REGISTRATION RIGHTS AGREEMENT


         THIS  REGISTRATION  RIGHTS  AGREEMENT  is  made  as of the  9th  day of
January,  1998, by and among COVOL  TECHNOLOGIES,  INC., a Delaware  corporation
(the "Company"),  and AJG FINANCIAL SERVICES,  INC. and its successors,  assigns
and  transferees   (herein   referred  to  collectively  as  the  "Holders"  and
individually as a "Holder").

                              W I T N E S S E T H:

         WHEREAS,  on the date  hereof,  Holder is the  holder of those  certain
Warrants To Purchase  Common Stock of the Company,  both issued January 9, 1998,
to AJG Financial Services, Inc., one designated Warrant A for 216, 272 Shares of
Common Stock, and the other  designated  Warrant B for 216, 272 Shares of Common
Stock.

         WHEREAS,  the Company has agreed to provide  the Holders  with  certain
registration rights as set forth herein.

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings  contained herein,  and for other good and valuable  consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and  conditions  herein  set forth,  the  parties  hereto  agree as
follows:

         1.       Definitions.

         As used in this  Agreement,  the  following  capitalized  defined terms
shall have the following meanings:

         "Company"  shall have the meaning set forth in the  preamble  and shall
also include the Company's successors.

         "Company Common Stock" shall mean the shares of common stock, $.001 par
value per share, of the Company.

         "Effective Date" shall mean the date of this Agreement.

         "Exchange  Act"  shall mean the  Securities  Exchange  Act of 1934,  as
amended from time to time.

         "Holder" or "Holders" shall have the meaning set forth in the preamble.

         "Person" shall mean an individual, partnership,  corporation, trust, or
unincorporated organization,  or a government or agency or political subdivision
thereof.


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         "Prospectus"  shall  mean the  prospectus  included  in a  Registration
Statement,  and any such prospectus as amended or supplemented by any prospectus
supplement  with  respect  to the terms of the  offering  of any  portion of the
Registrable  Securities  covered by a Registration  Statement,  and by all other
amendments  and  supplements  to  such  prospectus,   including   post-effective
amendments,  and in each case including all material  incorporated  by reference
therein.

         "Public Sale" shall mean a public sale or  distribution  of Registrable
Securities, including a sale pursuant to Rule 144 (or any similar provision then
in effect) under the Securities Act.

         "Registrable  Securities"  shall mean the Shares,  excluding (i) Shares
for which a  Registration  Statement  relating to the sale thereof by the Holder
shall  have  become  effective  under the  Securities  Act and  which  have been
disposed of by the Holder  under such  Registration  Statement,  and (ii) Shares
sold or otherwise distributed pursuant to Rule 144 under the Securities Act.

         "Registration  Expenses"  shall mean any and all  expenses  incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all  SEC or  National  Association  of  Securities  Dealers,  Inc.  ("NASD")
registration and filing fees, (ii) all fees and expenses  incurred in connection
with  compliance with state  securities or blue sky laws  (including  reasonable
fees and  disbursements of counsel in connection with blue sky  qualification of
any of the Registrable  Securities and the preparation of a Blue Sky Memorandum)
and  compliance  with the rules of the NASD,  (iii) all  expenses of any Persons
engaged by the Company in preparing or assisting in preparing,  word processing,
printing  and   distributing  any   Registration   Statement,   any  Prospectus,
certificates  and other documents  relating to the performance of and compliance
with this Agreement,  (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Securities on any securities exchange
or  exchanges  pursuant  to  Section  3(a)(vii)  hereof,  and (v) the  fees  and
disbursements  of  counsel  for  the  Company  and  of  the  independent  public
accountants  of the Company,  including  the  expenses of any special  audits or
"cold comfort" letters,  if any, required by or incident to such performance and
compliance.  Registration  Expenses  shall  specifically  exclude  the  fees and
disbursements  of  counsel   representing  a  selling  Holder  and  underwriting
discounts and commissions,  and transfer taxes, if any,  relating to the sale or
disposition of Registrable Securities by a selling Holder, all of which shall be
borne by such Holder in all cases.

         "Registration  Statement"  shall mean a  registration  statement of the
Company and any other entity  required to be a  registrant  with respect to such
registration  statement pursuant to the requirements of the Securities Act which
covers the  Registrable  Securities  requested  by Holders to be covered by such
registration statement,  and all amendments and supplements to such registration
statement,  including  post-effective  amendments,  in each case  including  the
Prospectus   contained   therein,   all  exhibits   thereto  and  all  materials
incorporated by reference therein.

         "SEC" shall mean the Securities and Exchange Commission.

         "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.


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         "Selling Holder" shall mean each Holder who elects to participate in an
underwritten public offering of Company Common Stock.

         "Shares"  shall mean Company  Common Stock that is issued upon exercise
of the Warrants.

