.

          (j) Pending Litigation.  Except as disclosed on Schedule 4.1(j), there
are  no  actions,  suits,  arbitrations,   claims,  grievances,  or  proceedings
currently  pending  or, to the best of  Sellers'  knowledge  after due  inquiry,
threatened  against or  affecting  the  Purchased  Assets or the  conduct of the
construction,  maintenance and operation of the Alabama Project, the consequence
of which could  reasonably be expected to have a material  adverse effect on the
construction,  operation or  maintenance  of the Alabama  Project.  There are no
outstanding or unsatisfied judgements,  orders or decrees to which the Purchased
Assets or the conduct of the  construction,  maintenance  and  operation  of the
Alabama Project are bound.

<PAGE>
                                                                              12

          (k) Compliance with Laws.  Sellers are in compliance with all material
orders,  writs,  injunctions,   decrees,  judgments,  rulings,  laws,  rules  or
regulations  of any  Governmental  Entity to which the  Purchased  Assets or the
construction,  maintenance and operation of the Alabama Project are bound. There
are no outstanding  "notices of violation" with respect to the Purchased  Assets
or the  construction,  maintenance  and  operation of the Alabama  Project.  The
construction, maintenance and operation of the Alabama Project are in compliance
with,  and neither  Seller is in violation  of,  conflict  with or default under
(nor, to the best of either  Seller's  knowledge  after due inquiry,  does there
exist any condition which upon the passage of time or the giving of notice would
cause such violation, conflict or default), any order, writ, injunction, decree,
judgment,  ruling,  law,  rule or  regulation of any  Governmental  Entity,  the
consequence  of which could  reasonably  be expected to have a material  adverse
effect on the construction, operation or maintenance of the Alabama Project.

          (l) Hazardous  Materials.  Except as disclosed on Schedule 4.1(l),  no
Hazardous  Materials exist on, under or about any of the Purchased Assets or the
Alabama Project in violation of any Hazardous Materials Laws to the satisfaction
of the relevant  governmental  agency that enforces such laws. The construction,
maintenance  and operation of the Alabama  Project is and has been in compliance
with all Hazardous  Materials  Laws.  Neither Seller has received any notice of,
and to the best  knowledge  of each  Seller  after  due  inquiry,  there  are no
existing or threatened Hazardous Materials Claims. The construction, maintenance
and operation of the Alabama Project do not generate any Hazardous Materials. No
storage tanks are or have been located on or under the  Purchased  Assets or the
Alabama Project within the last five (5) years.

          (m)  Status  of  Contracts.  Schedule  4.1(m) is a true,  correct  and
complete  list  of  all  the  material  contracts,   leases,  mortgages,  credit
agreements,  indentures, sales contracts,  purchase orders, and other agreements
entered into by the Sellers to which the Purchased Assets and the  construction,
maintenance  and operation of the Alabama  Project are bound.  The Contracts are
valid and in good  standing,  and there is no  violation  of,  conflict  with or
default under the Contracts (nor, to the best of either Seller's knowledge after
due inquiry,  does there exist any  condition  which upon the passage of time or
the giving of notice  would  cause such  violation,  conflict or  default),  the


<PAGE>
                                                                              13

consequence  of which could  reasonably  be expected to have a material  adverse
effect on the construction, operation or maintenance of the Alabama Project. The
Sellers have not  received  any notice from any party to any Contract  that such
party  intends  to  terminate,  cancel  or refuse to renew the same or that such
party  intends to offset any amount due  thereunder or assert any defense to the
enforceability  thereof.  No action  other  than the  execution  of  appropriate
transfer  documents by Sellers and Buyer is required to transfer such  Contracts
to Buyer, subject only to such consents as are set forth on Schedule 4.1(c).

          (n) Governmental Approvals,  Licenses, Orders, Agreements and Permits.
Schedule  4.1(n) is a true,  correct and complete list of all material  permits,
licenses,  franchises,   authorizations,   variances,  exemptions,  concessions,
leases, instruments, orders or approvals of any Governmental Entity to which the
Purchased Assets are bound or are held or used by Sellers in connection with the
conduct of the  construction,  maintenance and operation of the Alabama Project.
The  construction,  maintenance  and  operation  of the  Alabama  Project are in
compliance  with the Permits,  the  consequence of which could not reasonably be
expected  to have a  material  adverse  effect  on the  Purchase  Assets  or the
construction, operation or maintenance of the Alabama Project, and no additional
permits,   licenses,   franchises,   authorizations,    variances,   exemptions,
concessions, leases, instruments, orders or approvals of any Governmental Entity
are necessary to lawfully conduct the construction, maintenance and operation of
the Alabama Project.  The Sellers have not received any notice from any party to
any Permit that such party intends to  terminate,  cancel or refuse to renew the
same or that such  party  intends to assert  any  defense to the  enforceability
thereof. No action other than the execution of appropriate transfer documents by
Sellers and Buyer is required to transfer such Permits to Buyer, subject only to
such consents as are set forth on Schedule 4.1(c).

          (o) Leases. Schedule 4.1(o) contains a true, correct and complete list
of the Property Leases. There is no violation of, conflict with or default under
the Property  Leases (nor, to the best of either  Seller's  knowledge  after due
inquiry,  does there exist any  condition  which upon the passage of time or the
giving of notice would cause such  violation,  conflict or default),  except for
such  violations,  conflicts  and defaults the  consequences  of which could not
reasonably be expected to have a material adverse effect on the Purchased Assets
or the  construction,  maintenance  or  operation  of the Alabama  Project.  The


<PAGE>
                                                                              14

Sellers have not  received any notice from any party to any Property  Lease that
such party intends to terminate, cancel or refuse to renew the same or that such
party  intends to assert any defense to the  enforceability  thereof.  No action
other than the execution of appropriate  transfer documents by Sellers and Buyer
is required to transfer  such  Property  Leases to Buyer,  subject  only to such
consents as are set forth on Schedule 4.1(c).

