Prepared by, and after recording return to:
Michael S. Kosmas, Esquire
Jones, Day, Reavis & Pogue
1450 G Street, N.W., Suite 600
Washington, D.C. 20005



                              LEASEHOLD CREDIT LINE
                                  DEED OF TRUST
                             AND SECURITY AGREEMENT

                  THIS  LEASEHOLD   CREDIT  LINE  DEED  OF  TRUST  AND  SECURITY
AGREEMENT  (this "Deed of Trust"),  dated as of the 8th day of  December,  1998,
from COVOL TECHNOLOGIES, INC., a Delaware corporation, having an address at 3280
North Frontage Road, Lehi, Utah 84043 (the "Borrower"),  to ________________ and
________________,  each a  resident  of West  Virginia,  having  an  address  at
_____________________________________________________________     (collectively,
together with their successors in such capacity, the "Trustee"), for the benefit
of MOUNTAINEER SYNFUEL,  L.L.C., a Delaware limited liability company, having an
address at 3280 North Frontage Road, Lehi, Utah 84043 (the "Beneficiary").


                                   WITNESSETH:

                  WHEREAS, pursuant to a Deed of Ground Lease dated as of May 5,
1998 between Upshur Property,  Inc. and the Borrower (the "Ground  Lease"),  the
Borrower has acquired a leasehold  estate in certain  real  property  located in
Upshur County, West Virginia,  described on Exhibit A attached hereto (the "Real
Property"). A Memorandum of Lease setting forth certain information with respect
to the Ground Lease is recorded immediately prior hereto.

                  WHEREAS,  pursuant  to a  Promissory  Note  dated of even date
herewith in an original maximum aggregate principal amount of NINE MILLION SEVEN
HUNDRED FIFTY THOUSAND  DOLLARS  ($9,750,000.00)  (the "Note"),  the Borrower is
indebted to the  Beneficiary  as more fully set forth  therein.  The amounts due
from the Borrower to the Beneficiary pursuant to the Note are sometimes referred
to hereinafter as the "Obligations".



                THIS IS A CREDIT LINE DEED OF TRUST SECURING THE
            PAYMENT OF THE MAXIMUM PRINCIPAL AMOUNT OF $9,750,000.00



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                  NOW,  THEREFORE,  for good  and  valuable  consideration,  the
receipt and sufficiency of which are hereby acknowledged, and FOR THE PURPOSE OF
SECURING the Obligations (the original maximum  aggregate amount of principal to
be secured at any one time by this Deed of Trust being  $9,750,000.00),  and the
full  and  punctual  performance  and  observance  by the  Borrower  of all  the
covenants,  agreements, terms and conditions set forth herein, the Borrower does
hereby irrevocably grant, sell,  release,  convey,  warrant,  assign,  transfer,
mortgage,  pledge,  set over and confirm unto the Trustee,  its  successors  and
assigns,  IN TRUST,  WITH POWER OF SALE,  for the  benefit  and  security of the
Beneficiary,  under and  subject  to the terms and  conditions  hereinafter  set
forth, the following described property, to wit:

                  All of the right, title and interest of the Borrower under the
Ground Lease and in and to the Real Property (collectively, the "Property");

                  TOGETHER WITH all interests,  estates or other claims, both in
law and in equity,  which the Borrower now has or may  hereafter  acquire in (i)
the Property,  (ii) all easements,  rights-of-way  and rights used in connection
therewith  or  as  a  means  of  access   thereto,   and  (iii)  all  tenements,
hereditaments and  appurtenances in any way belonging,  relating or appertaining
thereto;

                  TOGETHER  WITH all estate,  right,  title and  interest of the
Borrower  now owned or hereafter  acquired,  in and to any land lying within the
right-of-way of any street, open or proposed, adjoining to the Property, and any
and all  sidewalks,  alleys,  strips  of land and gores  adjacent  to or used in
connection therewith;

                  TOGETHER  WITH all estate,  right,  title and  interest of the
Borrower,  now owned or hereafter acquired,  in and to any and all buildings and
other improvements now or hereafter erected on the Property  (collectively,  the
"Improvements");

                  TOGETHER  WITH all estate,  right,  title and  interest of the
Borrower now owned or hereafter  acquired,  in and to all inventory,  machinery,
apparatus,   equipment,  materials,  supplies,  goods,  fittings,  fixtures  and
articles of personal  property now or hereafter located on or at the Property or
used in connection  therewith  (including in connection  with the  construction,
renovation,  or improvement thereof) and all additions,  and accessions thereto,
replacements  therefor  and  proceeds  and profits  thereof  (collectively,  the
"Personal Property");

                  TOGETHER WITH all estate,  claim, demand, right (including all
rights to  possession  and use, all options and other  rights to give  consents,
modify, amend, extend, renew, terminate or purchase or sell), title and interest
of the Borrower under all contracts, agreements, understandings or arrangements,
whether written or oral, now or hereafter in effect relating to the development,
construction,  reconstruction,  repair,  alteration,  addition to,  improvement,
replacement,  use,  operation  or  management  of the  Property and as lessee or
lessor  under any leases or  occupancy  arrangements  relating to the  Property,
whether  oral or written,  now or  hereafter  in effect  (all of the  foregoing,
collectively, the "Agreements"), provided that any of the

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Agreements  that by their  terms  or by  operation  of law  would  become  void,
voidable  or  revocable  if  mortgaged,  pledged or assigned  hereunder  or if a
security  interest  therein were granted  hereunder are  expressly  excepted and
excluded from the lien of this Deed of Trust;

                  TOGETHER WITH all right, claim,  demand, title and interest of
the Borrower in, to and under all permits, approvals,  certificates,  variances,
orders, exemptions and other authorizations,  including any condominium permits,
approvals, certificates, variances, orders, assumptions and other authorizations
now or  hereafter  issued,  made or granted  with  respect  to the  development,
construction,   reconstruction,   repair,  alteration,   addition,  improvement,
replacement,  use,  operation or management of the Property  (collectively,  the
"Permits"), provided that any of the Permits that by their terms or by operation
of law would  become  void,  voidable  or  revocable  if  mortgaged,  pledged or
assigned  hereunder or if a security interest therein were granted hereunder are
expressly excepted and excluded from the lien of this Deed of Trust;

                  TOGETHER  WITH  all  reversion  or  reversions,  remainder  or
remainders,  rents, revenues,  proceeds, issues, profits,  royalties, income and
other benefits of the Property, the Improvements,  the Personal Property and the
Agreements,  and the Beneficiary is hereby authorized to collect and receive the
same, to give proper receipts and acquittances therefor and to apply the same to
the payment of the Obligations,  notwithstanding  the fact that the same may not
then be due and payable;