         "Warrants"  shall mean the two Warrants (one  designated  Warrant A and
the other  designated  Warrant  B),  each dated  January 9, 1998,  issued by the
Company to AJG Financial Services,  Inc. evidencing rights to purchase initially
up to an aggregate of 432,544  shares of Common Stock,  and all warrants  issued
upon transfer,  division or combination  of, or in substitution or exchange for,
any thereof.

         2.       Registration Under the Securities Act.

                  (a)  Filing  of   Registration   Statement.   As  promptly  as
practicable after the date hereof, the Company intends, but is not obligated, to
cause to be filed a  Registration  Statement  providing  for the issuance of the
Shares to the Holder to the extent  allowed by  applicable  regulations  and the
resale by the  Holder of  Registrable  Securities  then held by the  Holder  and
intends to use its best efforts to cause such Registration Statement if filed to
be declared effective by the SEC as soon as reasonably practicable.  The Company
agrees to use its best efforts to keep such Registration  Statement continuously
effective  under the  Securities  Act for a period  expiring on the date two (2)
years from the date of the last  issuance  of any Shares and  further  agrees to
supplement or amend the Registration Statement, if and as required by the rules,
regulations  or  instructions  applicable to the  registration  form used by the
Company for such Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for such Registration Statement.

                  (b)  Demand  Registration.  In the event the  Company  has not
caused to be filed a  Registration  Statement as provided in Section 2(a) within
six (6) months from the date hereof,  Holder  shall have the right,  at any time
and from time to time  after  such six (6)  month  period,  to  demand  that the
Company  cause  to be  filed  a  Registration  Statement  or an  amendment  to a
Registration  Statement  providing for the registration under the Securities Act
of the  Shares  to be  issued to Holder  to the  extent  allowed  by  applicable
regulations and the resale by the Holder of all Registrable  Securities,  or, in
the event the Company has filed a Registration  Statement as provided in Section
2(a) within six (6) months from the date hereof, but such Registration Statement
has not been declared  effective by the SEC,  Holder shall have the right at any
time and from time to time after  September 1, 1998,  to demand that the Company
cause to be filed a  Registration  Statement or an  amendment to a  Registration
Statement  providing for the registration under the Securities Act of the Shares
to be  issued  to  Holder  and  the  resale  by the  Holder  of all  Registrable
Securities;  provided,  however,  if at the time of such demand, the Shares have
been issued,  such Registration  Statement shall only relate to sales by Holder.
The Company agrees to use its best efforts to keep such  Registration  Statement
continuously  effective  under the Securities  Act for a period  expiring on the
date two (2) years from the date of the last  issuance of any Shares and further
agrees to supplement or amend the Registration  Statement, if and as required by
the rules, regulations or instructions


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applicable to the  registration  form used by the Company for such  Registration
Statement  or by the  Securities  Act  or by any  other  rules  and  regulations
thereunder for such Registration Statement.

                  (c)  Cut-Back  Registration.  In the event that the Holder has
requested the inclusion of Registrable  Securities in a  registration  statement
pursuant to Section 3(a) or Section 3(b) and all or a portion of the Registrable
Securities with respect to which the Holder has requested  registration  are not
registered by virtue of the provisions of said sections,  Holder shall thereupon
have the right to require  the  registration  under the  Securities  Act of such
Registrable Securities pursuant to the provisions of Section 2(b),  irrespective
of whether the date upon which Registration is requested is within six months of
the date of this Agreement.

                  (d) Expenses.  The Company shall pay all Registration Expenses
in connection with any Registration Statement filed pursuant to this Section 2.


                  (e)  Inclusion  in  Registration  Statement.  The  Company may
require  each  Holder of  Registrable  Securities  to furnish to the  Company in
writing such information  regarding the proposed offer or sale by such Holder of
such  Registrable  Securities  as the Company  may from time to time  reasonably
request in writing.  Any Holder who does not provide the information  reasonably
requested  by the  Company in  connection  with the  Registration  Statement  as
promptly as  practicable  after receipt of such  request,  but in no event later
than ten (10) days  thereafter,  shall not be entitled  to have its  Registrable
Securities included in the Registration Statement.

                  (f) Underwritten Demand by Holder. If at the demand of Holder,
the  Company  proposes  to  file  a  Registration   Statement   relating  to  an
underwritten  public offering of any Registerable  Securities and the investment
banking firm selected by Holder to act as lead  underwriter  in connection  with
such public  offering of securities  by Holder  advises in writing that, in such
firm's opinion,  a registration of other  securities of the Company at that time
would  materially  and  adversely  affect  the  offering  by  Holder,  no person
(including  the  Company)  shall have a right to have shares of common  stock or
other securities  included in such Registration  Statement;  provided,  however,
that if an offering of some but not all of the shares requested to be registered
by Holder  would not  adversely  affect the  offering by Holder,  the  aggregate
number of shares  requested  to be included in such  offering by the Company and
each other  person  shall be reduced pro rata  according  to the total number of
securities proposed to be sold by the Company and other Person taken as a whole;
provided, in no event shall the shares requested by Holder to be included in the
Registration Statement be reduced.