          (p) No Fee Property.  The Purchased Assets do not include any interest
in real property other than the Property  Leases,  and no other interest in real
property is held or used by the  Sellers in  connection  with the  construction,
maintenance and operation of the Alabama Project.

          (q) Personal Property. Schedule 4.1(q) is a true, correct and complete
list of the Personal Property  (excluding  Inventory) used or held by Sellers in
connection  with the  Purchased  Assets and the  construction,  maintenance  and
operation of the Alabama Project.  Sellers are the beneficial owners of and have
title to the  Personal  Property  (including  Inventory)  free and  clear of all
Liens,  other  than  Permitted  Liens.  No action  other than the  execution  of
appropriate transfer documents by Sellers and Buyer is required to transfer such
Personal Property (including Inventory) to Buyer.

          (r)  Inventory.  The  Inventory  (i) is reflected  on Schedule  4.1(r)
hereto in accordance with GAAP, and (b) all unusable  Inventory has been written
off in accordance  with GAAP. The values at which such  Inventories  are carried
reflect an inventory valuation policy stating inventory based on actual physical
count and at the lower of Sellers' cost or fair market value, in accordance with
GAAP.

          (s) Complete  Project.  The  Purchased  Assets will  constitute,  upon
completion of construction in accordance with the Contracts and Permits, a fully
operational  coal briquette and extrusion  manufacturing  facility with all real
property,  personal property,  agreements,  contracts,  leases, purchase orders,
files, reports, records, data, permits,  licenses,  franchises,  authorizations,
variances, exemptions,  concessions, leases, instruments, orders or approvals of
any Governmental  Entity necessary to conduct the construction,  maintenance and
operation of the Alabama Project.

          (t) ERISA and  Labor Matters. Neither  Seller has  initiated any ERISA
Plans, nor is either Seller party to any collective  bargaining  agreements. The


<PAGE>
                                                                              15

transfer  of the  Purchased  Assets  does not  obligate  Buyer to employ  any of
Sellers' employees or require Buyer's assumption of any liabilities, obligations
or costs incurred as a result of, in connection  with,  arising under or related
to Sellers' employment of any employee.

          (u) Agreements with Related Persons. There are no contracts, licenses,
agreements  or  arrangements  with any  Related  Person in  connection  with the
construction,  maintenance and operation of the Alabama  Project,  other than as
disclosed on Schedule 4.1(u).

     4.2 Changes  Prior to Closing.  Prior to and at the Closing,  Sellers shall
provide Buyer with a list ("Sellers' Disclosure List") of any knowledge acquired
or events  occurring  after the date hereof that cause Sellers'  representations
and  warranties  in Section 4.1 to be untrue in any respect,  or are  reasonably
likely to cause them to be untrue in any respect,  if such  representations  and
warranties were to be made on and as of the Effective Time.

     4.3  Representations and Warranties of Buyer. Buyer represents and warrants
that as of the date  hereof,  the facts set forth below in this  Section 4.3 are
and shall be true:

          (a)  Corporate  Standing.  Buyer is a limited  liability  company duly
organized, validly existing, and in good standing under the laws of the State of
Oregon, has power to own its own property,  and to execute,  deliver and perform
this Agreement and each of the other Transaction Documents,  and to carry on its
business as now being  conducted.  Buyer is  qualified  to do business and is in
good standing as a foreign limited liability  company  authorized to do business
under the laws of the State of Alabama.

          (b) Authorizations;  Binding Agreements. The execution,  delivery, and
performance of this Agreement and the other  Transaction  Documents by Buyer and
of  each   conveyance,   assignment,   agreement,   and  other  document  herein
contemplated to be executed by Buyer have been fully authorized by all necessary
corporate  actions.  This Agreement and the other Transaction  Documents and the
conveyances, assignments, agreements, and other documents herein contemplated to
be executed,  delivered and  performed by Buyer are, or will be upon  execution,
legal, valid and binding obligations of Buyer, duly enforceable against Buyer in
accordance  with their terms  (subject,  however,  to the effects of bankruptcy,


<PAGE>
                                                                              16

insolvency,  reorganization,  moratorium,  and similar laws from time to time in
effect  relating to the rights and  remedies of  creditors as well as to general
principles of equity),  do not and will not result in any violation of, conflict
with or default under the terms of Buyer's organizational  documents, and do not
and will not do not result in any violation  of,  conflict with or default under
the  terms  of any  permit,  lease,  venture,  indenture,  mortgage,  agreement,
contract,  judgment,  order or other obligation or restriction to which Buyer is
bound (nor, to the best of Buyer's knowledge after due inquiry, does there exist
any condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default).

          (c) No Brokers or Finders Fees. No obligation or liability, contingent
or  otherwise,  for brokers or finders fees created by Buyer with respect to the
matters provided for in this Agreement shall be imposed upon Sellers.

          (d)  Single  Purpose  Entity.  Buyer was  formed  for the  purpose  of
acquiring the Purchased Assets and does not conduct any operations other than in
connection  with  acquisition and operation of the Alabama project in accordance
with the Transaction Documents.

     4.4 Changes  Prior to  Closing.  Prior to and at the  Closing,  Buyer shall
provide  Sellers  with a  list  ("Buyer's  Disclosure  List")  of any  knowledge
acquired  or  events   occurring  after  the  date  hereof  that  cause  Buyer's
representations and warranties in Section 4.3 to be untrue in any respect, or is
reasonably  likely to be  untrue in any  respect,  if such  representations  and
warranties were to be made on and as of the Effective Time.

