LICENSE AGREEMENT

         THIS LICENSE AND BINDER PURCHASE AGREEMENT (the  "Agreement"),  is made
and entered into as of December 4, 1997 by and between Appalachian Synfuel, LLC,
a  West  Virginia  limited  liability   company  (the  "Licensee"),   and  Covol
Technologies, Inc., a Delaware corporation (the "Licensor").

         WHEREAS Licensor entered into Design and Construction Agreements with a
Design/Builder for the construction of coal agglomeration  facilities within the
United States;

         WHEREAS Licensor assigned certain Design and Construction Agreements to
Licensee pursuant to an Assignment Agreement of even date herewith;

         WHEREAS  Licensee  wishes to  obtain  and  Licensor  wishes to grant to
Licensee  a  license  for the  coal  extruding  and  briquetting  technology  in
connection with a project to be constructed in proximity to the coal preparation
plant of Marfork  Coal  Company,  Inc.  in Raleigh  County,  West  Virginia  and
containing  two  Production  Lines on the terms and conditions set forth in this
Agreement (the "Facility"), and Licensee wishes to obtain and Licensor wishes to
sell to Licensee the Proprietary Binder Material (as defined below) manufactured
by Licensor for use in applying Licensor's proprietary binding technology in the
operation of the Facility.

         NOW, THEREFORE,  in consideration of the foregoing premises, the mutual
covenants  and  agreements  hereinafter  set forth,  and other good and valuable
consideration,  the receipt  and  sufficiency  of which is hereby  acknowledged,
Licensor and Licensee each agree as follows:

         Section 1.  Definitions.

                  "Coal Briquetting Technology" means all intellectual property,
patents  (including but not limited to United States Patent  Numbers  5,599,361,
5,487,764  and  5,453,103)  and  applications  therefor,  printed and  unprinted
technical  data,  know-how,  trade secrets,  copyrights  and other  intellectual
property rights, inventions, discoveries, techniques, works, processes, methods,
plans, software, designs, drawings, schematics,  specifications,  communications
protocols,  source and object code and modifications,  test procedures,  program
cards,  tapes,   disks,   algorithms  and  all  other  scientific  or  technical
information in whatever form relating to, embodied in or used in the proprietary
process to produce synthetic coal fuel extrusions and briquettes from waste coal
dust,  coal  fines  and  other  similar  coal  derivatives,  including  all such
information in

*  Confidential  material  has been omitted from this Exhibit and filed with the
Securities and Exchanges Commission (the "Commission").

<PAGE>

existence as of the date of this Agreement as well as related  information later
developed by Licensor; provided however, that the defined term "Coal Briquetting
Technology"  shall  not  include  either  (i)  Licensee  Technology  or (ii) the
proprietary  process  developed by Licensor to produce synthetic coke extrusions
and briquettes from coke breeze,  iron revert  materials,  or any technology for
other than the processing  and production of synthetic coal fuel  extrusions and
briquettes. Nothing in this Agreement is intended to grant to Licensee the right
to apply  the  Coal  Briquetting  Technology  to  produce  anything  other  than
synthetic  coal fuel  extrusions  and  briquettes  intended  to qualify  for tax
credits under Section 29(c)(1)(C) of the Code and then only at the Facility.

                  "Code" means the Internal Revenue Code of 1986, as amended.

                  "Developed Technology" means any inventions, "Improvement," or
new  technology  that  Licensor  may  conceive,  make,  invent,  or  suggest  in
connection  with  Licensor's  disclosure  to  Licensee  of the Coal  Briquetting
Technology. "Developed Technology" also means any inventions,  "Improvement," or
new technology directly related to the Coal Briquetting Technology that Licensor
may  conceive,  make,  invent  or  suggest  relating  to  the  Coal  Briquetting
Technology during the Term of this Agreement.  "Improvement" means an alteration
or addition  to an  invention  or  discovery  which  enhances,  to some  extent,
performance or economics without changing or destroying a product's, device's or
method's basic  identity and essential  character.  An Improvement  may comprise
alterations   or  additions  to  either   patented  or  unpatented   inventions,
discoveries, technology or devices, and may or may not be patentable.

                  "Earned Royalty" has the meaning set forth in Section 3.4.

                  "Effective  Date" means the date of this  Agreement  set forth
above.

                  "Extension Royalty" has the meaning set forth in Section 7.

                  "Facility" has the meaning set forth in the preamble.

                  "Fixed Royalty" has the meaning set forth in Section 3.3.

                  "Initial Royalty" has the meaning set forth in Section 3.2.

                  "IRS" means the Internal Revenue Service.

                                       2
<PAGE>


                  "Licensee" has the meaning set forth in the preamble.

                  "Licensee  Technology" means all intellectual  property of any
kind or  nature  developed  by  Licensee  or any  affiliate  or  sublicensee  of
Licensee,  whether  before or after the date of this  Agreement  and  whether in
connection  with  the  use of the  Coal  Briquetting  Technology  or  otherwise,
including  patents and applications  therefor,  printed and unprinted  technical
data, know-how, trade secrets, copyrights, inventions, discoveries,  techniques,
works,  processes,  methods,  plans, software,  designs,  drawings,  schematics,
specifications,   communications   protocols,   source  and   object   code  and
modifications,  test  procedures,  program cards,  tapes,  disks,  and all other
scientific or technical information in whatever form, including any Improvement.

                  "Licensor" has the meaning set forth in the preamble.

                  "Production  Line" means an arrangement of equipment  designed
to use the Coal  Briquetting  Technology  and  having  the  capacity  to produce
approximately  360,000 tons of synthetic coal fuel extrusions and briquettes per
year.

                  "Proprietary  Binder  Material" means and refers to the binder
compound necessary for the production, by Licensee, of synthetic coal extrusions
and  briquettes and which  extrusions and briquettes are reasonably  expected to
constitute "qualified fuels" pursuant to the terms of Section 29(c)(1)(C) of the
1986  Internal  Revenue Code and with respect to which  Section 29 is applicable
pursuant to Section 29(f) and 29(g) of the Code.

                  "Royalty" means the Initial  Royalty,  the Fixed Royalty,  the
Earned Royalty and the Extension Royalty.

                  "Ruling"  means a  private  letter  ruling by the IRS that the
owner of the Facility  will be entitled to claim Tax Credits for the  production
and sale of synthetic coal fuel extrusions and briquettes.

                  "Tax Credits" mean the tax credits  available under Section 29
of the Code with  respect  to the  production  of  "qualified  fuels" as defined
thereunder.

         Section 2.  License Grant.

                  2.1.  General.  Subject  to the terms and  conditions  of this
Agreement,  Licensor  hereby  grants to  Licensee,  for the full and entire term
hereof,  a  non-exclusive

                                       3
<PAGE>

license to use the Coal Briquetting Technology for commercial  exploitation (and
not for research  development  purposes),  including the non-exclusive  right to
make,  have  made  or use at the  Facility  and to  offer  to  sell,  to sell or
otherwise   transfer  products  which  have  been  manufactured  with  the  Coal
Briquetting Technology.  Licensee hereby accepts the license on the terms hereof
and agrees to make and have made products using the Coal Briquetting  Technology
at the Facility only under this License  Agreement.  Licensee  shall not make or
have made products using the Coal Briquetting Technology except at the Facility,
but Licensee may use, sell and otherwise transfer at any other facility products
which  have  been  manufactured  at  the  Facility  with  the  Coal  Briquetting
Technology.  Licensee shall have no obligation to commence or continue operation
of the  Facility  or to  achieve  any  particular  level  of  production  at the
Facility, all such matters being within Licensee's sole discretion.

                  2.2. Developed  Technology.  Licensee shall have the right and
is hereby  granted  a  non-exclusive  license  to use all  Developed  Technology
relating to the Coal  Briquetting  Technology at the Facility without payment of
any additional compensation to Licensor,  throughout the term of this Agreement,
subject to the  restrictions  and  limitations  in this Section 2. All Developed
Technology shall become Licensor's absolute property. Licensee shall at any time
during the term of this  Agreement  and  thereafter,  at  Licensor's  reasonable
request, execute any patent papers covering such Developed Technology as well as
any other  documents  that  Licensor  may  consider  necessary or helpful in the
prosecution  of  applications  for a patent  thereon or in  connection  with any
litigation or controversy related thereto; provided,  however, that all expenses
incident to the filing of such applications and the prosecution  thereof and the
conduct of such litigation shall be borne by Licensor.

                  2.3. Licensee  Technology.  All Licensee  Technology shall, as
between Licensor and Licensee, remain the sole property of Licensee, and nothing
in this  Agreement or its  performance  shall grant to Licensor any right in the
Licensee  Technology  or restrict  the  ability of Licensee to use the  Licensee
Technology as Licensee elects in its sole discretion.

                  2.4.  Non-licensed  Technology.  Licensor retains the absolute
right to fully exploit its proprietary  technology and processes,  including but
not  limited  to the  application  of  such  technology  embodied  in  the  Coal
Briquetting  Technology  together  with any  improvements  thereto,  to produce,
market and use synthetic coke extrusions and briquettes  from coke breeze,  iron
revert materials and any other materials to which  Licensor's  technology can be
applied.

                                       4
<PAGE>


                  2.5.  Confidentiality.  Each of the  parties  hereby  agree to
maintain the Coal  Briquetting  Technology  confidential and not to disclose the
Coal Briquetting Technology, or any aspect thereof, or the Improvements,  or any
aspect thereof  (collectively,  the  "Confidential  Information").  Furthermore,
disclosure by the Licensee of the  Proprietary  Binder  Material  formula to its
personnel  may be only on a bona fide  need to know  basis to  persons  who have
signed a  written  confidentiality  agreement.  Notwithstanding  the  foregoing,
information which (i) is or becomes generally available to the public other than
as a result of an  unauthorized  disclosure  by the parties or their  respective
agents, employees, directors or representatives, (ii) was available to the party
receiving  disclosure  on  a  non-confidential  basis  prior  to  its  receiving
disclosure hereunder, or (iii) lawfully becomes available to the party receiving
disclosure on a non-confidential  basis from a third party source (provided that
such  source is not  known by the  party  receiving  disclosure  or its  agents,
employees,  directors or  representatives to be prohibited from transmitting the
information),  shall not be subject  to the terms of this  Section  2.5.  At the
termination  of this  Agreement,  all  copies  of any  Confidential  Information
(including without limitation any reports or memoranda) shall be returned by the
party receiving  disclosure,  and the duties of confidentiality  set forth above
shall  continue  for five  years  thereafter.  Nothing in this  Agreement  shall
prohibit Licensee from disclosing the Confidential  Information to others as may
be  reasonably  necessary for Licensee to exploit  Licensee's  rights under this
Agreement;  provided  that the  recipient of any such  Confidential  Information
executes a  Confidentiality  Agreement  restricting  further  disclosure  of the
Confidential Information. Nothing in this Agreement shall prohibit Licensor from
licensing the Coal Briquetting Technology to third parties.

         Section 3.  License Fee and Royalty.

                  3.1. License Fee. Licensee shall pay the Initial Royalty,  the
Fixed Royalty and Earned Royalty as a license fee to Licensor.

                  3.2. Initial Royalty.  Upon the execution and delivery of this
Agreement,  Licensee shall pay * to Licensor in immediately available funds (the
"Initial Royalty") as an initial royalty payment.

                  3.3.  Fixed  Royalty.  Within ten (10) days after the later of
(i) the first  shipment of product from the Facility to a customer  ("Commercial
Production"),  excluding  any test  shipments  not to exceed  10,000 tons in the
aggregate,  or (ii) Licensee's  obtaining a Ruling or, if Licensee elects not to
pursue a Ruling,  then the filing of any  quarterly  estimated tax payment by an
owner of the Facility that takes into

                                       5

* Confidential material omitted and filed separately with the Commission.

<PAGE>

account Tax Credits with respect to product  produced at the Facility,  Licensee
shall pay to Licensor * as additional royalty (the "Fixed Royalty").  During the
pendency of a request  for a Ruling or if such a Ruling has been  refused or the
IRS has otherwise  indicated,  either  formally or informally,  its intention to
deny Tax Credits with respect to the Facility, and such adverse decision has not
been  subsequently  reversed,  but the owner of the Facility elects to claim Tax
Credits notwithstanding the position of the IRS, the Fixed Royalty shall be paid
into escrow as described in Section 3.7 below.

                  3.4. Earned Royalty. After satisfaction of and pursuant to the
conditions for the payment of the Fixed Royalty,  Licensee shall  thereafter pay
to Licensor  quarterly earned royalty payments  ("Earned  Royalty") in an amount
equal to *  (subject  to  adjustment  as set forth  below) per  million  British
thermal units of heat content ("mmbtu") for the first * tons of product produced
and sold at the Facility  during any contract  year and * (subject to adjustment
as set forth  below) per mmbtu with respect to product in excess of * tons up to
a maximum of * tons at the Facility during any contract year, minus * per ton of
product  produced  and  sold up to * tons  in any  contract  year  and * per ton
thereafter,  but in no event  shall  such  deductions  apply to more than * tons
during any contract  year or * tons  produced  during any contract  year.  In no
event shall  Licensee  owe any  royalty  with  respect to sales at the  Facility
during any contract year * tons. An example of the Earned Royalty calculation is
attached hereto as Exhibit A. A "contract year" shall consist of the 12 calendar
months  beginning  on the  first  day of the month  after  the  Facility  begins
Commercial  Production  and each twelve  month  period  thereafter.  The royalty
amounts per mmbtu stated above shall be adjusted  with respect to  production in
calendar  year 1998 by the  increase  or decrease  in the  inflation  adjustment
factor (set forth in Code Section  29(d)(2))  applicable  to calendar  year 1998
over the inflation adjustment factor applicable to calendar year 1996, and shall
thereafter be adjusted annually to reflect further annual increases or decreases
in such inflation adjustment factor. For purposes of this section, the number of
btu with  respect  to which  payment  is due  shall  equal the btu  reported  by
Licensee  to the IRS  for  purposes  of  claiming  Tax  Credits,  including  any
subsequent  adjustments  thereto,  and the number of tons shall be  conclusively
determined  by  railroad  weights if the product is shipped  unmixed  with other
material  and by belt scales at or  adjacent  to the  Facility if the product is
mixed  with  other  material  before  being  shipped.  Earned  Royalty  shall be
applicable  to  production  at the  Facility as to which Tax Credits are claimed
(subject to Section 3.7 below)  regardless of whether such  production  resulted
from the use of the Coal  Briquetting  Technology or Licensee  Technology or any
combination thereof.

                                       6

* Confidential material omitted and filed separtely with the Commission.

<PAGE>


                  3.5.  Payment  Terms.  Earned  Royalty  payments  shall be due
within  thirty (30) days after the end of each  quarter,  together with a report
showing tons  shipped and btu content  with  respect to which Earned  Royalty is
due. The parties  acknowledge that the applicable  inflation  adjustment  factor
will  typically  not be available at the time payment of Earned  Royalty is due.
Therefore,  Licensee shall pay initially the Earned Royalty calculated under the
latest inflation adjustment factor available, and then any subsequent adjustment
shall be reflected in the first  quarterly  Earned Royalty payment due after the
correct inflation  adjustment factor becomes available.  Similarly,  the per ton
deductions  described in Section 3.4 shall be taken  against the first * tons (*
amount as  Licensee  estimates  in good  faith to be * expected  production)  of
production to which Earned  Royalty is applicable  during any contract year, and
any necessary  subsequent  adjustment  shall be reflected in the Earned  Royalty
payment for the final quarter of such contract year.

                  3.6. Royalty Buyout.  After payment of the Initial Royalty and
the Fixed Royalty,  in lieu of and notwithstanding  Section 3.4 above,  Licensee
shall  have  the  option  at any  time  during  the  term of this  Agreement  to
extinguish any  obligation to pay further  royalties to Licensor with respect to
production  at the  Facility by making a one-time  payment  equal to the present
value,  based on a * annual  discount  rate, of future  royalties  expected with
respect to production at the Facility and assuming the following for purposes of
such  calculation:  (a) annual production of * tons, (b) Earned Royalty (in lieu
of any amount calculated under Section 3.4) of * per ton, without any adjustment
for inflation, (c) expiration of the Earned Royalty on December 31, 2007, if the
option is exercised before 2003, or expiration of the Earned Royalty on the date
set for  expiration of all Tax Credits  according to any Section 29 extension in
effect or proposed by a bill in Congress if the option is exercised  during 2003
or thereafter, with the amount of the Earned Royalty applicable to such extended
term in the case  only of a  Section  29  extension  actually  enacted  into law
increased  or decreased  proportionately  to reflect any increase or decrease in
the Tax Credits  applicable to such extended  term, and (d) exercise by Licensee
of its option to extend the term of this  Agreement  and pay the annual  royalty
provided therefor. Licensee shall be entitled to a one-time credit in the amount
of the Initial Royalty and Fixed Royalty paid by the Licensee against the amount
otherwise  due with  respect  to the  buyout of the  royalty  obligation  at the
Facility.

                  3.7.  Royalty  Escrow  and  Repayment.  If the IRS rules  that
either the  product to be  produced  at the  Facility  does not  qualify for Tax
Credits or that the Tax Credits are  unavailable to Licensee as the owner of the
Facility,  whether by declining to issue a Ruling, issuing an adverse ruling, or
by disallowing Tax Credits claimed by

                                       7

* Confidential material omitted and filed separately with the Commission.

<PAGE>

the owner(s) of the Facility (an "Adverse Decision"), the obligation of Licensee
to  pay  Royalty  hereunder  shall  immediately  cease  pending   exhaustion  of
Licensee's  right to  appeal  the  Adverse  Decision.  Licensee  shall  have the
absolute right, in its sole  discretion,  to elect whether and in what manner to
appeal an Adverse  Decision and on what terms any such  Adverse  Decision or its
appeal shall be settled.  If,  notwithstanding the position of the IRS, Licensee
elects to claim Tax Credits,  the Royalty  otherwise  payable hereunder shall be
deposited  in  escrow  into  an  interest   bearing  account  with  a  financial
institution  reasonably  acceptable  to  Licensor.  If an  Adverse  Decision  is
reversed on appeal, Licensee's obligation to pay Royalty shall resume, including
Royalty previously placed in escrow,  together with the amount, if any, by which
the  accumulated  interest on such funds exceeds  Licensee's  costs  incurred in
contesting the Adverse  Decision.  If an Adverse  Decision becomes final without
any further right of appeal,  then (a) Royalty previously placed in escrow shall
be released  from such escrow to  Licensee,  and (b)  Licensor  shall  refund to
Licensee  within  thirty  (30)  days  thereafter  any  Royalty  previously  paid
hereunder,  together  with  interest  thereon at the prime rate,  if the Adverse
Decision  is  caused,  in  whole  or in  part,  by (i) the  failure  of the Coal
Briquetting Technology to produce a synthetic fuel qualified under Section 29 or
(ii)  any  breach  by  Licensor  of any  representation,  warranty  or  covenant
contained  herein.  Notwithstanding  any  other  provision  of  this  Agreement,
although the obligation to refund Royalty already paid to Licensor is subject to
the conditions set forth in the preceding sentence, in no event shall any Earned
Royalty be due or payable with respect to any  production  as to which  Licensee
has not  claimed  Tax  Credits  (other  than as a result of a lack of income tax
liability  against which to apply the Tax Credits) or such Tax Credits have been
disallowed  for any reason  whatever.  It is understood  that the Royalty is not
contingent upon Licensee's ability to use the Tax Credits,  but rather solely on
the availability of the Tax Credits to Licensee. In no event shall Licensee have
any liability to Licensor by reason of the failure by Licensee for any reason to
obtain the Tax  Credits  as  available  for its use.  In the event of an Adverse
Decision,  Licensee  shall  have the  option to retain the right to use the Coal
Briquetting  Technology  throughout the term of this Agreement in return for the
payment of an annual royalty of One Hundred  Thousand  Dollars  ($100,000),  pro
rated for any partial contract years.

                  3.8.  Royalty Setoff.  If any person (a "Claimant")  asserts a
claim  that  all or any  part  of the  Coal  Briquetting  Technology  is not the
property of Licensor  and is instead the  property of  Claimant,  Licensee  may,
pending  resolution of such claim,  withhold from Royalty otherwise due Licensor
hereunder  amounts equal to such license fees as the Claimant may demand for the
use by Licensee of the Coal Briquetting Technology allegedly owned by Claimant.
Any amounts so withheld will be placed in

                                       8
<PAGE>

escrow by Licensee.  Upon entrance of a final non-appealable order by a court of
competent  jurisdiction that the Coal Briquetting  Technology is the property of
Licensor  or upon  receipt  of a  release  of  Licensee  from  liability  by the
Claimant,  Licensee shall pay to Licensor any amounts withheld  pursuant to this
Section 3.8. If a court of competent  jurisdiction enters a final non-appealable
order that all or any portion of the Coal Briquetting Technology is the property
of Claimant,  Licensee may pay to Claimant a reasonable  license fee and set off
any amounts so paid  against any amount  withheld  pursuant to this  Section 3.8
and/or any other Royalty  otherwise due Licensor  without any further  liability
with respect thereto. Nothing in this Section 3.8 shall be construed as limiting
in any respect Licensee's rights and remedies related to a breach by Licensor of
the representations and warranties contained in Section 6.3.

         Section 4.  Sale of Binder.

                  4.1. Sale and Purchase.  Licensor shall sell to Licensee,  and
Licensee shall purchase from Licensor,  Licensee's  requirements  of Proprietary
Binder  Material  required to operate the Facility.  Licensor  shall deliver the
Proprietary  Binder  Material at such times and in such  amounts as requested by
Licensee.  Payments for Proprietary Binder Material delivered by Licensor during
any  calendar  month shall be due and payable to Licensor on the tenth  Business
Day of the immediately succeeding month.

                  4.2.  Price.  The  price  which  Licensee  shall  pay  for the
Proprietary Binder Material delivered by Licensor during the first contract year
(the "Binder Base Price") shall be an amount equal to (i) Licensor's  direct and
actual costs  (direct  material,  labor and  transportation  costs)  incurred in
connection with the manufacture and sale of the Proprietary Binder Material plus
(ii)  *  of  the  amount   determined   pursuant  to  clause  (i)  exclusive  of
transportation costs, but in no event shall the Binder Base Price for such first
contract year exceed * per ton of product produced at the Facilities. The Binder
Base Price  shall be  subject  to  adjustment  annually  to  reflect  any actual
increase in Licensor's  cost, but no such annual  adjustment  shall exceed *. If
Licensor elects to have such binder material produced by a third party, Licensee
shall  have the right to contact  such  third  party  directly  to  monitor  the
appropriateness of reported costs. If Licensee can obtain binder material from a
third  party  at  a  cost  less  than  Licensor's  cost  plus  *  of  Licensor's
non-transportation  costs,  Licensee shall have the right to do so, but Licensee
shall pay Licensor * of Licensee's cost (exclusive of transportation costs) from
such third party  supplier.  Notwithstanding  anything  herein to the  contrary,
Licensor shall have no obligation to sell binder material to Licensee at a price
below Licensor's actual out-of-pocket cost, provided that Licensor uses its best
reasonable efforts to minimize

                                       9

* Confidential material omitted and filed separately with the Commission.

<PAGE>

such costs.

                  4.3.  Representations and Warranties.  Licensor represents and
warrants as follows:

                  (a)  Licensor  shall  convey  to  Licensee  good  title to all
         Proprietary   Binder  Material  purchased  by  Licensee  from  Licensor
         hereunder, free and clear of any and all liens, claims and encumbrances
         of any type whatsoever.

                  (b) No Proprietary Binder Material shall contain any hazardous
         material in  violation of currently  applicable  laws and  governmental
         regulations.

                  (c) At Licensee's  option,  Licensor shall replace,  or refund
         the purchase of, all non-conforming Proprietary Binder Material.

                  4.4.  Order  Procedure.  Licensee  shall  deliver all purchase
orders for Proprietary  Binder Materials at least thirty (30) days in advance of
the first day of the month in which delivery of such Proprietary Binder Material
is required under such purchase order,  and all such purchase orders received by
Licensor during the term of this Agreement shall be deemed to have been accepted
by Licensor. (For example,  Licensee shall deliver a purchase order for December
delivery  by no later than  November  1st).  Each such  purchase  order shall be
delivered  either (i) in writing,  or (ii) orally by telephone by an  authorized
agent of  Licensee  (subject to the  condition  that it is followed by a written
purchase order within 24 hours).  Such purchase orders shall be sent to Licensor
at such address as Licensor shall direct.

                  4.5. Delivery and Acceptance.  All Proprietary Binder Material
purchased  hereunder  shall be delivered  F.O.B.  the Facility.  Licensor  shall
arrange for  transportation of the Proprietary  Binder Material to the Facility.
Licensee  shall bear the expense of unloading the trucks or railroad  cars.  The
weight of Proprietary  Binder Material in each delivery shall be determined by a
comparison  of  the  weight,  on  Licensee's   scales,  of  the  delivery  truck
immediately prior to unloading and its weight, on Licensee's scales, immediately
following unloading,  as reflected in customary weighing certificates.  Licensee
represents  that it will use its best efforts to maintain  its scales  correctly
calibrated.  At Licensor's request and expense from time to time, Licensor shall
have the right to inspect Licensee's scales for accuracy.  Licensee shall have a
reasonable  opportunity to sample  Proprietary  Binder Material  delivered to it
hereunder to confirm that such Proprietary Binder Material conforms to the terms
and requirements  hereof, and Licensee shall not be deemed or required to accept
any such

                                       10
<PAGE>

Proprietary Binder Material prior to the completion of such sampling.

                  4.6.  Binder  Technology  License.  If  Licensor's  ability to
deliver the  Proprietary  Binder  Material to Licensee  will be  interrupted  or
terminated  for any reason,  Licensor  shall give not less than ninety (90) days
notice to  Licensee.  Subject to giving  notice of its  inability to deliver the
Proprietary  Binder Material to Licensee (or, in the absence of such notice, the
actual failure to deliver the Proprietary  Binder Material for at least ten days
after  Licensee  gives written  notice of  non-delivery  to Licensor).  Licensor
hereby grants to Licensee a non-exclusive license for the term of this Agreement
(or such shorter period as provided in the proviso hereto) to use the technology
used  to  manufacture  the  Proprietary   Binder  Material  to  manufacture  the
Proprietary Binder Material in sufficient  quantities to operate the Facility up
to full  capacity,  and  such  technology  shall  be  deemed  "Coal  Briquetting
Technology"  for the purposes of this  Agreement;  provided,  however,  that the
license  granted  to the  Licensee  under  this  section  shall end and sales of
Proprietary  Binder  Material  under  the  terms  of  this  Agreement  shall  be
reinstated,  so long as Licensor gives notice of reinstatement no longer than 90
days after the interruption or termination of delivery, together with reasonable
evidence  that  Licensor  is able to resume  delivery  in  accordance  with this
Agreement and Licensor  agrees to reimburse  Licensee for any increased  cost of
the  Proprietary  Binder  Material  to  Licensee  during  the  period it was not
provided by Licenesor. No additional fee or royalty shall be payable to Licensor
in  connection  with the license  granted  pursuant to this Section and Licensee
shall be responsible for its own direct  out-of-pocket  operating costs incurred
in connection  with the production of Proprietary  Binder  Material  pursuant to
this Section.

         Section 5.  Records:  Inspection:  Confidentiality.  Each party  hereto
shall keep accurate  records  containing  all data  reasonably  required for the
computation and verification of the amounts to be paid by the respective parties
under  this  Agreement,  and shall  permit  each other  party or an  independent
accounting  firm  designated  by such other party to inspect  and/or  audit such
records during normal business hours upon reasonable  advance notice.  All costs
and expenses  incurred by a party in connection  with such  inspection  shall be
borne by it. Each party agrees to hold  confidential  from all third parties all
information contained in records examined by or on behalf of it pursuant to this
Section 5 and Section 3.5 above.

         Section 6.  Representations and Warranties.

                  6.1.  Authority.  Each of Licensee and Licensor represents and
warrants that (i) the execution,  delivery and performance of this Agreement and
the

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<PAGE>

consummation of the transactions  contemplated  hereby have been duly authorized
on its behalf by all requisite action,  corporate or otherwise,  (ii) it has the
full right,  power and  authority to enter into this  Agreement and to carry out
the terms of this  Agreement,  (iii) it has duly  executed  and  delivered  this
Agreement,  and (iv) this  Agreement  is a valid and  binding  obligation  of it
enforceable in accordance with its terms.

                  6.2. No consent.  Each of Licensee and Licensor represents and
warrants  that  no  approval,  consent,  authorization,  order,  designation  or
declaration  of any court or regulatory  authority or  governmental  body or any
third party is required to be obtained by it, nor is any filing or  registration
required  to be  made  therewith  by  it  for  the  consummation  by  it of  the
transactions contemplated under this Agreement.

                  6.3. Intellectual Property Matters. Licensor warrants that (i)
to its best  knowledge  and good faith  belief,  it owns,  free and clear of all
liens  and  encumbrances,  intellectual  property,  patents  (including  but not
limited to United States Patent Numbers 5,599,361,  5,487,764 and 5,453,103) and
applications  therefor,  printed and unprinted technical data,  know-how,  trade
secrets  copyrights  and  other  intellectual  property  rights  and  all  other
scientific or technical information in whatever form relating to, embodied in or
used in the  proprietary  process to produce  synthetic coal fuel extrusions and
briquettes from waste coal dust, coal fines and other similar coal  derivatives,
and the right to freely use, sell and exploit  Proprietary  Binder Material used
in  manufacturing  synthetic coal fuel extrusions and briquettes from waste coal
dust,  coal fines and other  similar  coal  derivatives,  (ii) has the right and
power to grant to Licensee the licenses  granted herein,  (iii) has not made and
will not make any  agreement  with another in conflict  with the rights  granted
herein,  and  (iv)  has no  knowledge  that  the  sale  or  use  of the  rights,
Proprietary  Binder Material  and/or licenses  granted herein as contemplated by
this Agreement would infringe any third party's intellectual property rights.

                  6.4.  Tax  Matters.   Licensor  warrants  that  (i)  the  Coal
Briquetting  Technology  licensed hereunder is substantially the same technology
described in Private Letter Ruling  103439-97 issued on August 26, 1997, and the
related facts and  circumstances  provided therein remain accurate and complete,
(ii) the contracts with Centerline  Engineering  Corporation  dated December 20,
1996, Nos.  CL-004JW and CL-005JW to construct the Facility are, in all material
respects,  substantially  the same as the The Industrial  Company contract dated
December 20, 1996 cited in Private Letter Ruling  103439-97 issued on August 26,
1997, and are "binding written contracts" for purposes of Section 29(g)(1)(A) of
the Code,  and  (iii) all  information  supplied  by  Licensor  to  Licensee  in
connection  with  Licensee's  request for a Ruling  shall,  to  Licensor's  best
knowledge and good faith belief, be accurate and not

                                       12
<PAGE>

misleading  and shall not fail to include any  information  necessary to prevent
the information supplied from being misleading.

                  6.5.  Indemnification.  Licensor shall  indemnify,  defend and
hold  harmless  Licensee  and  its  partners,   directors,   officers,   agents,
representatives,  subsidiaries  and  affiliates  from  and  against  any and all
claims,  demands or suits (by any party,  including  any  governmental  entity),
losses,  liabilities,   damages,  obligations,   payments,  costs  and  expenses
(including  the costs and  expenses of  defending  any and all  actions,  suits,
proceedings,  demands and assessments which shall include reasonable  attorneys'
fees and court costs)  resulting from,  relating to, arising out of, or incurred
in  connection  with  any  breach  by  Licensor  of any of the  representations,
warranties  and/or  covenants  contained  in  this  Agreement.   Licensee  shall
indemnify,  defend  and hold  harmless  Licensor  and its  partners,  directors,
officers, agents, representatives,  subsidiaries and affiliates from and against
any and all claims,  demands or suits (by any party,  including any governmental
entity), losses, liabilities, damages, obligations, payments, costs and expenses
(including  the costs and  expenses of  defending  any and all  actions,  suits,
proceedings,  demands and assessments which shall include reasonable  attorneys'
fees and court costs)  resulting from,  relating to, arising out of, or incurred
in  connection  with  any  breach  by  Licensee  of any of the  representations,
warranties and/or covenants contained in this Agreement.

         Section 7. Term.  The initial term of this  Agreement is for the period
commencing  on the effective  date of this  Agreement and ending on December 31,
2007.  Licensee shall have the option to extend the term of the Agreement  until
December 31, 2015 or for the full life of the last U. S. Patents to expire which
disclose and claim Licensor's proprietary Coal Briquetting  Technology,  defined
above, whichever date is earlier.  During any such extended term, if Tax Credits
under Section 29 are  applicable to production at the Facility,  Licensee  shall
continue to pay to Licensor the Earned Royalty  described in Section 3.4, except
that the  Earned  Royalty  shall be  adjusted  proportionately  to  reflect  any
increase or decrease in the Tax Credits applicable to such extended term. During
any such extended  term,  if Tax Credits under Section 29 are not  applicable to
production  at the  Facility,  Licensee  shall pay to  Licensor,  in lieu of the
Earned  Royalty  described  in Section 3.4, an annual  royalty  (the  "Extension
Royalty") of * for the use of the Coal  Briquetting  Technology at the Facility.
Notice of Licensee's  intent to effect such  extension of this Agreement must be
in writing and given prior to December 31, 2007.

         Section  8.  Termination.  This  Agreement  shall  terminate  upon  the
termination  date set forth in Section 7,  unless the  Agreement  is  terminated
sooner pursuant to this

                                       13

* Confidential material omitted and filed separately with the Commission.

<PAGE>

Section 8.

                  8.1.  Termination  for Cause.  Either party may terminate this
Agreement for cause (i.e.,  in the event either party commits a material  breach
of any  provision  of this  Agreement)  at any time by giving the other party at
least  sixty (60) days prior  written  notice of such  termination  unless  such
default or breach is cured  within said sixty (60) days.  Solely for purposes of
this  Section  8.1, a material  breach of this  Agreement  by Licensee  shall be
deemed to consist  solely of a failure to pay  Royalty as to which no good faith
dispute exists. A good faith dispute  concerning the amount of Royalty due shall
not excuse the failure of  Licensee to pay in a timely  manner any Royalty as to
which no such good faith dispute exists.  If Licensor  terminates this Agreement
pursuant to this Section 8, Licensee shall promptly  return and cause all agents
of Licensee to promptly return to Licensor all Confidential  Information and all
Coal Briquetting  Technology then in Licensee's  possession,  and Licensee shall
not thereafter use for its own commercial benefit or disclose to any third party
any Confidential  Information or Coal Briquetting  Technology  during the period
ending five (5) years from the date of such termination.

                  8.2.  Noticed  Termination.  This  Agreement may be terminated
upon thirty days written notice, if not cured, if:

                  (a)      Licensee is unable to pay its debts as they  fall due
                           continuously for  ninety  (90) days or  longer, seeks
                           protection voluntarily or involuntarily under any law
                           relating  to  bankruptcy,  receivership,  insolvency,
                           administration,  liquidation,  dissolution or similar
                           law or any jurisdiction  (other than for the purposes
                           of a  reorganization  with a view to  continuing  the
                           business as a going concern under relevant bankruptcy
                           or insolvency  proceedings)  or enters into a general
                           assignment or  arrangement  or a composition  with or
                           for the benefit of its creditors; or

                  (b)      Licensee takes  any step  (including  the  filing  or
                           presentation  of  a  petition,  the  convening  of  a
                           meeting or  the filing of  an application or consent)
                           in  any  jurisdiction  for,  or  with a  view to, the
                           appointment   of    an   administrator,   liquidator,
                           receiver,  trustee,  custodian  or  similar  official
                           (other than for the purposes of a reorganization with
                           a view to continuing the business as a going  concern
                           under relevant bankruptcy or  insolvency proceedings)
                           for  Licensee  and/or the  whole or any  part of  the
                           business,  undertaking,

                                       14
<PAGE>

                           property,  assets,  receiver  or  uncalled capital of
                           Licensee or  any such  person is appointed.

                           8.3.  Effect of Termination. Upon termination of this
Agreement,   all  rights  granted  to  and  obligations  of  the  parties  shall
immediately  cease;  however,  termination shall not relieve either party of its
obligations   accrued  during  the  Term  of  this   Agreement   (including  any
pre-termination obligation Licensee may have to pay Licensor) which has not been
fulfilled, and all representations,  warranties, obligations and confidentiality
agreements made herein shall survive termination of this Agreement.

         Section 9. Waiver.  The failure of any party to enforce at any time any
provision of this Agreement shall not be construed as a waiver of such provision
or the right  thereafter to enforce each and every  provision.  No waiver by any
party, either express or implied, of any breach of any of the provisions of this
Agreement  shall be  construed  as a waiver of any other  breach of such term or
condition.

         Section 10.  Severability.  If any provision of this Agreement shall be
held by a court of competent  jurisdiction to be invalid or unenforceable in any
respect for any reason, the validity and enforceability of any such provision in
any other respect and of the remaining provisions of this Agreement shall not be
in any way impaired.

         Section  11.  Notices.  All  notices  required  or  authorized  by this
Agreement  shall be given in  writing.  Notices  may be served by  certified  or
registered mail, postage paid with return receipt requested; by private courier,
prepaid; by facsimile or other telecommunication  device capable of transmitting
or creating a written  record;  or  personally.  Mailed  notices shall be deemed
delivered five days after mailing,  properly addressed.  Couriered notices shall
be deemed  delivered  when delivered as addressed,  or if the addressee  refuses
delivery,   when   presented   for  delivery   notwithstanding   such   refusal.
Telecommunicated  notices  shall be  deemed  delivered  when  receipt  is either
confirmed by confirming  transmission equipment or acknowledged by the addressee
or its office. Personal delivery shall be effective when accomplished.  Unless a
party  changes  its  address  by giving  notice to the other  party as  provided
herein, notices shall be delivered to the parties at the following addresses:

         Licensor:                  Mr. Brent M. Cook
                                    Covol Technologies, Inc.
                                    3280 North Frontage Road
                                    Lehi, UT  84043

                                       15
<PAGE>

                                    Telephone:                (801) 768-4481
                                    Facsimile:                (801) 768-4483

         With a copy to:            Mr. William Marsh
                                    Ballard Spahr Andrews & Ingersoll
                                    201 South Main Street, Suite 1200
                                    Salt Lake City, UT  84111-2215
                                    Telephone:                (801) 531-3000
                                    Facsimile:                (801) 531-3001

         Licensee:                  Appalachian Synfuel, LLC
                                    c/o Fluor Daniel, Inc.
                                    3353 Michelson Drive
                                    Irvine, California  92698
                                    Attn:  General Counsel
                                    Telephone:                (714) 975-6995
                                    Facsimile:                (714) 975-5454

         Section  12.  Remedies   Cumulative.   Remedies  provided   under  this
Agreement shall be cumulative and in addition to other remedies  provided by law
or in equity.

         Section 13. Entire  Agreement.  This Agreement  constitutes  the entire
agreement of the parties  relating to the subject  matter  hereof.  There are no
promises,  terms,  conditions,   obligations  or  warranties  other  than  those
contained   herein.   This  Agreement   supersedes  all  prior   communications,
representations or agreements,  verbal or written, among the parties relating to
the subject matter  hereof.  This Agreement may not be amended except in writing
signed by the parties hereto.

         Section 14.  Governing  Law.   This  Agreement  shall  be  governed  in
accordance with the laws of the State of Delaware,  exclusive of its conflict of
laws rules.

         Section 15. Assignment. This Agreement may not be assigned, in whole or
in part, by any party without the written  consent of each of the other parties,
which consent may not be unreasonably withheld,  except that (i) Licensor and/or
Licensee  shall have the right to assign its rights and  obligations  under this
Agreement to any entity which is controlled by Licensor  and/or  Licensee and of
which  Licensor  and/or  Licensee owns,  directly or indirectly,  at least fifty
percent (50%) of each class of its outstanding securities or any entity which is
wholly owned by Licensee's  parent  corporation,  (ii)  Licensee  shall have the
right to assign its rights and obligations to

                                       16
<PAGE>

Licensor in  connection  with any sale by Licensee to Licensor of  substantially
all of the assets of the Facility and (iii) Licensee shall have the right at any
time to assign any portion of its rights and/or obligations under this Agreement
and  sublicense  the Coal  Briquetting  Technology to one or more third parties,
whether or not affiliated  with Licensee,  in connection with the acquisition of
an  ownership  interest  in the  Facility  or in an entity  having an  ownership
interest  in the  Facility.  No  such  assignment  and/or  sublicense  permitted
hereunder shall release the assigning or  sublicensing  party of its obligations
hereunder.

         Section 16.  Cooperation.  Licensor recognizes that Licensee and/or its
sublicensee(s)  intend  to  request  a  Ruling  by the IRS with  respect  to the
Facility.  Licensor  agrees to cooperate as  reasonably  requested in efforts to
obtain the  Ruling,  including  any  appeals of an  Adverse  Decision.  Licensor
further  recognizes that it is critically  important that the Facility be placed
in service no later than June 30, 1998 in order to qualify for the Tax  Credits.
Licensor  agrees to use its best  efforts to  cooperate  with  Licensee  to make
possible the construction and operation of the Facility by that date,  including
without limitation assisting as reasonably  requested in equipment  procurement,
permitting, sampling and testing of feedstock, and test runs of material through
Licensor prototypes of the Coal Briquetting Technology.

         Section 17.  Relocation of Facility.  Licensee  shall have the right to
relocate the Facility to any location of its choosing in Boone, Raleigh,  Logan,
Mingo, Nicholas or McDowell counties,  West Virginia or Pike or Martin counties,
Kentucky,  or any other site with respect to which  Licensor has not  previously
conveyed a conflicting  exclusive  territorial license to a third party. Royalty
shall continue to be due under this Agreement  after such relocation on the same
terms as if such  relocation  had not  occurred.  The Binder Base Price shall be
adjusted  to  reflect  any  increase  or  decrease  in the cost of  transporting
Proprietary  Binder  Material  to the new  location  as  compared to the Marfork
Facility.

         Section 18. Right of First  Refusal.  In the event  Licensee  elects to
discontinue using the Coal Briquetting Technology and sell the equipment used in
the Facility  (other than to an assignee or sublicensee  of Licensee),  Licensor
shall have the right to purchase the  equipment  proposed to be sold by agreeing
to match the proposed  purchase  price from a third party.  Licensor  shall have
thirty (30) days after  notice of such a proposed  sale to  exercise  its rights
hereunder.  If Licensor  elects to purchase such  equipment,  Licensor  shall be
responsible for the costs of relocation.

         Section 19.  Counterparts.  This  License Agreement  may be executed in
two or

                                       17
<PAGE>

more original  counterparts,  and all such counterparts  shall constitute
one and the same instrument.

         Executed by the duly  authorized  representatives  of the parties as of
the date and year first above written.


COVOL TECHNOLOGIES, INC.                       APPALACHIAN SYNFUEL, LLC
                                               By Fluor Daniel, Inc. as its
                                               sole member


By:  /s/ Stanley M. Kimball                    By:  /s/ James O. Rollans
   --------------------------                     ---------------------------
Its: CFO                                       Its: Chief Administrative Officer

                                       18