                  (g) Rights to  Subsequent  Investors.  The  Company  shall not
grant any rights to any other person which shall  diminish in any way the rights
granted to the Holders  hereunder.  The Company may grant  subsequent  investors
rights of registration  (such as those provided in Section 2 hereof);  provided,
however,  that (i) such rights are limited to shares of Common Stock (including,
in the case of any underwritten offering, shares issuable upon the conversion of
convertible  securities  or upon the exercise of warrants if such  conversion or
exercise is effected by the sellers or the


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underwriters prior to sale to the public in such offering), (ii) such rights are
not inconsistent with the provisions hereof;  (iii) the instrument granting such
rights  specifically  confirms the rights of the Holders of  Registrable  Shares
hereunder;  (iv) the  rights of the  Holder  hereunder  shall be the same as the
rights of registration granted to the subsequent investors.

         3.       Incidental Registration.

                  (a) If the Company  proposes to register any shares of Company
Common Stock ("Other  Securities") for public sale by the Company pursuant to an
underwritten  offering  under the  Securities  Act it will give  prompt  written
notice to Holders of its  intention  to do so, and upon the  written  request of
Holders  delivered to the Company  within  fifteen (15)  Business Days after the
giving of any such notice which request shall specify the number of  Registrable
Securities  intended to be disposed of by Holders and the Company  shall include
such Registrable Securities in such Registration Statement. The Company will not
be required to effect any  registration  pursuant  to this  Section  3(a) if the
Company shall have been advised in writing (with a copy to the Selling  Holders)
by a nationally recognized  independent  investment banking firm selected by the
Company to act as lead  underwriter  in connection  with the public  offering of
securities by the Company that, in such firm's  opinion,  a registration at that
time by other holders would  materially  and adversely  affect the Company's own
scheduled offering;  provided,  however, that if an offering of some but not all
of the shares  requested to be  registered by Holder and other holders would not
adversely  affect  the  Company's  offering,  the  aggregate  number  of  shares
requested  to be  included  in such  offering by each  selling  holder  shall be
reduced pro rata according to the total number of securities proposed to be sold
by the selling holders taken as a whole.

                  (b) If at the  demand  of any  other  Person  but  the  Holder
("Other  Person"),  the Company proposes to register Other Securities for public
sale pursuant to an underwritten  offering under the Securities Act it will give
prompt  written notice to Holder of its intention to do so, and upon the written
request of Holders  delivered to the Company  within  fifteen (15) Business Days
after the giving of any such notice which  request  shall  specify the number of
Registrable  Securities  intended  to be  disposed  of by Holder and the Company
shall include such Registrable Securities in such Registration Statement. If the
Other  Person  shall have been  advised in writing  (with a copy to the  Selling
Holders) by a nationally recognized  independent  investment banking firm acting
as lead  underwriter in connection with the public offering of securities by the
Other Person that, in such firm's opinion, a registration by the Holders at that
time would materially and adversely affect the offering by the Other Person, the
Registrable Securities of the Holder shall not be included in such Registration,
provided the number of shares  requested to be included in such  offering by the
Holders and all other Persons  shall be reduced pro rata  according to the total
number of securities proposed to be sold by the Holder and other selling holders
taken as a whole; provided, however, notwithstanding the foregoing sentence, the
shares  requested by the Other Person  demanding  registration to be included in
the  Registration  Statement  shall not be reduced if required  by an  agreement
between such Other Person and the Company.


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                  (c) With respect to any proposed sale or sale by the Holder of
Registrable  Securities  pursuant to this  Section 3 the  Company  shall pay all
Registration Expenses.

                  (d) No registration of Registrable  Securities  effected under
this Section 3 shall  relieve the Company of its  obligation  (if any) to effect
registrations of Registrable Securities pursuant to Section 2.

         4.       Registration Procedures.

                  (a)  Obligations  of  the  Company.  In  connection  with  any
Registration Statement pursuant to Sections 2 or 3 hereof, the Company shall:

                           (i)      cause  the   Registration  Statement  to  be
                                    available  for the  sale of the  Registrable
                                    Securities   by   Holders  in  one  or  more
                                    transactions,  in  negotiated  transactions,
                                    through   the  writing  of  options  of  the
                                    Registrable Securities,  or a combination of
                                    such  methods  of sale,  and to comply as to
                                    form  in  all  material  respects  with  the
                                    requirements  of  the  applicable  form  and
                                    include all financial statements required by
                                    the  SEC to be  filed  therewith  and in the
                                    event the  Company  is listed on the  NASDAQ
                                    National  Market  System  ("NMS")  in one or
                                    more  transactions  on NMS or  otherwise  in
                                    special offerings, exchange distributions or
                                    secondary  distribution  pursuant  to and in
                                    accordance with the rules of the NMS, in the
                                    over-the-counter market;