     4.5 Joint Obligations. The  following  shall  apply  with  equal  force  to
Sellers and Buyer:

          (a) Buyer and  Sellers  shall  each  promptly  give the other  written
notice of the  existence or  occurrence  of any item to be reflected on Sellers'
Disclosure Statement or Buyer's Disclosure Statement.

          (b)  Neither  Party  shall  intentionally  perform  any act which,  if
performed (or omit to perform any act which,  if omitted to be performed)  would
prevent or excuse the  performance  of this  Agreement by either party hereto or
which,  except  as a result  of the  conduct  of the  business  in the usual and


<PAGE>
                                                                              17

ordinary course, would result in any representation or warranty herein contained
being untrue in any respect if made on and as of the Closing.

                                    ARTICLE V
                               CONDUCT OF BUSINESS

     5.1 Operations by Sellers. During  the period  from the date  hereof to the
Effective Time:

          (a)  Sellers  shall  maintain  the  Purchased  Assets and  conduct the
construction,  maintenance  and  operation of the Alabama  Project in compliance
with this Agreement and the other  Transaction  Documents,  the  Contracts,  the
Property Leases and the Permits and each  applicable  order,  writ,  injunction,
decree,  judgment,  ruling, law, rule or regulation of any Governmental  Entity,
and pay  all  fees,  assessments  and  costs  arising  in  connection  with  the
execution,  delivery  and  performance  of this  Agreement  and the  Transaction
Documents  and  the  construction,  maintenance  and  operation  of the  Alabama
Project.

          (b) Sellers  may remove any items  included  in the  Retained  Assets;
provided,  however,  such removal does not damage or impair the Purchased Assets
or interfere with the conduct of the construction,  maintenance and operation of
the Alabama Project in any manner.

          (c)   Buyer   and  its  duly   authorized   agents,   employees,   and
representatives,  at their  sole  risk and  expense,  shall  have  access to the
Purchased  Assets and the Alabama  Project for  familiarization  and orientation
purposes;   provided,  however,  that  such  access  and  observation  does  not
unreasonably  interfere with or delay the conduct of  construction,  maintenance
and  operation  of the Alabama  Project.  Sellers  shall  cooperate in orienting
Buyer's personnel to the construction,  maintenance and operation of the Alabama
Project.

          (d) Sellers shall use reasonable  efforts to preserve  intact Sellers'
relationships with suppliers, customers and others having business dealings with
respect to the Purchased Assets and the construction,  maintenance and operation
of the Alabama Project.

          (e) Sellers shall take all necessary actions to maintain the Purchased
Assets in their present condition, quantity and state of repair, reasonable wear
and tear excepted.

<PAGE>
                                                                              18

          (f)  Sellers  shall take all  commercially  reasonable  actions (i) to
construct  the  Alabama  Project  as soon as  practicable,  (ii) to  secure  the
consents and permits  identified  in Schedule  4.1(c),  and (iii) to conduct the
construction,  maintenance  and  operation of the Alabama  Project in accordance
with commercially reasonable practices.

          (g) Sellers  shall  continue  to carry and  maintain in full force and
effect the  existing  casualty and  liability  insurance as provided in the Loan
Document through and including the Effective Time.

          (h) Sellers shall comply with all applicable  bulk sales laws, if any,
in effect in any  jurisdiction  in which the  Purchased  Assets are  located and
where Sellers have their place of business.

     5.2 Negative Covenants. During  th period  from  the  date  hereof  and the
Effective Time, Sellers shall:

          (a) not sell,  lease,  assign,  hypothecate  or agree to sell,  lease,
assign,  hypothecate  or otherwise  transfer or dispose of, any of the Purchased
Assets;

          (b)  not  enter  into  any  lease,  contract,  agreement,  commitment,
arrangement  or  transaction  relating  to the  Purchased  Assets or the Alabama
Project except in the normal course of  construction,  maintenance and operation
of the Alabama  Project and in  accordance  with past  practice,  or  terminate,
cancel or modify or in any way impair any of the Contracts,  Property  Leases or
Permits;

          (c) not subject to any Lien,  other than Permitted  Liens,  any of the
Purchased  Assets,  or  permit or allow  any of the  Purchased  Assets to become
subject to any Lien, other than Permitted Liens;

          (d) not fail to pay any taxes, debts or other  obligations relating to
the Purchased Assets, as the same become due and payable;

          (e)  not  enter  into  any  lease,  contract,  agreement,  commitment,
arrangement  or transaction or do any other act or omit to do any act that might
adversely  affect the  Purchased  Assets or the  construction,  maintenance  and


<PAGE>
                                                                              19

operation  of the  Alabama  Project  or  the  consummation  of the  transactions
contemplated by this Agreement and the other Transaction Documents; and

     5.3 Additional Covenants.

          (a) None of the Sellers  and Buyer  shall  issue any public  statement
with respect to the Alabama  Project or the  transactions  contemplated  by this
Agreement and the other Transaction  Documents without the prior written consent
of  the  other  parties,  which  consent  shall  not be  unreasonably  withheld;
provided, however, that the consenting party shall have two (2) Business Days to
review the proposed public statement.

          (b)  Seller  shall  do or cause to be done  all  things  necessary  to
preserve,  renew and keep in full force and effect the Contracts,  including the
Construction  Contract,  and shall not  breach,  violate  or commit any event of
default  under  the  same.  In the event of any  breach,  violation  or event of
default with  respect to the  Contracts,  Sellers  shall give  immediate  notice
thereof to Buyer.

          (c)  Prior to June 30,  1997,  Sellers  shall  construct  the  Alabama
Project to conform with the representations set forth in the Letter Ruling.

