ASSET PURCHASE AGREEMENT


                                     between


                          MOUNTAINEER SYNFUEL, L.L.C.,
                                  as Purchaser



                                       and



                            COVOL TECHNOLOGIES, INC.
                                    as Seller


                                      Dated
                                   May 5, 1998




<PAGE>



                                TABLE OF CONTENTS
                                                                           Page

                                    ARTICLE I

                                   DEFINITIONS
 Section 1.01.  Definitions...................................................1

                                   ARTICLE II

                                    PURCHASE
 Section 2.01.  Sale and Purchase of Assets...................................6
 Section 2.02.  Adjustment Amounts...........................................10
 Section 2.03.  Deferred Contingent Payments.................................11

                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER
 Section 3.01  Assets........................................................12
 Section 3.02. Ownership of Assets...........................................12
 Section 3.03.  Organization; Due Authorization; Binding Obligation..........12
 Section 3.04.  Absence of Certain Changes or Events.........................12
 Section 3.05.  Insurance....................................................12
 Section 3.06.  Commitments..................................................12
 Section 3.07.  Legal Proceedings............................................13
 Section 3.08.  Taxes........................................................13
 Section 3.09.  Compliance with Laws.........................................13
 Section 3.10.  Environment..................................................14
 Section 3.11.  Non-Contravention............................................14
 Section 3.12.  Regulatory Approvals.........................................14
 Section 3.13.  Conduct of Operations........................................14
 Section 3.14.  Designs and Drawings.........................................15
 Section 3.15.  Licenses, Permits, Etc.......................................15
 Section 3.16.  No Tax-Assisted Financing....................................15
 Section 3.17.  IRS Ruling...................................................15
 Section 3.18.  Certain Expectations.........................................15
 Section 3.19.  Projections..................................................16
 Section 3.20.  Production Capacity of Synthetic Coal Facilities.............16

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
 Section 4.01.  Organization.................................................17
 Section 4.02.  Due Authorization of the Purchaser; Binding Obligation.......17
 Section 4.03.  Non-Contravention............................................17
 Section 4.04.  Regulatory Approvals.........................................17


                                        i
<PAGE>





 Section 4.05.  Legal Proceedings............................................17
 Section 4.06.  Availability of Funds........................................18

                                    ARTICLE V

                        FURTHER AGREEMENTS AND ASSURANCES
 Section 5.01.  Confidentiality..............................................18
 Section 5.02.  Reports and Financial Statements.............................18
 Section 5.03.  Concerning the Project.......................................19

                                   ARTICLE VI

                           CONDITIONS TO THE PURCHASE
 Section 6.01.  No Legal Proceedings.........................................19
 Section 6.02.  Project Contracts............................................19

                                   ARTICLE VII

                             CONDITIONS TO THE SALE
 Section 7.01.  No Legal Proceedings.........................................20
 Section 7.02.  Payment of Purchase Price....................................20

                                  ARTICLE VIII

                                EVENTS OF DEFAULT
 Section 8.01.  Events of Default............................................20
 Section 8.02.  Purchaser's Obligation to Take Action Against 
                Defaulting Member............................................21

                                   ARTICLE IX

                    CONSEQUENCES OF BREACH OF REPRESENTATIONS
                          AND WARRANTIES AND COVENANTS
 Section 9.01.  Consequence of Breach of Representations and 
                Warranties and Covenants  ...................................21

                                    ARTICLE X

                            TERMINATION OF AGREEMENT
 Section 10.01.  Mutual Agreement............................................21
 Section 10.02.  Noncompliance; Nonperformance...............................21

                                   ARTICLE XI

                                  MISCELLANEOUS
 Section 11.01.  Entire Agreement............................................22
 Section 11.02.  Successors and Assigns......................................22



                                       ii
<PAGE>





 Section 11.03.  Counterparts; Effectiveness.................................22
 Section 11.04.  Headings....................................................22
 Section 11.05.  Amendment; Waiver; Requirement of Writing...................22
 Section 11.06.  Notices.....................................................22
 Section 11.07.  Governing Law...............................................23
 Section 11.08.  Exclusion of Consequential Damages..........................23
 Section 11.09.  No Third-Party Beneficiaries................................23
 Section 11.10.  Interim Funding.............................................23


 Exhibit A                  Base Case
 Exhibit B                  Form of Deferred Contingent Payment Note
 Exhibit C                  Interim Funding Draw Schedule


                                       iii

<PAGE>




                            ASSET PURCHASE AGREEMENT


                  THIS ASSET PURCHASE AGREEMENT (this "Agreement"),  dated as of
May 5, 1998, between MOUNTAINEER  SYNFUEL,  L.L.C., a Delaware limited liability
company (the "Purchaser"), and COVOL TECHNOLOGIES,  INC., a Delaware corporation
(the "Seller"),


                              W I T N E S S E T H :

                  WHEREAS,  the Seller has  constructed the Project and owns the
Assets (as such terms are defined below);

                  WHEREAS,  the Seller  desires to sell,  assign,  transfer  and
convey (and upon  placement  in service for federal  income tax  purposes of the
Project,  as defined  below) the  Purchaser  desires to purchase  and accept the
Assets for the consideration and on the terms set forth in this Agreement;

                  NOW,  THEREFORE,  in  consideration of the promises and of the
mutual agreements  hereinafter contained,  the parties,  intending to be legally
bound, do hereby agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.01. Definitions. For purposes of this Agreement, the
following terms have the meanings specified or referred to in this Section 1.01.
Terms used herein and not defined herein shall have the meaning assigned thereto
in the Amended and Restated Limited  Liability  Company Agreement of Mountaineer
Synfuel, L.L.C. dated May 5, 1998.

                  "Adjustment Date" means the first Quarterly Payment Date after
June 30 of each year.

                  "Annual   Adjustment   Amount"   means  the  amount  which  is
determined  under  Section  2.02(a)  hereof as the  adjustment to be made to the
Contingent Payments otherwise due on the Adjustment Date.

                  "Assets"   means  the  assets  which   comprise  the  Project,
including those  identified on Schedule 3.01 hereto (on the date hereof,  and at
the Closing, on the Closing Date), and the Lease.


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                  "Base Case" means the pro forma  economic  projections  of the
expected financial results of the Project attached hereto as Exhibit A.

                  "Calendar   Quarter"   means,  in  each  calendar  year,  each
three-month period beginning with January, April, July or October.

                  "Capacity  Warranty" has the meaning specified in Section 9.01
hereof.

                  "Capital  Contributions"  means the amounts contributed to the
Limited Liability Company by the Members as provided in the Company Agreement.

                  "Cash  Expenditures"  means,  with respect to any period,  all
disbursements of cash by the Purchaser  including,  but not limited to, payments
of operating  expenses,  amounts payable by the Purchaser as Contingent Payments
under  this  Agreement  (determined  without  regard to the  application  of any
provision  hereof  permitting or requiring all or any portion of such Contingent
Payments to be deferred due to Operating Deficits), amounts paid as royalties or
license fees under the Technology License and Binder Purchase Agreement or other
agreements regarding technology utilized by the Purchaser, payments of principal
and interest as it becomes due on indebtedness and any amounts set aside in such
period  as  Reserves  or  placed in escrow  pursuant  to this  Agreement  or the
Technology   License  and  Binder  Purchase   Agreement;   provided  that,  Cash
Expenditures shall not include  distributions to the Members or amounts expended
or applied from Initial Contributions, other than amounts expended or applied as
working capital or otherwise to cover operating costs  identified in the Project
Construction Budget.

                  "Cash Receipts"  means,  with respect to any period,  all cash
receipts of the Purchaser from the operation of the Project or the sale of fuels
produced  thereby  and any other cash  receipts  from  Purchaser  operations  or
assets,   plus  Quarterly   Contributions  plus  that  portion  of  the  Initial
Contributions  contributed  and  expended  or  applied  as  working  capital  or
otherwise  to cover  operating  costs,  in each case not to exceed  the  amounts
specified therefor in the Project Construction Budget, plus interest received on
any Reserves or accounts of the Purchaser or their subsidiaries;  provided that,
Cash Receipts shall not include proceeds of borrowings.

                  "Closing"  means the  transfer of the Assets to the  Purchaser
and the payment to the Seller of the Initial Payment.

                  "Closing Date" means the date and time (specified in notice by
Purchaser  pursuant to Section  2.01(b)) as of which the Closing  actually takes
place.

                  "Code" means the Internal Revenue Code of 1986, as amended, or
any successor  law, and  regulations  issued by the IRS pursuant to the Internal
Revenue Code or any successor law.

                  "Company   Agreement"  means  the  Limited  Liability  Company
Agreement of the  Purchaser as dated October 23, 1997 as amended and restated by
the Amended and Restated Limited  Liability  Company  Agreement of the Purchaser
dated May 5, 1998.


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                  "Contingent  Payment"  means  with  respect  to each  Calendar
Quarter,  the Contingent Payment due on the Quarterly Payment Date following the
end of such Calendar  Quarter all as provided in Section 2.01(e) and the payment
due on the Final Adjustment Date.

                  "Deferred  Contingent  Payments"  means  (i)  all  amounts  of
Contingent  Payments  which,  under Section 2.03,  are not paid on the Quarterly
Payment  Date when such  amounts  become due and (ii)  interest on the  deferred
amount until paid.