                  TOGETHER WITH all right, title and interest of the Borrower in
and to (i) all proceeds of the insurance required to be maintained under section
1.04 of this Deed of Trust and (ii) all awards  heretofore or hereafter  made to
the Borrower with respect to any part of the  Property,  the  Improvements,  the
Agreements,  or the Personal Property as the result of the exercise of the power
of eminent domain, including any awards for changes of the grades of streets, or
as the result of any other damage to any part of the Property, the Improvements,
the Agreements or the Personal Property for which compensation shall be given by
any  governmental  authority  (a  "Condemnation"),  and the  Trustee  is  hereby
authorized  to collect  and receive  the  proceeds  thereof to the extent of the
right,  title  and  interest  of the  Borrower,  to  give  proper  receipts  and
acquittances  therefor,  and, at the direction of the Beneficiary,  to apply the
same to the payment of the Obligations,  notwithstanding  the fact that the same
may not then be due and payable;

                  TOGETHER  WITH  any and all air  rights,  development  rights,
zoning  rights  or other  similar  rights  or  interests  which  benefit  or are
appurtenant to the Property or the Improvements or both and any proceeds arising
therefrom;

                  Permitting  the said  Borrower to use and occupy the  Property
and the  Improvements,  until an Event of  Default  shall have  occurred  and be
continuing;

                  All of the foregoing  property is sometimes herein referred to
as the "Trust Estate".


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                  TO HAVE AND TO HOLD the Trust Estate,  with all privileges and
appurtenances  thereunto  belonging,  to the Trustee and its successors in trust
and, for the benefit of the Beneficiary and its successors and assigns forever.

                  PROVIDED  ALWAYS,  if the  Obligations  shall  be paid in full
according to the terms and provisions  hereof and of the Note, then this Deed of
Trust and the lien and estate hereby granted shall cease, determine and be void.

                  TO PROTECT THE  SECURITY OF THIS DEED OF TRUST,  THE  BORROWER
HEREBY COVENANTS AND AGREES AS FOLLOWS:


                                    ARTICLE I

                            Particular Covenants and
                           Agreements of the Borrower

                  Section  1.01.  Payment of the  Obligations;  Title,  etc. The
Borrower  shall pay the  Obligations  according  to the  terms of the Note.  The
Borrower warrants and represents that the Borrower (i) is lawfully  possessed of
a leasehold  estate in the  Property  and is lawfully  possessed  of a fee title
estate in and to the Improvements and the Personal Property, subject to no liens
or encumbrances, and (ii) has full power and lawful authority to grant, bargain,
sell, release, convey, warrant, assign, transfer, mortgage, pledge, set over and
confirm unto the Trustee and  Beneficiary  all right,  title and interest of the
Borrower in and to the Trust Estate.  The Borrower also warrants and  represents
that this Deed of Trust is given to secure  indebtedness  incurred in connection
with the  carrying on of a commercial  enterprise.  Subject to the rights of the
Borrower  under this Deed of Trust,  the Borrower shall forever defend the title
to the  Trustee  in and to the Trust  Estate  and the  validity  of the lien and
estate hereof against the claims and demands of all persons whomsoever.

                  Section 1.02. Further Assurances.

                  (a) The Borrower shall execute,  acknowledge and deliver, from
time to time,  such further  instruments as the Trustee or the  Beneficiary  may
reasonably require to accomplish the purposes of this Deed of Trust.

                  (b) The Borrower,  immediately upon the execution and delivery
of this Deed of Trust,  and thereafter from time to time,  shall cause this Deed
of Trust,  each supplement and amendment hereof  (collectively,  the "Recordable
Document"),  to be filed,  registered or recorded and refiled,  re-registered or
re-recorded  in such manner and in such places as may be required by any present
or future law in order to publish  notice of and  perfect the lien and estate of
this Deed of Trust upon the Trust Estate. The Borrower shall, from time to time,
perform  or cause to be  performed  any other act as  required  by law and shall
execute or cause to be executed any and all

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further instruments (including financing statements, continuation statements and
similar statements with respect to any Recordable Document) (collectively,  "UCC
Documents")  reasonably  requested  by the Trustee or the  Beneficiary  for such
purposes. Without limiting the foregoing, not more than six months nor less than
three months prior to the date on which any continuation statements are required
to be filed with respect to any Recordable Document, the Borrower shall file all
such  continuation  statements  and send  copies  evidencing  such filing to the
Trustee  and the  Beneficiary.  If the  Borrower  shall fail to execute  any UCC
Document  by  the  date  three  (3)  months  prior  to the  date  on  which  any
continuation  statement is required to be filed, the Beneficiary shall be and is
hereby irrevocably  appointed the agent and  attorney-in-fact of the Borrower to
execute such UCC Document.

                  (c) The  Borrower  shall  pay  all  filing,  registration  and
recording fees, all refiling,  re-registration  and  re-recording  fees, and all
expenses  incident  to  the  execution,   acknowledgment  and  delivery  of  the
Recordable Documents,  and all Federal,  State, county and municipal stamp taxes
and other taxes, duties,  imposts,  assessments and charges arising out of or in
connection  with the  execution,  acknowledgment  and delivery of the Recordable
Documents.

                  (d) The Borrower has not caused,  accepted or  permitted,  and
shall not cause, accept or knowingly permit, the disposal, release or threatened
release on the Property of any hazardous  substance,  as that term is defined in
the  Comprehensive  Environmental  Response,  Compensation  and Liability Act of
1980, 42 U.S.C.  ss. 9601, et seq., and to Borrower's  knowledge no other owner,
user or  operator of the  Property,  past or  present,  has caused,  accepted or
permitted the disposal, release or threatened release of any hazardous substance
on the Property.

                  Section 1.03. Compliance with Legal Requirements. The Borrower
shall comply with all laws, ordinances,  regulations,  covenants, conditions and
restrictions  now or  hereafter  affecting  the Trust Estate or any part thereof
(collectively,  "Legal Requirements");  provided,  however, that if the Borrower
contests  in  good  faith  and  by  appropriate   proceedings  the  validity  or
applicability of any Legal Requirement so that the enforcement thereof is stayed
or provides the Beneficiary with security in such amount and in such form as the
Beneficiary  may require,  in its  reasonable  discretion,  then, in either such
case,  compliance  with the Legal  Requirement  in question  shall be  suspended
during the pendency of such contest.

                  Section 1.04.  Required  Insurance.  The Borrower shall at all
times (i) keep the Trust Property insured for the benefit of Beneficiary, as its
interests may appear,  in an amount not less than one hundred  percent (100%) of
the full  replacement  cost of such Trust  Property,  (ii) carry and maintain or
cause others to carry and maintain such liability and indemnity insurance as may
be required from time to time by the  Beneficiary,  and (iii) carry and maintain
or cause  others to carry and  maintain  workers'  compensation  and  disability
insurance  to  the  fullest  extent   required  by  law.  Upon  request  of  the
Beneficiary,  the originals of all such policies and renewals thereof,  together
with receipts satisfactory to the Beneficiary  evidencing payment thereof, shall
be delivered to and held by the Beneficiary.


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                  Section 1.05.  Insurance Proceeds.  (a) After the happening of
any casualty to the Property,  the Improvements or the Personal  Property or any
part thereof,  the Borrower shall give prompt notice thereof to the  Beneficiary
and the Trustee.