                           (ii)     (A) prepare  and  file  with  the  SEC  such
                                    amendments and post- effective amendments to
                                    any   Registration   Statement   as  may  be
                                    necessary  to keep  each  such  Registration
                                    Statement   effective  for  the   applicable
                                    period; (B) cause the Prospectus included in
                                    each  such  Registration   Statement  to  be
                                    supplemented  by  any  required   prospectus
                                    supplement,  and  as so  supplemented  to be
                                    filed  pursuant  to Rule 424 or any  similar
                                    rule   that  may  be   adopted   under   the
                                    Securities Act; (C) respond  promptly to any
                                    comments  received from the SEC with respect
                                    to  each  Registration   Statement,  or  any
                                    amendment,   post-effective   amendment   or
                                    supplement relating thereto;  and (D) comply
                                    with the  provisions of the  Securities  Act
                                    with  respect  to  the  disposition  of  all
                                    securities   covered  by  each  Registration
                                    Statement;

                           (iii)    furnish  to  each   Holder  of   Registrable
                                    Securities,  without charge,  as many copies
                                    of each  Prospectus,  and any  amendment  or
                                    supplement  thereto and such other documents
                                    as they may reasonably  request, in order to
                                    facilitate   the   public   sale  or   other
                                    disposition of the  Registrable  Securities;
                                    the Company consents to the use of the


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                                    Prospectus,   by   each   such   Holder   of
                                    Registrable  Securities,  in connection with
                                    the  offering  and  sale of the  Registrable
                                    Securities covered by the Prospectus;

                           (iv)     notify promptly  each Holder of  Registrable
                                    Securities   and  confirm   such  advice  in
                                    writing  (A) of the  issuance  by the SEC or
                                    any state  securities  authority of any stop
                                    order  suspending  the  effectiveness  of  a
                                    Registration  Statement or the initiation of
                                    any proceedings for that purpose, (B) if the
                                    Company  receives  any   notification   with
                                    respect   to   the    suspension    of   the
                                    qualification of the Registrable  Securities
                                    for   sale  in  any   jurisdiction   or  the
                                    initiation  of  any   proceeding   for  such
                                    purpose,  and  (C) of the  happening  of any
                                    event  during  the  period  a   Registration
                                    Statement  is effective as a result of which
                                    such  Registration  Statement or the related
                                    Prospectus  contains any untrue statement of
                                    a  material  fact  or  omits  to  state  any
                                    material fact required to be stated  therein
                                    or necessary to make the statements therein,
                                    in light of the  circumstances  under  which
                                    they   were   made   (in  the  case  of  the
                                    Prospectus), not misleading;

                           (v)      use its best effort to obtain the withdrawal
                                    of any order suspending the effectiveness of
                                    a  Registration  Statement  at the  earliest
                                    possible moment;

                           (vi)     use its best efforts to  register or qualify
                                    the  Registrable  Securities by the time the
                                    applicable    Registration    Statement   is
                                    declared  effective  by the  SEC  under  all
                                    applicable  state  securities  or "blue sky"
                                    laws of such  jurisdictions as any Holder of
                                    Registrable    Securities   covered   by   a
                                    Registration   Statement  shall   reasonably
                                    request   in   writing,   keep   each   such
                                    registration  or   qualification   effective
                                    during   the   period   such    Registration
                                    Statement  is required to be kept  effective
                                    or  during  the  period  offers or sales are
                                    being made by a Holder that has  delivered a
                                    Registration    Notice   to   the   Company,
                                    whichever  is  shorter,  and do any  and all
                                    other   acts  and   things   which   may  be
                                    reasonably  necessary or advisable to enable
                                    such Holder to consummate the disposition in
                                    each such  jurisdiction of such  Registrable
                                    Securities  owned by such Holder;  provided,
                                    however,  that  the  Company  shall  not  be
                                    required  to  (A)  qualify  generally  to do
                                    business in any  jurisdiction or to register
                                    as a broker or  dealer in such  jurisdiction
                                    where it would not  otherwise be required to
                                    qualify but for this Section  4(a)(vi),  (B)
                                    subject  itself  to  taxation  in  any  such
                                    jurisdiction,  or (C) submit to the  general
                                    service of process in any such jurisdiction;


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                           (vii)    upon    the    occurrence   of   any   event
                                    contemplated by Section  4(a)(iv)(C) hereof,
                                    use its best efforts promptly to prepare and
                                    file  a  supplement  or  prepare,  file  and
                                    obtain  effectiveness  of  a  post-effective
                                    amendment to a Registration Statement or the
                                    related    Prospectus    or   any   document
                                    incorporated  therein by  reference  or file
                                    any  other  required  document  so that,  as
                                    thereafter  delivered to the  purchasers  of
                                    the Registrable Securities,  such Prospectus
                                    will not contain any untrue  statement  of a
                                    material  fact or omit to  state a  material
                                    fact  required  to  be  stated   therein  or
                                    necessary to make the statements therein, in
                                    the light of the  circumstances  under which
                                    they were made, not misleading;

                           (viii)   use  its   best   efforts   to   cause   all
                                    Registrable  Securities  to be listed on any
                                    securities   exchange   on   which   similar
                                    securities  issued by the  Company  are then
                                    listed;

                           (ix)     provide a CUSIP  number for all  Registrable
                                    Securities,  not  later  than the  effective
                                    date  of  the   Registration   Statement  or
                                    amendment    thereto    relating   to   such
                                    Registrable Securities;

                           (x)      otherwise  use its best  efforts  to  comply
                                    with all applicable rules and regulations of
                                    the SEC and make  available  to its security
                                    holders, as soon as reasonably  practicable,
                                    an  earning  statement   covering  at  least
                                    twelve (12) months  which shall  satisfy the
                                    provisions   of   Section   11(a)   of   the
                                    Securities Act and Rule 158 thereunder; and

                           (xi)     use  its   best   efforts   to   cause   the
                                    Registrable    Securities   covered   by   a
                                    Registration Statement to be registered with
                                    or  approved  by  such  other   governmental
                                    agencies or  authorities as may be necessary
                                    by virtue of the business and  operations of
                                    the Company to enable  Holders to consummate
                                    the   disposition   of   such    Registrable
                                    Securities.

                  (b)  Obligations  of  Holders.  In  connection  with  and as a
condition to the Company's obligations with respect to a Registration  Statement
pursuant to Section 2 hereof and this Section 4, each Holder  agrees that (i) it
will  not  offer or sell  its  Registrable  Securities  under  the  Registration
Statement until it has received copies of the supplemental or amended Prospectus
contemplated   by  Section   4(a)(ii)   hereof  and  receives  notice  that  any
post-effective  amendment  has become  effective;  and (ii) upon  receipt of any
notice from the Company of the  happening of any event of the kind  described in
Section 4(a)(iv)(C) hereof, such Holder will forthwith  discontinue  disposition
of Registrable Securities pursuant to a Registration Statement until such Holder
receives  copies of the  supplemented  or  amended  Prospectus  contemplated  by
Section 4(a)(vii) hereof and receives notice that any  post-effective  amendment
has become  effective,  and,  if so directed  by the  Company,  such Holder will
deliver to the Company (at the expense of the Company) all copies in


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its  possession,  other  than  permanent  file  copies  then  in  such  Holder's
possession,  of the Prospectus  covering such Registrable  Securities current at
the time of receipt of such notice.

                  (c) Lockup.  In the event the  Company  proposes to effect the
distribution  of its securities by the Company  through an  underwritten  public
offering,  each Holder who then  beneficially  owns in excess of 100,000  shares
agrees for a period of time,  beginning  seven (7) days  prior to the  effective
date of the underwriting agreement pertaining to such offering and ending thirty
(30) days after such effective  date that such Holder will  forthwith  cease any
sale or other disposition of any of the Registrable  Securities or sale or other
disposition of any of its Registrable  Securities during such period of time, if
requested in writing by the  representatives  of the  underwriters  for any such
underwritten  public  offering;  provided,  however,  that Holders  shall not be
subject to more than one Lockup Period during any twelve (12) month period.

         5. Indemnification; Contribution.

                  (a)  Indemnification  by the  Company.  The Company  agrees to
indemnify  and hold  harmless  each  Holder,  each  officer and director of such
Holder,  and each Person,  if any, who controls any Holder within the meaning of
Section 15 of the Securities Act as follows:

                           (i)      against any and all loss,  liability, claim,
                                    damage and expense whatsoever,  as incurred,
                                    arising  out  of  any  untrue  statement  or
                                    alleged untrue  statement of a material fact
                                    contained in any Registration  Statement (or
                                    any  amendment  thereto)  pursuant  to which
                                    Registrable Securities were registered under
                                    the Securities Act,  including all documents
                                    incorporated  therein by  reference,  or the
                                    omission or alleged omission  therefrom of a
                                    material fact necessary in order to make the
                                    statements  therein,  in  the  light  of the
                                    circumstances  under  which  they were made,
                                    not misleading;

                           (ii)     against any and all loss, liability,  claim,
                                    damage and expense whatsoever,  as incurred,
                                    to the extent of the  aggregate  amount paid
                                    in   settlement   of  any   litigation,   or
                                    investigation    or    proceeding   by   any
                                    governmental  agency or body,  commenced  or
                                    threatened, or of any claim whatsoever based
                                    upon any such untrue  statement or omission,
                                    or any  such  alleged  untrue  statement  or
                                    omission,  if such  settlement  is  effected
                                    with the written consent of the Company; and

                           (iii)    against any and all expense  whatsoever,  as
                                    incurred  (including   reasonable  fees  and
                                    disbursements   of   counsel),    reasonably
                                    incurred  in  investigating,   preparing  or
                                    defending   against   any   litigation,   or
                                    investigation    or    proceeding   by   any
                                    governmental  agency or body,  commenced  or
                                    threatened,  in each case  whether  or not a
                                    party,  or any claim  whatsoever  based upon
                                    any such untrue statement or omission,

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                                    or any  such  alleged  untrue  statement  or
                                    omission,   to  the  extent  that  any  such
                                    expense is not paid under  subparagraph  (i)
                                    or (ii) above;

provided,  however,  that the indemnity  provided  pursuant to this Section 4(a)
does not apply to any Holder with respect to any loss, liability,  claim, damage
or expense to the extent  arising  out of any untrue  statement  or  omission or
alleged  untrue  statement or omission  made in reliance  upon and in conformity
with written  information  furnished to the Company by such Holder expressly for
use in a Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto).

                  (b)  Indemnification  by the  Holders.  Each Holder  severally
agrees to indemnify and hold harmless the Company and the other selling Holders,
and each of their respective directors and officers (including each director and
officer of the Company who signed the Registration Statement),  and each Person,
if any, who controls the Company or any other selling  Holder within the meaning
of  Section  15 of the  Securities  Act,  to the same  extent  as the  indemnity
contained  in Section  5(a) hereof  (except  that any  settlement  described  in
Section  4(a)(ii)  shall be  effected  only  with the  written  consent  of such
Holder),  but only  insofar as such loss,  liability,  claim,  damage or expense
arises out of or is based upon (i) any untrue statement or omission,  or alleged
untrue  statements  or  omissions,  made  in a  Registration  Statement  (or any
amendment thereto) or any Prospectus (or any amendment or supplement thereto) in
reliance  upon and in  conformity  with  written  information  furnished  to the
Company by such selling Holder expressly for use in such Registration  Statement
(or any amendment  thereto) or such  Prospectus  (or any amendment or supplement
thereto), or (ii) such Holder's failure to deliver a Prospectus to any purchaser
of  Registrable  Securities  where such a delivery  obligation was applicable to
such Holder's sale of  Registrable  Securities and such Holder had been provided
with sufficient copies of such Prospectus for the relevant  deliveries  thereof.
In no event shall the liability of any Holder under this Section 4(b) be greater
in amount than the dollar  amount of the  proceeds  received by such Holder upon
the  sale of the  Registrable  Securities  giving  rise to such  indemnification
obligation.

                  (c) Conduct of Indemnification  Proceedings.  Each indemnified
party shall give  reasonably  prompt  notice to each  indemnifying  party of any
action or proceeding  commenced  against it in respect of which indemnity may be
sought hereunder,  but failure to so notify an indemnifying  party (i) shall not
relieve it from any liability  which it may have under the  indemnity  agreement
provided  in  Section  4(a) or (b)  above,  unless  and to the extent it did not
otherwise learn of such action and the lack of notice by the  indemnified  party
results in the forfeiture by the  indemnifying  party of substantial  rights and
defenses and (ii) shall not, in any event,  relieve the indemnifying  party from
any  obligations  to  any  indemnified  party  other  than  the  indemnification
obligation  provided under Section 4(a) or (b) above. If the indemnifying  party
so  elects  within  a  reasonable  time  after  receipt  of  such  notice,   the
indemnifying  party may assume the defense of such action or  proceeding at such
indemnifying  party's own expense with counsel chosen by the indemnifying  party
and approved by the indemnified  parties defendant in such action or proceeding,
which approval shall not be unreasonably withheld;  provided,  however, that, if
such  indemnified  party or parties  reasonably  determine  that a  conflict  of
interest exists where it is advisable for such indemnified party


                                       10

<PAGE>



or  parties to be  represented  by  separate  counsel  or that,  upon  advice of
counsel,  there may be legal defenses available to them which are different from
or  in  addition  to  those  available  to  the  indemnifying  party,  then  the
indemnifying  party  shall  not be  entitled  to  assume  such  defense  and the
indemnified  party or parties  shall be entitled to one separate  counsel at the
indemnifying party's expense. If an indemnifying party is not entitled to assume
the  defense  of such  action or  proceeding  as a result of the  proviso to the
preceding  sentence,  such  indemnifying  party's  counsel  shall be entitled to
conduct the defense of such  indemnified  party or parties,  it being understood
that both such counsel will  cooperate with each other to conduct the defense of
such action or proceeding as efficiently as possible.  If an indemnifying  party
is not so  entitled to assume the defense of such action or does not assume such
defense,  after having  received the notice referred to in the first sentence of
this paragraph,  the indemnifying  party or parties will pay the reasonable fees
and  expenses of counsel for the  indemnified  party or parties.  In such event,
however,  no  indemnifying  party  will be liable  for any  settlement  effected
without the written consent of such indemnifying party. If an indemnifying party
is entitled to assume, and assumes,  the defense of such action or proceeding in
accordance with this paragraph,  such indemnifying party shall not be liable for
any fees and expenses of counsel for the indemnified parties incurred thereafter
in connection with such action or proceeding.  The  indemnification  obligations
provided  pursuant to Sections  4(a) and (b) hereof  survive,  with respect to a
Holder, the transfer of Registrable  Securities by such Holder, and with respect
to a Holder or the Company,  shall remain in full force and effect regardless of
any investigation made by or on behalf of any indemnified party.

                  (d)      Contribution.

                           (i)      In order to  provide for  just and equitable
                                    contribution in  circumstances  in which the
                                    indemnity  agreement  provided  for in  this
                                    Section  4 is  for  any  reason  held  to be
                                    unenforceable    although    applicable   in
                                    accordance  with its terms,  the Company and
                                    the selling Holders shall  contribute to the
                                    aggregate   losses,   liabilities,   claims,
                                    damages   and   expenses   of   the   nature
                                    contemplated  by  such  indemnity  agreement
                                    incurred  by the  Company  and  the  selling
                                    Holders,    in   such   proportion   as   is
                                    appropriate to reflect the relative fault of
                                    and  benefits to the Company on the one hand
                                    and the  selling  Holders  on the  other (in
                                    such  proportions  that the selling  Holders
                                    are severally, not jointly,  responsible for
                                    the  balance),   in   connection   with  the
                                    statements  or omissions  which  resulted in
                                    such losses, claims, damages, liabilities or
                                    expenses,  as  well  as any  other  relevant
                                    equitable   considerations.   The   relative
                                    benefits  to  the  indemnifying   party  and
                                    indemnified  parties  shall be determined by
                                    reference to, among other things,  the total
                                    proceeds  received by the indemnified  party
                                    and  indemnified  parties in connection with
                                    the offering to which such  losses,  claims,
                                    damages, liabilities or expenses relate. The
                                    relative fault of the indemnifying party and
                                    indemnified  parties  shall be determined by
                                    reference  to, among other  things,  whether
                                    the action in question,


                                       11

<PAGE>



                                    including  any  untrue  or  alleged   untrue
                                    statement of a material  fact or omission or
                                    alleged  omission to state a material  fact,
                                    has been made by, or relates to  information
                                    supplied by, such indemnifying  party or the
                                    indemnified   parties,   and  the   parties'
                                    relative   intent,   knowledge,   access  to
                                    information  and  opportunity  to correct or
                                    prevent such action.

                           (ii)     The Company and  the Holders agree  that  it
                                    would   not  be   just   or   equitable   if
                                    contribution  pursuant to this  Section 4(d)
                                    were determined by pro rata allocation or by
                                    any other  method of  allocation  which does
                                    not   take   account   of   the    equitable
                                    considerations    referred    to   in    the
                                    immediately       preceding       paragraph.
                                    Notwithstanding   the   provisions  of  this
                                    Section  4(d),  no selling  Holder  shall be
                                    required to contribute  any amount in excess
                                    of the  amount by which  the total  price at
                                    which  the  Registrable  Securities  of such
                                    selling  Holder  were  offered to the public
                                    exceeds the amount of any damages which such
                                    selling  Holder  would  otherwise  have been
                                    required  to pay by  reason  of such  untrue
                                    statement or omission.

                           (iii)    Notwithstanding  the  foregoing,  no  Person
                                    guilty   of   fraudulent   misrepresentation
                                    (within the meaning of Section  11(f) of the
                                    Securities   Act)  shall  be   entitled   to
                                    contribution  from  any  Person  who was not
                                    guilty of such fraudulent misrepresentation.
                                    For  purposes  of this  Section  4(d),  each
                                    Person, if any, who controls a Holder within
                                    the meaning of Section 15 of the  Securities
                                    Act and  directors  and officers of a Holder
                                    shall have the same  rights to  contribution
                                    as such  Holder,  and each  director  of the
                                    Company,  each  officer of the  Company  who
                                    signed the  Registration  Statement and each
                                    Person,  if any,  who  controls  the Company
                                    within  the  meaning  of  Section  15 of the
                                    Securities Act shall have the same rights to
                                    contribution as the Company.

                           (iv)     The   contribution   provided  for  in  this
                                    Section 4(d) shall survive,  with respect to
                                    a  Holder,   the  transfer  of   Registrable
                                    Securities by such Holder,  and with respect
                                    to a Holder or the Company,  shall remain in
                                    full  force  and  effect  regardless  of any
                                    investigation  made by or on  behalf  of any
                                    indemnified party.

         6.       Rule 144 Sales.

                  (a)  Reports.  The  Company  covenants  that it will  file the
reports  required to be filed by the Company  under the  Securities  Act and the
Securities  Exchange Act of 1934, as amended,  and will take such further action
as any Holder of Registrable Securities may reasonably request, all to


                                       12

<PAGE>



the  extent  required  to  enable  such  Holder to sell  Registrable  Securities
pursuant to Rule 144 under the Securities Act.

                  (b)  Certificates.  In connection  with any sale,  transfer or
other disposition by any Holder of any Registrable  Securities  pursuant to Rule
144 under the  Securities  Act, the Company shall  cooperate with such Holder to
facilitate  the timely  preparation  and delivery of  certificates  representing
Registrable Securities to be sold and not bearing any Securities Act legend, and
enable  certificates  for such  Registrable  Securities to be for such number of
shares  and  registered  in such names as the  selling  Holders  may  reasonably
request  at  least  two (2)  business  days  prior  to any  sale of  Registrable
Securities.

         7. Miscellaneous.

                  (a) Amendments and Waivers.  The provisions of this Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given without the written consent of the Company and the Holders of a
majority in amount of the outstanding Registrable Securities; provided, however,
that no  amendment,  modification  or  supplement  or waiver or  consent  to the
departure  with respect to the  provisions of Sections 2, 3, 4, 5, 6 or 7 hereof
shall be  effective  as against  any  Holder of  Registrable  Securities  unless
consented to in writing by such Holder of  Registrable  Securities,  as the case
may be. Notice of any  amendment,  modification  or supplement to this Agreement
adopted in accordance with this Section 6(a) shall be provided by the Company to
each Holder of  Registrable  Securities  at least  thirty (30) days prior to the
effective date of such amendment, modification or supplement.

                  (b) Notices. All notices and other communications provided for
or permitted  hereunder  shall be made in writing by  hand-delivery,  registered
first-class  mail,  telex,  telecopier,  or any courier  guaranteeing  overnight
delivery,  (i) if to a Holder,  at the most current address given by such Holder
to the Company by means of a notice given in accordance  with the  provisions of
this Section 6(b), which address initially is, with respect to each Holder,  the
address  set forth next to such  Holder's  name on the books and  records of the
Company,  or (ii) if to the Company,  at: Covol  Technologies,  Inc., 3280 North
Frontage Road,  Lehi,  Utah 84043;  Facsimile:  (801)  768-4483;  Attn:  General
Counsel.

                  All such  notices and  communications  shall be deemed to have
been duly given:  at the time delivered by hand, if personally  delivered;  five
(5) business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged,  if telecopied; or
at the time  delivered  if delivered  by an air courier  guaranteeing  overnight
delivery.

                  (c) Successors and Assigns.  This Agreement shall inure to the
benefit of and be binding upon the  successors,  assigns and transferees of each
of the Company and the Holders,  including  without  limitation  and without the
need for an express assignment,  subsequent Holders. If any successor,  assignee
or transferee of any Holder shall acquire Registrable Securities, in any


                                       13

<PAGE>


manner, whether by operation of law or otherwise,  such Registrable  Securities,
as the case may be, shall be held subject to all of the terms of this Agreement,
and by taking and holding  such  Registrable  Securities  such  Person  shall be
entitled to receive the benefits hereof and shall be conclusively deemed to have
agreed to be bound by all of the terms and provisions hereof.

                  (d)  Headings.  The  headings  in this  Agreement  are for the
convenience  of  reference  only and  shall not limit or  otherwise  affect  the
meaning hereof.

                  (e)  GOVERNING  LAW. THIS  AGREEMENT  SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF DELAWARE  WITHOUT  GIVING
EFFECT TO THE CONFLICTS OF LAW PROVISIONS THEREOF.

                  (f) Specific  Performance.  The Company and the Holders hereto
acknowledge  that there would be no adequate remedy at law if any party fails to
perform any of its obligations hereunder, and accordingly agree that each party,
in addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any other
party under this  Agreement in accordance  with the terms and conditions of this
Agreement  in any  court  of the  United  States  or any  State  thereof  having
jurisdiction.

                  (g)  Entire  Agreement.  This  Agreement  is  intended  by the
Company as a final expression of its agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the Company in respect
of the subject matter  contained  herein.  This  Agreement  supersedes all prior
agreements  and  understandings  of the  Company  with  respect to such  subject
matter.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first written above.

                                                 COVOL TECHNOLOGIES, INC.


                                                 By:/Stanley M. Kimball/
                                                    ---------------------------
                             Name:Stanley M. Kimball
                                                      Title: President


                                                 AJG FINANCIAL SERVICES, INC.


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



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