                  "Encumbrance"  means any  charge,  claim,  community  property
interest,   condition,   equitable  interest,  lien,  option,  pledge,  security
interest,  right of first refusal,  or  restriction  of any kind,  including any
restriction  on use,  voting,  transfer,  receipt of income,  or exercise of any
other attribute of ownership.

                  "Environmental  Law" means any Legal Requirement which relates
to or otherwise imposes  liability or standards of conduct  concerning mining or
reclamation  of  mined  land,  discharges,  emissions,  releases  or  threatened
releases of noises, odors or any pollutants,  contaminants or hazardous or toxic
wastes, substances or materials,  whether as matter or energy, into ambient air,
water or land, or otherwise relating to the manufacture, processing, generation,
distribution,  use, treatment, storage, disposal, cleanup, transport or handling
of  pollutants,  contaminants,  or  hazardous  or toxic  wastes,  substances  or
materials  including,  but  not  limited  to,  the  Comprehensive  Environmental
Response  Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Clean Air Act, the Federal Mine Safety Act of 1977,  the Surface Mining
Control and Reclamation Act of 1977, and the Occupational  Safety and Health Act
of  1970,  all as  amended,  any  regulations  promulgated  thereunder,  and any
comparable state, local or foreign laws and regulations.

                  "Estimated  Tax Credits" has the meaning  specified in Section
2.01(e).

                  "Event of Bankruptcy" means, for any entity:

                  (a) that such  entity  shall  fail  generally  to, or admit in
writing its inability to, pay its obligations as they become due; or

                  (b) a proceeding  shall have been instituted in a court having
jurisdiction in the premises  seeking a decree or order for relief in respect of
such entity in an involuntary case under any applicable  bankruptcy,  insolvency
or other  similar law now or hereafter in effect,  or for the  appointment  of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other  similar  official  of  such  entity  or for any  substantial  part of its
property,  or for  the  winding-up  or  liquidation  of  its  affairs  and  such
proceeding  shall not have been dismissed,  or such execution or similar process
shall  not  be  released,   vacated  or  fully  bonded,  within  60  days  after
commencement, filing or levy, as the case may be; or

                  (c) the  commencement by such entity of a voluntary case under
any applicable  bankruptcy,  insolvency or other similar law now or hereafter in
effect,  or such  entity's  consent  to the entry of an order  for  relief in an
involuntary  case under any such law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,

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<PAGE>



sequestrator,  conservator  or other similar  official of such entity or for any
substantial part of its property,  or any general  assignment for the benefit of
creditors.

                  "Final  Adjustment  Amount" means the adjustment to be paid on
the Final Adjustment Date which amount is to be determined under Section 2.02(b)
hereof.

                  "Final  Adjustment  Date" means June 30, 2008 (or,  (i) if Tax
Credits are  unavailable  by reason of the repeal or  amendment of Section 29 of
the Code,  June 30 of the year  following  the year in which the Tax Credits are
last  available as a result of such repeal or amendment,  or (ii) if Tax Credits
are available  beyond January 1, 2008, June 30 of the year following the year in
which the Tax Credits are last available).

                  "Final  Determination"  has the meaning  specified  in Section
2.01(j)(3).

                  "Governmental Body" means any of the following:

                  (a)      nation, state, county, city, town, village, district,
         or other jurisdiction of any nature;

                  (b)      federal,  state,  local, municipal, foreign, or other
         government;

                  (c) governmental or quasi-governmental authority of any nature
         (including any governmental agency,  branch,  department,  official, or
         entity and any court or other tribunal);

                  (d)      multi-national organization or body; or

                  (e)  body   exercising,   or   entitled   to   exercise,   any
         administrative,  executive, judicial, legislative,  police, regulatory,
         or taxing authority or power of any nature.

                  "Initial  Payment"  means the  return of the  promissory  note
referred to in Section 11.10 marked paid in full, or cancellation of such note.

                  "IRS" means the Internal Revenue Service or its successor.

                  "IRS Ruling" has the meaning  ascribed  thereto in the Company
Agreement.

                  "Lease"  means the Deed of Ground Lease of even date  herewith
by and between Seller and Upshur Property, Inc.

                  "Legal   Requirement"   means  any  federal,   state,   local,
municipal,  foreign,  international,  multinational or other  administrative (or
quasi-administrative) order, constitution,  law, ordinance,  principle of common
law, regulation, statute or treaty.

                  "Manager"  means Covol  Technologies,  Inc. in its capacity as
manager of the Purchaser.

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<PAGE>



                  "Maximum Tax Credit Amount at Risk" has the meaning  specified
in Section 2.01(j)(4).

                  "Member"  means  the  entities  which are the  Members  of the
Purchaser.

                  "Operating Deficit" means, for any period, the amount, if any,
by which Cash Expenditures exceed Cash Receipts.

                  "Operating Gain" means, for any period, the amount, if any, by
which Cash Receipts exceed Cash Expenditures.

                  "Permitted  Encumbrances"  means (i) liens for taxes  that are
not yet due and payable,  (ii) liens that are being  contested in good faith and
by  appropriate  proceedings  which have the effect of staying the  execution of
such liens, (iii) materialmen's,  mechanic's, worker's, repairmen's, employees',
carriers',  warehousemen's  and other like liens relating to the construction of
the Project, so long as the same relate to amounts that are not more than thirty
days past due, and (iv)  exceptions to title that are  disclosed  after the date
hereof to the Purchaser in the title policy relating to its lease of the land on
which the  Project is located  and which  Purchaser  reasonably  determines  (by
written  notice within  thirty days of receipt of the relevant  title policy) do
not interfere with its use and enjoyment of the leasehold.

                  "Project"  means  the  synthetic  fuel   production   facility
developed  and  constructed  by the Seller and  described  in Schedule II to the
Company Agreement.

                  "Purchaser"  or  "Partnership"   means  Mountaineer   Synfuel,
L.L.C., a Delaware limited liability company.

                  "Purchase Price" has the meaning specified in Section 2.01(a).

                  "Qualified  Fuels" means qualified fuels as defined in Section
29(c) of the Code.

                  "Quarterly  Payment Date" means the date  following the end of
each  Calendar  Quarter on which the  Contingent  Payment is due as  provided in
Section 2.01(h).

                  "Reserves" means reserves established and maintained from time
to time by the Purchaser, in amounts deemed adequate and sufficient from time to
time by the Purchaser for working capital and to pay taxes, insurance,  repairs,
replacements or renewals or other costs and expenses incident to the Purchaser's
business.

                  "Sale  or   Refinancing"   means   any  sale  or   refinancing
transaction  not in the  ordinary  course of business of Purchaser as more fully
described in the Company Agreement.

                  "Sale or Refinancing  Proceeds" means all cash receipts of the
Purchaser arising from a Sale or Refinancing less those amounts described in the
Company Agreement.

                  "Seller"   means   Covol   Technologies,   Inc.,   a  Delaware
corporation.

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<PAGE>



                  "Tax Credits" means the tax credits  provided by Section 29 of
the Code.

                  "Tax Credits  Limit" means,  for any calendar  year, an amount
equal to the Tax Credits  that would be  generated  by 480,000 tons of Qualified
Fuel (with each ton having a deemed energy content of 26 MMBtu)  produced at the
Project owned by the Purchaser.

                  "Tax Event" has the meaning specified in Section 2.01(j)(2).


                                   ARTICLE II

                                    PURCHASE

                  Section 2.01.  Sale and Purchase of Assets.


                  (a) On the Closing Date,  subject to the terms and  conditions
set forth in this  Agreement,  the Purchaser shall purchase and the Seller shall
sell, assign,  transfer and convey the Assets. At the Closing,  the Seller shall
deliver to the  Purchaser an update to the Closing Date of Schedule 3.01 hereto.
The Seller shall retain,  and shall  discharge  fully in  accordance  with their
terms,  any  and  all  liabilities  related  to any of the  Assets,  except  for
liabilities  under the Lease for the period  after the  Closing,  which shall be
assigned to and assumed by the Purchaser. The Purchase Price of the Assets shall
include two components:  (1) the Initial Payment and (2) Contingent Payments due
on each Quarterly  Payment Date through and including the Quarterly Payment Date
which  follows the Calendar  Quarter ended on December 31, 2007 and on the Final
Adjustment Date.

                  (b) The Purchaser  shall have the right to purchase the Assets
at any time on or before August 31, 1998 by giving written notice to such effect
to the Seller, which notice shall designate the Closing Date.

                  (c) Subject to the terms and conditions of this Agreement,  at
the Closing with respect to the sale of the Assets,  the Seller will, by bill of
sale, assignment and assumption agreement,  and other appropriate  documentation
and actions, sell, assign, transfer and convey all of the Seller's rights, title
and interest in the Assets to the  Purchaser and the  Purchaser  will  purchase,
assume and accept the Assets  from the Seller and will pay for the  Assets,  the
Initial  Payment and all of the  Contingent  Payments as they become due. On the
Closing Date, all right, title and interest of the Seller in the Assets shall be
transferred,  assigned  and  conveyed to the  Purchaser  and all interest of the
Seller in the Assets shall be released by the Seller.

                  (d) On the Closing Date,  the  Purchaser  shall pay in full in
immediately available funds the Initial Payment.