          (d) So long as the Promissory Note is outstanding, Buyer shall (i) not
engage in any other  business  other than the operation and  maintenance  of the
Alabama  Project,  (ii) not transfer the Purchased Assets or any assets acquired
by Buyer to be used in  connection  with the operation  and  maintenance  of the
Alabama  Project,  and (iii)  maintain  in full  force  and  effect  hazard  and
liability  insurance with respect to the Alabama Project, in such amounts as are
commercially reasonable in accordance with industry standards.

          (e) Sellers shall not issue any public statement that, either directly
or indirectly, makes reference to PacifiCorp or any of its directors,  officers,
agents,  representatives,  subsidiaries and Affiliates without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.

          (f) During the term of the Operation and  Maintenance  Agreement,  and
subject to clauses (a) and (e) of this Section 5.3, Sellers shall have the right
to (i) make and use  photographs  and  videotapes  of the  Alabama  Project  for
promotional purposes and (ii) conduct tours of the Alabama Project for potential

<PAGE>
                                                                              20

investors and purchasers of Covol's  products and services;  provided,  however,
that such  activities  shall not interfere with the  construction,  operation or
maintenance  of  the  Alabama  Project;  provided,  further,  that  Covol  shall
reimburse  Buyer for any cost incurred by Buyer as a result of such  activities,
including any incremental increase in insurance costs.


                                   ARTICLE VI
                              DESTRUCTION OF ASSETS

     If, prior to the Closing,  all or any material part of the Purchased Assets
shall be destroyed by fire, flood, or other casualty  (including  condemnation),
and the items affected by such destruction  have not been  effectively  restored
before the Closing Date at least to their  condition  immediately  prior to such
destruction,  either  Buyer or Sellers may elect not to proceed with the Closing
and to  terminate  this  Agreement.  If Buyer and Sellers  nonetheless  elect to
proceed  with the  Closing,  or if less than a  material  part of the  Purchased
Assets shall have been destroyed, then notwithstanding any such destruction, the
Closing  shall take place and the  Purchase  Price shall be reduced by an amount
equal to the amount of such destruction  measured by the costs of restoring such
Purchased Assets as are destroyed to their condition  immediately  prior to such
destruction,  less the amount of any insurance  proceeds paid or payable without
contingency to Sellers on account of such destruction  (which Sellers shall make
available  to  Buyer).  If  Sellers  elect not to  proceed  with the  Closing as
provided in the first  sentence of this Article VI,  Buyer may,  within ten (10)
days after receiving notice of such election from Sellers, elect to proceed with
the Closing without any restoration of destroyed  Purchased  Assets or reduction
in the Purchase  Price.  For  purposes of this Article VI, any of the  Purchased
Assets shall be considered  material if the loss of such assets would materially
adversely affect the ability of Buyer to operate the Alabama Project.


                                   ARTICLE VII
                  CONDITIONS PRECEDENT TO CLOSING; TERMINATION

     7.1 Conditions  Precedent to the  Obligations of Buyer.  All obligations of
Buyer  under this  Agreement  are  subject to the  fulfillment  on or before the
Closing Date of each of the following conditions:

<PAGE>
                                                                              21

          (a) Correctness of Representations and Warranties. The representations
and  warranties  of  Sellers  contained  in this  Agreement  and in the  related
Exhibits  and  Schedules,  to be  delivered  to  Buyer  pursuant  hereto  and in
connection  herewith shall be true on the date hereof and on the Closing Date as
though such  representations  and warranties  were made on and as of the Closing
Date.

          (b) No Adverse  Change in Purchased  Assets and Alabama  Project.  The
Purchased  Assets and the  Alabama  Project  shall not be or shall not have been
threatened or affected,  or interfered  with, in a material adverse way, whether
or not  covered  by  insurance,  as a  result  of fire,  explosion,  earthquake,
disaster,  accident,  labor  dispute,  any action of the United  States or other
governmental  authority,  riots, civil disturbances,  uprising,  activity of the
Armed Forces, or act of God or the public enemy.

          (c)  Compliance  with  Agreement.  Sellers  shall have  performed  and
complied in all material  respects  with all  obligations  under this  Agreement
which are to be performed or complied with by them prior to the Closing Date.

          (d) Certification of Compliance. Sellers shall have delivered to Buyer
a certificate  dated the Closing Date,  certifying as to the  fulfillment of the
conditions set forth in this Section 7.1.

          (e) Absence of  Litigation.  No suit,  action or other  proceeding  or
investigation  shall be threatened or pending  before any court or  governmental
agency  to  restrain  or  prohibit,  or to  obtain  damages  or other  relief in
connection  with this  Agreement  or the  other  Transaction  Documents,  or the
consummation  of  the  transactions   contemplated  by  this  Agreement  or  the
Transaction Documents.

          (f)  Consents.  Sellers  shall have  obtained  (and  delivered  copies
thereof to Buyer) all permits, licenses, franchises, authorizations,  variances,
exemptions,  concessions,  leases, instruments, orders, consents or approvals of
Governmental  Entities  and third  parties  necessary  to  execute,  deliver and
perform  this  Agreement  and the other  Transaction  Documents  as set forth on
Schedule 4.1(c).

          (g) Further  Assurances.  Buyer  shall   have  received  such  further
instruments and documents as it may reasonably  require to carry out effectively


<PAGE>
                                                                              22

the transactions contemplated by  this Agreement and  the Transaction  Documents
and to evidence the  fulfillment of the  agreements  contained in this Agreement
and the  Transaction  Documents  and the  performance  of all  conditions to the
consummation of such transactions.

          (h) Opinion of  Counsel.  Buyer shall have  received  from  counsel to
Sellers,  opinions of counsel to the Sellers,  dated as of the Closing  Date, in
form and substance reasonably satisfactory to Buyer and its counsel.

