THIS  DEBENTURE  HAS  BEEN  ACQUIRED  FOR  INVESTMENT  AND HAS NOT BEEN
         REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
         REGISTERED OR OTHERWISE QUALIFIED FOR SALE UNDER THE SECURITIES LAWS OF
         ANY STATE. THIS DEBENTURE MAY NOT BE TRANSFERRED OR SOLD OR OFFERED FOR
         SALE OR OTHERWISE  TRANSFERRED,  PLEDGED OR HYPOTHECATED IN THE ABSENCE
         OF SUCH  REGISTRATION OR QUALIFICATION OR AN EXEMPTION  THEREFROM UNDER
         SUCH ACT AND SUCH LAWS OR AN  OPINION OF  COUNSEL  SATISFACTORY  TO THE
         ISSUER  HAS BEEN  DELIVERED  TO THE  ISSUER  TO THE  EFFECT  THAT  SUCH
         REGISTRATION IS NOT REQUIRED.

                         DEBENTURE DUE JANUARY 10, 2000

                              Salt Lake City, Utah

$4,367,351.28                                                    January 9, 1998

         COVOL TECHNOLOGIES, INC., a Delaware corporation whose headquarters are
located at 3280 North Frontage Road, Lehi, Utah 84043 (the "Company"),  promises
to pay to the order of AJG  FINANCIAL  SERVICES,  INC.,  or its  successors  and
assigns (the  "Holder"),  the aggregate  principal  sum of Four  Million,  Three
Hundred  Sixty-Seven  Thousand,  Three  Hundred  Fifty-One  and  28/100  Dollars
($4,367,351.28) (the "Principal  Amount"),  in lawful money of the United States
of America,  together with  interest  thereon from the date hereof on the unpaid
Principal  Amount, on the terms and conditions as hereinafter  specified,  until
the Principal Amount is repaid in full.

         1.  Identification  of  Debenture.  This  Debenture is the  "Debenture"
defined in that certain Debenture  Agreement and Security Agreement of even date
herewith between the Company and the Holder (the "Debenture  Agreement") and the
Holder is  entitled  to all of the  benefits  that  arise  under  the  Debenture
Agreement  from  being  the  "Investor"  and  the  holder  of  the   "Debenture"
thereunder.

         2. Payment of Principal and Interest.

         (a)  The  Principal  Amount  shall  be  payable  on  January  10,  2000
("Principal Repayment Date", also herein referred to as the "Maturity Date"). At
the Maturity  Date, any final  Prepayment  (as defined in Section 3 below),  any
acceleration of the Principal Amount pursuant to Section 8

                                        1
<PAGE>

below,  any unpaid  Principal  Amount of this  Debenture,  all interest  accrued
thereon  and other  sums  payable  hereunder  shall be due and  payable in full,
notwithstanding any other provision hereof.

         (b) From and after the date hereof,  interest on the unpaid  balance of
the Principal Amount shall accrue at the per annum rate of six percent (6%) (the
"Interest  Rate") and shall be due and payable upon the Maturity Date,  provided
that upon any Prepayment and any  acceleration of the Principal  Amount pursuant
to Section 8 below,  all accrued and unpaid interest on the principal  amount of
the Prepayment or on the accelerated  Principal  Amount shall be immediately due
and payable. Interest shall be calculated on the basis of a 365-day year and the
actual  number of days  elapsed.  In the event  that all or any  portion  of the
Principal Amount is not paid on the scheduled  payment date of this Debenture or
upon  acceleration  (regardless  of the  reason  therefor),  the  portion of the
Principal  Amount  not paid  when due  shall  bear  interest  until  paid at the
"Default Rate" (as defined in Section 8 below).

         (c) All portions of the Principal Amount,  all interest thereon and all
other sums due hereunder, shall be payable, without set-off or deduction, at the
offices  of the Holder set forth  above or at such other  place as Holder,  from
time to time may designate to the Company in writing,  in cash,  certified check
or check of the  Company  that the  Holder  has  agreed in writing in advance to
accept  or a wire  transfer  to such  account  as  Holder  may  have  previously
designated to the Company in writing.

         3.  Prepayment.  The Company  may prepay any  portion of the  Principal
Amount without penalty or premium,  upon five (5) days' written notice to Holder
(a "Prepayment"). Any Prepayments shall be applied first to any overdue payments
of principal or interest that bear interest at the "Default  Rate",  next to any
other  accrued but unpaid  interest  and then to  reduction  of principal of the
Principal Amount.

         If a Change in Control (as hereinafter defined) occurs, the Holder may,
by notice to the  Company  given not later  than the date 10 days after the date
the Company  has  notified  the Holder of such  Change in  Control,  require the
prepayment  of the entire  unpaid  Principal  Amount of this  Debenture  and all
accrued but unpaid interest thereon; whereupon the Company shall, on the date 10
days after the date such notice is given by the Holder,  prepay this  Debenture.
The  Company  shall give the Holder  notice of the  occurrence  of any Change in
Control not later than 10 days after such Change in Control occurred.

         As used herein, "Change in Control" of the Company means:

                  (a) any "person",  as such term is used in Sections  13(d) and
         14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
         Act"), (other than the Company,  any trustee or other fiduciary holding
         securities  under  an  employee  benefit  plan of the  Company,  or any
         corporation owned,  directly or indirectly,  by the stockholders of the
         Company in  substantially  the same  proportions as their  ownership of
         stock of the Company), is or becomes the "beneficial owner" (as defined
         in Rule 13d-3 under the Exchange Act), directly

                                        2

<PAGE>



         or indirectly, of securities of the Company representing 30% or more of
         the combined voting power of the Company's then outstanding securities;

                  (b) during any period of two consecutive  years (not including
         any period prior to the date of this Debenture), individuals who at the
         beginning  of such period  constitute  the Board,  and any new director
         (other than a director  designated  by a person who has entered into an
         agreement  with the  Company  to  effect  a  transaction  described  in
         paragraph  (a), (c) or (d) of this Section) whose election by the Board
         of Directors or nomination  for election by the Company's  stockholders
         was approved by a vote of at least  two-thirds  (2/3) of the  directors
         then still in office who either were  directors at the beginning of the
         period or whose  election or nomination  for election was previously so
         approved,  cease  for any  reason  to  constitute  at least a  majority
         thereof;

                  (c) the  stockholders  of the  Company  approve  a  merger  or
         consolidation of the Company with any other corporation, other than (I)
         a merger or consolidation  which would result in the voting  securities
         of the Company  outstanding  immediately  prior  thereto  continuing to
         represent  (either by remaining  outstanding or by being converted into
         voting  securities  of  the  surviving  entity)  more  than  80% of the
         combined  voting power of the voting  securities of the Company or such
         surviving  entity   outstanding   immediately   after  such  merger  or
         consolidation or (II) a merger or consolidation effected to implement a
         recapitalization  of the Company (or similar  transaction)  in which no
         "person"  (as  hereinabove  defined)  acquires  more  than  30%  of the
         combined voting power of the Company's then outstanding securities; or

                  (d) the stockholders of the Company approve a plan of complete
         liquidation  of the Company or an agreement for the sale or disposition
         by the Company of all or substantially all of the Company's assets.

         4. Exchange of Debenture.  At the option of the Holder,  this Debenture
may be  exchanged  for other  Debentures  in  denominations  of  $1,000  and any
integral  multiple  thereof and of a like aggregate  principal amount and tenor.
Upon surrender of this Debenture to the Company for exchange,  the Company shall
execute and deliver to the Holder the Debentures which the Holder is entitled to
receive in exchange.

         5. Ranking of Obligations.  The obligations of the Company hereunder do
rank and will rank at least pari  passu in  priority  of payment  with all other
indebtedness of the Company.

         6.  Covenants.  Until  satisfaction  in full of all  obligations of the
Company under this Debenture,  the Company shall at all times comply with all of
the  covenants  of the Company set forth herein or in the  Debenture  Agreement,
which are hereby  incorporated by reference  herein as if each such covenant was
set forth in full in this Debenture,  together with any necessary  defined terms
from the Debenture Agreement.

                                        3

<PAGE>



         7. Events of Default.  The following  events are hereby defined for all
purposes of this Debenture as Events of Default:

                  (a)  Failure of the Company to pay any  principal  or interest
         hereunder  when and as the same  shall  become due and  payable,  which
         failure  shall have  continued  for a period of 5 days after  receiving
         written notice of such late payment.

                  (b) The breach by the  Company  of any of the other  covenants
         set  forth in this  Debenture  or in the  Debenture  Agreement  if such
         breach is not cured  within 30 days  after  written  notice  thereof is
         given by the Holder.

                  (c)  The  institution  by the  Company  of  proceedings  to be
         adjudicated  a  bankrupt  or  insolvent,  or the  consent  by it to the
         institution of bankruptcy or insolvency  proceedings against it, or the
         filing by it of a petition or answer or consent  seeking  relief  under
         Title 11 of the United States Code, as now  constituted or hereafter in
         effect, or any other applicable Federal or State bankruptcy, insolvency
         or other  similar  law,  or the  consent  by it to the  institution  of
         proceedings  thereunder  or the filing of any such  petition  or to the
         appointment of a receiver,  liquidator,  assignee,  trustee, custodian,
         sequestrator  (or other  similar  official)  of the  Company  or of any
         substantial  part of its  property,  or the making by the Company of an
         assignment  for the  benefit  of  creditors,  or the  admission  by the
         Company in writing of its inability to pay its debts  generally as they
         become due;

                  (d)  The  entry  of  a  decree  or  order  by a  court  having
         jurisdiction  for relief in respect of the Company,  or  adjudging  the
         Company a bankrupt or  insolvent,  or  approving  as  properly  filed a
         petition seeking reorganization, arrangement, adjustment or composition
         of or in respect of the  Company  under  Title 11 of the United  States
         Code,  as  now  constituted  or  hereafter  in  effect,  or  any  other
         applicable  Federal or State  bankruptcy,  insolvency  or other similar
         law, or appointing a receiver, liquidator,  assignee, trustee (or other
         similar  official)  of the  Company or of any  substantial  part of its
         property, or ordering the winding-up or liquidation of its affairs, and
         the  continuance of any such decree or order unstayed and in effect for
         a period of 60 consecutive days; or

                  (e) A default shall occur under any other agreement,  document
         or  instrument  to which the Company is a party and such default is not
         cured within any applicable grace period or waived in writing, and such
         default  (i)  involves  the  failure  to make any  payment  when due in
         respect  of any  indebtedness  (other  than the  Principal  Amount  and
         interest  thereon)  of the Company in excess of Five  Hundred  Thousand
         Dollars  ($500,000) in the aggregate,  or (ii) causes such indebtedness
         or a  portion  thereof  in  excess  of Five  Hundred  Thousand  Dollars
         ($500,000) in the aggregate to become due prior to its stated  maturity
         or prior to its regularly  scheduled dates of payment, or (iii) permits
         any holder of such indebtedness or a trustee to cause such indebtedness
         or a  portion  thereof  in  excess  of Five  Hundred  Thousand  Dollars
         ($500,000) in the aggregate to become due prior to its stated

                                        4

<PAGE>



         maturity or prior to the regularly  scheduled dates of payment and such
         default  is not cured or waived  within  30 days  after the  occurrence
         thereof.

         If one or more Events of Default shall happen and be continuing,  then,
and in each and every such case, the Holder, at its option, by notice in writing
to the Company, may declare the entire Principal Amount and all interest accrued
thereon and any other sums due hereunder,  if not already due and payable, to be
immediately due and payable.  If there shall occur an Event of Default described
in Sections 8(c) or 8(d), the entire unpaid balance of the Principal Amount with
interest  accrued  thereon and all other sums due under this Debenture  shall be
immediately due and payable without notice to the Company.  If the entire unpaid
balance  with  interest  accrued  thereon  shall,  as a result  of either of the
preceding two sentences,  be immediately due and payable,  the unpaid balance of
the  Principal  Amount shall accrue  interest at the  Interest  Rate  compounded
annually to the date of default and thereafter at a rate which shall be equal to
the Interest Rate plus two percent (2%) (the "Default  Rate") and all other sums
due by the Company  hereunder  shall also be  immediately  due and payable;  and
payment thereof may be enforced and recovered in whole or in part at any time by
one or more of the  remedies  provided to the Holder in this  Debenture or under
applicable  law. In such case, the Holder may also recover all costs of suit and
other expenses in connection therewith, together with reasonable attorney's fees
for  collection,  together  with the  interest on any  judgment  obtained by the
Holder at the Default Rate,  including  interest at that rate from and after the
date of any execution, judicial or foreclosure sale until actual payment is made
to the Holder of the full amount due the Holder.

         8.  Payment on  Default.  In the event  that an Event of Default  shall
occur,  then the  Company  shall pay to the Holder the whole  amount  which then
shall have  become due on the  Debenture  for  principal  and  interest,  and in
addition  thereto,  such  additional  amount as shall be sufficient to cover the
costs and expenses of collection.

         No delay or  omission  of the Holder to  exercise  any rights or powers
accruing upon any default  which shall not have been  remedied  shall impair any
such right or power, or shall be construed to be a waiver of any such default or
acquiescence therein; and every power and remedy given by this to the Holder may
be  exercised  from time to time and as often as may be deemed  expedient by the
Holder.

         9. Immunity of  Incorporators,  Stockholders,  Officers,  Directors and
Employees. No recourse shall be had for the payment of the principal or interest
on this  Debenture or for any claim based  thereon or otherwise in any manner in
respect  thereof,  to or  against  any  subsidiary,  incorporator,  stockholder,
officer,  director or employee, as such, past, present or future, of the Company
or any respective subsidiary,  incorporator,  stockholder,  officer, director or
employees,  as such,  past,  present or future,  of any predecessor or successor
corporation,  either  directly  or through the  Company or such  predecessor  or
successor  corporation,  whether by virtue of any  constitutional  provision  or
statute or rule of law, or by the  enforcement of any assessment or penalty,  or
in any other manner,  all such liability being expressly  waived and released by
the acceptance of this Debenture and as part of the  consideration for the issue
thereof.

                                        5

<PAGE>



         10.  Notices.   Unless  otherwise  provided,  any  notice  required  or
permitted  under this  Debenture  shall be given in writing  and shall be deemed
effectively  given upon  personal  delivery  to the party to be notified or upon
deposit  with a  reputable  overnight  courier  or with the United  States  Post
Office,  by registered or certified  mail,  postage prepaid and addressed to the
party to be notified at the address  indicated  for such party in the  Debenture
Agreement, or at such other address as such party may designate by ten (10) days
advance written notice to the other party.

         11.      Miscellaneous.

         (a) The Company hereby waives presentment,  demand,  protest, notice of
demand,  notice of  nonpayment  or  dishonor,  notice of  protest  and all other
notices of any kind in  connection  with the delivery,  acceptance,  performance
default or enforcement of the payment of this Debenture. No failure to exercise,
and no delay in exercising any rights hereunder on the part of the Holder hereof
shall operate as a waiver of such rights.

         (b) The Holder and the Company may from time to time enter into written
agreements  amending  or  changing  any  provisions  of  this  Debenture  or the
Debenture  Agreement  or the rights of the Holder or the  Company  hereunder  or
thereunder, or may grant written waivers or consents to a departure from the due
performance of the obligations of the Company hereunder or thereunder.

         (c) The Company agrees that its liability under this Debenture shall be
unconditional, without regard to the liability of any other party, and shall not
be affected in any manner by any indulgence,  extension of time, renewal, waiver
or modification  granted or consented to by the Holder. No course of dealing and
no delay or failure  of the Holder in  exercising  any right,  power,  remedy or
privilege under this Debenture or the Debenture Agreement shall affect any other
or future exercise thereof or operate as a waiver thereof;  nor shall any single
or partial  exercise  thereof or any abandonment or  discontinuance  of steps to
enforce such a right,  power,  remedy of privilege preclude any further exercise
thereof  or of any other  right,  power,  remedy or  privilege.  The  rights and
remedies of the Holder under this  Debenture  and the  Debenture  Agreement  are
cumulative  and not  exclusive  of any  rights  or  remedies  which  they  would
otherwise have. Any waiver, permit, consent or approval of any kind or character
on the part of the Holder of any breach or default  under this  Debenture or any
such waiver of any provision or condition of this  Debenture  must be in writing
and  shall  be  effective  only to the  extent  specifically  set  forth in such
writing.

         (d) Whenever any payment or action to be made or taken  hereunder shall
be stated to be due on a day which is not a business day, such payment or action
shall be made or taken on the next following business day, and such extension of
time shall be included in computing interest or fees, if any, in connection with
such payment or action.

         (e) All notices, requests, demands, directions and other communications
(collectively,  "notices")  given to or made  upon any  party  hereto  under the
provisions of this Debenture shall be in writing and shall be effective if given
in accordance with the provisions of the Debenture Agreement.

                                        6

<PAGE>



         (f) The provisions of this  Debenture are intended to be severable.  If
any provision of this Debenture shall be held invalid or  unenforceable in whole
or in part in any jurisdiction such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability  without in any
manner   affecting  the  validity  or   enforceability   thereof  in  any  other
jurisdiction or the remaining provisions hereof in any jurisdiction.

         (g) This  Debenture  and the Debenture  Agreement  and other  documents
delivered  in   connection   herewith   and   therewith   supersede   all  prior
understandings  and  agreements,  whether  written or oral,  between the parties
hereto and thereto relating to the transactions provided for herein and therein.
Any  Holder of this  Debenture  acknowledges  that  such  Holder is bound by the
applicable  provisions of the Debenture  Agreement and by the acceptance of this
Debenture such Holder agrees to the terms thereof.

         (h) All  representations and warranties of the Company contained herein
or made in  connection  herewith  shall  survive  and shall not be waived by the
execution and delivery of this Debenture or by any  investigation by the Holder,
but  shall  terminate  upon  Company's  full  satisfaction  and  payment  of all
outstanding amounts in the Principal Amount of or interest on this Debenture.

         (i) This Debenture shall be binding upon and shall inure to the benefit
of the Holder, the Company and their respective  successors and assigns,  except
that the Company may not assign or  transfer  any of its rights and  obligations
hereunder or any interest herein.

         (j) Whenever the Holder's consent is required to be obtained under this
Debenture or the  Debenture  Agreement  as a condition to any action,  inaction,
condition or event,  the Holder  shall be  authorized  to give or withhold  such
consent in its sole and absolute  discretion  and to condition  its consent upon
the giving of additional collateral, the payment of money or any other matter.

         (k) The  representations,  warranties  and covenants  contained  herein
shall be  independent  of each  other and no  exception  to any  representation,
warranty  or  covenant  shall  be  deemed  to  be  an  exception  to  any  other
representation, warranty or covenant contained herein unless expressly provided,
nor shall any such  exceptions  be deemed to permit any action or omission  that
would be in contravention of applicable law.

         (l) This  Debenture  shall be governed by, and  construed in accordance
with, the laws of the State of Utah,  excluding,  however, the rules relating to
conflicts of law.

         (m) In no event shall the rate of interest payable under this Debenture
exceed the maximum rate of interest  permitted to be charged by  applicable  law
(including  the  choice of law  rules)  and any  interest  paid in excess of the
permitted  rate shall be refunded to the  Company.  Such refund shall be made by
application  of  the  excessive   amount  of  interest  paid  against  any  sums
outstanding  and shall be applied in such order as the Holder may determine.  If
the excessive amount of interest paid exceeds the sums outstanding,  the portion
exceeding the said sums outstanding shall

                                        7

<PAGE>



be refunded in cash by the Holder.  Any such  crediting or refund shall not cure
or waive any default by the Company hereunder. The Company agrees, however, that
in determining  whether or not any interest payable under this Debenture exceeds
the  highest  rate  permitted  by law,  any  non-principal  payment,  other than
interest payments,  including,  without limitation, fees and late charges, shall
be deemed,  to the extent  permitted by law, to be an expense,  fee,  premium or
liquidated damages, rather than interest.

         (n) THE  COMPANY  AND THE  HOLDER  HEREBY  WAIVE  TRIAL  BY JURY IN ANY
ACTION,  SUIT,  PROCEEDING  OR  COUNTERCLAIM  OF ANY KIND DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATED TO THIS  DEBENTURE OR THE  DEBENTURE  AGREEMENT OR ANY
ACT OR OMISSION  WHICH EITHER  PARTY  ASSERTS  RESULTED IN ANY  LIABILITY TO THE
COMPANY,  THE  HOLDER OR THEIR  RESPECTIVE  OFFICERS,  DIRECTORS,  STOCKHOLDERS,
PARTNERS, EMPLOYEES OR AGENTS, TO THE FULL EXTENT PERMITTED BY LAW.

         (o) To the extent the Company  fails to make  payment of  principal  or
interest  when due under  this  Debenture,  Holder may setoff the amount of such
deficiency  against  "Royalty  Amounts" (net of any commission  that the Company
would be required to pay (e.g.,  Coalco))  due and owing to the Company from the
Holder.  For  purposes  of this  paragraph  (o),  "Royalty  Amounts"  shall mean
royalties and license fees due to the Company either from the Holder or from any
of the Holder's  assigns or transferees that may owe a royalty or license fee to
the Company.

         IN WITNESS WHEREOF, the Company,  intending to be legally bound hereby,
has caused  this  Debenture  to be duly  executed by its  respective  authorized
officers on the day and year first above written.

                                                COVOL TECHNOLOGIES, INC.


                                                By: /Stanley M. Kimball/
                                                     -------------------------
                            Name: Stanley M. Kimball
                                                      Title: President
[Corporate Seal]

Attest: /Asael T. Sorensen, Jr./
       ----------------------------
Asael T. Sorensen, Jr., Secretary

Accepted and Agreed to as of
the first day referred to above

AJG FINANCIAL SERVICES, INC.


By:/David R. Long/
   ---------------------
   Name: David R. Long
   Title:   President

                                        8