                  (e) The  Purchaser  shall,  as further  consideration  for the
Assets  purchased  hereunder,  be required to make and agrees to make Contingent
Payments  to the Seller in the amounts set forth in this  Section  2.01(e).  The
Contingent Payments shall be due and payable on

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<PAGE>



each  Quarterly  Payment Date and on the Final  Adjustment  Date. The Contingent
Payments in respect of the Assets shall  commence on the Quarterly  Payment Date
immediately  following the Calendar  Quarter in which the first  Qualified  Fuel
produced by the Project is sold and end with the Final Adjustment Date.  Subject
to Article IX hereof,  with respect to each  Calendar  Quarter,  the  Contingent
Payment due on the Quarterly  Payment Date  immediately  following such Calendar
Quarter  shall be an amount equal to (i) 16.7% of the  aggregate  Estimated  Tax
Credits  generated  by the Project  during such  Calendar  Quarter and (ii) with
respect to the Contingent  Payment due on the Adjustment Date, plus or minus the
Annual  Adjustment  Amount.  The term  "Estimated Tax Credits," for any Calendar
Quarter,  as used in  this  Agreement,  means  the  sum of the Tax  Credits,  as
determined in accordance with Section 3.1(e) of the Company  Agreement;  and, as
adjusted  following  review by the Seller as provided herein and by the Members'
Accountant  as provided in Section  3.1(f) of the Company  Agreement;  provided,
however,  that for purposes of calculating  Contingent  Payments,  Estimated Tax
Credits  for  any  calendar  year  shall  not  exceed  the  Tax  Credits  Limit.
Notwithstanding  the foregoing,  the Seller agrees that the Purchaser  shall not
have any  obligation  to make any  Contingent  Payment for the Assets unless and
until  the date the  conditions  set  forth in  Section  3.1(g)  in the  Company
Agreement have been satisfied or waived.

                  (f) The  final  Contingent  Payment  shall be due on the Final
Adjustment  Date and shall be in the  amount of the Final  Adjustment  Amount if
such Final Adjustment Amount is a positive amount.

                  (g) The Manager shall prepare its calculation of the Estimated
Tax Credits and the  Contingent  Payment for each  Calendar  Quarter at the same
time that the Manager  prepares its  calculation  of the amount of the Quarterly
Contribution  as provided in Section  3.1(e) of the Company  Agreement and shall
submit a report showing the Purchaser's  determination of the Contingent Payment
to the Seller at the same time as the Manager  submits the report  described  in
Section 3.1(f) of the Company Agreement to the Members' Accountant for review.

                  (h) The  Contingent  Payment  with  respect  to each  Calendar
Quarter  shall be due to the Seller not later than five days after the Quarterly
Contribution  for such Calendar Quarter is due to the Purchaser from the Members
under the terms of Section  3.1(f) of the Company  Agreement.  Such due date for
Contingent  Payments,  being  the date  which is five days  after the  Quarterly
Contribution Date, is herein referred to as the "Quarterly Payment Date."

                  (i) If the Seller objects to the Manager's  calculation of any
Contingent Payment, the Seller shall notify the Purchaser within two weeks after
the Purchaser has submitted the report to the Seller. If the Seller disputes the
Purchaser's  calculations,  the  Purchaser  shall,  in good faith,  consider the
issues  raised or in dispute and discuss such issues with the Seller and attempt
to reach a mutually  satisfactory  agreement,  taking into account as well,  any
issues  raised  by the  Members'  Accountant  and if such  dispute  is  promptly
resolved,  the adjusted amount agreed upon shall be the Contingent  Payment due.
If the  dispute is not  promptly  resolved,  the  Purchaser  shall  pay,  on the
Quarterly Payment Date, the amount not in dispute.  Thereafter,  the Seller, the
Manager and the Members'  Accountant shall promptly select an independent entity
qualified and  knowledgeable  in the area who shall be instructed to resolve the
dispute  promptly and, upon resolution of the dispute,  if it is determined that
additional Quarterly Contributions are

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<PAGE>



due from the Members,  the corresponding  additional amount shall be paid to the
Seller within ten days of the date of such determination, together with interest
thereon from the date sixty days after the relevant  Quarterly  Payment Date, at
the rate of 6% per annum.

                  (j) (1) If the Purchaser  advises the Seller in writing that a
Tax Event has occurred,  all payments of Contingent Payments thereafter up to an
amount equal to the  aggregate  Maximum Tax Credit  Amount at Risk shall be made
into  an  escrow  account  for the  benefit  of the  Seller  (but  owned  by the
Purchaser) at a bank or trust company of national standing, on terms whereby the
amounts  held in escrow will be released on the joint  signatures  of the Seller
and the Purchaser (which shall require the approval of a Majority in Interest of
the Members,  as such term is defined in the Company Agreement) in the following
circumstances, and in the following amounts:

                           (i)  upon a Final  Determination  with  respect  to a
         Member or Members and a Calendar Quarter or Calendar  Quarters that Tax
         Credits  are  disallowed,  the product of (x) the sum of (I) the amount
         disallowed,  plus (II) any interest and  penalties  (including  without
         limitation substantial  understatement  penalties and any penalties for
         underpayment  of  estimated  taxes to the  extent  attributable  to Tax
         Credits  arising  from  the  Purchaser)  due with  respect  to any such
         Calendar  Quarters  related to such Tax Credits,  multiplied by (y) the
         applicable  percentage  under Section  2.01(e) hereof shall be released
         from the  escrow  to the  relevant  Member  or  Members  so long as the
         relevant Member or Members certifies that (A) the amount being released
         is in the same proportion as the amounts escrowed hereunder bear to all
         amounts  placed into escrow  following a Tax Event under this Agreement
         and the Technology  License and Binder  Purchase  Agreement and (B) all
         actions necessary to cause the proportionate amounts escrowed under the
         Technology  License and Binder  Purchase  Agreement to be released have
         been taken or are being taken contemporaneously; and

                           (ii) if there is no  longer  an  extant  Tax Event as
         determined  in  accordance  with the final  sentence of  paragraph  (2)
         below, the amounts  remaining in escrow after  application of (i) above
         shall be released to the Seller.

                  (2) For purposes of this Agreement,  "Tax Event" means (i) the
issuance of any information document request related to Tax Credits arising from
the  operations  of the  Purchaser,  or any other  reasonable  indication  of an
intention by the IRS to examine or disallow any portion of such Tax Credits, but
in each case only if the IRS  continues  to make  inquiries  or  persists in its
examination  after the IRS has  received a response to its first such inquiry or
been  provided  with a copy  of  the  private  letter  ruling(s)  issued  to the
Purchaser,  (ii)  the  Purchaser  or  Seller  becoming  aware  that  the IRS has
questioned  or  otherwise  implicated  the  ability of the  proprietary  process
licensed under the Technology  License and Binder Purchase  Agreement to produce
Qualified Fuels at any other synthetic fuel production  project, or (iii) except
with respect to matters addressed in clause (i) or (ii) above, a Member having a
Percentage  Interest of at least 45% reasonably  determines,  after consultation
with Seller, that it is more likely than not that the IRS will disallow all or a
portion of Tax Credits.  Any Tax Event  arising  under this  Section  2.01(j)(2)
shall cease on the earlier of (A) a Final Determination,  (B) when the Purchaser
(with the  approval  of a Majority  in  Interest  of the Members or, if a Member
objecting to the same delivers an

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opinion of  nationally  recognized  tax counsel  that it is more likely than not
that the IRS will  disallow Tax  Credits,  with the approval of all the Members)
and the Seller  agree that the tax issue  giving  rise to the Tax Event has been
resolved,  or (C) solely with respect to a Tax Event  arising under clause (iii)
above,  more than one year passes  without an  examination of Tax Credits of the
Partnership commencing or another Tax Event occurring.

                  (3) For  purposes  of this  Agreement,  "Final  Determination"
means, with respect to Tax Credits related to the Purchaser,

                                    (i) unless an  adjustment  is proposed  with
                  respect  to  any  such  Tax  Credits,  the  expiration  of the
                  applicable statute of limitations;

                                    (ii)  unless an  administrative  appeal or a
                  judicial  proceeding  is  initiated  by the  Purchaser  or the
                  affected Member,  the date ninety days after the issuance of a
                  notice of deficiency;

                                    (iii)  unless   judicial   proceedings   are
                  initiated by the  Purchaser or the  affected  Member,  a final
                  decision  with  respect to the proposed  adjustment  by an IRS
                  appeals  officer,  as  evidenced  by the  issuance of a 90-day
                  letter, 870-AD or like notice and the expiration of the period
                  for initiating judicial proceedings;

                                    (iv) unless appealed by the Purchaser or the
                  affected Member, a final decision with respect to the proposed
                  adjustment  by the United  States Tax Court,  Court of Federal
                  Claims  or the  appropriate  Federal  District  Court  and the
                  expiration  of  the  period  for  filing  an  appeal  of  such
                  decision;

                                    (v) a  final  decision  of a  United  States
                  Court of  Appeals  with  respect to the  proposed  adjustment,
                  unless a petition for  certiorari to the United States Supreme
                  Court has been  applied for and is pending or has been granted
                  with respect to such decision;

                                    (vi)  denial  of  certiorari  by,  or  final
                  decision of, the United States Supreme Court; or

                                    (vii)   the   settlement   of   a   proposed
                  adjustment as evidenced by a closing agreement.