          (i) Letter  Ruling;  Initial  Production.  Buyer  shall have  received
either (i) a letter  ruling (the  "Letter  Ruling")  from the  Internal  Revenue
Service  setting  forth  the  specific  terms of the  proposed  transaction  and
confirming  to  the  satisfaction  of  Buyer,   among  other  things,   (a)  the
availability  and  calculation  of the credit  available  under  Section 29 (the
"Section 29  Credits") of the  Internal  Revenue  Code of 1986,  as amended (the
"1986  Code"),  (b) that  the  construction  contract  for the  Alabama  Project
satisfies  the  requirements  of the  Section  29  Credits,  and  (c)  that  the
allocation  of the Section 29 Credits to the  various  members of Buyer is valid
under the 1986 Code, or (ii) a certificate  of the Sellers  (together  with such
other evidence as Buyer  requests)  certifying that the Alabama Project is ready
to be placed into commercial operation.

          (j) Covol shall be the general partner of Alabama Synfuel, with an 80%
partnership interest.

          (k) Covol shall assign to Buyer the coal sale  contracts  set forth on
Schedule 7.1(l).

          (l) Sellers shall have assigned the Construction  Contract to Buyer as
a Purchased Asset and Contract under the terms of this Agreement.

          (m) Other Deliveries. The other deliveries referred  to in Section 8.2
shall be made at Closing.

     7.2 Conditions  Precedent to the Obligations of Sellers. All obligations of
Sellers under this Agreement are subject to fulfillment on or before the Closing
Date of each of the following conditions:

          (a) Correctness of Warranties and Representations. The representations
and warranties of Buyer contained  in this Agreement and in the related Exhibits


<PAGE>
                                                                              23

and  Schedules,  to be delivered to Sellers  pursuant  hereto and in  connection
herewith shall be true on the date hereof and on the Closing Date as though such
representations and warranties were made on and as of the Closing Date.

          (b) Compliance with Agreement. Buyer shall have performed and complied
in all material  respects with all obligations under this Agreement which are to
be formed or complied with by it prior to the Closing Date.

          (c) Certification of Compliance.  Buyer shall have delivered to Seller
a certificate  dated the Closing Date,  certifying as to the  fulfillment of the
conditions set forth in this Section 8.1.

          (d) Absence of  Litigation.  No suit,  action or other  proceeding  or
investigation  shall be threatened or pending  before any court or  governmental
agency  to  restrain  or  prohibit,  or to  obtain  damages  or other  relief in
connection with this Agreement or the Transaction Documents, or the consummation
of the transactions contemplated by this Agreement or the Transaction Documents.

          (e)  Opinion of  Counsel.  Sellers  shall have  received an opinion of
Stoel Rives LLP, counsel to the Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to Sellers and their counsel.

          (f) Other Deliveries. The other deliveries referred  to in Section 8.2
shall be made at Closing.

          (g) Further  Assurances.  Sellers  shall have  received  such  further
instruments and documents as it may reasonably  require to carry out effectively
the  transactions  contemplated  by this  Agreement  and the  other  Transaction
Documents and to evidence the  fulfillment of the  agreements  contained in this
Agreement  and  the  other  Transaction  Documents  and the  performance  of all
conditions to the consummation of such transactions.

     7.3 Termination. This Agreement may be  terminated prior  to the Closing as
follows:

          (a) at the  election of  the  Sellers,  if  any  one  or  more  of the
conditions to the obligation of Sellers to  close has not been fulfilled  as  of
the Closing Date;

<PAGE>
                                                                              24

          (b) at the election of the Buyer, if any one or more of the conditions
to the obligation  of Buyer  to close  has not been  fulfilled as of the Closing
Date;

          (c) at the  election of the  Sellers,  if the Buyer has  breached  any
representation,  warranty,  covenant or agreement  contained in this  Agreement,
which  breach  cannot  be or is not cured  within  thirty  (30)  days  after the
occurrence of such breach, but in no event after December 31, 1997;

          (d) at the  election  of the  Buyer,  if  either  of the  Sellers  has
breached any representation,  warranty, covenant, or agreement contained in this
Agreement,  which breach cannot be or is not cured within thirty (30) days after
the occurrence of such breach, but in no event after December 31, 1997;

          (e) at the election of the Buyer or Sellers,  if any legal  proceeding
is commenced or threatened by any  Governmental  Entity or other person directed
against the consummation of the Closing and either the Buyer or the Sellers,  as
the case may be, reasonably and in good faith deem it impractical or inadvisable
to proceed in view of such legal proceeding or threat thereof;

          (f) upon the  election of Buyer or Sellers  pursuant to Article VI, if
there has been damage or  destruction  of the  Purchased  Assets  giving them an
election to terminate  this  Agreement if such damage or  destruction  is not or
cannot be cured within  thirty (30) days of the  occurrence  thereof,  but in no
event after December 31, 1997; or

          (g) at any time on or prior to the  Effective Time,  by mutual written
consent of the Sellers and the Buyer.

          A party who terminates  this Agreement in accordance with this Section
7.3 shall have no liability  to the other party in respect of such  termination,
but any cause of action  held by a party  related to a breach of this  Agreement
prior to such termination shall survive.

                                  ARTICLE VIII
                                     CLOSING

     8.1 Time and Place of Closing. The closing of the transaction  contemplated
by this Agreement (the "Closing") shall be at 9:00 a.m.,  Mountain Time, on such
date as the parties shall mutually agree,  not later than the earlier of (i) ten


<PAGE>
                                                                              25

(10) business days  following  the  satisfaction  or waiver of the condition set
forth in Section  7.1(i) hereto or (ii) December 31, 1997 (the "Closing  Date"),
at the offices of Stoel Rives,  LLP, 201 South Main Street,  Suite 11, Salt Lake
City,  Utah  84111-2215,  or at such  other time or place as the  parties  shall
mutually agree.