                  (b) Any insurance  proceeds shall be paid over promptly to the
Beneficiary,  and the Beneficiary,  at its sole discretion, may apply such sums,
in whole or in part, to the repair, restoration and replacement of the Property,
the Improvements or the Personal Property, or to the payment of the indebtedness
secured by this Deed of Trust in such order of priority as the Beneficiary shall
determine.

                  Section 1.06. Assignments of Policies Upon Foreclosure. In the
event  of  foreclosure  of this  Deed of Trust  or  other  transfer  of title or
assignment  of the Trust Estate in  extinguishment,  in whole or in part, of the
Obligations,  to the extent  permitted by the Borrower's  policies of insurance,
all  right,  title  and  interest  of the  Borrower  in and to all  policies  of
insurance  shall inure to the benefit of and pass to the  successors in interest
to the  Borrower  or the  purchaser  or grantee of the Trust  Estate or any part
thereof.

                  Section 1.07.  Indemnification;  Waiver of Offset.  (a) If the
Trustee  or  the  Beneficiary  is  made a  party  defendant  to  any  litigation
concerning  this  Deed of Trust or the  Trust  Estate  or any  part  thereof  or
interest therein, or concerning the occupancy thereof by the Borrower,  and such
litigation  did not  arise  as a  result  of the  gross  negligence  or  willful
misconduct  of the  Trustee  or the  Beneficiary,  as the case may be,  then the
Borrower shall indemnify, defend and hold the Trustee or the Beneficiary, as the
case  may be,  harmless  from  and  against  all  liability  by  reason  of said
litigation,  including  reasonable  attorneys'  fees  and  expenses  in any such
litigation, whether or not any such litigation is prosecuted to judgment. If the
Trustee  or the  Beneficiary  in good  faith  commences  an action  against  the
Borrower  to  enforce  any of the terms  hereof or  because of the breach by the
Borrower  of  any  of the  terms  hereof,  or  for  the  recovery  of any of the
Obligations, then the Borrower shall, to the extent permitted by law, pay to the
Trustee or the Beneficiary,  as the case may be, its reasonable  attorneys' fees
and expenses, and the right to such attorneys' fees and expenses shall be deemed
to have accrued on the  commencement  of such action,  and shall be  enforceable
whether or not such action is prosecuted to judgment, provided that the Borrower
shall not be liable for any amounts to be paid in settlement unless Borrower has
consented in writing to such settlement, which consent shall not be unreasonably
withheld.  If a  Default  shall  occur and be  continuing,  the  Trustee  or the
Beneficiary may employ an attorney or attorneys to protect its rights hereunder,
and in the event of such employment  following any Default by the Borrower,  the
Borrower  shall, to the extent  permitted by law, pay the reasonable  attorneys'
fees and expenses  incurred by the Trustee or the  Beneficiary,  as the case may
be,  whether or not an action is  actually  commenced  against  the  Borrower by
reason of such  Default.  The  Borrower  will  assume the  defense of any action
against the Trustee or the Beneficiary  covered by the indemnification set forth
in this Section, including the retaining of counsel selected by Borrower and the
payment by the Borrower of reasonable  counsel's  fees and expenses  relating to
such  defense  and of the  aggregate  amount  to be  paid at  settlement  of any
litigation if such settlement is effected with the written consent of the

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Borrower.  The  Trustee  and the  Beneficiary  shall  have the  right to  retain
separate  counsel in any such action and to participate in the defense  thereof,
but the fees and expenses of such counsel shall be at the expense of the Trustee
and/or  the   Beneficiary   unless  the  retaining  of  such  counsel  has  been
specifically  authorized in writing by the Borrower or the use of counsel chosen
by the Borrower to represent the Trustee  and/or the  Beneficiary  would present
such counsel with a conflict of interest.

                  (b) The Borrower  hereby  waives any and all right to claim or
recover against the Trustee or the Beneficiary,  or their  respective  officers,
employees,  agents and  representatives,  for loss of or damage to the Borrower,
the Trust  Estate,  the property of the Borrower or the property of others under
the control of the  Borrower  from any cause  insured  against or required to be
insured  against  under  this  Deed of  Trust  unless  arising  from  the  gross
negligence or willful misconduct of the Trustee or the Beneficiary.

                  Section 1.08. Impositions. The Borrower shall pay, or, where a
third party is  responsible  for  payment,  cause the payment by third  parties,
before  any  fine,  penalty,  interest  or cost  attaches  thereto,  all  taxes,
assessments,  water and sewer rates,  utility charges and all other governmental
or nongovernmental charges or levies now or hereafter assessed or levied against
the Property,  the Improvements,  the Personal Property or any other part of the
Trust  Estate  or upon the lien or  estate  of the  Trustee  or the  Beneficiary
therein  (collectively,  "Impositions"),  as  well  as  all  claims  for  labor,
materials  or  supplies  which,  if  unpaid,  might by law  become a prior  lien
thereon, and as soon as possible after request by the Trustee or the Beneficiary
shall cause  receipts  showing  payment of any of the foregoing to be exhibited;
provided,  however,  that if by law any Imposition  may be paid in  installments
(whether- or not  interest  shall accrue on the unpaid  balance  thereof),  such
Imposition may be paid in  installments  (together with accrued  interest on the
unpaid balance  thereof) as the same  respectively  become due, before any fine,
penalty  or  cost  attaches  thereto;  provided  further,  however,  that if the
Borrower or other party  responsible  for payment  contests in good faith and by
appropriate  proceedings  the validity or  applicability  of any  Imposition  or
claims for labor, materials or supplies and provides to the Beneficiary security
in such amount and in such form as the Beneficiary may reasonably require, then,
in either such case, compliance with the Imposition in question may be suspended
during the pendency of such contest.

                  Section 1.09.  Limitations of Use.  Without the consent of the
Beneficiary,  the Borrower shall not initiate,  join in or consent to any change
in any private restrictive covenant, zoning ordinance or other public or private
restrictions limiting or defining the uses which may be made of the Property and
the Improvements or any part thereof.

                  Section 1.10.  Encumbrances.  The Borrower shall discharge all
existing liens and encumbrances on the Property.

                  Section 1.11. Estoppel  Certificates.  The Borrower shall upon
request by the  Beneficiary,  but not more often than twice per  calendar  year,
within twenty (20) days of such

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request furnish to the Beneficiary a written statement,  duly  acknowledged,  of
the unpaid amount of the  Obligations  and whether any offsets or defenses exist
against the Obligations.

                  Section 1.12. Actions by Trustee and/or Beneficiary to Protect
Trust Estate.  If the Borrower  shall fail to (i) perform and observe any of the
terms,  covenants or conditions required to be performed or observed by it; (ii)
cause the  insurance  required by section  1.04 to be  effected;  (iii) make (or
cause to be made) the payments  required by section  1.02(c) or section 1.08; or
(iv)  perform or observe any other  covenants or  agreements  to be performed or
observed by the Borrower hereunder,  the Trustee or the Beneficiary may, without
obligation  so to do, at any time  after ten (10)  days'  written  notice to the
Borrower  (except  in any  emergency)  and for so long  as such  failure  by the
Borrower  continues,  effect,  pay,  perform  or  observe  the  same.  Each sum,
including reasonable  attorneys' fees, so expended by the Trustee or Beneficiary
or  expended  to  sustain  the  lien  and  estate  of this  Deed of Trust or its
priority,  or to  protect or  enforce  any of the  rights of the  Trustee or the
Beneficiary under this Deed of Trust, shall (together with interest thereon from
and including the date of  expenditure  of such sum until the same shall be paid
in full at the rate of ten percent  (10%) per annum (the  "Default  Rate")) be a
lien on the Trust Estate, be deemed to be added to the Obligations,  and be paid
by the  Borrower  within ten (10) days after demand  therefor.  In any action or
proceeding  to  enforce  this  Deed  of  Trust  or to  recover  or  collect  the
Obligations,   the   provisions  of  law   respecting  the  recovery  of  costs,
disbursements and allowances shall prevail unaffected by this covenant.

                  Section  1.13.   Condemnation.   (a)  If  the  Property,   the
Improvements or the Personal  Property or any part thereof or interest  therein,
are taken or damaged by reason of any Condemnation,  or if the Borrower receives
any notice or other  information  regarding such proceeding,  the Borrower shall
give prompt notice thereof to the Beneficiary and the Trustee.

                  (b)  Subject  to the rights of the  landlord  under the Ground
Lease with respect to  compensation in connection with any taking of all or part
of the Property,  all  compensation,  awards and other payments or relief in any
condemnation (collectively, "Condemnation Proceeds") shall, at the option of the
Beneficiary,  be  distributed  first to the  Beneficiary  to be  applied  to the
payment  of the  indebtedness  secured  by this  Deed of Trust in such  order of
priority as the Beneficiary  shall determine.  The Beneficiary shall be entitled
at its option to participate in any compromise or settlement in connection  with
such  Condemnation,  and the Borrower  shall within ten (10) Business Days after
request  therefor,  reimburse the  Beneficiary  for all  out-of-pocket  expenses
(including reasonable attorneys' fees) incurred by the Beneficiary in connection
with  such  participation.  The  Borrower  shall  not  make  any  compromise  or
settlement  in  connection  with any  Condemnation  without the  approval of the
Beneficiary.

                  Section 1.14.  Additional Security.  If the Beneficiary at any
time holds additional  security for the Obligations,  and if an Event of Default
shall have  occurred and be  continuing,  the  Beneficiary  may enforce the sale
thereof or otherwise  realize  upon the same,  at its option,  either  before or
concurrently herewith or after a sale is made hereunder.


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                  Section 1. 15.  Disposition  of Trust Estate.  Notwithstanding
any other provision hereof,  and except with respect to the sale of inventory in
the ordinary course of business, the Borrower shall not sell, assign,  transfer,
pledge or otherwise  transfer or encumber or dispose of all or part of the Trust
Estate,  whether voluntary or by operation of law, except with the prior written
consent of the Beneficiary.

                  Section 1.16. Subordination of Leases. All leases or subleases
entered into by the Borrower (or any other entity  representing  the Borrower or
succeeding  to the  Borrower's  position)  in respect of the  Property  shall be
subordinate  to and subject to this Deed of Trust and shall  contain a clause to
that effect.

                  Section 1.17. Hazardous Materials; Contamination.

                  (a) The Borrower  represents,  warrants and covenants that (i)
the Trust Estate and the business  operations  occurring thereon comply with all
applicable  federal,  state and local environmental and hazardous waste laws and
regulations;  (ii) no enforcement  actions are pending or threatened against the
Trust  Estate;  (iii) to the best of its  knowledge,  during  the  period of its
ownership of the Trust Estate, there has been no disposal, release or threatened
release  of  hazardous   substances,   wastes  or  materials  or   environmental
contaminants  on, from or under the Trust  Estate;  (iv) it has no  knowledge of
(and has no reason to have  knowledge  of) any  presence,  disposal,  release or
threatened  release  of  any  hazardous  substances,   wastes  or  materials  or
environmental  contaminants  on,  from or under the Trust  Estate  that may have
occurred prior to the Borrower's  acquisition of title to the Trust Estate;  (v)
neither  it nor to the best of its  knowledge  any  lessee  under  any lease has
received  any  notice  from  any  governmental  agency  of a  violation  of  any
environmental  or hazardous  waste law or  regulation;  (vi) it has not used and
does not intend to use or to allow the Trust Estate to be used in a manner which
would violate  applicable  federal,  state and local  environmental or hazardous
waste laws or regulations; (vii) during the period of its ownership of the Trust
Estate there has been no litigation  or  administrative  enforcement  actions or
proceedings brought or, to its knowledge,  threatened to be brought, nor has the
Borrower  reached any settlements  with anyone alleging the presence,  disposal,
release or threatened  release of any hazardous waste,  substance or material or
any  environmental  contaminant on, from or under the Trust Estate and (viii) it
shall keep or cause the Trust  Estate to be kept free of hazardous  wastes.  The
terms  "disposal",  "release",  "threatened  release",  "hazardous  substances",
"hazardous wastes" "hazardous  materials" and "environmental  contaminants" mean
and include any hazardous,  toxic or dangerous waste, substance, or material, or
any disposal,  discharge, release, or threatened release, or any term defined as
such in (or for purposes of) the federal Comprehensive  Environmental  Response,
Compensation,  and Liability  Act, as amended,  the Resources  Conservation  and
Recovery Act, as amended,  the Federal Clean Water Act, as amended,  the Federal
Clean Air Act, as amended,  the Emergency  Planning and Community  Right to Know
Act, as amended, or any other federal,  state or local statute,  law, ordinance,
code, rule,  regulation,  order or decree  regulating,  relating to, or imposing
liability or standards of conduct concerning,  any hazardous, toxic or dangerous
waste, substance or material, as now or at any time hereafter may be in effect.

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                  (b) The  Borrower  shall  comply  with all  laws,  ordinances,
orders,  rules and  regulations  of all  federal,  state,  county and  municipal
governments  and  appropriate  departments,  commissions,  boards  and  officers
thereof which now are or at any time in the future may be (i)  applicable to the
Trust  Estate or (ii)  related to  asbestos,  radon,  environmental  conditions,
environmental contaminants, toxic wastes, hazardous wastes, hazardous materials,
solid  wastes or  similar  matters  (collectively,  "Legal  Requirements").  The
Borrower shall  indemnify and hold harmless the Trustee or the  Beneficiary  and
their affiliates from and against all loss, cost,  liability and expense. (x) in
any manner  arising out of or related to any  violation  of or failure to comply
with any Legal Requirement,  (y) imposed upon the Trustee or the Beneficiary, an
affiliate  of the  Trustee  or the  Beneficiary  or the  Borrower  by any  Legal
Requirement or (z) in any manner arising out of or related to the presence, use,
storage,  disposal or transport  of any  hazardous  materials  or  environmental
contaminants  found in, on or under, or affixed to, or emanating from, the Trust
Estate (including, without limitation, (i) all foreseeable and all unforeseeable
damages,  directly or indirectly arising out of the use, generation,  storage or
disposal of hazardous materials or environmental  contaminant by the Borrower or
any  prior  owner or  operator  of the Trust  Estate,  and (ii) all costs of any
required or necessary repair,  clean-up or detoxification and the preparation of
any  closure or other  required  plans),  whether  such  action is  required  or
necessary  prior to or following  transfer of title to the Trust Estate,  to the
full extent that such action is  attributable,  directly or  indirectly,  to the
presence or use, generation, storage, release, threatened release or disposal of
hazardous  materials or  environmental  contaminants  by any person on the Trust
Estate;  provided  that  this.  sentence  shall  not  apply to any  loss,  cost,
liability or expense  arising from the act of the Trustee or  Beneficiary or the
failure of the Trustee or the Beneficiary to act when legally required to do so.
The foregoing  indemnity shall survive the repayment in full of the Obligations.
If any action or proceeding is brought  against the Beneficiary in respect of or
in connection with any of the foregoing  indemnified matters, the Borrower shall
upon notice from the  Beneficiary  defend such action or  proceeding  by counsel
satisfactory to the Beneficiary. The Trust Estate shall at all times comply with
all  zoning,  subdivision  regulations,  building  restrictions  and other Legal
Requirements.

                  (c) The Borrower,  as promptly as possible  upon request,  but
only if the  Beneficiary  has a good  faith  reason  to  believe  that a problem
exists,  shall furnish to the  Beneficiary a radon and/or other  hazardous waste
and/or  other  environmental  contaminant  inspection  report,  at the  cost and
expense  of the  Borrower,  covering  the Trust  Estate  (i) in form,  scope and
substance  satisfactory  to the  Beneficiary  and (ii)  prepared by an inspector
selected  and  commissioned  by  the   Beneficiary.   At  the  election  of  the
Beneficiary,  the Borrower shall remove,  encapsulate or otherwise deal with any
radon and/or other hazardous waste and/or other environmental contaminant on the
Trust  Estate  at  the  Borrower's  cost  and  expense  in a  manner  reasonably
satisfactory to the Beneficiary.

                  Section 1.18. Deed of Trust Secures Future Advances. This Deed
of Trust is a credit line deed of trust for the  purposes of Section  38-1-14 of
the West  Virginia  Code,  and the  aggregate  principal  amount of the loans or
indebtedness  secured  by this  Deed of  Trust  shall  not  exceed  the  maximum
principal amount of $9,750,000.00, and this Deed of Trust is also security

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for the  payment of  interest on such  principal  sums and for taxes,  insurance
premiums and other obligations,  including  interest thereon,  undertaken by the
Beneficiary  or the Trustee  (to the extent  permitted  by law)  pursuant to the
provisions of this Deed of Trust. THE  INDEBTEDNESS  SECURED HEREBY PROVIDES FOR
NON-OBLIGATORY  FUTURE ADVANCES  PURSUANT TO THE TERMS OF THE NOTE NOT TO EXCEED
THE MAXIMUM PRINCIPAL AMOUNT OF $9,750,000.00.  ALL NOTICES OF LIENS,  CLAIMS OR
ENCUMBRANCES   AGAINST  THE  PROPERTY  COVERED  HEREBY  SHALL  BE  SENT  TO  THE
BENEFICIARY  AT THE ADDRESS  SPECIFIED  IN THE FIRST  PARAGRAPH  OF THIS DEED OF
TRUST.


                                   ARTICLE II

                               Security Agreement

                  Section  2.01.  Creation  of  Security  Interest  in the Trust
Estate.  The Borrower  hereby grants to the  Beneficiary a security  interest in
such portion of the Trust Estate that is not real property (including all of the
Personal  Property,  the Agreements and the Permits) for the purpose of securing
the Obligations.

                  Section 2.02.  Representations and Warranties of the Borrower.
The Borrower  hereby  warrants,  represents and covenants that: (a) the Personal
Property is not used or bought for personal,  family or household purposes;  and
(b) this Deed of Trust constitutes a Security  Agreement as that term is used in
the Uniform Commercial Code in effect in the State of West Virginia.

                  Section 2.03.  Fixture Fling.  This  instrument is to be filed
for record in the real estate  records of the County in which the Real  Property
is located so as to serve as a fixture  filing  pursuant to West  Virginia  Code
Chapter 46, Article 9, Section 402.

                  Section 2.04.  Technology License.  The Borrower hereby grants
to the Beneficiary an irrevocable non-exclusive, royalty-free license to use the
technology of the Borrower  described on Exhibit B hereto at the Property at any
and all times,  but otherwise  subject to the terms and conditions of the May 5,
1998 Technology  License and Binder Purchase  Agreement between the Borrower and
the  Beneficiary  (i)  during  which an Event of  Default  has  occurred  and is
continuing, or (ii) following a foreclosure pursuant to this Deed of Trust until
such  time as the Note and all  obligations  of the  Borrower  under the Deed of
Trust and under any judgement  obtained with respect to the Note or this Deed of
Trust have been satisfied in full.






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                                   ARTICLE III

                        Events of Default; Remedies; Etc.


                  Section 3.01.  Event of Default.  Borrower shall be in default
under  this  Agreement  upon  the  occurrence  and  continuation  of  any of the
following events or conditions (each, an "Event of Default"):

                  (a) an "Event of Default" as specified and defined in the Note
or in the  Security  Agreement  of even date  herewith  between the Borrower and
Mountaineer Synfuel, L.L.C.

                  (b) any material  default in the performance of any obligation
of Borrower hereunder; and

                  (c) levy or seizure, or attachment of any of the Trust Estate.

                  Section 3.02. Remedies.

                  (a)  If an  Event  of  Default  shall  have  occurred  and  be
continuing,  this Deed of Trust may, to the extent permitted by law, be enforced
as a deed of trust and the Trustee or the  Beneficiary  may  exercise any right,
power or remedy  permitted to it hereunder or by law, and,  without limiting the
generality of the foregoing,  the Trustee or the Beneficiary  may, to the extent
permitted by law:

                           (i) enter and take  possession of the Trust Estate or
                  any  part  thereof,  exclude  the  Borrower  and  all  persons
                  claiming  under the  Borrower  whose claims are junior to this
                  Deed of Trust,  wholly or partly therefrom,  and use, operate,
                  manage  and  control  the same as the  Beneficiary  shall deem
                  best, and upon such entry, from time to time at the expense of
                  the  Trust  Estate,  make  all  such  repairs,   replacements,
                  alterations,  additions or improvements to the Trust Estate or
                  any part thereof as the Beneficiary may deem proper; and

                           (ii) personally or by agents,  with or without entry,
                  if the Beneficiary shall deem it advisable:

                                    (a)  exercise  THE POWER OF SALE  granted by
                           this Deed of Trust and sell all or any portion of the
                           Trust  Estate  in  accordance  with  applicable  West
                           Virginia  law for  cash  in hand on the day of  sale,
                           unless otherwise

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                           specified by the Beneficiary to the highest bidder at
                           public  auction at a sale or sales held at such place
                           or places and time or times and upon such  notice and
                           otherwise  in such  manner as may be required by law,
                           or in the  absence  of any such  requirement,  as the
                           Beneficiary  may deem  appropriate  and from  time to
                           time  adjourn  any such sale by  announcement  at the
                           time and  place  specified  for such sale or for such
                           adjourned sale without further notice, except such as
                           may be required by law;

                                    (b)  proceed  to  protect  and  enforce  its
                           rights under this Deed of Trust, by suit for specific
                           performance of any covenant  contained  herein, or in
                           aid of the execution of any power granted herein,  or
                           for the  foreclosure  of this  Deed of Trust  and the
                           sale of the Trust Estate under the judgment or decree
                           of a  court  of  competent  jurisdiction,  or for the
                           enforcement  of any other right as the Trustee or the
                           Beneficiary   shall  deem  most  effectual  for  such
                           purpose or;

                                    (c)  exercise  any or  all  of the  remedies
                           available  to a secured  party  under the  applicable
                           Uniform Commercial Code, including:

                                            (1) either personally or by means of
                                    a court appointed receiver,  take possession
                                    of all or any of the  Trust  Estate  that is
                                    not real property and exclude  therefrom the
                                    Borrower and all persons  claiming under the
                                    Borrower and thereafter  hold,  store,  use,
                                    operate,  manage, maintain and control, make
                                    repairs,     replacements,      alterations,
                                    additions and  improvements  to and exercise
                                    all  rights and  powers of the  Borrower  in
                                    respect  of all or any of the  Trust  Estate
                                    that   is   not   real   property.   If  the
                                    Beneficiary  demands  or  attempts  to  take
                                    possession of all or any of the Trust Estate
                                    that is not real property in the exercise of
                                    any rights  hereunder,  the  Borrower  shall
                                    promptly  turn  over  and  deliver  complete
                                    possession thereof to the Beneficiary;

                                            (2) without notice to or demand upon
                                    the Borrower  make such payments and do such
                                    acts as the  Beneficiary  may deem necessary
                                    to protect its  security  interest in all or
                                    any of the  Trust  Estate  that is not  real
                                    property   including   paying,   purchasing,
                                    contesting or  compromising  any encumbrance
                                    which  is  prior  to  or   superior  to  the
                                    security interest granted hereunder,  and in
                                    exercising  any such powers or  authority to
                                    pay  all  expenses  incurred  in  connection
                                    therewith;

                                            (3) require the Borrower to assemble
                                    all or any of the Trust  Estate  that is not
                                    real property at a place designated by the

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                                    Beneficiary  and convenient to both parties,
                                    and   promptly   to   deliver   it  to   the
                                    Beneficiary,  or  its  designated  agent  or
                                    representative.  The  Beneficiary,  and  its
                                    agents and  representatives,  shall have the
                                    right  to  enter  upon  the   premises   and
                                    property of the  Borrower  to  exercise  the
                                    Beneficiary's rights hereunder;

                                            (4) sell, lease or otherwise dispose
                                    of all or any of the  Trust  Estate  that is
                                    not real  property at public  sale,  with or
                                    without  having  all or  any  of  the  Trust
                                    Estate  that  is not  real  property  at the
                                    place of sale,  and upon  such  terms and in
                                    such   manner   as   the   Beneficiary   may
                                    reasonably  determine  (the  Trustee  or the
                                    Beneficiary  may be a purchaser  at any such
                                    sale); and

                                            (5) the  Beneficiary  shall give the
                                    Borrower  at  least  ten  (10)  days'  prior
                                    notice of the time and  place of any  public
                                    sale of all or any of the Trust  Estate that
                                    is  not  real  property  or  other  intended
                                    disposition thereof.

                  (b)  If an  Event  of  Default  shall  have  occurred  and  be
continuing,  the Beneficiary,  to the extent permitted by law, shall be entitled
as a matter of right to the  appointment  of a  receiver  of the  Trust  Estate,
without notice or demand, without the requirement for a bond, and without regard
to the  adequacy of the  security  for the  Obligations  or the  solvency of the
Borrower.  The Borrower  hereby  irrevocably  consents to such  appointment  and
waives notice of any application therefor.  Any such receiver or receivers shall
have all the usual powers and duties of  receivers in like or similar  cases and
all the powers and duties of the  Beneficiary  in case of entry as  provided  in
section 3.01(a)(i) and shall continue as such and exercise all such powers until
the date of confirmation of sale of the Trust Estate,  unless such  receivership
is sooner terminated.

                  (c)  If an  Event  of  Default  shall  have  occurred  and  be
continuing,  the  Borrower  hereby also  assents to the passage of a decree by a
court of competent jurisdiction for the sale of the Trust Estate pursuant to the
terms of this Deed of Trust and applicable West Virginia law.

                  (d) In any sale under any  provision  of this Deed of Trust or
pursuant to any  judgment or decree of court,  the Trust  Estate,  to the extent
permitted  by law,  may be sold in one or more  parcels or as an entirety and in
such order as the Trustee or the  Beneficiary  may elect,  without regard to the
right  of the  Borrower,  or any  person  claiming  under  the  Borrower  to the
marshalling  of assets.  The  purchaser at any such sale shall take title to the
Trust  Estate or the part thereof so sold free and  discharged  of the estate of
the Borrower  therein,  the purchaser being hereby discharged from all liability
to see to the  application  of the purchase  money.  Any person,  including  the
Beneficiary and the Trustee,  may purchase at any such sale. Upon the completion
of any such sale made by the  Trustee  or the  Beneficiary  or by virtue of this
Section  3.01,  the  Trustee  shall  execute  and  deliver to the  purchaser  an
appropriate instrument which shall

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effectively  transfer all of the  Borrower's  and the Trustee's  estate,  right,
title,  interest,  property,  claim and  demand  in and to the  Trust  Estate or
portion  thereof so sold,  but without  any  covenant  or  warranty,  express or
implied.  The Trustee and the Beneficiary are hereby  irrevocably  appointed the
attorneys-in-fact  of the Borrower in its name and stead to make all appropriate
transfers  and  deliveries  of the Trust Estate or any portions  thereof so sold
and, for that purpose,  the Beneficiary or the Trustee, or both, may execute all
appropriate instruments of transfer, and may substitute one or more persons with
like power, the Borrower hereby ratifying and confirming all that said attorneys
or such substitute or substitutes  shall lawfully do by virtue hereof.  Any sale
or sales  made  under or by  virtue of this Deed of  Trust,  to the  extent  not
prohibited  by law,  shall  operate  to divest  all the  estate,  right,  title,
interest, property, claim and demand whatsoever, whether at law or in equity, of
the Borrower in and to the Trust Estate,  or any portions  thereof so sold,  and
shall be a  perpetual  bar both at law and in equity  against the  Borrower  and
against  any and all  persons  claiming  or who may claim the same,  or any part
thereof, by through or under the Borrower.  The powers and agency herein granted
are coupled with an interest and are irrevocable.


                  (e) In the event that  foreclosure  proceedings are instituted
hereunder but are not completed,  Trustee shall be reimbursed for all reasonable
costs and expenses so incurred by Trustee,  together with interest thereon until
paid at the Default Rate.

                  Section  3.03.  Application  of Proceeds.  The proceeds of any
enforcement  of this Deed of Trust,  including  any sale made  either  under the
power of sale  hereby  given or under a  judgment,  order or decree  made in any
action to  foreclose  or to  enforce  this  Deed of Trust  shall be  applied  as
determined by the Beneficiary in a manner  consistent with Section 38-1-7 of the
Code of West Virginia, as from time to time amended.

                  Section  3.04.  Right  to Sue.  If an  Event  of  Default  has
occurred and is continuing, the Trustee and the Beneficiary shall have the right
from time to time to sue for any sums required to be paid by the Borrower  under
the  terms of this  Deed of Trust as the same  become  due,  without  regard  to
whether  or not the  Obligations  shall  be,  or have  become,  due and  without
prejudice to the right of the Trustee or the Beneficiary thereafter to bring any
action or proceeding of  foreclosure  or any other action upon the occurrence of
any Event of Default existing at the time such earlier action was commenced.

                  Section 3.05. Powers of the Trustee and the Beneficiary.

                  (a) The  Trustee  or the  Beneficiary  may at any time or from
         time to time  renew or extend  this Deed of Trust,  alter or modify the
         same in any way,  or waive any of the terms,  covenants  or  conditions
         hereof or thereof, in whole or in part, and may release or reconvey any
         portion  of the  Trust  Estate or any other  security,  and grant  such
         extensions and indulgences in relation to the  Obligations,  or release
         any  person  liable  therefor  as the  Trustee or the  Beneficiary  may
         determine without the consent of any junior lien or

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         encumbrancer,  without  any  obligation  to  give  notice  of any  kind
         thereto,  without in any manner  affecting the priority of the lien and
         estate of this Deed of Trust on or in any part of the Trust Estate, and
         without  affecting  the  liability  of the Borrower or any other person
         liable for any of the Obligations;

                  (b) No right or remedy  herein  conferred  upon or reserved to
         the Trustee or the Beneficiary is intended to be exclusive of any other
         right  or  remedy,  and  each  and  every  right  and  remedy  shall be
         cumulative  and in addition  to any right or remedy  under this Deed of
         Trust,  and the failure of the Trustee or the  Beneficiary to insist at
         any time  upon  the  strict  observance  or  performance  of any of the
         provisions  of this Deed of Trust,  or to exercise  any right or remedy
         provided  for herein,  shall not impair any such right or remedy nor be
         construed as a waiver or relinquishment thereof, and

                  (c) The Trustee and the  Beneficiary,  and each of them, shall
         be  entitled  to  enforce   payment  and  performance  of  any  of  the
         Obligations  and to exercise  all rights and powers  under this Deed of
         Trust or any laws now or hereafter in force,  notwithstanding that some
         or all of the  Obligations  may now or hereafter be otherwise  secured,
         whether  by  mortgage,  deed of  trust,  pledge,  lien,  assignment  or
         otherwise;  neither  the  acceptance  of  this  Deed of  Trust  nor its
         enforcement,  whether by court  action or pursuant to the power of sale
         or other  powers  herein  contained,  shall  prejudice or in any manner
         affect the  Trustee's  or the  Beneficiary's  right to realize  upon or
         enforce any other  security now or hereafter held by the Trustee or the
         Beneficiary,  it being stipulated that the Trustee and the Beneficiary,
         and each of them,  shall be entitled to enforce  this Deed of Trust and
         any  other  security  now  or  hereafter  held  by the  Trustee  or the
         Beneficiary in such order and manner as they, in their sole discretion,
         may determine; every power or remedy given by this Deed of Trust to the
         Trustee  or  Beneficiary  or to which  either of them may be  otherwise
         entitled, may be exercised, concurrently or independently, from time to
         time and as often as may be deemed  expedient by the  Beneficiary,  and
         either of them may pursue inconsistent remedies.

                  (d) The Trustee  may act through its agent or attorney  and it
         shall not be  necessary  for the Trustee to be present in person at any
         foreclosure sale under this Deed of Trust.

                  Section  3.06.  Waiver of Stay,  Extension,  Moratorium  Laws;
Equity of Redemption.  To the extent permitted by law, the Borrower shall not at
any time insist  upon,  or plead,  or in any manner  whatever  claim or take any
benefit or advantage  of any  applicable  present or future  stay,  extension or
moratorium  law, which may affect  observance or performance of any provision of
this Deed of Trust;  nor claim,  take or insist upon any benefit or advantage of
any present or future law  providing for the valuation or appraisal of the Trust
Estate or any portion  thereof  prior to any sale or sales  thereof which may be
made under or by virtue of Section 3.01; and the Borrower, to the extent that it
lawfully  may,  hereby  waives all benefit or advantage of any such law or laws.
The Borrower for itself and all who may claim under it,  hereby  waives,  to the
extent  permitted  by  applicable  law,  any  and all  rights  and  equities  of
redemption from sale

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under the power of sale created hereunder or from sale under any order or decree
of  foreclosure  of this Deed of Trust and (if an Event of  Default  shall  have
occurred and be continuing)  all notice or notices of seizure,  and all right to
have the Trust  Estate  marshalled  upon any  foreclosure  hereof.  Neither  the
Trustee nor the  Beneficiary  shall be obligated to pursue or exhaust its rights
or remedies as against any other part of the Trust Estate nor shall the Borrower
have the right to have the Trustee or the Beneficiary  proceed in any particular
order.


                                   ARTICLE IV

                                   The Trustee

                  Section 4.01.  Acceptance by Trustee. The Trustee accepts this
trust when this Deed of Trust, duly executed and acknowledged,  is made a public
record as provided by law.

                  Section 4.02.  Compensation.  The Trustee waives any statutory
fee and  shall  accept  reasonable  compensation  from the  Beneficiary  in lieu
thereof for any services rendered by it in accordance with the terms hereof.

                  Section 4.03.  Action in Accordance  With  Instructions.  Upon
receipt by the Trustee of instructions  from the Beneficiary at any time or from
time to time, the Trustee shall (a) give any notice or direction or exercise any
right,  remedy or power  hereunder or in respect of any part or all of the Trust
Estate as shall be specified in such instructions and (b) approve such direction
or exercise as  satisfactory to the Trustee or to the  Beneficiary.  The Trustee
may, but need not, take any of such actions in the absence of such instructions.
At any  time  or  from  time  to  time,  upon  request  of the  Beneficiary  and
presentation of this Deed of Trust for  endorsement,  and without  affecting the
liability  of any  person for  payment of the  Obligations,  the  Trustee  shall
reconvey all or any part of the Trust  Estate,  consent to the making of any map
or plat thereof, join in granting any easement thereon, or join in any extension
agreement or any agreement subordinating the lien and estate hereof. If there is
at any time more than one person or entity serving as Trustee hereunder,  either
of them or any successor of either of them may act on behalf of the Trustee.

                  Section 4.04. Resignation.  The Trustee may resign at any time
upon giving not less than 60 days' prior  notice to the  Beneficiary,  but shall
continue  to act as  trustee  until its  successor  shall  have been  chosen and
qualified.

                  Section 4.05.  Successor  Trustee.  In the event of the death,
removal,  resignation  or refusal or inability of the Trustee to act, or for any
reason at any time, the Beneficiary  shall have the irrevocable  power,  with or
without  cause,  without prior notice of any kind,  and without  applying to any
court,  to select and appoint a successor  trustee.  Each such  appointment  and
substitution shall be made by notice to the Borrower,  the Trustee and successor
trustee  and by  recording  notice of such in each  office in which this Deed of
Trust is recorded. Such notice shall

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be executed and acknowledged by the Beneficiary and shall be conclusive proof of
proper  appointment  of the  successor  trustee.  Such  successor  shall  not be
required to give bond for the faithful performance of its duties unless required
by the Beneficiary.


                                    ARTICLE V

                                  Miscellaneous

                  Section 5.01. Release by Trustee.  Upon payment by Borrower of
the Obligations and the Trustee's expenses,  the Trustee shall release this Deed
of Trust by an instrument duly acknowledged, in form for recording.

                  Section  5.02.  Notices.  All  notices,   requests,   demands,
consents,  approvals  or other  communications  to, upon or by any party  hereto
shall be sent to the parties at the addresses  set forth in the first  paragraph
of this Deed of Trust or at such other address as may be specified in writing to
the parties.  The address of the Beneficiary as specified is the address for the
party secured by this Deed of Trust.

                  Section  5.03.  Amendments,  Waivers,  Etc. This Deed of Trust
cannot be  modified,  changed or  discharged  except by an agreement in writing,
duly  acknowledged  in form for  recording,  signed  by the party  against  whom
enforcement of such  modification,  change or discharge is sought.  No amendment
shall  be  deemed  approved  by or  consented  to by or  effective  against  the
Beneficiary unless approved in writing by MSDW Synfuels II, Inc. and Fannie Mae.

                  Section 5.04. Successors and Assigns. This Deed of Trust shall
bind and  inure to the  benefit  of the  parties  hereto  and  their  respective
successors and assigns and shall run with the Property, except that the Borrower
may not assign its rights or delegate its obligation hereunder without the prior
consent of the Beneficiary.

                  Section 5.05.  Severability.  If any term or provision of this
Deed of Trust or the application  thereof to any person or circumstance shall to
any extent be invalid or unenforceable,  the remainder of this Deed of Trust, or
the application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Deed of Trust shall be valid and enforceable
to the fullest extent  permitted by law.  Should this Deed of Trust be or become
ineffective  as a deed of trust,  then it shall be  construed  and enforced as a
realty mortgage with the Borrower being the mortgagor and the Beneficiary  being
the mortgagee.

                  Section  5.06.  No Merger.  If both the  lessor's and lessee's
estates under any lease or any portion  thereof which  constitutes a part of the
Trust  Estate shall at any time become  vested in one owner,  this Deed of Trust
and the lien and estate  created  hereby shall not be destroyed or terminated by
application of the doctrine of merger and, in such event, the Beneficiary shall

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continue to have and enjoy all of the rights and  privileges of the  Beneficiary
as to the separate estates. In addition, upon foreclosure of this Deed of Trust,
any such lease shall not be destroyed or terminated by application of the law of
merger  or as a matter  of law or as a result  of such  foreclosure  unless  the
Beneficiary or any purchaser at such foreclosure sale shall so elect.

                  Section 5.07.  Limitation of Interest.  It is the intention of
the Borrower  and the  Beneficiary  in the  execution of the Note to contract in
strict  compliance with all applicable usury laws. In furtherance  thereof,  the
Beneficiary  and the Borrower  stipulate  that none of the terms and  provisions
contained  in the Note shall ever be construed to create a contract for the use,
forbearance  or  detention of money  requiring  payment of interest at a rate in
excess of the maximum  interest rate permitted to be charged by applicable  law.
The Borrower shall never be liable for unearned  interest on the Obligations and
shall  never be  required  to pay  interest  thereon  at a rate in excess of the
maximum  interest which may be lawfully  charged under applicable usury laws and
this Section 5.07 shall  control over all other  provisions of the Note executed
in connection  herewith or therewith which may be in apparent conflict herewith.
If the Beneficiary shall collect monies which are deemed to constitute  interest
which would otherwise increase the effective interest rate on the Obligations to
a rate in excess of that  permitted to be charged by applicable  usury laws, all
such sums  deemed to  constitute  interest  in excess of the legal rate shall be
immediately returned to the Borrower upon such determination.

                  Section 5.08.  Trust is Irrevocable.  The trust created hereby
is  irrevocable  by the Borrower  subject to defeasance in accordance  with this
Deed of Trust.

                  Section  5.09.  Governing  Law.  This  Deed of Trust  shall be
governed  by and  interpreted  in  accordance  with the law of the State of West
Virginia.

                  Section 5. 10.  Beneficial  Owner.  The  beneficial  owner and
holder of the  Obligations  at the time of execution and delivery  hereof is the
Beneficiary,  whose  resident  address is stated in the first  paragraph of this
Deed of Trust.

                  Section 5.11.  Status of Parties.  It is understood and agreed
that the  relationship  of the Borrower and the  Beneficiary is that of borrower
and lender and that nothing herein or in the Note or any document  evidencing or
securing the same shall be construed to constitute a partnership,  joint venture
or co-tenancy among the Borrower or the Beneficiary.



                        [Signatures begin on next page.]

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                  IN WITNESS WHEREOF, this Deed of Trust has been duly executed,
acknowledged  and  delivered  by the Borrower as of the day and year first above
written.

                            COVOL TECHNOLOGIES, INC.

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



State of _______Utah________) City/County of _Utah________________), to wit:

         On this _8th_ day of December,  1998,  before me,  __Asael T. Sorensen,
Jr._,  a  notary  public  in and for  the  above-said  jurisdiction,  personally
appeared  ___________________,  personally  known to me (or  proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within  instrument as  __President_________  of Covol  Technologies,  Inc.,  the
company which executed and delivered the within  instrument and  acknowledged to
me that, being informed of the contents  thereof,  he executed and delivered the
same,  voluntarily in his capacity as such, for the purposes therein stated,  on
behalf of said company as the free act and deed of said company.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.

[SEAL]                                               /Asael T. Sorensen, Jr./
                                  Notary Public




This Deed of Trust was 
prepared by:                 Michael S. Kosmas, Esq.
                           Jones, Day, Reavis & Pogue
                         1450 G Street, N.W., Suite 600
                             Washington, D.C. 20005



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