                  (4) For purposes of this Agreement, "Maximum Tax Credit Amount
At Risk" means the amount  reasonably  determined  by any affected  Member to be
potentially  subject to  disallowance  by the IRS  following  a Tax Event,  plus
interest and substantial understatement penalties, which amount shall not exceed
the  product of (x) the sum of (I) the Tax  Credits  claimed by such Member with
respect to the  operations  of the  Purchaser for all open tax years (so long as
such claims are consistent with the applicable final tax return of the Purchaser
as to any such tax year), it being understood that such amount is not limited to
amounts  directly  implicated  by the Tax  Event  (since  an audit of one  issue
related to Tax Credits could result in a disallowance  of other such credits for
the same or a subsequent period, or on other grounds discovered later),

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<PAGE>



plus (II) any interest and  penalties  payable by such  affected  Member (to the
extent attributable to Tax Credits arising from the Partnership),  multiplied by
(y) the applicable percentage under Section 2.01(e) hereof.

                  (5) Each of the Seller and the Purchaser agrees that, promptly
after obtaining knowledge thereof, it will give prompt notice of any matter that
is or could become a Tax Event or that the IRS has commenced an  examination  of
any other synthetic fuel production  project  utilizing the proprietary  process
licensed under the Technology  License and Binder  Purchase  Agreement,  and the
parties as  promptly  thereafter  as  practicable  shall meet to discuss in good
faith  whether  a Tax  Event  in  fact  exists  or  will  likely  occur  and the
consequences thereof; provided, however, that neither party shall be required to
make  any  disclosures  prohibited  under  contractual  obligations  related  to
synthetic fuel production projects or under applicable law.

                  Section 2.02.  Adjustment Amounts.

                  (a) Each year,  following  the  publication  by the IRS of the
revised  inflation  adjustment factor and the reference price, and following the
filing of the  Purchaser's  federal  income  tax return  (A) the  Estimated  Tax
Credits  for each  Calendar  Quarter  of the  preceding  calendar  year shall be
recomputed,  using such revised factor and taking into account the effect of the
operation of Section  29(b)(1) of the Code based on such  reference  price,  but
otherwise using the same information used to determine the Estimated Tax Credits
for such  periods,  except as necessary  to cause the  aggregate  Estimated  Tax
Credits to equal the Tax Credits  actually  reported on the Purchaser's  federal
income tax return;  and (B) the  Estimated  Tax  Credits for the first  Calendar
Quarter of the then current calendar year shall be recomputed using such revised
inflation  adjustment  factor.  The Manager shall then  determine the difference
between (x) the Estimated  Tax Credits for the  preceding  calendar year and the
first Calendar  Quarter of the current  calendar  year, as recomputed  using the
revised  information as set forth in this Section  2.02(a) and (y) the Estimated
Tax  Credits as  originally  determined  for the four  Calendar  Quarters in the
preceding  calendar year and the first Calendar  Quarter of the current calendar
year.  (In the event the Company's  federal income tax return is amended for any
year,  the Adjustment  Amount first  following the filing of such amended return
shall be increased or decreased to reflect changes in the tax credits claimed on
such amended  return,  using the  principles  of the  preceding  sentence.)  The
product of (I), the  difference  between (x) and (y) in the preceding  sentence,
multiplied by (II) the applicable  percentage  under Section 2.01(e) hereof,  is
the "Annual  Adjustment  Amount." If the Annual  Adjustment Amount is a positive
amount, it shall be added to the amount of the Contingent  Payment otherwise due
on the Adjustment Date and if the Annual Adjustment Amount is a negative number,
such amount shall be used to reduce the Contingent  Payment otherwise due on the
Adjustment Date, or if the Annual  Adjustment Amount is negative and exceeds the
amount of the Contingent  Payment  otherwise due on such date, the excess amount
shall be successively  credited  against  Contingent  Payments as they otherwise
become due thereafter.

                  (b) In the calendar  year in which the Final  Adjustment  Date
occurs, following the publication of the revised inflation adjustment factor and
the reference price  applicable to the immediately  preceding  calendar year and
following  the  filing of the  Partnership's  federal  income  tax  return,  the
Estimated Tax Credits for each Calendar Quarter of such immediately preceding

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<PAGE>



calendar  year shall be  recomputed,  using such revised  factor and taking into
account  the effect of the  operation  of Section  29(b)(1) of the Code based on
such reference price, but otherwise using the same information used to determine
the  Estimated  Tax Credits for such  periods,  except as necessary to cause the
aggregate  Estimated Tax Credits to equal the Tax Credits  actually  reported on
the Purchaser's  federal income tax return. The Manager shall then determine the
difference  between (x) the  Estimated  Tax Credits  for such  calendar  year as
recomputed  using the revised  information as set forth in this Section  2.02(b)
and (y) the Estimated Tax Credits as originally determined for the four Calendar
Quarters in such calendar year.  The product of (I), the difference  between (x)
and (y) in the preceding sentence,  multiplied by (II) the applicable percentage
under  Section  2.01(e)  hereof  (determined  based on the Project in respect of
which the Tax Credits were  generated),  is the "Final  Adjustment  Amount." The
Final  Adjustment  Amount,  if positive,  shall be due from the Purchaser to the
Seller as the final  Contingent  Payment on the Final  Adjustment  Date.  If the
Final  Adjustment  Amount is negative,  the amount  thereof shall be paid by the
Seller to the Purchaser on the Final Adjustment Date.

                  Section 2.03. Deferred Contingent Payments. (a) To the extent,
for any Calendar Quarter,  the Purchaser  experiences an Operating Deficit,  the
Purchaser,  with respect to the Contingent  Payment due on the Quarterly Payment
Date following such Calendar Quarter, shall be permitted to defer payment of the
Contingent  Payment due on such date up to the amount of the  Operating  Deficit
for such Calendar Quarter.  Any such amount deferred as provided in this Section
2.03  together  with  interest  thereon  is herein  referred  to as a  "Deferred
Contingent  Payment." Any amount of a Contingent Payment which is deferred shall
continue as an  obligation  of the Purchaser and shall bear interest at the rate
of six percent per annum, compounded annually,  until paid. If, for any Calendar
Quarter,  the  Purchaser  experiences  an Operating  Gain and there are Deferred
Contingent Payments outstanding, the Purchaser shall, on or before the Quarterly
Payment Date immediately  following such Calendar Quarter, pay to the Seller the
lesser of (i) the amount of such  Operating  Gain for the  Calendar  Quarter and
(ii) the  aggregate  amount of unpaid  Deferred  Contingent  Payments  including
accrued  and  unpaid  interest.  Any  payments  made with  respect  to  Deferred
Contingent Payments shall be credited first to accrued and unpaid interest,  and
then to the principal  amount of the unpaid Deferred  Contingent  Payments.  All
Deferred  Contingent  Payments  not paid prior to such date shall become due and
payable and shall be paid to the Seller on August 1, 2008. The Purchaser  agrees
that, to the extent it sells assets,  the Sale or  Refinancing  Proceeds will be
used first to pay any unpaid  Deferred  Contingent  Payments before such amounts
are used for any other purpose of the Purchaser. The obligation of the Purchaser
to pay the Deferred  Contingent  Payment shall be evidenced by a promissory note
substantially in the form of Exhibit B hereto.


                                   ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

                  The Seller hereby represents and warrants to the Purchaser, as
of the date hereof and as of the Closing Date, as follows:



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                  Section 3.01 Assets.  Set forth on Schedule  3.01 hereto is an
identification  of all of the tangible and intangible assets which comprise (or,
for purposes of Schedule 3.01 delivered on the date of this  Agreement,  but not
Schedule  3.01 to be updated and  delivered  on the Closing  Date as provided in
Section  2.01(a)  hereof,  when  constructed  and completed,  will comprise) the
Project; which assets, collectively,  are all of the assets necessary to operate
the Project so as to achieve results equal at least to the Base Case. All of the
tangible  assets set forth on Schedule  3.01 are in good  condition  and repair,
ordinary wear and tear excepted,  and the Seller has good and  marketable  title
(or a valid leasehold interest in, as relevant) to all of such assets,  free and
clear of Encumbrances except Permitted Encumbrances.

                  Section  3.02.  Ownership  of  Assets.  The  Seller (a) is the
owner, free and clear of any Encumbrances, of the Assets, and (b) subject to the
terms and conditions of this Agreement,  will sell, transfer, assign and deliver
good and valid  title to the  Assets and  relinquish  all  rights  with  respect
thereto.  At the Closing the Purchaser  will acquire good and valid title to the
Assets, free and clear of any Encumbrances.

                  Section  3.03.   Organization;   Due  Authorization;   Binding
Obligation.  The Seller is a Delaware corporation having all requisite power and
authority to execute,  deliver and perform this  Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by the
Seller of this  Agreement have been duly  authorized by all necessary  action on
its part. This Agreement has been duly and validly executed and delivered by the
Seller.  This  Agreement  is the valid and  binding  obligation  of the  Seller,
enforceable in accordance with its terms, subject to the qualification, however,
that  enforcement  of the  rights  and  remedies  created  hereby is  subject to
bankruptcy  and  other  similar  laws  of  general  application  relating  to or
affecting  the rights and remedies of creditors  and that the remedy of specific
enforcement  or of injunctive  relief is subject to the  discretion of the court
before which any proceeding therefor may be brought.