     8.2 Actions at Closing.  At the Closing,  the following events shall occur,
each being a condition  precedent  to the other and each being  declared to have
occurred simultaneously with the other:

          (a) Buyer shall pay to Sellers the  Purchase  Price by  executing  and
delivering to Alabama Synfuel the Promissory Note.

          (b) Sellers shall execute, acknowledge and deliver to Buyer the deeds,
bills of sale,  assignments  and other  documents  necessary  to transfer all of
Sellers' right, title, and interest in and to the Purchased Assets to Buyer.

          (c) The Parties shall execute,  acknowledge  and deliver to each other
the  Operation  and  Maintenance  Agreement  substantially  in the form attached
hereto as Exhibit D.

          (d) The Parties shall execute,  acknowledge  and deliver to each other
the Licensing and Binder Purchase  Agreement  substantially in the form attached
hereto as Exhibit E.

          (e) The Parties shall execute,  acknowledge  and deliver to each other
the Covenant Not to Compete substantially in the form attached hereto as Exhibit
F.

          (f) The Parties shall execute,  acknowledge  and deliver to each other
the Call Option  Agreement  substantially in the form attached hereto as Exhibit
G.

          (g) The  Parties  shall  enter  into a  sublease,  license  agreement,
easement or such other arrangement as is mutually agreeable to the Parties, with
respect to  locating  a facility  in which to  conduct  the  manufacture  of the
proprietary binder material used in connection with the operation of the Alabama
Project.

          (h) Sellers shall  deliver  original  executed  copies of all required
permits,   licenses,   franchises,   authorizations,    variances,   exemptions,


<PAGE>
                                                                              26

concessions, leases, instruments, orders, consents and approvals of Governmental
Entities  and third  parties  necessary  to execute,  deliver  and perform  this
Agreement and the Transaction Documents as set forth on Schedule 4.1(c).

          (i)  Sellers  shall  take all steps  necessary  to put Buyer in actual
possession and control of the Purchased Assets and the Alabama Project.

          (j) Sellers shall deliver to Buyer, at agreed locations, the Files and
Records.


                                   ARTICLE IX
                             APPROVALS AND CONSENTS

     Sellers, at their sole expense, shall make every reasonable effort prior to
the   Closing   to  obtain   all   required   permits,   licenses,   franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents and approvals of Governmental  Entities and third parties  necessary to
execute, deliver and perform this Agreement and the Transaction Documents as set
forth on Schedule 4.1(c).  Buyer shall make every reasonable effort to cooperate
in  connection  with  obtaining  all  required  permits,  licenses,  franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents and approvals of Governmental  Entities and third parties  necessary to
execute, deliver and perform this Agreement and the Transaction Documents as set
forth on Schedule 4.1(c);  provided,  however, that Buyer shall not be obligated
to incur any cost or expense associated with such transfer or application.


                                    ARTICLE X
                              CROSS INDEMNIFICATION

     10.1  Obligations  of Sellers.  Sellers  shall  indemnify,  defend and hold
harmless   Buyer  and  its   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  (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
of the following:

<PAGE>
                                                                              27

          (a) Any  breach by  either Seller  of any of Sellers' representations,
warranties and covenants contained in this Agreement; and

          (b) All  liabilities  and  obligations assumed  or retained by Sellers
under this Agreement.

     10.2 Obligations of Buyer. Buyer shall indemnify, defend, and hold harmless
Sellers,  and their respective  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 (including the original costs
of defending any and all actions,  suits,  proceedings,  demands and  assessment
which shall include reasonable  attorneys' fees and court costs) resulting from,
relating to, arising out of or incurred in connection with any of the following:

          (a) Any breach by Buyer of  any of Buyer's representations, warranties
and covenants contained in this Agreement; and

          (b) All  obligations  and  liabilities  assumed  by  Buyer  under this
Agreement.

     10.3 Indemnity Procedures.

          (a)  Notwithstanding  any  provision to the contrary  included in this
Article X, each party  hereto  waives the right,  for itself and its  respective
Affiliates,  to be  indemnified  by the other party  hereto to the extent of any
insurance proceeds or other recovery it receives with respect to the liabilities
for which  indemnification  would  otherwise  be  required  hereunder.  (For the
purposes of this  paragraph,  insurance  proceeds shall not include any payments
received  pursuant  to an  insurance  program  under  which  the  party  seeking
indemnification or an Affiliate of such party bears the ultimate cost.)

          (b) A  party  claiming  indemnification  under  this  Article  X  (the
"Indemnitee")  shall  notify in writing the party from whom  indemnification  is
claimed  (the  "Indemnitor")  in  reasonable  detail  of the  nature,  basis and
estimated  amount of the claim within a reasonable  time after  discovery by the
Indemnitee  of the basis  therefor  or the  assertion  thereof by a third  party


<PAGE>
                                                                              28

against the Indemnitee.  Notice of a claim filed in any court or  administrative
agency,  or submitted to arbitration,  shall be given the Indemnitor  within ten
(10) days of the Indemnitee's receipt of knowledge of such filing but failure to
provide   notice   within  the  10  days  shall  not  result  in  forfeiture  of
indemnification  rights except to the extent that the ability of the  Indemnitor
to defend against the claim is materially impaired.  In the event of such notice
by the Indemnitee to the Indemnitor of a third party claim, the Indemnitor shall
have  twenty  (20)  days  after  receipt  thereof  in  which  to  admit  or deny
responsibility  for  indemnification  of the Indemnitee by written notice to the
Indemnitee, and

          (i) as to  claims  with  respect  to  which  the  Indemnitee  and  the
Indemnitor may share responsibility,  each party may elect to participate in the
defense of the claim  through  counsel of its  choice  and at its  expense,  and
neither  party shall settle or  compromise  the claim without the consent of the
other;

          (ii) if the Indemnitor denies responsibility or fails to admit or deny
responsibility for a claim within twenty (20) days of the notice, the Indemnitee
shall have the sole option and right to defend the claim, including the right to
settle or compromise the claim without consent of the Indemnitor,  by counsel of
its choice; and

          (iii)  except with respect to a claim as to which the  Indemnitee  and
the Indemnitor share responsibility, if the Indemnitor admits responsibility for
indemnification,  the  Indemnitor  may at the same  time  elect to  control  the
defense of the claim by counsel of its choice and at its expense,  which counsel
shall consult with the  Indemnitee or its counsel at the  Indemnitee's  expense,
and  except  as  limited  herein  shall in such case have the right to settle or
compromise  the claim as the  Indemnitor  deems fit,  and the  Indemnitee  shall
cooperate  in such  defense  and agree to and  accept  any money  settlement  or
compromise  approved by the  Indemnitor.  If the Indemnitor does not so elect to
control the defense, the Indemnitee shall appear and defend the claim by counsel
of its choice,  and the Indemnitor may participate in such defense by counsel of
its choice at its expense,  which counsel shall be consulted by and shall assist
counsel for the  Indemnitee,  in which case the Indemnitor  shall  reimburse the
Indemnitee for its reasonable legal fees and expenses on a monthly basis.

<PAGE>
                                                                              29

                                   ARTICLE XI
                              REMEDIES AND SURVIVAL

     11.1 Survival of  Representations,  etc.. All of the warranties,  covenants
and  agreements  of the parties  hereto  contained in this  Agreement and in any
certificates   or  documents   delivered  at  Closing  in  connection  with  the
transactions contemplated hereby shall survive Closing of this transaction,  the
sale and  purchase  herein,  and any  reorganization,  or  merger  by any of the
parties  hereto or permitted  assignment of this  Agreement.  No  examination or
investigation  by or on behalf of any party shall in any way  modify,  affect or
diminish  the  obligations  of the party with  respect  to the  representations,
warranties  and covenants  contained  herein or in any of the other  Transaction
Documents.  No warranty or  representation  of any party herein or in any of the
other  Transaction  Documents  shall be deemed waived or modified by any fact or
matter within the actual or imputed  knowledge  any party hereto,  nor shall any
party  hereto be estopped  from  claiming  damages for breach of any warranty or
representation  herein or in any other  Transaction  Document  by virtue of such
knowledge, as it is the expressed intention of the parties that each party shall
be fully responsible for the falsity of any warranty or representation herein or
in any other Transaction  Document  notwithstanding  such knowledge.  Each party
hereto  expressly  waives all defenses  based on such  knowledge to any claim by
party to this  Agreement  or the  other  Transaction  Documents  for  breach  of
warranties  and  representations  of such party in this  Agreement  or any other
Transaction Documents.

     11.2 Procedure. Notice of any claim shall be given by a party (for purposes
of this Article XI the "claiming party")to the other party (for purposes of this
Article XI the "defaulting  party") as soon as reasonably  practicable after the
claiming  party  becomes  aware  thereof  and,  if the claim in question is as a
result of or in connection  with a liability to or from, or a dispute with,  any
other third party,  the claiming party shall take reasonable steps in connection
with such  liability  or dispute so as to recover or  minimize  or resolve  such
liability or dispute. The claiming party shall give to the defaulting party full
facilities to investigate the subject matter of the claim and, at the request of
the defaulting  party, to allow it at its own expense to participate in, or have
the conduct of (as it may elect),  all proceedings of whatsoever  nature against
the relevant third party arising out of, or in connection  with,  such liability


<PAGE>
                                                                              30

or dispute,  in the name of the claiming  party as it may consider  necessary in
order to mitigate any such claim.  The claiming party shall not accept or pay or
compromise any such liability or claim without  providing the defaulting party a
reasonable opportunity to dispute the same.

                                   ARTICLE XII
                                  MISCELLANEOUS

     12.1 Books, Records and Assistance by Personnel.

          (a) Buyer  agrees  that for a period of four (4) years  following  the
Closing,  Buyer shall take all  necessary  actions to ensure  that all  relevant
records relating to the Purchased  Assets,  with respect to periods ending on or
before the Effective  Time that are in the possession or control of Buyer or its
Affiliates  (whether  acquired  before or after the  Closing)  shall be retained
intact and shall be opened for inspection by  representatives  of Sellers at any
time during regular  business hours, and that Sellers may, during such period at
its expense, make such excerpts therefrom as Sellers may reasonably request.

          (b) Sellers  agree that for a period of four (4) years  following  the
Closing,  Sellers shall take all  necessary  actions to ensure that all of their
relevant  records  relating to the Purchased  Assets that are not required to be
delivered to Buyer  hereunder,  shall be retained intact and shall be opened for
inspection by representatives of Buyer at any time during regular business hours
and that Buyer may during  such  periods at its own expense  make such  excerpts
therefrom as Buyer may reasonably request.

          (c) Buyer and Sellers shall each use their  respective best efforts to
cooperate with the other as requested from time to time and make their employees
available  to the  other at  requesting  party's  expense  (including  the fully
allocated costs and  out-of-pocket  expenses of the party of whom cooperation is
being requested) to the extent that the requesting party may reasonably  require
for  its  corporate  purposes  including  attendance  at  depositions  or  legal
proceedings,  or audits  requested  by the  requesting  party to be performed by
their  employees or  independent  accountants  relating to any period through or
including the Closing.