                  Section  3.04.  Absence  of Certain  Changes or Events.  Since
January  1,  1998,  there  has not  been  any  material  adverse  change  in the
properties,  assets,  business,  financial condition or results of operations of
the Seller as they relate to the Project.

                  Section 3.05. Insurance.  The assets,  business and operations
of the Seller are insured in accordance  with prudent  industry  practices  with
respect  to loss due to  casualty  and other  risks,  in amounts  and  coverages
reasonable in the  circumstances.  Schedule  3.05  attached  hereto sets forth a
complete and accurate  list of all casualty,  directors and officers  liability,
general  liability  (including  product  liability) and other types of insurance
maintained by the Seller that relate to the Project,  together with the carriers
and  liability  limits for each such  policy.  Each  policy is in full force and
effect,  there are no defaults or conditions which with the passage of time, the
giving of notices or both, would become defaults under any such policies, and no
written  or oral  notice has been  received  by the  Seller  from any  insurance
carrier  purporting  to cancel or reduce  coverage  under any such  policy.  The
Seller is current in all premiums or other payments due thereunder.

                  Section 3.06. Commitments.  Schedule 3.06 attached hereto sets
forth a complete and accurate list of all agreements, contracts, leases (whether
of real or personal property),

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<PAGE>



options, commitments,  arrangements and understandings,  whether oral or written
(including any and all amendments  thereto) to which Seller is a party and which
relate  to the  Project,  including,  but  not  limited  to,  (a)  licenses  for
technology,  (b)  agreements  for  the  purchase  of  feedstock  and  other  raw
materials,   (c)  operating   agreements,   (d)   engineering   procurement  and
construction  contracts,  (e)  management  services  agreements,  (f) employment
contracts and contracts with consultants and other independent contractors,  (g)
contracts  with  Affiliates  and (h) all  other  material  contracts.  All  such
contracts,  agreements, leases, commitments,  arrangements or understandings are
on commercially  reasonable and arms-length  terms,  and the sale of Assets will
not constitute a breach or default under any such contracts. To the knowledge of
Seller  neither the Seller nor any of the other  parties  thereto is in default,
thereunder and, to the knowledge of the Seller, no event has occurred which with
the  giving of notice or the lapse of time or both would  constitute  a default,
under any such  agreements,  contracts,  leases,  commitments,  arrangements  or
understandings.

                  Section  3.07.  Legal  Proceedings.  Except  as  disclosed  in
filings under the Securities  Exchange Act of 1934, the Seller is not engaged in
and is not a party to, or, to the Seller's knowledge, threatened with, any suit,
investigation,  legal  action or other  adverse  proceeding,  before  any court,
administrative agency,  arbitration panel or other similar authority (whether or
not covered by insurance),  and there is no outstanding order,  ruling,  decree,
judgment or stipulation by or with any court, administrative agency, arbitration
panel or other similar authority,  or any litigation pending or, to the Seller's
knowledge, threatened, against the Seller.

                  Section 3.08. Taxes. All federal, state and local tax returns,
reports, declarations, statements and other documents required to be filed by or
with respect to the Seller in respect of all taxes, including income, franchise,
sales,  property,  payroll and other  taxes,  levies,  imposts and duties of any
nature   whatsoever   ("Taxes")  have  been  filed  with  the   appropriate  tax
authorities,  such  documents  are true,  accurate  and complete in all material
respects and all amounts shown by such documents to be due and payable have been
paid.  Seller has no  liability  for taxes,  or for any interest or penalties in
respect  thereof  which,  if due and payable,  have not been paid or will not be
paid at or  prior to the  Closing.  There  are no  pending,  or to the  Seller's
knowledge, threatened, claims or assessments against Seller in respect of Taxes,
or interest or penalties,  other than claims or  assessments  for which adequate
reserves have been provided.

                  Section 3.09. Compliance with Laws. (a) Seller has complied in
all material respects,  and is now in compliance in all material respects,  with
all federal,  state and local laws, ordinances and regulations  applicable to it
on or prior to the  date of this  Agreement,  (b)  those  governmental  permits,
licenses  and  other  authorizations  required  to  be  obtained  or  waived  in
connection with further  development,  construction,  equipping and operation of
the Project are set forth on Part B of Schedule  3.09  attached  hereto,  (c) no
written claims or written complaints from any Governmental Body or other parties
have been  received  by Seller  and, to the  knowledge  of the  Seller,  none is
threatened,  to the  effect  that  Seller  is in  violation  of  any  applicable
building,  zoning,  occupational safety and health, or similar law, ordinance or
regulation  which relate to the Project or of any  applicable  fair  employment,
equal  opportunity or similar law,  ordinance or regulation,  and (d) Seller has
not received  written or oral notice from any  Governmental  Body of any pending
proceedings  to take all or any part of the  properties  of the Seller  (whether
leased or

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<PAGE>



owned) which relate to the Project by  condemnation  or right of eminent  domain
and, to the knowledge of the Seller, no such proceedings are threatened.  Part A
of Schedule  3.09 sets forth all  material  governmental  permits,  licenses and
authorizations  with  respect  to the  Project  obtained  to the  date  of  this
Agreement.

                  Section 3.10.  Environment.

                  (a) The  Seller  possesses,  or has the  use  and  benefit  of
through  its   respective   Project   Contracts,   all  permits,   licenses  and
authorizations required by any existing Environmental Law to construct,  own and
operate the  Project as  contemplated  in the Base Case,  except as set forth in
Part B of Schedule 3.10, and is in compliance with all applicable  Environmental
Laws in effect  as of the date  hereof  and,  no  condition  exists or event has
occurred  which would  constitute  or give rise to any  material  non-compliance
under any  applicable  Environmental  Law  affecting,  or which may  affect  the
Project,  the leasehold on which the Project is situated or the Purchaser as the
owner of the Project or as the lessee of such leasehold.  Except as set forth on
Part B of such Schedule 3.13, the Purchased Companies are not required to obtain
any  additional  permits,   licenses  or  authorizations  under  any  applicable
Environmental Law.

                  (b) The Seller has timely filed all reports and notifications,
if any,  required  to be filed on or  prior to the date of this  Agreement  with
respect to its  properties  and  facilities and has generated and maintained all
records and data, if any, required prior to the date of this Agreement under all
applicable Environmental Laws.

                  Section 3.11.  Non-Contravention.  The execution, delivery and
performance of this Agreement by the Seller and the  consummation  by the Seller
of the transactions contemplated hereby do not and will not, with or without the
giving of notice or the lapse of time, or both,  violate,  conflict with, result
in the breach of or  accelerate  the  performance  required by any of the terms,
conditions or provisions of any covenant,  agreement or  understanding  to which
the Seller is a party or any order,  ruling,  decree,  judgment  or  arbitration
award,  or any law,  rule,  regulation  or  stipulation,  to which the Seller is
subject or  constitute  a default  thereunder  or result in the  creation of any
lien,  charge or  encumbrance  upon any of the  properties  or assets of Seller,
other than violations,  conflicts,  breaches,  accelerations,  defaults,  liens,
charges or encumbrances which are not material.

                  Section 3.12. Regulatory Approvals. The Seller is not required
to  file,  seek  or  obtain  any  governmental  notice,  filing,  authorization,
approval,  order or consent,  or any bond in  satisfaction  of any  governmental
regulation in connection  with the execution,  delivery and  performance of this
Agreement by the Seller.

                  Section  3.13.   Conduct  of  Operations.   The  business  and
operations of Seller as they relate to the Project have been  conducted (a) in a
prudent and  commercially  reasonable  manner,  and (b) in  compliance  with all
applicable federal,  state and local laws including,  without  limitation,  such
laws  relating  to coal mine  health and safety  and other laws  relating  to or
affecting  coal mine  activity and labor and  employment  matters.  All existing
contracts or commitments of Seller for the purchase of goods or services as they
relate to the Project are on

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<PAGE>



terms which are commercially  reasonable,  arms-length and commensurate with the
goods or services provided or to be provided.

                  Section   3.14.   Designs  and  Drawings.   The  Project,   if
constructed in accordance with the designs and construction  drawings in respect
thereof, will have the operational  capabilities to produce Qualified Fuels of a
quality  expected to satisfy the  requirements  of the marketplace for synthetic
coal-based  fuels,  and the capacities to produce  Qualified  Fuels on an annual
basis as contemplated in the Base Case.

                  Section 3.15. Licenses,  Permits,  Etc. All licenses,  permits
and other  governmental  approvals  and all  private  consents  which  have been
obtained  in  connection  with the  construction  and  operation  of the Project
(including without limitation those required under  Environmental  Laws) are set
forth in Part A of Schedule  3.09;  all such  licenses,  permits,  approvals and
consents are in full force and effect,  there are no breaches or defaults by the
Seller under any thereof,  or  conditions  which with the passage of time or the
giving of  notice or both  would  give  rise to such a breach or  default,  each
thereof my be  assigned to  Purchaser  to undue delay or expense and the sale of
Assets as  contemplated  under  this  Agreement  will not  result in a breach or
default or  require  further  consent  under the terms  thereof,  other than any
breach or  default  that could not  reasonably  be  expected  to have a material
adverse  effect on Seller.  The Seller  reasonably  expects that all  additional
licenses,  permits,  other governmental  approvals and private consents that are
necessary  or  advisable  for the  construction  of,  operation  of, and sale of
synthetic  coal-based  fuels  produced by, the Project will be obtained  without
undue delay or expense so as to permit the Project to meet the  requirements  of
Section 3.1(g) of the Company  Agreement and operate so as to produce  Qualified
Fuel as contemplated in the Base Case.

                  Section 3.16. No Tax-Assisted Financing. None of the following
exist  with   respect  to  the   Project:   (i)  grants   described  in  Section
29(b)(3)(A)(i) of the Code; (ii) proceeds of issues of State or local government
obligations  described  in  Section   29(b)(3)(A)(ii)  of  the  Code;  or  (iii)
subsidized energy financing described in Section 29(b)(3)(A)(iii) of the Code.

                  Section  3.17.  IRS Ruling.  The  representations  made by the
Purchaser  and its  representatives  in applying for the private  letter  ruling
expected to be issued to the Purchaser were (and any future such representations
will be) correct in all material  respects,  and reflected (and will reflect) an
accurate  statement of the material facts.  The only written  submissions to the
IRS and the  only  written  communications  from the IRS in the  course  of such
request are listed on Schedule  3.24.  The Seller is not aware of any fact which
would render it unable to rely upon the IRS Ruling, or that would permit the IRS
to revoke or modify,  prospectively or  retroactively,  in whole or in part, the
IRS Ruling, in any manner adverse to the Seller. Seller has not taken any action
inconsistent  with  the  IRS  Ruling  in  connection  with  the  Project.   This
representation  and  warranty  shall  be made  only  at the  Closing  Date.  The
Purchaser  acknowledges that before the date hereof an application for a private
letter  ruling  was  submitted  to the IRS and is  about to be  withdrawn;  this
representation and warranty is to be made without regard to that application.

                  Section  3.18.  Certain  Expectations.  The Seller  reasonably
expects that the Project will be able to be completed, and will be completed, in
accordance with the requirements of Section 3.1(g) of the Company  Agreement and
will be able to be operated and will be operated

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<PAGE>



at a level of  operations  at least equal to the Base Case and  consistent  with
(but without  limitation of) that expectation,  the Seller  reasonably  believes
that:

                  (a)  there  are no  material  physical,  contractual  or legal
impediments  to  the   construction  of  any  Project  in  accordance  with  the
requirements of Section 3.1(g) of the Company Agreement and the operation of the
Project as contemplated in the Base Case;

                  (b)  Purchaser  has,  or  will  have  at the  time  reasonably
required  consistent  with the  requirements  of Section  3.1(g) of the  Company
Agreement  and the Base Case,  full right and  entitlement  to possess,  use and
conduct operations on the properties on which the Project is located;

                  (c) all  necessary  or advisable  rights of easement,  access,
ingress and egress, and transportation arrangements to and from the Project site
will be able to be obtained  without undue delay or cost, and in order to permit
the Project to be constructed  substantially in accordance with the requirements
of Section 3.1(g) of the Company  Agreement and to be operated  substantially in
accordance with the Base Case;

                  (d) there will be available to Purchaser sufficient coal fines
and other  feedstock to meet the  requirements  of the IRS Ruling and to produce
Qualified Fuels in the quantities and with the quality  contemplated in the Base
Case;

                  (e) the production and sale of Qualified Fuels by the Project,
and the Tax Credits resulting therefrom,  will be substantially  consistent with
the Base Case;

                  (f)  Purchaser  will  be  able  to  produce   Qualified  Fuels
substantially  in accordance  with the Base Case and in compliance  with the IRS
Ruling and the requirements of the marketplace for synthetic  coal-based  fuels;
and

                  (g) the Covol  technology  as used in the  Project  is able to
produce  Qualified Fuels in compliance  with the  requirements of the IRS Ruling
and the requirements of the marketplace for synthetic coal-based fuels.

                  The references in this Section 3.18 to the IRS Ruling shall be
a part of the  representations  and warranties only at the Closing Date, and not
at the date hereof.

                  Section  3.19.   Projections.   The  Base  Case  is  based  on
reasonable  assumptions,  and the Seller reasonably  believes that the Purchaser
will be able to pay Deferred Contingent Payments, if any, when due.

                  Section   3.20.   Production   Capacity  of   Synthetic   Coal
Facilities.  Assuming  completion of the applicable  synthetic  fuel  production
facility in accordance with the terms of the Design and  Construction  Agreement
and operation thereof by a qualified operator, the Project will, in at least two
consecutive Calendar Quarters occurring between the date hereof and December 31,
2000,  be capable of producing  at least  85,000 tons of Qualified  Fuels in the
aggregate  in  compliance  with the IRS  Ruling.  The  failure of the Project to
produce at least

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<PAGE>



85,000 tons of Qualified  Fuels in  compliance  with the IRS Ruling  within such
period shall create a presumption that the  representation  and warranty in this
Section 3.20 has been breached;  provided,  however, that the presumption may be
rebutted by clear and  convincing  evidence  that such failure was the result of
operations,  it being the intent of the parties  that this  representation  is a
representation as to design, equipment and capacity.

                                   ARTICLE IV

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

                  The Purchaser hereby  represents and warrants to the Seller as
follows:

                  Section  4.01.  Organization.   The  Purchaser  is  a  limited
liability  company duly organized,  validly  existing and in good standing under
the laws of the State of Delaware, with all requisite power and authority to own
and operate its business  and  properties  and to  consummate  the  transactions
contemplated hereby.

                  Section 4.02.  Due  Authorization  of the  Purchaser;  Binding
Obligation.  The  Purchaser  has all  requisite  power and authority to execute,
deliver  and  perform  this  Agreement  and  to  consummate   the   transactions
contemplated hereby. The execution, delivery and performance by the Purchaser of
this Agreement has been duly  authorized by all necessary  action on the part of
the Purchaser.  This Agreement has been duly and validly  executed and delivered
by the Purchaser.  This Agreement including,  but not limited to, the obligation
to pay the Initial Payment,  each Contingent Payment and all Deferred Contingent
Payments,  is the valid and binding obligation of the Purchaser,  enforceable in
accordance  with  its  terms,  subject  to  the  qualification,   however,  that
enforcement  of the rights and remedies  created hereby is subject to bankruptcy
and other  similar  laws of general  application  relating to or  affecting  the
rights and remedies of creditors and that the remedy of specific  enforcement or
of injunctive  relief is subject to the discretion of the court before which any
proceeding therefor may be brought.

                  Section 4.03.  Non-Contravention.  The execution, delivery and
performance  of this  Agreement by the  Purchaser  and the  consummation  by the
Purchaser of the transactions  contemplated  hereby do not and will not, with or
without the giving of notice or the lapse of time,  or both,  violate,  conflict
with,  result in the breach of or accelerate the performance  required by any of
the terms,  conditions or provisions of the Purchaser Agreement or any covenant,
agreement  or  understanding  to which the  Purchaser  is a party or any  order,
ruling,  decree,  judgment  or  arbitration  award or,  subject to the  filings,
registrations and notices referred to in Section 4.04, any law, rule, regulation
or  stipulation,  to which the  Purchaser  is  subject or  constitute  a default
thereunder or result in the creation of any lien, charge or encumbrance upon any
of the Purchaser's properties or assets.

                  Section  4.04.  Regulatory  Approvals.  The  Purchaser  is not
required to file, seek or obtain any governmental notice, filing, authorization,
approval,  order  or  consent  or  bond  in  satisfaction  of  any  governmental
regulation,  in connection with the execution,  delivery and performance of this
Agreement by the Purchaser.


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                                                       -17-

<PAGE>



                  Section  4.05.  Legal  Proceedings.  There  is no  outstanding
order, ruling, decree, judgment or stipulation, or any litigation pending or, to
the Purchaser's  knowledge,  threatened against the Purchaser which would have a
material  adverse  effect  on  the  ability  of the  Purchaser  to  perform  its
obligations under this Agreement,  or which seeks to enjoin or obtain damages in
respect of the consummation of the transactions contemplated hereby.

                  Section 4.06.  Availability of Funds.  The Purchaser will have
available to it on the Closing Date sufficient  funds to enable it to consummate
the transactions contemplated by this Agreement.


                                    ARTICLE V

                        FURTHER AGREEMENTS AND ASSURANCES

                  Section   5.01.    Confidentiality.    If   the   transactions
contemplated by this Agreement  shall be consummated,  the Seller agrees that it
shall, and shall cause each of its agents, representatives and employees to, for
a period of three years  following the final Closing Date hereunder (a) maintain
in confidence any and all proprietary and  confidential  information  concerning
the  Purchaser  and (b)  refrain  from  using any such  information  for its own
benefit or in  competition  with or otherwise to the detriment of the Purchaser.
It is  understood  that the  Seller  shall  not  have  liability  hereunder  for
disclosure or use of any such  information  which (i) is in or, through no fault
of the Seller, its agents,  representatives or employees,  comes into the public
domain, or (ii) was acquired by the Seller from other sources after the Closing,
provided such sources are not, to the knowledge of the Seller,  prohibited  from
disclosing such information by legal, contractual or fiduciary obligation to the
Purchaser,  any  affiliate  of the  Purchaser,  or (iii) the  Seller is  legally
required to disclose. In the event that the Seller becomes compelled by legal or
administrative  process to  disclose  any of such  information,  the Seller will
provide  the  Purchaser  with  prompt  notice so that the  Purchaser  may seek a
protective  order or other  appropriate  remedy and/or waive compliance with the
provisions  of this Section  5.01.  In the event that such  protective  order or
other remedy is not obtained,  or that the Purchaser waives  compliance with the
provisions  of this Section  5.01,  the Seller will furnish only that portion of
such information which the Seller is advised,  by opinion of counsel, is legally
required and will exercise reasonable  efforts,  at the Purchaser's  expense, to
obtain  reliable  assurance  that  confidential  treatment will be accorded such
information.  Nothing herein shall be construed as  prohibiting  the Seller from
using such  information  in  connection  with (i) any claim  against  the Seller
hereunder,  (ii) any third  party  claims  for which the  Purchaser  is  seeking
indemnification  from the Seller  hereunder and (iii) any exercise by the Seller
of any of its or his rights hereunder.

                  Section 5.02. Reports and Financial Statements.  The Purchaser
will prepare (a) quarterly  reports of synthetic  fuel  produced,  and synthetic
fuel sold to unaffiliated third parties,  (b) quarterly reports of Cash Receipts
and Cash  Expenditures  (c)  quarterly  statements  showing the  calculation  of
Estimated  Tax Credits and, for the  applicable  Calendar  Quarters,  the Annual
Adjustment  Amount and the Final  Adjustment  Amount  and (d)  annual  financial
statements, including statements of cash flows. Such annual financial statements
shall be prepared in accordance with generally accepted  accounting  principles.
The Purchaser shall provide the Seller

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                                                       -18-

<PAGE>



with copies of all such reports  within a reasonable  time after the end of each
Calendar  Quarter but not later than the  submission of the report  described in
Section 3.1(f) of the Company Agreement to the Members'  Accountant and all such
financial  statements  within 90 days after the end of each calendar  year.  The
Purchaser  shall,  at the reasonable  request of Seller from time to time,  make
available promptly to Seller, and to make the calculations  required by Sections
3 and 4 of such  Transfer  Agreements,  provided that any such  additional  data
shall be so made  available  only on conditions  that do not involve cost to the
Purchaser.

                  Section 5.03. Concerning the Project. The Seller shall (a) use
commercially   reasonable   efforts  to  cause  the  Project  to  be  developed,
constructed  and placed in commercial  operation and to do so at an overall cost
not to exceed the cumulative  aggregate  budgeted  development cost set forth in
Exhibit B to the  Company  Agreement,  (b)  supervise,  monitor  and  direct the
development and  construction of the Project and the placing of the Project into
service and shall, on commercially  reasonable terms,  procure all contracts and
agreements  appropriate  for  such  development,  construction  and  placing  in
service, and (c) proceed generally with due diligence to cause the Project to be
completed and placed in service and to meet the  requirements  of Section 3.1(g)
(other than clause (iii) thereof) of the Company Agreement.


                                   ARTICLE VI

                           CONDITIONS TO THE PURCHASE

                  The  Purchaser's  purchase  of the  Assets is  subject  to the
satisfaction  or waiver on or prior to the Closing  Date on which the Assets are
purchased of the following  conditions (provided that, if the Purchaser pays the
Initial  Payment  for the  Assets,  such  payment  shall  constitute  conclusive
evidence that each of the following conditions has been satisfied or waived):

                  Section 6.01. No Legal Proceedings. No Governmental Body shall
have commenced any administrative or judicial proceeding to restrain or prohibit
or otherwise  challenge the transactions  contemplated by this Agreement and, in
the  case  of any  action  commenced  by  other  than a  Governmental  Body,  no
preliminary or permanent injunctive order issued by any United States federal or
state court of competent  jurisdiction  which prevents the  consummation  of the
transactions contemplated by this Agreement shall have been issued and remain in
effect.

                  Section 6.02.  Project  Contracts.  The  Purchaser  shall have
entered  into the  Project  Contracts,  each of which shall be in full force and
effect and there shall be no default under any thereof,  and no condition  which
with the passage of time or giving of notice might become such a default.




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                                      -19-

<PAGE>



                                   ARTICLE VII

                             CONDITIONS TO THE SALE

                  The sale by the Seller of the Assets  hereunder  is subject to
the satisfaction,  or waiver on or prior to the Closing Date with respect to the
sale of  Assets  of the  following  conditions  (provided  that,  if the  Seller
executes and delivers  such  documents as the Purchaser  reasonably  requests to
evidence the Seller's transfer of the Assets,  such execution and delivery shall
constitute  conclusive  evidence that each of the following  conditions has been
satisfied or waived):

                  Section 7.01. No Legal Proceedings. No Governmental Body shall
have  commenced  any  judicial  proceeding  to restrain or prohibit or otherwise
challenge the  transactions  contemplated  by this Agreement and, in the case of
any action  commenced  by other than a  Governmental  Body,  no  preliminary  or
permanent injunctive order issued by any United States federal or state court of
competent  jurisdiction  which  prevents the  consummation  of the  transactions
contemplated by this Agreement shall have been issued and remain in effect.

                  Section 7.02.  Payment of Purchase Price.  The Purchaser shall
have tendered for delivery to the Seller the amount  required by Section 2.01 as
the Initial Payment due at Closing.


                                  ARTICLE VIII

                                EVENTS OF DEFAULT

                  Section  8.01.  Events of  Default.  Upon the  occurrence  and
continuance of any of the following events (each an "Event of Default"):

                  (a) Payments by the Purchaser. Failure by the Purchaser to pay
         in full (i) any Contingent Payment due herein on the Contingent Payment
         Date (except to the extent such payment may be deferred under the terms
         of Section 2.03 of this Agreement) and continuation of such failure for
         five days after the  Contingent  Payment Date,  (ii) failure to pay any
         Deferred Contingent Payment when due under the terms of Section 2.03 of
         this  Agreement  or (iii)  failure  by the  Purchaser  to pay the Final
         Adjustment Amount, if positive, on the Final Adjustment Date; or

                  (b) Bankruptcy Proceedings of the Purchaser. There shall occur
         an Event of  Bankruptcy  with respect to the  Purchaser or the Manager;
         provided  that,  if  such  Event  of  Bankruptcy  involves  involuntary
         proceedings  against the Purchaser or the Manager,  no Event of Default
         hereunder  shall occur unless such  proceeding or petition shall not be
         dismissed,  or such execution or similar process shall not be released,
         vacated or fully  bonded,  within  sixty (60) days after  commencement,
         filing or levy, as the case may be or

                  (c)  Covenants by the  Purchaser.  Failure by the Purchaser to
         observe or perform (i) any of the  covenants or  agreements  in Section
         5.02 hereof or (ii) any other covenant or

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                                      -20-

<PAGE>



         agreement  contained  herein and not  constituting  an Event of Default
         under  any other  clause  of this  Article  VIII;  provided,  that such
         failure  shall have  continued  for 60 days after the Seller shall have
         given written notice of such failure to the Purchaser;

then,  at any time during the  continuance  of any Event of  Default,  except as
provided by Section 8.02 hereof, the Seller may proceed to enforce its rights by
any means permitted by applicable law, including without limitation  bringing an
action to enforce  payment,  for damages and/or for specific  performance by the
Purchaser of any of the Purchaser's obligations under this Agreement.

                  Section 8.02.  Purchaser's  Obligation to Take Action  Against
Defaulting  Member.  The Purchaser agrees that if the Purchaser  defaults on the
payment  of any  amounts  due  hereunder  and such  default is the result of the
default by any Member in making a  Quarterly  Contribution,  then the  Purchaser
shall,  if the  default  has not been  cured  within  30 days of the  occurrence
thereof,  promptly  proceed to exercise the  remedies  available to it under the
Company Agreement.


                                   ARTICLE IX

                    CONSEQUENCES OF BREACH OF REPRESENTATIONS
                          AND WARRANTIES AND COVENANTS

         Section 9.01.  Consequence of Breach of Representations  and Warranties
and  Covenants.  Except as provided in the next sentence  hereof,  to the extent
that the Purchaser is damaged from time to time as a result of any breach of, or
inaccuracy in, any representation or warranty contained in Article III hereof or
the  breach of any  covenant  contained  in this  Agreement  the  Purchaser  may
withhold  from any  Contingent  Payment  due  hereunder  the  amount  reasonably
determined by the  Purchaser to be necessary to recover such damages.  All funds
so  withheld  shall  be  maintained  by  the  Purchaser  in  Permitted   Interim
Investments  (as  defined  in  the  Company  Agreement)  until  released  to the
appropriate  party (together with the earnings thereon) upon final resolution of
the matter  (which  resolution  shall  require  the  approval  of a Majority  in
Interest of the Members) or as directed by a court of  applicable  jurisdiction.
In case of a breach of the representation and warranty set forth in Section 3.20
hereof (the  "Capacity  Warranty"),  the amount of each  Contingent  Payment due
under Section 2.01 (e) shall be reduced  thereafter on a permanent basis to 6.7%
as liquidated damages and not as a penalty.  The Purchaser and Seller agree that
the sole  remedy  for any  breach of the  Capacity  Warranty  shall be the price
reduction set forth in the immediately preceding sentence.


                                    ARTICLE X

                            TERMINATION OF AGREEMENT

                  Section  10.01.  Mutual  Agreement.   This  Agreement  may  be
terminated at any time prior to the Closing by mutual  written  agreement of the
Purchaser and the Seller.


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                                                       -21-

<PAGE>



                  Section 10.02. Noncompliance;  Nonperformance.  This Agreement
may be  terminated  by written  notice by the  Purchaser to the Seller or by the
Seller to the Purchaser,  without prejudice to the terminating party's rights to
claim damages or other relief, if (i)(A) any of the material terms, covenants or
conditions  of this  Agreement to be complied with or performed at or before the
Closing by the party to whom notice is  addressed  shall not have been  complied
with or performed by the Closing Date, (B) such  noncompliance or nonperformance
shall be such as would  entitle the  terminating  party to decline to consummate
the transaction,  and (C) such  noncompliance or  nonperformance  shall not have
been waived by the party giving notice of  termination or (ii) the Closing shall
not have occurred on or prior to August 31, 1998.


                                   ARTICLE XI

                                  MISCELLANEOUS

                  Section 11.01. Entire Agreement. This Agreement (including the
Schedules attached hereto) constitutes the entire agreement and understanding of
the parties  relating  to the subject  matter  hereof and  supersedes  all prior
agreements and understandings,  whether oral or written, relating to the subject
matter hereof.

                  Section 11.02. Successors and Assigns. This Agreement shall be
binding  upon,  and  inure to the  benefit  of,  the  parties  hereto  and their
respective  successors and permitted assigns. This Agreement may not be assigned
by the Purchaser without the prior written consent of the Seller.

                  Section 11.03. Counterparts; Effectiveness. This Agreement may
be executed in any number of  counterparts,  each of which shall be deemed to be
an  original,  but all of  which  together  shall  constitute  one and the  same
instrument.

                  Section  11.04.  Headings.  The headings in this Agreement are
included for  convenience  of reference only and shall not in any way affect the
meaning or interpretation of this Agreement.

                  Section 11.05. Amendment; Waiver; Requirement of Writing. This
Agreement cannot be amended, changed,  modified,  released or discharged, and no
performance,  term or condition  can be waived in whole or in part,  except by a
writing signed by the party against whom  enforcement of the amendment,  change,
modification or waiver is sought. Any term or condition of this Agreement may be
waived at any time by the party hereto entitled to the benefit thereof. No delay
or failure on the part of any party in exercising any rights  hereunder,  and no
partial or single exercise  thereof,  will constitute a waiver of such rights or
of any other rights hereunder.

                  Section 11.06. Notices. Any notice,  request,  consent, waiver
or other  communication  required or permitted hereunder shall be effective only
if it is in writing and personally  delivered or sent by certified or registered
mail,  postage  prepaid,  by  nationally  recognized  overnight  courier  or  by
telecopier, addressed as set forth below:

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                                                       -22-

<PAGE>



                  If to the Seller:

                           Covol Technologies, Inc.
                           3280 North Frontage Road
                           Lehi, Utah  84043
                           Attention: General Counsel
                           Facsimile:  (801) 768-4483


                  If to the Purchaser:

                           Mountaineer Synfuel, L.L.C.
                           3280 North Frontage Road
                           Lehi, Utah  84043
                           Facsimile:  (801) 766-1979

                  with a copy to each Member at the address  specified  therefor
                  in the Company Agreement (as amended from time to time).

or such other person or address as the addressee may have  specified in a notice
duly given to the sender as provided herein.  Such notice or communication shall
be deemed to have been given as of the date received by the recipient thereof.

                  Section  11.07.   Governing  Law.  This  Agreement   shall  be
construed in accordance  with and governed by the laws of the State of Delaware,
without regard to its principles of conflicts of laws.

                  Section 11.08.  Exclusion of  Consequential  Damages.  Neither
party, its Affiliates nor their respective  employees,  agents or subcontractors
shall  be  liable  to the  other  party,  its  Affiliates  or  their  respective
employees,  agents  or  subcontractors,  whether  based  in  contract,  in  tort
(including negligence and strict liability),  under warranty, or otherwise,  for
any consequential,  indirect, punitive, incidental, exemplary or special loss or
damage whatsoever, including without limitation, loss of use, loss of productive
resources,  loss of opportunity or anticipated profits,  damages to good will or
reputation or punitive or speculative  damages.  The inclusion of this provision
has been a  material  inducement  for each of the  parties  to enter  into  this
Agreement.

                  Section 11.09. No Third-Party  Beneficiaries.  Nothing in this
Agreement  will be construed as giving any person,  firm,  corporation  or other
entity,  other  than the  parties  hereto  and their  successors  and  permitted
assigns, any right, remedy or claim under or in respect of this Agreement or any
provision hereof.

                  Section 11.10. Interim Funding. The Purchaser has concurrently
with the  execution  and delivery of this  Agreement  loaned  $6,250,000  to the
Seller to be used for the  construction and placing in service of the Project on
the terms and conditions of this  Agreement.  The Purchaser  agrees,  to provide
working capital for the construction of the Project, to lend the

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                                                       -23-

<PAGE>



further  amounts,  on the  dates,  and  subject to the  conditions  set forth on
Exhibit C hereto.  The  Seller  agrees  to repay  the full  amount  loaned to it
hereunder  on the  earlier of the Closing  Date or January 1, 1999.  To evidence
Seller's  obligation to repay that amount,  the Seller is concurrently  herewith
delivering to the Purchaser its promissory note.

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

                                            MOUNTAINEER SYNFUEL, L.L.C.

                                            By:   Covol Technologies, Inc.
                                                  Its Manager

                                            By:   /s/ Covol Technologies, Inc.
                                            Name: Brent M. Cook
                                            Title:   President

                                            COVOL TECHNOLOGIES, INC.

                                            By:   /s/ Stanley M. Kimball
                                            Name: Stanley M. Kimball
                                            Title:   CFO



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                                                       -24-

<PAGE>





                                    Exhibit A

Mountaineer Synfuels,LLC
Schedule of Operating Results and Cash Flows
Not Attached

                                                     Exhibit B

                                    [FORM OF DEFERRED CONTINGENT PAYMENT NOTE]

                                         DEFERRED CONTINGENT PAYMENT NOTE


$50,000,000
                                            Lehi, Utah

                                                                           ,

                  FOR VALUE  RECEIVED,  the  undersigned,  MOUNTAINEER  SYNFUEL,
L.L.C., a Delaware limited liability company ("MSLCC"),  hereby  unconditionally
promises to pay to the order of COVOL TECHNOLOGIES, INC., a Delaware corporation
("Covol"),  located at 3280 North Frontage  Road,  Lehi,  Utah 84043,  in lawful
money of the United States and in  immediately  available  funds,  the principal
amount of $50,000,000,  or, if less, the aggregate  unpaid  Deferred  Contingent
Payments due but not paid under the Purchase Agreement (as hereinafter defined),
which sum shall be due and payable from time to time in accordance  with Section
2.03 of the  Purchase  Agreement,  and if not repaid  earlier,  shall be due and
payable  and paid to Covol on  August  1,  2008.  MSLCC  further  agrees  to pay
interest  in like money  from the date  hereof on the  unpaid  principal  amount
hereof  from time to time  outstanding  at the rate of 6% per annum,  compounded
annually, until paid.

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

                  The holder of this promissory note is authorized to record, on
the  schedule  annexed  hereto and made a part hereof,  or on other  appropriate
records  of Covol,  the date and  amount  of each  Contingent  Payment  deferred
pursuant to Section  2.03 of the Purchase  Agreement  and the date and amount of
each payment of principal thereof;  provided,  however, that failure by Covol to
make any recordation or other error therein shall not limit or otherwise  affect
the obligations of MSLCC hereunder.

                  This promissory note is the promissory note referred to in the
Purchase  and Sale  Agreement,  dated May 1, 1998,  by and  between  Mountaineer
Synfuel,  L.L.C.  and  Covol  Technologies,  Inc.  (as the same may be  amended,
modified or  supplemented  from time to time,  the "Purchase  Agreement").  This
promissory note is entitled to the benefits of the Purchase Agreement.

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                                                       - 1 -

<PAGE>



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

         There  shall be full  recourse  to MSLCC and all of its  assets for the
liabilities and obligations of MSLCC under this promissory note and the Purchase
Agreement,  but in no event  shall  any  partner  of  MSLCC,  nor any  Affiliate
thereof,  nor any  shareholder,  officer,  director,  employee  or  agent of any
thereof,  be personally liable or obligated for such liabilities and obligations
of MSLCC.

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

                                  MOUNTAINEER SYNFUEL, L.L.C.

                                  By:  Covol Technologies, Inc.
                                                   its Manager


                                           By:
                                               Name:
                                                 Title:



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                                                       - 2 -

<PAGE>


                                                     Exhibit C

Interim Funding Draw Schedule
Not Attached

                                                     Schedules

3.01     Purchase Assets - Not attached
3.05     Insurance - Not attached
3.06     Commitments - Not attached
3.09     Permits - Not attached


                                      - 3 -