          (d) Each party shall provide the other party with reasonable access to
all relevant documents, data and other information  which  may  be  required  by


<PAGE>
                                                                              31


the other party for the purpose of preparing  tax returns and  responding to any
audit by any taxing jurisdiction. Each party shall cooperate with all reasonable
requests of the other party made in connection with contesting the imposition of
taxes. Notwithstanding anything to the contrary in this Agreement, neither party
to this  Agreement  shall be required at any time to disclose to the other party
any tax return or other confidential tax information.

     12.2  Assignment.  This Agreement shall not be assigned in whole or in part
by Sellers  without the prior written  consent of Buyer, or assigned in whole or
in part by Buyer without the prior written consent of Sellers.

     12.3  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 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 addresses:

     Sellers:           Covol Technologies, Inc.
                        3280 North Frontage Road
                        Lehi, Utah 84043
                        Telephone: (801)768-4481
                        Telecopier: (801)768-4483
                        Attn.: Mr. Asael T. Sorensen

<PAGE>
                                                                              32

                        Alabama Synfuel #1 Ltd.
                        c/o Covol Technologies, Inc.
                        3280 North Frontage Road
                        Lehi, Utah 84043
                        Telephone: (801)768-4481
                        Telecopier: (801)768-4483
                        Attn.: Mr. Asael T. Sorensen

    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. William Marsh


    Buyer:              Birmingham Syn Fuel, L.L.C.
                        c/o PacifiCorp Financial Services, Inc.
                        775 NE Multnomah
                        Suite 775
                        Portland, Oregon 97232
                        Telephone: (503)7977222
                        Telecopier: (503)797-7246
                        Attn.: Mr. Reynold Roeder

    With a copy
    to:                 Stoel Rives LLP
                        700 NE Multnomah
                        Suite 950
                        Portland, Oregon 97232-4109
                        Telephone: (503)294-9100
                        Telecopier: (503)230-1907
                        Attn.: Gary R. Barnum, Esq.

     12.4 Expenses and Fees.  Each party hereto agrees to pay,  without right of
reimbursement  from  the  other,  the  costs  incurred  by it  incident  to  the
preparation  of this  Agreement,  and the fees  and  disbursements  of  counsel,
accountants and consultants employed by it in connection with the negotiation of
this Agreement and the consummation of the transaction  contemplated herein. All
sales,  use,  or similar  taxes  imposed by or due to any  taxing  authority  in
connection  with, or as a result of, the sale by Seller of the Purchased  Assets
shall be the sole responsibility of Seller.

<PAGE>
                                                                              33

     12.5  Successors and Assigns.  Except as otherwise  provided  herein,  this
Agreement  shall be binding upon and inure to the benefit of the parties  hereto
and their respective successors and permitted assigns.

     12.6 Waiver. Buyer or Sellers,  by written notice to  the  other,  may: (i)
extend a time  for performance  of any of the obligations or other actions under
this  Agreement;  (ii) waive by express  written  waiver any  inaccuracy  in the
representations  or  warranties  contained  in this  Agreement  or any  document
delivered pursuant to this Agreement;  (iii) waive by express written waiver any
compliance with the conditions or covenants contained in this Agreement; or (iv)
waive or modify by express written waiver or agreement performance of any of the
obligations performed under this Agreement; provided, however, that neither such
party may without the consent of the other grant such extension of time,  waiver
of   inaccuracies  or  compliance  or  waiver  or  modification  of  warranties,
conditions or covenants hereunder. Except as provided in this section, no action
taken pursuant to this Agreement (including without limitation the acts taken at
the  Closing)  shall be deemed to  constitute  a waiver of  compliance  with any
representations,  warranties or covenants  contained in this Agreement and shall
not operate or be construed as a waiver of any subsequent breach of a similar or
dissimilar nature.

     12.7 Entire Agreement. This Agreement,  together with the other Transaction
Documents,  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  and/or  in  the  Transaction
Documents.   The  Transaction  documents  supersede  all  prior  communications,
representations, or agreements, verbal or written, among the parties relating to
the subject matter hereof.

     12.8 Amendments, Supplements  and Etc.  This  Agreement  may  be amended or
supplemented at any time only by an additional written agreement executed by the
parties hereto.

     12.9  Applicable  Law.  This  Agreement and the legal  relations  among the
parties  hereto  shall be  governed  by and  construed  in  accordance  with the
substantive laws of the State of Utah without giving effect to the principles of
conflict of laws thereof.

     12.10 Execution and 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.

<PAGE>
                                                                              34

     12.11 Titles and  Headings.  Titles and headings to  paragraphs  herein are
inserted for  convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

     12.12 Third  Parties.  Nothing  herein  expressed or implied is intended or
shall be  construed  to confer upon or give any person or entity  other than the
parties hereto and their  successors and assigns any right or remedies by reason
of this Agreement as a third party beneficiary or otherwise.

     12.13 Further Assurances. The parties  agree from  time to  time to execute
such  additional  documents as are necessary to effect the intent of the parties
as manifested by this Agreement.

     IN WITNESS  WHEREOF,  the parties  hereto have executed  this  Agreement by
their duly authorized representatives the day and year first above written.

                                       SELLERS:

                                       COVOL TECHNOLOGIES, INC.



                                       By:______________________________________
                                       Name:
                                       Title:

                                       ALABAMA SYNFUEL #1 LTD.



                                       By:______________________________________
                                       Name:
                                       Title:

<PAGE>
                                                                              35


                                       BUYER:

                                       BIRMINGHAM SYN FUEL, L.L.C.



                                      By:_______________________________________
                                      Name:
                                      Title: