Document:

LICENSE AND BINDER PURCHASE AGREEMENT

         THIS LICENSE AND BINDER PURCHASE AGREEMENT (this "Agreement"), is made
and entered into as of January 21, 2000 by and between Premier Elkhorn Coal
Company, a Kentucky corporation ("Licensee"), and Covol Technologies, Inc., a
Delaware corporation ("Licensor").

                                    RECITALS

         WHEREAS, Licensor has developed and owns a proprietary process to
produce synthetic coal fuel extrusions, pellets and briquettes (collectively
referred to herein as "briquettes") from waste coal dust, coal fines, run of
mine coal and other similar coal derivatives (collectively, "Coal Feedstock"),
and Licensor is entitled to license the synthetic Coal Briquetting Technology
(as defined below) to Licensee;

         WHEREAS, Mohave Fuel Company, L.L.C., a Utah limited liability company
("Mohave"), owns a solid synthetic fuel manufacturing plant located near
Laughlin, Clark County, Nevada (the "Facility");

         WHEREAS, Licensor and Mohave have entered into that certain Option
Agreement dated as of December 30, 1999, as amended pursuant to that certain
Extension of Option Agreement dated January 7, 2000, between Licensor and
Mohave, pursuant to which Mohave has granted to Licen1sor the exclusive right
and option to purchase the Facility (the "Option");

         WHEREAS, Licensor and Licensee have entered into that certain Option
and Purchase Agreement, dated as of the date hereof (the "Option and Purchase
Agreement"), pursuant to which Licensor has assigned to Licensee the Option;

         WHEREAS, Licensee has exercised the Option and purchased the Facility
pursuant to that certain Purchase and Sale Agreement dated as of the date
hereof, by and between Licensee and Mohave (the "Purchase and Sale Agreement");

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**       This Exhibit contains confidential material which has been omitted
         pursuant to a Confidential Treatment Request. The omitted information
         has been filed separately with the Securities and Exchange Commission.

<PAGE>

         WHEREAS, Licensee wishes to obtain and Licensor wishes to grant to
Licensee a license for the synthetic Coal Briquetting Technology to be used in
connection with the Facility, and Licensee wishes to obtain and Licensor wishes
to sell to Licensee the Proprietary Binder Material (as defined below) for use
in the operation of the Facility, in each case, on the terms and conditions set
forth in this Agreement.

         NOW, THEREFORE, in consideration of the foregoing, 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. Capitalized terms used herein shall have the
meanings specified in the Option and Purchase Agreement, unless otherwise
specified below:

         1.1 "Bankruptcy Code" has the meaning set forth in Section 16.

         1.2 "Claimant" has the meaning set forth in Section 3.2.

         1.3 "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 not printed
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 including "Developed Technology" relating to,
embodied in or used in the process to produce synthetic coal fuel briquettes
from Coal Feedstock, including all such information in 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 the proprietary process/method or other binder material or composition
developed by Licensor to produce synthetic coke briquettes from coke breeze,
iron revert materials, or any technology used in any application other than the
processing and production of synthetic coal fuel 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
intended to qualify for tax credits under Section 29(c)(1)(C) of the Code.1.1

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         1.4 "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

         1.5 "Confidential Information" has the meaning set forth in Section
2.4.

         1.6 "Developed Technology" means any inventions, "Improvement" or
technology that Licensor may conceive, make, invent or suggest in connection
with or related to the Coal Briquetting Technology; provided, however, that
"Developed Technology" shall not include (i) coal fines recovery, coal fines
washing, material handling or product marketing techniques or technologies
conceived, made, invented or suggested by Licensee that are generally applicable
to the coal industry but which are used at the Facility in connection with the
Coal Briquetting Technology or (ii) any inventions, "Improvement" or technology
that Licensee may conceive, make, invent or suggest in connection with or
related to the Coal Briquetting Technology.

         1.7 "Dow Agreement" means that certain agreement between Dow Chemical
Company and Licensor, effective January 1, 1998.

         1.8 "Facility" has the meaning set forth in the Recitals.

         1.9 "Formula" has the meaning set forth in Section 4.7.

         1.10 "Hazardous Substances" means (a) any petrochemical or petroleum
products (provided that for purposes of this Agreement, the Proprietary Binder
Material shall not be considered to be a petrochemical or petroleum product),
oil or coal ash, radioactive materials, radon gas, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid which may contain polychlorinated
biphenyls, (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "hazardous constituents," "restricted hazardous materials,"
"extremely hazardous substances," "toxic substances," "contaminants,"
"pollutants," "toxic pollutants" or words of similar meaning and regulatory
effect under any applicable environmental law and (c) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any applicable environmental law.

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         1.11 "Increased Cost of Manufacture" has the meaning set forth in
Section 4.2.

         1.12 "Improvement" means an alteration or addition to an invention or
discovery which may enhance performance or economics while maintaining a
product's, device's or method's essential identity and character; provided,
however, that "Improvement" shall not include (i) coal fines recovery, coal
fines washing, material handling, or product marketing techniques or
technologies conceived, made, invented or suggested by Licensee that are
generally applicable to the coal industry but which are used at the Facility in
connection with the Coal Briquetting Technology or (ii) any alteration or
addition to an invention or discovery which was conceived, made, invented or
suggested by Licensee. An "Improvement" may comprise alterations or additions to
either patented or unpatented inventions, discoveries, technology or devices and
may or may not be patentable.

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

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

         1.15 "Mohave" has the meaning set forth in the Recitals.

         1.16 "Option" has the meaning set forth in the Recitals.

         1.17 "Option and Purchase Agreement" has the meaning set forth in the
Recitals.

         1.18 "Proprietary Binder Material" means and refers to the binder
compound derived from the Formula and used for the production of synthetic coal
briquettes by the Facility.

         1.19 "Reduced Cost of Manufacture" has the meaning set forth in Section
4.2.

         Section 2. License Grant.

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<PAGE>

         2.1 General. Licensor hereby grants to Licensee a non-exclusive license
to use the Coal Briquetting Technology, including Developed Technology relating
to the Coal Briquetting Technology, for the term of this Agreement, for the
purpose of commercial exploitation, including the non-exclusive right to make,
have made or use at the Facility and to offer to sell and to sell or otherwise
transfer products that have been manufactured with the Coal Briquetting
Technology, subject to the terms and conditions of this Agreement. Licensee
hereby accepts the license on the terms hereof. Licensee shall not have the
right to sublicense the Coal Briquetting Technology, except to any assignee,
transferee or purchaser in accordance with Section 18. Licensee further agrees
to use the Coal Briquetting Technology only under authority of this Agreement
with Licensor.

         2.2 Licensor's Ownership of Developed Technology. All Developed
Technology is and shall become Licensor's absolute property, subject to the
terms of this Agreement.

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

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<PAGE>

         2.4 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, including, but not limited to,
the Developed Technology (collectively, the "Confidential Information").
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, (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), (iv) a party is compelled by legal process by any
court or other authority to disclose or (v) is developed by Licensee
independently of (or which does not depend on the use of) Confidential
Information received from Licensor, shall not be subject to the terms of this
Section 2.4. In the case of (iv) above, the compelled party shall give the other
party prompt written notice of such legal process in order that an appropriate
protective order can be sought and each party agrees not to oppose the other
party's efforts to prevent the public disclosure of Confidential Information. At
the termination of this Agreement, each party receiving Confidential Information
shall use commercially reasonable efforts to return all copies of such
Confidential Information (including, without limitation, any reports or
memoranda), except to the extent such Confidential Information is necessary for
accounting, tax, regulatory or other similar purposes. Nothing in this Agreement
shall prohibit Licensee from disclosing the Confidential Information to
affiliates or to others as may be reasonably necessary for Licensee to exploit
Licensee's rights under the Transaction Documents and/or this Agreement,
provided that the recipient of any such Confidential Information executes a
confidentiality agreement restricting further disclosure of the Confidential
Information.

         2.5 Know-How and Assistance. To enable Licensee to benefit fully from
the license of the Coal Briquetting Technology, Licensor shall provide access to
all relevant documentation, drawings, engineering specifications and other
know-how in its possession, reasonable access to its employees or agents who are
familiar with the Coal Briquetting Technology, including, but not limited to,
Developed Technology, and shall provide such technical assistance and training
as is requested by Licensee. If Licensor does not have responsibility for the
operation of the Facility, Licensee shall reimburse Licensor for reasonable
travel and other similar out-of-pocket expenses of Licensor in performing
services under this Section 2.5; provided, however, that Licensor shall obtain
the prior approval of Licensee for any expenditures in excess of $5,000.

         Section 3. Royalty.

         3.1 Royalty Payments. Subject to adjustment as described below, during
the term of this Agreement, Licensee shall pay to Licensor a royalty in an
amount equal to $**** per ton of Section 29 Product produced at the Facility and
sold during the period commencing on the date of this Agreement and ending upon
the expiration of the term (or earlier termination) of this Agreement. Such
royalty shall be paid quarterly on the last business day of January, April, July
and October of each calendar year for the Section 29 Product produced at the
Facility and sold during the previous calendar quarter (commencing with the
calendar quarter which includes the date of this Agreement). To the extent
Licensee, at its option, does not purchase from Licensor and use the Proprietary
Binder Material to produce the Section 29 Product produced at the Facility and
sold and instead uses a binder or other compound obtained from one or more other
sources, the royalty amount payable to Licensor shall be reduced to $**** per
ton.

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<PAGE>

         3.2 Royalty Set-off. If any person ("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 the royalty payment otherwise due
Licensor pursuant to Section 3.1, amounts equal to such licensee fees as
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 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 Claimant, Licensee shall
pay to Licensor any amounts withheld pursuant to this Section 3.2. 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 the 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 3.2 and/or any other
royalty otherwise due Licensor without any further liability with respect
thereto. Nothing in this Section 3.2 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 7.3.

         Section 4. Sales of Binder.

         4.1 Sale and Purchase. Licensor shall sell to Licensee, and Licensee
shall purchase from Licensor, such amounts of Proprietary Binder Material as
Licensee may request from time to time to operate the Facility. Licensor shall
deliver the Proprietary Binder Material to Licensee at such times and in such
amounts as Licensee may request from time to time. Each calendar month Licensor
shall deliver an invoice to Licensee for the Proprietary Binder Material
delivered to Licensee during the immediately preceding calendar month. Payments
for Proprietary Binder Material delivered by Licensor to Licensee during any
calendar month shall be due and payable to Licensor within fifteen (15) days
following receipt of an invoice from Licensor with respect to such Proprietary
Binder Material. Notwithstanding anything in this Agreement to the contrary,
Licensee, at its option, may purchase and use binders or other compounds
obtained from other sources in lieu of, or in addition to, the Proprietary
Binder Material.

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<PAGE>

         4.2 Price. Subject to the next two preceding sentences, the price which
Licensee shall pay for the Proprietary Binder Material delivered by Licensor to
Licensee shall be an amount equal to $**** per unit of Proprietary Binder
Material (assuming 2% Proprietary Binder Material by weight) to produce one (1)
ton of synthetic fuel product. If during the term of this Agreement, Licensor
shall enter into one or more agreements from time to time with third parties
pursuant to which Licensor shall sell Proprietary Binder Material for less than
$**** per unit of Proprietary Binder Material (assuming 2% Proprietary Binder
Material by weight) to produce one (1) ton of synthetic fuel product (such lower
price, the "Reduced Cost of Manufacture"), then the parties hereto agree that
the price which Licensee shall pay for Proprietary Binder Material delivered by
Licensor to Licensee pursuant to this Agreement shall be automatically reduced
to such Reduced Cost of Manufacture. If during the term of this Agreement,
Licensor's direct and actual costs (including, but not limited to, material,
labor and transportation costs) incurred in connection with the manufacture and
sale of the Proprietary Binder Material delivered by Licensor to Licensee
pursuant to this Agreement shall exceed $**** per unit of Proprietary Binder
Material (assuming 2% Proprietary Binder Material by weight) to produce one (1)
ton of synthetic fuel product (such price, the "Increased Cost of Manufacture"),
then the parties hereto agree that the price which Licensee shall pay for
Proprietary Binder Material delivered by Licensor to Licensee pursuant to this
Agreement shall be automatically increased to an amount equal to such Increased
Cost of Manufacture, unless or until the price has been or is subsequently
reduced pursuant to the immediately preceding sentence.

         4.3 Licensor Representations, Warranties and Covenants. Licensor
represents, warrants and covenants as follows:

         (1) Licensor shall convey to Licensee good, valid and marketable 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.

         (2) Proprietary Binder Material purchased by Licensee from Licensor
hereunder shall not contain any Hazardous Substances and its sale, delivery and
use to produce solid synthetic fuel at the Facility, in each case, as
contemplated by this Agreement shall comply with all applicable laws and
governmental regulations (including, but not limited to, environmental laws and
regulations).

         (3) Licensor represents and warrants to Licensee that the Proprietary
Binder Material when applied to Coal Feedstock produces a "significant chemical
change" for purposes of Section 29 of the Code.

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<PAGE>

         (4) Licensor agrees that it shall not substitute other monomers or
polymers for the Dow carboxylated styrene/butadiene latex formulation currently
being used by Licensor to produce Proprietary Binder Material without the prior
written consent of Licensee and without first providing Licensee with a written
report of a third party fuels expert reasonably acceptable to Licensor and
Licensee to the effect that (in such third party's professional judgment) the
monomers or polymers so to be substituted will achieve the results set forth in
Section 4.3(c).

         (5) Licensor agrees that all Proprietary Binder Material delivered to
Licensee shall be in accordance with the specifications set forth in Exhibit A
attached hereto.

         (6) At Licensee's request, Licensor shall replace, or refund the
purchase price of, all non-conforming Proprietary Binding Material. In addition,
Licensor shall (i) pay all of Licensee's costs and expenses incurred to return,
remove or dispose of non-conforming Proprietary Binder Material and (ii)
indemnify, defend and hold harmless Licensee and its partners, directors,
officers, members, 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, penalties,
payments, costs and expenses (including the costs and expenses of enforcing this
indemnification and 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
products liability claim resulting from, relating to, arising out of, or
incurred in connection with the delivery to and use by Licensee of Proprietary
Binder Material delivered by Licensor; provided, however, that in no event shall
Licensor's liability under this Section 4.3(f)(ii) exceed the greater of (i) the
proceeds received from insurance provided for in Section 4.8 and (ii) the
proceeds received under the Dow Agreement and/or any of its other vendor or
binder manufacturing agreements which Licensor may enter into from time to time.

         (7) Licensor agrees that there will be available at the Facility from
time to time as reasonably requested by Licensee sufficient quantities of the
Proprietary Binder Material to supply the requirements of Licensee for the
production of up to 83,334 tons of Product per calendar month from the date
hereof until at least December 31, 2007.

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         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. (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 (including by fax) 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 twenty-four
(24) hours). Such purchase orders shall be sent to Licensor at such address as
Licensor shall direct in writing from time to time.

         4.5 Delivery and Acceptance. All Proprietary Binder Material purchased
hereunder shall be delivered F.O.B. the Facility. Licensor shall arrange for any
necessary transportation of the Proprietary Binder Material to the Facility and
shall deliver or cause to be delivered to Licensee a material safety data sheet
in respect of each delivery of Proprietary Binder Material to Licensee. Licensee
shall bear the expense of unloading Proprietary Binder Material from the trucks.
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 (including, but not
limited to, the specifications set forth in Exhibit A attached hereto), and
Licensee shall not be deemed or required to accept any such Proprietary Binder
Material prior to the completion of such sampling. From time to time as
requested by Licensee, Licensor shall certify in writing to Licensee that the
representations and warranties in Section 4.3 are true and complete with respect
to the Proprietary Binder Material delivered to Licensee pursuant to this
Agreement.

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         4.6 Grant of License. Licensor hereby grants to Licensee a nonexclusive
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, and the copy of the Formula delivered in escrow pursuant to
Section 4.7, to manufacture the Proprietary Binder Material in sufficient
quantities to operate the Facility to full capacity, and such technology shall
be deemed "Coal Briquetting Technology" for the purposes of this Agreement;
provided, however, that Licensee shall not be permitted to use, and Licensee
agrees that it shall not use, such license unless and until Licensor has given
notice to Licensee of its inability to deliver the Proprietary Binder Material
to Licensee (which Licensor shall give to Licensee not less than ninety (90)
days before its ability to deliver the Proprietary Binder Material to Licensee
will be interrupted or terminated for any reason, including Licensor's
insolvency, bankruptcy or liquidation) or, in the absence of such notice, the
actual failure by Licensor to deliver the Proprietary Binder Material to
Licensee for at least ten (10) days after Licensee gives written notice of
non-delivery to Licensor. Upon the occurrence of the events described in the
immediately proceeding proviso, Licensor agrees to coordinate and arrange for,
and does hereby authorize and permit, Licensee, its sublicensees or assignees,
to purchase the Proprietary Binder Material directly from Licensor's binder
manufacturing or vendor sources. The license granted to Licensee under this
Section shall cease (subject to reinstatement upon the reoccurrence of the
events contemplated above) and sales of Proprietary Binder Material under the
terms of this Agreement shall be reinstated, in each case, on a date not less
than ninety (90) days after Licensor gives notice to Licensee, together with
evidence reasonably satisfactory to Licensee, that Licensor is able to deliver
the Proprietary Binder Material to Licensee in accordance with this Agreement.
No additional fee or royalty shall be payable to Licensor in connection with the
license granted pursuant to this Section and Licensor shall be responsible for
any additional out-of-pocket costs incurred by Licensee in connection with the
production of Proprietary Binder Material pursuant to this Section.

         4.7 Escrow of Binder Material Formula.

         As a material inducement for Licensee entering into this Agreement and
the Option and Purchase Agreement, and in order to provide assurance to Licensee
of access to and adequate and continuing supply of the Proprietary Binder
Material during the term of this Agreement, Licensor agrees to place in escrow
with Licensee the formula and technology used to manufacture the Proprietary
Binder Material (the "Formula") as provided herein. In connection therewith,
Licensor agrees to deposit with Licensee, within ten (10) days of the date of
this Agreement, a copy of the Formula. During the term of this Agreement,
Licensor shall keep the Formula in escrow fully current by depositing all
updates and revisions thereto and related materials, as the Formula may be
updated or revised from time to time. Such supplemental deposits will be
completed no later than ten (10) days after the date of use of such revised
Formula by Licensor. Title to the Formula shall remain in Licensor, but title to
the copy thereof to be deposited in escrow hereunder shall, in the event the
Formula shall be released for use to Licensee as provided in Section 4.6, pass
to and vest in Licensee. Licensee shall hold such copy of the Formula and any
supplements in a safe-deposit box at a financial institution designated by
Licensee and located in Pike County, Kentucky or such other location as may be
designated by Licensee and, in each case, reasonably approved by Licensor.
Notwithstanding its ownership of a copy of the Formula in such event, Licensee's
use of the Formula shall remain subject to the terms of this Agreement.

         4.8 Required Insurance.

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         (1) Types. Licensor shall obtain and maintain, at its own cost, from
reputable insurers at all times during the term of this Agreement, general third
party liability insurance, including product liability coverage, with a
$10,000,000 coverage limit, which may be comprised of a $1,000,000 per
occurrence primary policy and a $10,000,000 umbrella policy.

         (2) "Occurrence" Basis Coverage. To the extent available on
commercially reasonable terms at commercially reasonable rates the liability
coverage required in this Section 4.8 shall be written on an "occurrence" basis.

         (3) Named Insured. Licensor shall cause Licensee to be named as an
additional insured on all the insurance policies required under this Section
4.8.

         (4) Subrogation Waiver. Licensor shall cause all the insurance policies
required under this Section 4.8 to contain a waiver of subrogation by the
insurer in favor of Licensee.

         (5) Notice of Cancellation/Coverage Reduction. Licensor shall insure
that each insurance policy required under this Section 4.8 shall contain a
"notice of cancellation/coverage reduction" provision requiring the insurer to
give at least thirty (30) days prior written notice to Licensee of the
cancellation of and/or material change to (including, but not limited to, a
reduction in coverage under such insurance policy) its insurance policy.

         (6) Default. If Licensor fails duly to perform it obligations to effect
and maintain any of the insurance required pursuant to this Section 4.8,
Licensee may, but shall not be obligated to, upon written notice to Licensor, in
the name of and on behalf of Licensor effect and maintain such insurance, and
all costs and expenses thereby incurred by Licensee shall be paid by Licensor
within ten (10) days of written demand.

         (7) Certificates of Insurance. Licensor shall cause its insurers under
each insurance policy required under this Section 4.8 to provide Licensee with
certificates of insurance evidencing the insurance policies and endorsements
required by this Section 4.8. Failure of Licensee to receive such certificates
shall not relieve Licensor of its obligation to obtain and maintain insurance in
accordance with this Section 4.8. Failure to obtain insurance pursuant to this
Section 4.8 shall in no way relieve or limit Licensor's obligations and
liabilities under this Agreement.

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         Section 5. Records; Inspection; Confidentiality.

         5.1 Records. 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 (including, but not
limited to, any Reduced Cost of Manufacture or Increased Cost of Manufacture),
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.

         5.2 Confidentiality. 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; provided, however, that information shall not be
subject to the terms of this Section 5 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, (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), (iv) a party is compelled by legal process by any
court or other authority to disclose, or (v) is developed by the party
independently of (or which does not depend on the use of) disclosure hereunder.
In the case of (iv) above, the compelled party shall give the other party prompt
written notice of such legal process in order that an appropriate protective
order can be sought and each party agrees not to oppose the other party's
efforts to prevent the public disclosure of such information. At the termination
of this Agreement, each party receiving copies of such information (including,
without limitation, any reports or memoranda) shall use commercially reasonable
efforts to return all such copies, except to the extent such information is
necessary for accounting, tax, regulatory or other similar purposes. Nothing in
this Agreement shall prohibit Licensee from disclosing such information to
affiliates or to others as may be reasonably necessary for Licensee to exploit
Licensee's rights under the Transaction Documents and/or this Agreement,
provided that the recipient of any such information executes a confidentiality
agreement restricting further disclosure of such information.

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         Section 6. Enforcement Of Proprietary Rights. Licensee shall cooperate
in good faith, with Licensor's efforts to enforce its proprietary patent and
trade secret rights at Licensor's sole expense.

         Section 7. General Representations, Warranties and Covenants.

         7.1 Authority. Each party represents and warrants to the other party
that (a) the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (i) have been duly
authorized on its behalf by all requisite action, corporate or otherwise, (ii)
does not and will not result in any violation of, conflict with or default under
the terms of any of its organizational documents (nor, to its knowledge, does
there exist any condition which upon the passage of time or the giving of notice
would cause such violation, conflict or default), and (iii) does not and will
not result in any violation of, conflict with or default under any collective
bargaining agreement, permit, lease, venture, indenture, mortgage, agreement,
contract, judgment, order or other obligation or restriction to which it or its
assets may be bound or encumbered (nor, to its knowledge, does there exist any
condition which upon the passage of time or the giving of notice would cause
such violation, conflict or default), (b) it has the full right, power and
authority to enter into this Agreement and to carry out the terms of this
Agreement, (c) it has duly executed and delivered this Agreement, and (d) this
Agreement is its valid and binding obligation, enforceable in accordance with
its terms (subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
relating to the rights and remedies of creditors as well as to general
principles of equity).

         7.2 No Consent. Each party represents and warrants to the other party
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.

         7.3 Intellectual Property Matters.

                                       14
<PAGE>

         (1) Licensor represents and warrants to Licensee that (i) it owns, free
and clear of all liens and encumbrances, patents related to the Coal Briquetting
Technology (including, but not limited to, United States Patent Numbers
5,599,361, 5,487,764 and 5,453,103) and has developed and exclusively owns the
Coal Briquetting Technology, including, but not limited to, printed and not
printed 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 process to produce
synthetic coal fuel briquettes from waste coal dust, coal fines, run of mine
coal and other similar coal feedstock, and, the right to freely make, use, sell
and exploit the Coal Briquetting Technology and Proprietary Binder Material used
in manufacturing synthetic coal fuel briquettes from waste coal dust, coal
fines, run of mine coal and other similar coal feedstocks, (ii) it has the sole
and complete right and power to grant to Licensee the licenses granted herein,
and (iii) the sale or use of the rights, Proprietary Binder Material and Coal
Briquetting Technology and/or licenses granted herein as contemplated by this
Agreement do not and will not infringe any third-party's intellectual property
rights.

         (2) Except as otherwise expressly provided in this Agreement, Licensor
agrees that it will not take any action or fail to take any action during the
term of this Agreement that would negate this Agreement or cause a loss to
Licensee of the licenses granted hereunder.

         (3) If during the term of this Agreement a third party has infringed
any intellectual property rights associated with the Coal Briquetting Technology
or otherwise misappropriated any Coal Briquetting Technology, Licensor shall, at
Licensor's expense, institute and conduct legal actions against such third party
or enter into such agreements or accord in settlement as are deemed appropriate
by Licensor, in which case Licensor shall be entitled to any sums recovered in
connection therewith from third parties. If Licensor does not take any action,
Licensee shall have the right, but not the obligation, to take action as a
plaintiff in the prosecution of any infringement or misappropriation action
affecting the Facility, and Licensee shall be entitled to any sums recovered in
connection therewith from third parties. If Licensee and Licensor have jointly
conducted an infringement or misappropriation action, after each party has been
reimbursed for costs and expenses incurred by it in prosecuting the action, any
sums recovered in connection therewith from third parties shall be distributed
to Licensee and Licensor based on the proportionate amount of damages suffered
by Licensee and Licensor. Licensee shall always have the right to be represented
at its expense by counsel of its own selection in any action. In no event shall
Licensor enter into any agreement or settlement inconsistent with the terms of
this Agreement.

                                       15
<PAGE>

         7.4 Indemnification. Each party agrees to indemnify, defend and hold
harmless the other party and its partners, directors, officers, members, 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, penalties (including, but not limited
to, for violation of environmental laws), payments, costs (including, but not
limited to, costs of remediation) and expenses (including, but not limited to,
the costs and expenses of enforcing this indemnification and 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 its breach of any of the representations,
warranties and/or covenants contained in this Agreement.

         Section 8. Term. The term of this Agreement will begin on the date of
this Agreement and will expire, unless terminated earlier pursuant to Section 9,
on the later of: (a) December 31, 2007, (b) the end of the term of Section 29 of
the Code, or (c) the last to expire of the U.S. patents referred to under the
definition of Coal Briquetting Technology above or any other U.S. patents in
existence at the date of this Agreement that disclose and claim Covol's
proprietary Coal Briquetting Technology. Any extension of this Agreement must be
in writing and signed by both parties.

         Section 9. Events of Default; Remedies.

         9.1 Events of Default. The following shall constitute an event of
default ("Event of Default") under this Agreement:

         (1) Licensor shall have breached any of its obligations pursuant to
Section 4.8, which breach cannot be or has not been cured within thirty (30)
days after the giving of written notice thereof by the non-defaulting party;

         (2) a party shall have breached in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement (other than as provided in Section 9.1(a)), which breach cannot be or
has not been cured within sixty (60) days after the giving of written notice
thereof by the non-defaulting party;

                                       16
<PAGE>

         (3) a party becomes insolvent or is unable to pay its debts as they
fall due, seeks protection voluntarily or involuntarily under any law relating
to bankruptcy, receivership, insolvency, administration, liquidation,
dissolution or similar law of 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

         (4) a party 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 such party
and/or the whole or any part of the business, undertaking, property, assets,
receiver or uncalled capital of such party or any such person is appointed.

         9.2 Remedies.

         (1) Upon the occurrence of an Event of Default, the non-defaulting
party may, in addition to exercising any of its remedies at law or equity or any
of its other remedies provided for in this Agreement, terminate this Agreement
upon written notice thereof to the defaulting party.

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

                                       17
<PAGE>

         (3) If either party terminates this Agreement pursuant to this Section
9.2, Licensee shall promptly return and cause all agents of Licensee to promptly
return to Licensor all Confidential Information (except to the extent such
Confidential Information is necessary for accounting, tax, regulatory or other
similar purposes) 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 person any Confidential Information or Coal Briquetting
Technology before the end of the term of Section 29 of the Code. Notwithstanding
the foregoing, Confidential Information shall not be subject to the terms of
this Section 9.2(c) which (i) is or becomes generally available to the public
other than as a result of an unauthorized disclosure by Licensee or its
respective members, agents, employees, directors or representatives, (ii) was
available to Licensee on a non-confidential basis prior to its receiving
disclosure hereunder, (iii) lawfully becomes available to Licensee on a
non-confidential basis from a third party source (provided that such source is
not known by Licensee or its members, agents, employees, directors or
representatives to be prohibited from transmitting the information), (iv)
Licensee is compelled by legal process by any court or other authority to
disclose or (v) is developed by Licensee independently of (or which does not
depend on the use of) Confidential Information received from Licensor; provided,
however, that in the case of (iv) above, Licensee shall give Licensor prompt
written notice of such legal process in order that an appropriate protective
order can be sought and Licensee agrees not to oppose Licensor's efforts to
prevent the disclosure of Confidential Information.

         Section 10. 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 11. 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 12. Notices. All notices required or authorized by this
Agreement shall be effective upon receipt and given to the parties in writing by
fax, mail, or courier as follows:

                  To Licensor:         Brent M. Cook, President
                                       Covol Technologies, Inc.
                                       3280 North Frontage Road
                                       Lehi, UT  84043-9534
                                       Fax:  (801) 768-4483

                  To Licensee:         Premier Elkhorn Coal Company
                                       c/o TECO Coal Corporation
                                       200 Allison Boulevard
                                       Corbin, Kentucky 40701
                                       Fax:  (606) 523-4180
                                       Attn:  President

                                       18
<PAGE>

                  With a copy to:      TECO Energy, Inc.
                                       702 N. Franklin Street
                                       Tampa, Florida 33602
                                       Fax:  (813) 228-4811
                                       Attn:  General Counsel

         Section 13. Remedies Cumulative. Remedies provided under this Agreement
shall be cumulative and in addition to other remedies provided by law or in
equity.

         Section 14. Entire Agreement. This Agreement, together with the
Transaction Documents (as defined in the Option and Purchase 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 and therein. This Agreement and the
Transaction Documents supersede any and all prior communications,
representations or agreements, verbal or written, between the parties relating
to the subject matter hereof. This Agreement may not be amended except in
writing signed by the parties hereto.

         Section 15. Relocation of the Facility. Licensee shall have the right
to relocate the Facility to Pike County, Kentucky or Lecher County, Kentucky or
any other site with respect to which Licensor has not as of the date of this
Agreement conveyed a conflicting exclusive territorial license to a third party,
provided that any such relocation shall not affect the terms of this Agreement
which shall remain in full force and effect.

         Section 16. License Status in Bankruptcy. (a) This Agreement shall
constitute an executory contract under Section 365 of the United States
Bankruptcy Code, 11 U.S.C. ss. ss. 101 et seq. (the "Bankruptcy Code"). All
rights and licenses granted pursuant to this Agreement are, and shall be deemed
to be, licenses of and right to "intellectual property" as that term is defined
in Section 101(35A), and as used in Section 365, of the Bankruptcy Code. The
parties agree that (i) Licensor is a "licensor" under Section 365(n) of the
Bankruptcy Code and (ii) Licensee, as licensee under this Agreement, shall
possess and may fully exercise all of its rights, remedies and elections
afforded by and under the Bankruptcy Code.

                                       19
<PAGE>

         (b) The parties further agree that, in the event of the commencement of
a case by or against Licensor under the Bankruptcy Code, Licensee shall be
entitled to all applicable rights under Section 365 of the Bankruptcy Code.
Without limiting the foregoing, the parties hereby agree that Licensee has (i)
the right to complete duplicate/ or complete access to, as appropriate) any such
intellectual property referred to in subsection (a) above and any and all
embodiments of such intellectual property upon the written request of Licensee
and (ii) the right (unless and until the Agreement is rejected), upon written
request of Licensee, (A) to compel Licensor to perform the Agreement or to
provide to Licensee such intellectual property (including any and all
embodiments thereof) and (B) to compel Licensor not to interfere with Licensee's
rights as provided in this Agreement/or any supplemental agreement) to such
intellectual property (including any and all embodiments thereof), including any
right to obtain such intellectual property/or any embodiment thereof) from
another entity (including without limitation, the escrow referred to in Section
4.7).

         Section 17. Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial.

         THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW EXCEPT SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW OR ANY
SUCCESSOR PROVISION THERETO).

                                       20
<PAGE>

         (1) Licensor, in respect of itself and its properties, (i) agrees to be
subject to (and hereby irrevocably submits to) the nonexclusive jurisdiction of
any Federal court located in the Commonwealth of Kentucky or any Kentucky state
court in the event of any dispute arising out of or relating to this Agreement
or the transactions contemplated hereby, (ii) agrees that it shall not attempt
to deny or defeat such jurisdiction by motion or other request for leave from
any such court and irrevocably waives, to the fullest extent it may effectively
do so under applicable Law, any objection to the laying of the venue of any such
action in any such court and any claim that any such action brought in any such
court has been brought in an inconvenient forum, (iii) agrees that it shall not
bring any action arising out of or relating to this Agreement or any
transactions contemplated hereby in any court other than a Federal or state
court sitting in the Commonwealth of Kentucky and (iv) irrevocably agrees that
all disputes arising our of or relating to this Agreement and the transactions
contemplated hereby may be determined in any Federal or state court sitting in
the Commonwealth of Kentucky.

         (2) Licensee, in respect of itself and its properties, (i) agrees to be
subject to (and hereby irrevocably submits to) the nonexclusive jurisdiction of
any Federal court located in the State of Utah or any Utah state court in the
event of any dispute arising out of or relating to this Agreement or the
transactions contemplated hereby, (ii) agrees that it shall not attempt to deny
or defeat such jurisdiction by motion or other request for leave from any such
court and irrevocably waives, to the fullest extent it may effectively do so
under applicable Law, any objection to the laying of the venue of any such
action in any such court and any claim that any such action brought in any such
court has been brought in an inconvenient forum, (iii) agrees that it shall not
bring any action arising out of or relating to this Agreement or any
transactions contemplated hereby in any court other than a Federal or state
court sitting in the State of Utah and (iv) irrevocably agrees that all disputes
arising our of or relating to this Agreement and the transactions contemplated
hereby may be determined in any Federal or state court sitting in the State of
Utah.

         (3) Either party may make service on the other Party by sending or
delivering a copy of the process to the Party to be served at the address and in
the manner provided for the giving of notices in Section 12, provided that
nothing in this Section 17, shall affect the right of any party to serve legal
process in any other manner permitted by law or in equity.

         (4) EACH OF THE PARTIES IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH,
THIS AGREEMENT OR THE TRANSACTION DOCUMENTS OR ANY MATTER ARISING HEREUNDER OR
THEREUNDER.

                                       21
<PAGE>

         Section 18. Assignment. This Agreement may not be assigned, in whole or
in part, by any party without the prior written consent of the other party,
which consent shall not be unreasonably withheld, except that each party shall
have the right to assign their respective rights and obligations under this
Agreement without the prior consent of the other party to (i) any affiliate or
any entity which is controlled by such party and of which such party owns,
directly or indirectly, at least fifty percent (50%) of each class of its
outstanding securities, provided that no such assignment shall release such
party from their respective obligations hereunder or (ii) in the case of
Licensee, to any transferee or purchaser of the Facility.

         Section 19. Further Assurances. Each party agrees, at the request of
the other party, at any time and from time to time, to execute and deliver all
such further documents, and to take and to forbear from all such action, as may
be reasonably necessary or appropriate in order to more effectively carry out
the provisions of this Agreement.

         Section 20. Interpretation. Unless the context requires otherwise:

         (1) When a reference is made in this Agreement to an article or
section, such reference shall be to an article or section of this Agreement.

         (2) Whenever the words "include", "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation."

         (3) The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and section
and exhibit references are to the sections and exhibits of this Agreement.

         (4) The meaning assigned to each term defined herein shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting any gender shall include all genders. Where a word or phrase is defined
herein, each of its other grammatical forms shall have a corresponding meaning.

         (5) A reference to any party to this Agreement or any other agreement
or document shall include such party's successors and permitted assigns.

         (6) A reference to any legislation or to any provision of any
legislation shall include any amendment to, and any modification or re-enactment
thereof, any legislative provision substituted therefor and all regulations and
statutory instruments issued thereunder or pursuant thereto.

         (7) All references to contracts, agreements, leases or other
understandings or arrangements shall refer to oral as well as written matters.

                                       22
<PAGE>

         (8) The specificity of any representation or warranty contained herein
shall not be deemed to limit the generality of any other representation or
warranty contained herein.

         (9) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

                    [SIGNATURES APPEAR ON THE FOLLOWING PAGE]

                                       23
<PAGE>

         IN WITNESS WHEREOF, each party has caused the License and Binder
Purchase Agreement to be executed by the duly authorized representative of the
parties on the date and year first above written.

COVOL TECHNOLOGIES, INC.                     PREMIER ELKHORN COAL COMPANY

By: /s/ Brent M. Cook                        By: /s/ J.J. Shackleford
   -------------------                          ----------------------
Name: Brent M. Cook                          Name: J.J. Shackleford
Title:   President                           Title: President

                                       24LOAN AGREEMENT

Borrower:

HEADWATERS INCORPORATED
11778 ELECTION DRIVE, SUITE 210
SALT LAKE CITY, UT 84020

Lender:  ZIONS FIRST NATIONAL BANK
         HEAD OFFICE/COMMERCIAL BANKING
         2460 SOUTH 3270 WEST
         WEST VALLEY CITY, UT  84119

================================================================================

THIS LOAN AGREEMENT between HEADWATERS INCORPORATED ("Borrower") and ZIONS FIRST
NATIONAL BANK ("Lender") is made and executed on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.

TERM. This Agreement shall be effective as of October 18, 2000, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

         Agreement. The word "Agreement" means this Loan Agreement, as this Loan
         Agreement may be amended or modified from time to time, together with
         all exhibits and schedules attached to this Loan Agreement from time to
         time.

         Account. The word "Account" means a trade account, account receivable,
         or other right to payment for goods sold or services rendered owing to
         Borrower (or to a third party grantor acceptable to Lender).

         Account Debtor. The words "Account Debtor" mean the person or entity
         obligated upon an Account.

         Advance. The word "Advance" means a disbursement of Loan funds under
         this Agreement.

         Borrower. The word "Borrower" means HEADWATERS INCORPORATED. The word
         "Borrower" also includes, as applicable, all subsidiaries and
         affiliates of Borrower as provided below in the paragraph titled
         "Subsidiaries and Affiliates."

         Borrowing Base. The words "Borrowing Base" mean, as determined by
         Lender from time to time, the lesser of (a) $8,000,000.00; or (b)
         80.000% of the aggregate amount of royalties receivable from license
         agreements, earned for the most recent month-end times two; plus (ii)
         80% of monthly accounts receivable earned from sale of binder, plus
         (iii) 50% of the aggregate amount of the outstanding princial balance
         of the Promissory Note between Covol Technologies, Inc. and Birmingham
         Synfuel, LLC.

         CERCLA. The word "CERCLA" means the Comprehensive Environmental
         Response, Compensation, and Liability Act of 1980, as amended.

         Collateral. The word "Collateral" means and includes without limitation
         all property and assets granted as collateral security for a Loan,
         whether real or personal property, whether granted directly or
         indirectly, whether granted now or in the future, and whether granted
         in the form of a security interest, mortgage, deed of trust,
         assignment, pledge, chattel mortgage, chattel trust, factor's lien,
         equipment trust, conditional sale, trust receipt, lien, charge, lien or
         title retention contract, lease or consignment intended as a security
         device, or any other security or lien interest whatsoever, whether
         created by law, contract, or otherwise. The word "Collateral" includes
         without limitation all collateral described below in the section titled
         "COLLATERAL."

         Eligible Accounts. The words "Eligible Accounts" mean, at any time, all
         of Borrower's Accounts which contain selling terms and conditions
         acceptable to Lender. The net amount of any Eligible Account against
         which Borrower may borrow shall exclude all returns, discounts,
         credits, and offsets of any nature. Unless otherwise agreed to by
         Lender in writing, Eligible Accounts do not include:

                  (a) Accounts with respect to which the Account Debtor is an
                  officer, an employee or agent of Borrower.

                  (b) Accounts with respect to which the Account Debtor is a
                  subsidiary of, or affiliated with or related to Borrower or
                  its shareholders, officers, or directors.

                  (c) Accounts with respect to which goods are placed on
                  consignment, guaranteed sale, or other terms by reason of
                  which the payment by the Account Debtor may be conditional.

<PAGE>

                  (d) Accounts with respect to which the Account Debtor is not a
                  resident of the United States, except to the extent such
                  Accounts are supported by insurance, bonds or other assurances
                  satisfactory to Lender.

                  (e) Accounts with respect to which Borrower is or may become
                  liable to the Account Debtor for goods sold or services
                  rendered by the Account Debtor to Borrower.

                  (f) Accounts which are subject to dispute, counterclaim, or
                  setoff.

                  (g) Accounts with respect to which the goods have not been
                  shipped or delivered, or the services have not been rendered,
                  to the Account Debtor.

                  (h) Accounts with respect to which Lender, in its sole
                  discretion, deems the creditworthiness or financial condition
                  of the Account Debtor to be unsatisfactory.

                  (i) Accounts of any Account Debtor who has filed or has had
                  filed against it a petition in bankruptcy or an application
                  for relief under any provision of any state or federal
                  bankruptcy, insolvency, or debtor-in-relief acts; or who has
                  had appointed a trustee, custodian, or receiver for the assets
                  of such Account Debtor; or who has made an assignment for the
                  benefit of creditors or has become insolvent or fails
                  generally to pay its debts (including its payrolls) as such
                  debts become due.

                  (j) Accounts with respect to which the Account Debtor is the
                  United States government or any department or agency of the
                  United States.

                  (k) Accounts which have not been paid in full within 30 DAYS
                  FROM DUE DATE .

                  (l) Accounts with respect to which the Account Debtor is not a
                  resident of the following Canadian Provinces: British
                  Columbia, Alberta, Saskatchewan, Manitoba and Ontario, except
                  to the extent such Accounts are supported by insurance, bonds
                  or other assurances satisfactory to Lender. Accounts which
                  Lender in its sole discretion reasonably deems ineligible.

         ERISA. The word "ERISA" means the Employee Retirement Income Security
         Act of 1974, as amended.

         Event of Default. The words "Event of Default" mean and include without
         limitation any of the Events of Default set forth below in the section
         titled "EVENTS OF DEFAULT."

         Expiration Date. The words "Expiration Date" mean the date of
         termination of Lender's commitment to lend under this Agreement.

         Grantor. The word "Grantor" means and includes without limitation each
         and all of the persons or entities granting a Security Interest in any
         Collateral for the Indebtedness, including without limitation all
         Borrowers granting such a Security Interest.

         Indebtedness. The word "Indebtedness" means and includes without
         limitation all Loans, together with all other obligations, debts and
         liabilities of Borrower to Lender, or any one or more of them, as well
         as all claims by Lender against Borrower, or any one or more of them;
         whether now or hereafter existing, voluntary or involuntary, due or not
         due, absolute or contingent, liquidated or unliquidated; whether
         Borrower may be liable individually or jointly with others; whether
         Borrower may be obligated as a guarantor, surety, or otherwise; whether
         recovery upon such Indebtedness may be or hereafter may become barred
         by any statute of limitations; and whether such Indebtedness may be or
         hereafter may become otherwise unenforceable.

         Lender. The word "Lender" means ZIONS FIRST NATIONAL BANK, its
         successors and assigns.

         Line of Credit. The words "Line of Credit" mean the credit facility
         described in the Section titled "LINE OF CREDIT" below.

         Loan. The word "Loan" or "Loans" means and includes without limitation
         any and all commercial loans and financial accommodations from Lender
         to Borrower, whether now or hereafter existing, and however evidenced,
         including without limitation those loans and financial accommodations
         described herein or described on any exhibit or schedule attached to
         this Agreement from time to time.

         Note. The word "Note" means and includes without limitation Borrower's
         promissory note or notes, if any, evidencing Borrower's Loan
         obligations in favor of Lender, as well as any substitute, replacement
         or refinancing note or notes therefor.

         Permitted Liens. The words "Permitted Liens" mean: (a) liens and
         security interests securing Indebtedness owed by Borrower to Lender;
         (b) liens for taxes, assessments, or similar charges either not yet due
         or being contested in good faith; (c) liens of materialmen, mechanics,
         warehousemen, or carriers, or other like liens arising in the ordinary
         course of business and securing obligations which are not yet
         delinquent; (d) purchase money liens or purchase money security
         interests upon or in any property acquired or held by Borrower in the
         ordinary course of business to secure indebtedness outstanding on the
         date of this Agreement or permitted to be incurred under the paragraph
         of this Agreement titled "Indebtedness and Liens"; (e) liens, security
         interests and other contract rights or obligations which are existence
         as of the date of this Agreement, and (f) those liens and security
         interests which in the aggregate constitute an immaterial and
         insignificant monetary amount with respect to the net value of
         Borrower's assets.

         Related Documents. The words "Related Documents" mean and include
         without limitation all promissory notes, credit agreements, loan
         agreements, environmental agreements, guaranties, security agreements,
         mortgages, deeds of trust, and all other instruments, agreements and
         documents, whether now or hereafter existing, executed in connection
         with the Indebtedness.

         Security Agreement. The words "Security Agreement" mean and include
         without limitation any agreements, promises, covenants, arrangements,
         understandings or other agreements, whether created by law, contract,
         or otherwise, evidencing, governing, representing, or creating a
         Security Interest.

         Security Interest. The words "Security Interest" mean and include
         without limitation any type of collateral security, whether in the form
         of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
         mortgage, chattel trust, factor's lien, equipment trust, conditional
         sale, trust receipt, lien or title retention contract, lease or
         consignment intended as a security device, or any other security or
         lien interest whatsoever, whether created by law, contract, or
         otherwise.

         SARA. The word "SARA" means the Superfund Amendments and
         Reauthorization Act of 1986 as now or hereafter amended.

<PAGE>

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows.

         Conditions Precedent to Each Advance. Lender's obligation to make any
         Advance to or for the account of Borrower under this Agreement is
         subject to the following conditions precedent, with all documents,
         instruments, opinions, reports, and other items required under this
         Agreement to be in form and substance satisfactory to Lender:

                  (a) Lender shall have received evidence that this Agreement
                  and all Related Documents have been duly authorized, executed,
                  and delivered by Borrower to Lender.

                  (b) Lender shall have received such opinions of counsel,
                  supplemental opinions, and documents as Lender may request.

                  (c) The security interests in the Collateral shall have been
                  duly authorized, created, and perfected with first lien
                  priority and shall be in full force and effect.

                  (d) All guaranties required by Lender for the Line of Credit
                  shall have been executed by each Guarantor, delivered to
                  Lender, and be in full force and effect.

                  (e) Lender, at its option and for its sole benefit, shall have
                  conducted an audit of Borrower's Accounts, books, records, and
                  operations, and Lender shall be satisfied as to their
                  condition.

                  (f) Borrower shall have paid to Lender all fees, costs, and
                  expenses specified in this Agreement and the Related Documents
                  as are then due and payable.

                  (g) There shall not exist at the time of any Advance a
                  condition which would constitute an Event of Default under
                  this Agreement, and Borrower shall have delivered to Lender
                  the compliance certificate called for in the paragraph below
                  titled "Compliance Certificate."

         Making Loan Advances. Advances under the Line of Credit may be
         requested orally by authorized persons. Lender may, but need not,
         require that all oral requests be confirmed in writing. Each Advance
         shall be conclusively deemed to have been made at the request of and
         for the benefit of Borrower (a) when credited to any deposit account of
         Borrower maintained with Lender or (b) when advanced in accordance with
         the instructions of an authorized person. Lender, at its option, may
         set a cutoff time, after which all requests for Advances will be
         treated as having been requested on the next succeeding Business Day.

         Mandatory Loan Repayments. If at any time the aggregate principal
         amount of the outstanding Advances shall exceed the applicable
         Borrowing Base, Borrower, immediately upon written or oral notice from
         Lender, shall pay to Lender an amount equal to the difference between
         the outstanding principal balance of the Advances and the Borrowing
         Base. On the Expiration Date, Borrower shall pay to Lender in full the
         aggregate unpaid principal amount of all Advances then outstanding and
         all accrued unpaid interest, together with all other applicable fees,
         costs and charges, if any, not yet paid.

         Loan Account. Lender shall maintain on its books a record of account in
         which Lender shall make entries for each Advance and such other debits
         and credits as shall be appropriate in connection with the credit
         facility. Lender shall provide Borrower with periodic statements of
         Borrower's account, which statements shall be considered to be correct
         and conclusively binding on Borrower unless Borrower notifies Lender to
         the contrary within thirty (30) days after Borrower's receipt of any
         such statement which Borrower deems to be incorrect.

COLLATERAL. To secure payment of the Line of Credit and performance of all other
Loans, obligations and duties owed by Borrower to Lender, Borrower (and others,
if required) shall grant to Lender Security Interests in such property and
assets as Lender may require (the "Collateral"), including without limitation
Borrower's present and future Accounts and general intangibles. Lender's
Security Interests in the Collateral shall be continuing liens and shall include
the proceeds and products of the Collateral, including without limitation the
proceeds of any insurance. With respect to the Collateral, Borrower agrees and
represents and warrants to Lender:

         Perfection of Security Interests. Borrower agrees to execute such
         financing statements and to take whatever other actions are requested
         by Lender to perfect and continue Lender's Security Interests in the
         Collateral. Upon request of Lender, Borrower will deliver to Lender any
         and all of the documents evidencing or constituting the Collateral, and
         Borrower will note Lender's interest upon any and all chattel paper if
         not delivered to Lender for possession by Lender. Contemporaneous with
         the execution of this Agreement, Borrower will execute one or more UCC
         financing statements and any similar statements as may be required by
         applicable law, and will file such financing statements and all such
         similar statements in the appropriate location or locations. Upon the
         occurrence of any event of default, Borrower hereby appoints Lender as
         its irrevocable attorney-in-fact for the purpose of executing any
         documents necessary to perfect or to continue any Security Interest.
         Lender may at any time, and without further authorization from
         Borrower, file a carbon, photograph, facsimile, or other reproduction
         of any financing statement for use as a financing statement. Borrower
         will reimburse Lender for all expenses for the perfection, termination,
         and the continuation of the perfection of Lender's security interest in
         the Collateral. Borrower promptly will notify Lender of any change in
         Borrower's name including any change to the assumed business names of
         Borrower. Borrower also promptly will notify Lender of any change in
         Borrower's Social Security Number or Employer Identification Number.
         Borrower further agrees to notify Lender in writing prior to any change
         in address or location of Borrower's principal governance office or
         should Borrower merge or consolidate with any other entity.

         Collateral Records. Borrower does now, and at all times hereafter
         shall, keep correct and accurate records of the Collateral, all of
         which records shall be available to Lender or Lender's representative
         upon demand for inspection and copying at any reasonable time. With
         respect to the Accounts, Borrower agrees to keep and maintain such
         records as Lender may require, including without limitation information
         concerning Eligible Accounts and Account balances and agings.

         Collateral Schedules. Concurrently with the execution and delivery of
         this Agreement, Borrower shall execute and deliver to Lender a schedule
         of Accounts and Eligible Accounts, in form and substance satisfactory
         to the Lender. Thereafter Borrower shall execute and deliver to Lender
         such supplemental schedules of Eligible Accounts and such other matters
         and information relating to Borrower's Accounts as Lender may request.
         Supplemental schedules shall be delivered according to the following
         schedule: EVERY 30 DAYS.

         Representations and Warranties Concerning Accounts. With respect to the
         Accounts, Borrower represents and warrants to Lender: (a) Each Account
         represented by Borrower to be an Eligible Account for purposes of this
         Agreement conforms to the requirements of the definition of an Eligible
         Account; (b) All Account information listed on schedules delivered to
         Lender will be true and correct, subject to immaterial variance; and
         (c) Lender, its assigns, or agents shall have the right at any time and
         at Borrower's expense to inspect, examine, and audit Borrower's records
         and to confirm with Account Debtors the accuracy of such Accounts.

         Notification Basis. Borrower agrees and understands that this Loan
         shall be on a notification basis pursuant to which Lender shall
         directly collect and receive all proceeds and payments from the
         Accounts in which Lender has a security interest. In order to
         facilitate the foregoing, upon the occurrence of an event of default,
         Borrower agrees to deliver to Lender, upon demand, any and all of
         Borrower's records, ledger sheets, payment cards, and other
         documentation, in the form requested by Lender, with regard to

<PAGE>

         the Accounts. Upon the occurrence of an event of default, Borrower
         further agrees that Lender shall have the right to notify each Account
         Debtor, pay such proceeds and payments directly to Lender, and to do
         any and all other things as Lender may deem to be necessary and
         appropriate, within its sole discretion, to carry out the terms and
         intent of this Agreement. Lender shall have the further right, where
         appropriate and within Lender's sole discretion, to file suit, either
         in its own name or in the name of Borrower, to collect any and all such
         Accounts. Upon the occurrence of an event of default, Borrower further
         agrees that Lender may take such other actions, either in Borrower's
         name or Lender's name, as Lender may deem appropriate within its sole
         judgment, with regard to collection and payment of the Accounts,
         without affecting the liability of Borrower under this Agreement or on
         the Indebtedness.

         Remittance Account. Borrower agrees that Lender may at any time require
         Borrower to institute procedures whereby the payments and other
         proceeds of the Accounts shall be paid by the Account Debtors under a
         remittance account or lock box arrangement with Lender, or Lender's
         agent, or with one or more financial institutions designated by Lender.
         Borrower further agrees that, if no Event of Default exists under this
         Agreement, any and all of such funds received under such a remittance
         account or lock box arrangement shall, at Lender's sole election and
         discretion, either be (a) paid or turned over to Borrower; (b)
         deposited into one or more accounts for the benefit of Borrower (which
         deposit accounts shall be subject to a security assignment in favor of
         Lender); (c) deposited into one or more accounts for the joint benefit
         of Borrower and Lender (which deposit accounts shall likewise be
         subject to a security assignment in favor of Lender); (d) paid or
         turned over to Lender to be applied to the Indebtedness in such order
         and priority as Lender may determine within its sole discretion; or (e)
         any combination of the foregoing as Lender shall determine from time to
         time. Borrower further agrees that, should one or more Events of
         Default exist, any and all funds received under such a remittance
         account or lock box arrangement shall be paid or turned over to Lender
         to be applied to the Indebtedness, again in such order and priority as
         Lender may determine within its sole discretion.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

         Organization. Borrower is a corporation which is duly organized,
         validly existing, and in good standing under the laws of the State of
         Delaware and is validly existing and in good standing in all states in
         which Borrower is doing business, including but not limited to Utah.
         Borrower has the full power and authority to own its properties and to
         transact the businesses in which it is presently engaged or presently
         proposes to engage. Borrower also is duly qualified as a foreign
         corporation and is in good standing in all states in which the failure
         to so qualify would have a material adverse effect on its businesses or
         financial condition.

         Authorization. The execution, delivery, and performance of this
         Agreement and all Related Documents by Borrower, to the extent to be
         executed, delivered or performed by Borrower, have been duly authorized
         by all necessary action by Borrower; do not require the consent or
         approval of any other person, regulatory authority or governmental
         body; and do not conflict with, result in a violation of, or constitute
         a default under (a) any provision of its articles of incorporation or
         organization, or bylaws, or any agreement or other instrument binding
         upon Borrower or (b) any law, governmental regulation, court decree, or
         order applicable to Borrower.

         Financial Information. Each financial statement of Borrower supplied to
         Lender truly and completely disclosed Borrower's financial condition as
         of the date of the statement, and there has been no material adverse
         change in Borrower's financial condition subsequent to the date of the
         most recent financial statement supplied to Lender. Borrower has no
         material contingent obligations except as disclosed in such financial
         statements.

         Legal Effect. This Agreement constitutes, and any instrument or
         agreement required hereunder to be given by Borrower when delivered
         will constitute, legal, valid and binding obligations of Borrower
         enforceable against Borrower in accordance with their respective terms.

         Properties. Except for Permitted Liens, Borrower owns and has good
         title to all of Borrower's properties free and clear of all Security
         Interests, and has not executed any security documents or financing
         statements relating to such properties. Except for its former name of
         Covol Technologies, Inc., All of Borrower's properties are titled in
         Borrower's legal name, and Borrower has not used, or filed a financing
         statement under, any other name for at least the last five (5) years.

         Hazardous Substances. The terms "hazardous waste," "hazardous
         substance," "disposal," "release," and "threatened release," as used in
         this Agreement, shall have the same meanings as set forth in the
         "CERCLA," "SARA," the Hazardous Materials Transportation Act, 49 U.S.C.
         Section 1801, et seq., the Resource Conservation and Recovery Act, 42
         U.S.C. Section 6901, et seq., or other applicable state or Federal
         laws, rules, or regulations adopted pursuant to any of the foregoing.
         Except as disclosed to and acknowledged by Lender in writing, Borrower
         represents and warrants that: (a) During the period of Borrower's
         ownership of the properties, there has been no use, generation,
         manufacture, storage, treatment, disposal, release or threatened
         release of any hazardous waste or substance by any person on, under,
         about or from any of the properties. (b) Borrower has no knowledge of,
         or reason to believe that there has been (i) any use, generation,
         manufacture, storage, treatment, disposal, release, or threatened
         release of any hazardous waste or substance on, under, about or from
         the properties by any prior owners or occupants of any of the
         properties, or (ii) any actual or threatened litigation or claims of
         any kind by any person relating to such matters. (c) Neither Borrower
         nor any tenant, contractor, agent or other authorized user of any of
         the properties shall use, generate, manufacture, store, treat, dispose
         of, or release any hazardous waste or substance on, under, about or
         from any of the properties; and any such activity shall be conducted in
         compliance with all applicable federal, state, and local laws,
         regulations, and ordinances, including without limitation those laws,
         regulations and ordinances described above. Borrower authorizes Lender
         and its agents to enter upon the properties to make such inspections
         and tests as Lender may deem appropriate to determine compliance of the
         properties with this section of the Agreement. Any inspections or tests
         made by Lender shall be at Borrower's expense and for Lender's purposes
         only and shall not be construed to create any responsibility or
         liability on the part of Lender to Borrower or to any other person. The
         representations and warranties contained herein are based on Borrower's
         due diligence in investigating the properties for hazardous waste and
         hazardous substances. Borrower hereby (a) releases and waives any
         future claims against Lender for indemnity or contribution in the event
         Borrower becomes liable for cleanup or other costs under any such laws,
         and (b) agrees to indemnify and hold harmless Lender against any and
         all claims, losses, liabilities, damages, penalties, and expenses which
         Lender may directly or indirectly sustain or suffer resulting from a
         breach of this section of the Agreement or as a consequence of any use,
         generation, manufacture, storage, disposal, release or threatened
         release of a hazardous waste or substance on the properties. The
         provisions of this section of the Agreement, including the obligation
         to indemnify, shall survive the payment of the Indebtedness and the
         termination or expiration of this Agreement and shall not be affected
         by Lender's acquisition of any interest in any of the properties,
         whether by foreclosure or otherwise.

         Litigation and Claims. No litigation, claim, investigation,
         administrative proceeding or similar action (including those for unpaid
         taxes) against Borrower is pending or threatened, and no other event
         has occurred which may materially adversely affect Borrower's financial
         condition or properties, other than litigation, claims, or other
         events, if any, that have been disclosed to and acknowledged by Lender
         in writing.

         Taxes. To the best of Borrower's knowledge, all tax returns and reports
         of Borrower that are or were required to be filed, have been filed, and
         all taxes, assessments and other governmental charges have been paid in
         full, except those presently being or to be contested by Borrower in
         good faith in the ordinary course of business and for which adequate
         reserves have been provided.

         Lien Priority. Except for permitted liens or otherwise previously
         disclosed to Lender in writing, Borrower has not entered into or
         granted any Security Agreements, or permitted the filing or attachment
         of any Security Interests on or affecting any of the Collateral
         directly or indirectly securing repayment of Borrower's Loan and Note,

<PAGE>

         that would be prior or that may in any way be superior to Lender's
         Security Interests and rights in and to such Collateral.

         Binding Effect. This Agreement, the Note, all Security Agreements
         directly or indirectly securing repayment of Borrower's Loan and Note
         and all of the Related Documents are binding upon Borrower as well as
         upon Borrower's successors, representatives and assigns, and are
         legally enforceable in accordance with their respective terms.

         Commercial Purposes. Borrower intends to use the Loan proceeds solely
         for business or commercial related purposes.

         Employee Benefit Plans. Each employee benefit plan as to which Borrower
         may have any liability complies in all material respects with all
         applicable requirements of law and regulations, and (i) no Reportable
         Event nor Prohibited Transaction (as defined in ERISA) has occurred
         with respect to any such plan, (ii) Borrower has not withdrawn from any
         such plan or initiated steps to do so, (iii) no steps have been taken
         to terminate any such plan, and (iv) there are no unfunded liabilities
         other than those previously disclosed to Lender in writing.

         Location of Borrower's Offices and Records. Borrower's place of
         business, or Borrower's Chief executive office, if Borrower has more
         than one place of business, is located at 11778 ELECTION DRIVE, SUITE
         210, SALT LAKE CITY, UT 84020. Unless Borrower has designated otherwise
         in writing this location is also the office or offices where Borrower
         keeps its records concerning the Collateral.

         Information. All information heretofore or contemporaneously herewith
         furnished by Borrower to Lender for the purposes of or in connection
         with this Agreement or any transaction contemplated hereby is, and all
         information hereafter furnished by or on behalf of Borrower to Lender
         will be, true and accurate in every material respect on the date as of
         which such information is dated or certified; and none of such
         information is or will be incomplete by omitting to state any material
         fact necessary to make such information not misleading.

         Survival of Representations and Warranties. Borrower understands and
         agrees that Lender, without independent investigation, is relying upon
         the above representations and warranties in extending Loan Advances to
         Borrower. Borrower further agrees that the foregoing representations
         and warranties shall be continuing in nature and shall remain in full
         force and effect until such time as Borrower's Indebtedness shall be
         paid in full, or until this Agreement shall be terminated in the manner
         provided above, whichever is the last to occur.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

         Litigation. Promptly inform Lender in writing of (a) all material
         adverse changes in Borrower's financial condition, and (b) all existing
         and all threatened litigation, claims, investigations, administrative
         proceedings or similar actions affecting Borrower or any Guarantor
         which could materially affect the financial condition of Borrower or
         the financial condition of any Guarantor.

         Financial Records. Maintain its books and records in accordance with
         generally accepted accounting principles, applied on a consistent
         basis, and permit Lender to examine and audit Borrower's books and
         records at all reasonable times.

         Financial Statements. Furnish Lender with, as soon as available, but in
         no event later than ninety (90) days after the end of each fiscal year,
         Borrower's balance sheet and income statement for the year ended,
         audited by a certified public accountant satisfactory to Lender. All
         financial reports required to be provided under this Agreement shall be
         prepared in accordance with generally accepted accounting principles,
         applied on a consistent basis, and certified by Borrower as being true
         and correct.

         Additional Information. Furnish such additional information and
         statements, lists of assets and liabilities, agings of receivables and
         payables, inventory schedules, budgets, forecasts, tax returns, and
         other reports with respect to Borrower's financial condition and
         business operations as Lender may request from time to time.

         Insurance. Maintain fire and other risk insurance, public liability
         insurance, and such other insurance as Lender may require with respect
         to Borrower's properties and operations, in form, amounts, coverages
         and with insurance companies reasonably acceptable to Lender. Borrower,
         upon request of Lender, will deliver to Lender from time to time the
         policies or certificates of insurance in form satisfactory to Lender,
         including stipulations that coverages will not be cancelled or
         diminished without at least ten (10) days' prior written notice.

         Insurance Reports. Furnish to Lender, upon request of Lender, reports
         on each existing insurance policy showing such information as Lender
         may reasonably request, including without limitation the following: (a)
         the name of the insurer; (b) the risks insured; (c) the amount of the
         policy; (d) the properties insured; (e) the then current property
         values on the basis of which insurance has been obtained, and the
         manner of determining those values; and (f) the expiration date of the
         policy.

         Loan Proceeds. Use all Loan proceeds solely for Borrower's commercial
         purposes, unless specifically consented to the contrary by Lender in
         writing.

         Taxes, Charges and Liens. Pay and discharge when due all of its
         indebtedness and obligations, including without limitation all
         assessments, taxes, governmental charges, levies and liens, of every
         kind and nature, imposed upon Borrower or its properties, income, or
         profits, prior to the date on which penalties would attach, and all
         lawful claims that, if unpaid, might become a lien or charge upon any
         of Borrower's properties, income, or profits. Provided however,
         Borrower will not be required to pay and discharge any such assessment,
         tax, charge, levy, lien or claim so long as (a) the legality of the
         same shall be contested in good faith by appropriate proceedings, and
         (b) Borrower shall have established on its books adequate reserves with
         respect to such contested assessment, tax, charge, levy, lien, or claim
         in accordance with generally accepted accounting practices. Borrower,
         upon demand of Lender, will furnish to Lender evidence of payment of
         the assessments, taxes, charges, levies, liens and claims and will
         authorize the appropriate governmental official to deliver to Lender at
         any time a written statement of any assessments, taxes, charges,
         levies, liens and claims against Borrower's properties, income, or
         profits.

         Performance. Perform and comply with all terms, conditions, and
         provisions set forth in this Agreement and in the Related Documents in
         a timely manner, and promptly notify Lender if Borrower learns of the
         occurrence of any event which constitutes an Event of Default under
         this Agreement or under any of the Related Documents.

         Operations. Maintain executive and management personnel with
         substantially the same qualifications and experience as the present
         executive and management personnel; provide written notice to Lender of
         any change in executive and management personnel; conduct its business
         affairs in a reasonable and prudent manner and in compliance with all
         applicable federal, state and municipal laws, ordinances, rules and
         regulations respecting its properties, charters, businesses and
         operations, including without limitation, compliance with the Americans
         With Disabilities Act and with all minimum funding standards and other
         requirements of ERISA and other laws applicable to Borrower's employee
         benefit plans.

         Inspection. Permit employees or agents of Lender at any reasonable time
         to inspect any and all Collateral for the Loan or Loans and Borrower's
         other properties and to examine or audit Borrower's books, accounts,
         and records and to make copies and memoranda of Borrower's books,
         accounts, and records. If Borrower now or at any time

<PAGE>

         hereafter maintains any records (including without limitation computer
         generated records and computer software programs for the generation of
         such records) in the possession of a third party, Borrower, upon
         request of Lender, shall notify such party to permit Lender free access
         to such records at all reasonable times and to provide Lender with
         copies of any records it may request, all at Borrower's expense.

         Compliance Certificate. Unless waived in writing by Lender, provide
         Lender at least annually and at the time of each disbursement of Loan
         proceeds with a certificate executed by Borrower's chief financial
         officer, or other officer or person acceptable to Lender, certifying
         that the representations and warranties set forth in this Agreement are
         true and correct as of the date of the certificate and further
         certifying that, as of the date of the certificate, no Event of Default
         exists under this Agreement.

         Environmental Compliance and Reports. Borrower shall comply in all
         respects with all environmental protection federal, state and local
         laws, statutes, regulations and ordinances; not cause or permit to
         exist, as a result of an intentional or unintentional action or
         omission on its part or on the part of any third party, on property
         owned and/or occupied by Borrower, any environmental activity where
         damage may result to the environment, unless such environmental
         activity is pursuant to and in compliance with the conditions of a
         permit issued by the appropriate federal, state or local governmental
         authorities; shall furnish to Lender promptly and in any event within
         thirty (30) days after receipt thereof a copy of any notice, summons,
         lien, citation, directive, letter or other communication from any
         governmental agency or instrumentality concerning any intentional or
         unintentional action or omission on Borrower's part in connection with
         any environmental activity whether or not there is damage to the
         environment and/or other natural resources.

         Additional Assurances. Make, execute and deliver to Lender such
         promissory notes, mortgages, deeds of trust, security agreements,
         financing statements, instruments, documents and other agreements as
         Lender or its attorneys may reasonably request to evidence and secure
         with the lender's collateral the Loans and to perfect all Security
         Interests in the lender's collateral.

RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would (a) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (b) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(c) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within ten (10) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

         Indebtedness and Liens. (a) Except for trade debt incurred in the
         normal course of business and indebtedness to Lender contemplated by
         this Agreement, create, incur or assume indebtedness for borrowed money
         in excess of $500,000, including capital leases, (b) except as allowed
         as a Permitted Lien, sell, transfer, mortgage, assign, pledge, lease,
         grant a security interest in, or encumber any of Lender's Collateral,
         or (c) sell with recourse any of Borrower's accounts, except to Lender.

         Continuity of Operations. (a) Engage in any business activities
         substantially different than those in which Borrower is presently
         engaged without Lender's approval, (b) cease operations, liquidate,
         merge, transfer, acquire or consolidate with any other entity, change
         ownership, change its name, dissolve or transfer or sell Collateral out
         of the ordinary course of business, (c) pay any dividends on Borrower's
         stock (other than dividends payable in its stock), provided, however
         that notwithstanding the foregoing, but only so long as no Event of
         Default has occurred and is continuing or would result from the payment
         of dividends, if Borrower is a "Subchapter S Corporation" (as defined
         in the Internal Revenue Code of 1986, as amended), Borrower may pay
         cash dividends on its stock to its shareholders from time to time in
         amounts necessary to enable the shareholders to pay income taxes and
         make estimated income tax payments to satisfy their liabilities under
         federal and state law which arise solely from their status as
         Shareholders of a Subchapter S Corporation because of their ownership
         of shares of stock of Borrower, or (d) purchase or retire any
         additional outstanding shares of borrower in excess of the lesser of
         500,000 shares or $2,000,000, or alter or amend Borrower's capital
         structure.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.

ACCOUNTS RECEIVABLE AGING. BORROWER SHALL FURNISH TO LENDER A MONTHLY ACCOUNTS
RECEIVABLE AGING REPORT WITHIN 30 DAYS OF THE END OF EACH MONTH IN A FORM
ACCEPTABLE TO LENDER.

ACCOUNTS PAYABLE AGING. BORROWER SHALL FURNISH TO LENDER A QUARTERLY ACCOUNTS
PAYABLE AGING REPORT WITHIN 30 DAYS OF THE END OF EACH QUARTER IN A FORM
ACCEPTABLE TO LENDER.

WAIVER OF CLAIMS. Borrower (i) represents that they have no defenses to or
setoffs against any indebtedness or other obligations owing to Lender or its
affiliates (the "Obligations"), nor claims against Lender or its affiliates for
any matter whatsoever, related or unrelated to the Obligations, and (ii) release
Lender and its affiliates from all claims, causes of action, and costs, in law
or equity, existing as of the date of this Agreement, which Borrower has or may
have by reason of any matter of any conceivable kind or character whatsoever,
related or unrelated to the Obligations, including the subject matter of this
Agreement. This provision shall not apply to claims for performance of express
contractual obligations owing to Borrower by Lender or its affiliates.

SYNTHETIC FUEL PRODUCTION REPORTS. BORROWER SHALL PROVIDE LENDER WITH MONTHLY
SYNTHETIC FUEL PRODUCTION REPORTS INCLUDING ROYALTIES AND ACCOUNTS RECEIVABLE
EARNED TO BE USED AS MONTHLY BORROWING BASE. SUCH REPORT IS DUE WITHIN 15 DAYS
OF EACH MONTH END.

ROYALTY REVENUES. BORROWER SHALL MAINTAIN ROYALTY REVENUE FROM LICENSEES OF NOT
LESS THAN $850,000.00 PER MONTH.

QUARTERTLY 10-Q. BORROWER SHALL PROVIDE LENDER WITH COPIES OF THEIR QUARTERLY
10-Q REPORTS WITHIN 45 DAYS OF EACH QUARTER END.

EARNINGS. BORROWER SHALL MAINTAIN AN OPERATING EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION OF NOT LESS THAN $2,000,000.00 PER QUARTER.

<PAGE>

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:

         Default on Indebtedness. Failure of Borrower to make any payment when
         due on the Loans.

         Other Defaults. Failure of Borrower or any Grantor to comply with or to
         perform when due any other term, obligation, covenant or condition
         contained in this Agreement or in any of the Related Documents, or
         failure of Borrower to comply with or to perform any other term,
         obligation, covenant or condition contained in any other agreement
         between Lender and Borrower.

         False Statements. Any warranty, representation or statement made or
         furnished to Lender by or on behalf of Borrower or any Grantor under
         this Agreement or the Related Documents is false or misleading in any
         material respect at the time made or furnished, or becomes false or
         misleading at any time thereafter.

         Defective Collateralization. This Agreement or any of the Related
         Documents ceases to be in full force and effect (including failure of
         any Security Agreement to create a valid and perfected Security
         Interest) at any time and for any reason.

         Insolvency. The dissolution or termination of Borrower's existence as a
         going business, the insolvency of Borrower, the appointment of a
         receiver for any part of Borrower's property, any assignment for the
         benefit of creditors, any type of creditor workout, or the commencement
         of any proceeding under any bankruptcy or insolvency laws by or against
         Borrower.

         Creditor or Forfeiture Proceedings. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower, any
         creditor of any Grantor against any collateral securing the
         Indebtedness, or by any governmental agency. This includes a
         garnishment, attachment, or levy on or of any of Borrower's deposit
         accounts with Lender. However, this Event of Default shall not apply if
         there is a good faith dispute by Borrower or Grantor, as the case may
         be, as to the validity or reasonableness of the claim which is the
         basis of the creditor or forfeiture proceeding, and if Borrower or
         Grantor gives Lender written notice of the creditor or forfeiture
         proceeding and furnishes reserves or a surety bond for the creditor or
         forfeiture proceeding satisfactory to Lender.

         Change In Ownership. Any person or entity acquires ownership of
         twenty-five percent (25%) or more of the common stock of Borrower.

         Adverse Change. A material adverse change occurs in Borrower's
         financial condition, or Lender believes the prospect of payment or
         performance of the Indebtedness is impaired.

         Insecurity. Lender, in good faith, deems itself insecure.

         Right to Cure. If any default, other than a Default on Indebtedness, is
         curable, it may be cured (and no Event of Default will have occurred)
         if Borrower or Grantor, as the case may be, after receiving written
         notice from Lender demanding cure of such default: (a) cures the
         default within thirty (30) days; or (b) if the cure requires more than
         thirty (30) days, immediately initiates steps which Lender deems in
         Lender's sole discretion to be sufficient to cure the default and
         thereafter continues and completes all reasonable and necessary steps
         sufficient to produce compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur and shall
remain uncured, except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this Agreement or the
Related Documents or any other agreement immediately will terminate (including
any obligation to make Loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice of
any kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

         Amendments. This Agreement, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as to
         the matters set forth in this Agreement. No alteration of or amendment
         to this Agreement shall be effective unless given in writing and signed
         by the party or parties sought to be charged or bound by the alteration
         or amendment.

         Applicable Law. This Agreement has been delivered to Lender and
         accepted by Lender in the State of Utah. If there is a lawsuit,
         Borrower agrees upon Lender's request to submit to the jurisdiction of
         the courts of SALT LAKE County, the State of Utah. Subject to the
         provisions on arbitration, this Agreement shall be governed by and
         construed in accordance with the laws of the State of Utah.

ARBITRATION DISCLOSURES:

         1.       ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO
                  ONLY VERY LIMITED REVIEW BY A COURT.

         2.       IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE
                  IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.

         3.       DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN
                  COURT.

         4.       ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
                  LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO
                  SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED.

<PAGE>

         5.       A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR
                  WAS AFFILIATED WITH THE BANKING INDUSTRY.

         6.       IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY
                  OR THE AMERICAN ARBITRATION ASSOCIATION.

         (a) Any claim or controversy ("Dispute") between or among the parties
         and their assigns, including but not limited to Disputes arising out of
         or relating to this agreement, this arbitration provision ("arbitration
         clause"), or any related agreements or instruments relating hereto or
         delivered in connection herewith ("Related Documents"), and including
         but not limited to a Dispute based on or arising from an alleged tort,
         shall at the request of any party be resolved by binding arbitration in
         accordance with the applicable arbitration rules of the American
         Arbitration Association (the "Administrator"). The provisions of this
         arbitration clause shall survive any termination, amendment, or
         expiration of this agreement or Related Documents. The provisions of
         this arbitration clause shall supersede any prior arbitration agreement
         between or among the parties. If any provision of this arbitration
         clause should be determined to be unenforceable, all other provisions
         of this arbitration clause shall remain in full force and effect.

         (b) The arbitration proceedings shall be conducted in Salt Lake City,
         Utah, at a place to be determined by the Administrator. The
         Administrator and the arbitrator(s) shall have the authority to the
         extent practicable to take any action to require the arbitration
         proceeding to be completed and the arbitrator(s)' award issued within
         one hundred fifty (150) days of the filing of the Dispute with the
         Administrator. The arbitrator(s) shall have the authority to impose
         sanctions on any party that fails to comply with time periods imposed
         by the Administrator or the arbitrator(s), including the sanction of
         summarily dismissing any Dispute or defense with prejudice. The
         arbitrator(s) shall have the authority to resolve any Dispute regarding
         the terms of this agreement, this arbitration clause or Related
         Documents, including any claim or controversy regarding the
         arbitrability of any Dispute. All limitations periods applicable to any
         Dispute or defense, whether by statute or agreement, shall apply to any
         arbitration proceeding hereunder and the arbitrator(s) shall have the
         authority to decide whether any Dispute or defense is barred by a
         limitations period and, if so, to summarily enter an award dismissing
         any Dispute or defense on that basis. The doctrines of compulsory
         counterclaim, res judicata, and collateral estoppel shall apply to any
         arbitration proceeding hereunder so that a party must state as a
         counterclaim in the arbitration proceeding any claim or controversy
         which arises out of the transaction or occurrence that is the subject
         matter of the Dispute. The arbitrator(s) may in the arbitrator(s)'
         discretion and at the request of any party: (1) consolidate in a single
         arbitration proceeding any other claim or controversy involving another
         party that is substantially related to the Dispute where that other
         party is bound by an arbitration clause with the Lender, such as
         borrowers, guarantors, sureties, and owners of collateral; (2)
         consolidate in a single arbitration proceeding any other claim or
         controversy that is substantially similar to the Dispute; and (3)
         administer multiple arbitration claims or controversies as class
         actions in accordance with the provisions of Rule 23 of the Federal
         Rules of Civil Procedure.

         (c) The arbitrator(s) shall be selected in accordance with the rules of
         the Administrator from panels maintained by the Administrator. A single
         arbitrator shall have expertise in the subject matter of the Dispute.
         Where three arbitrators conduct an arbitration proceeding, the Dispute
         shall be decided by a majority vote of the three arbitrators, at least
         one of whom must have expertise in the subject matter of the Dispute
         and at least one of whom must be a practicing attorney. The
         arbitrator(s) shall award to the prevailing party recovery of all costs
         and fees (including attorneys' fees and costs, arbitration
         administration fees and costs, and arbitrator(s)' fees). The
         arbitrator(s), either during the pendency of the arbitration proceeding
         or as part of the arbitration award, also may grant provisional or
         ancillary remedies, including but not limited to an award of injunctive
         relief, foreclosure, sequestration, attachment, replevin, garnishment,
         or the appointment of a receiver.

         (d) Judgment upon an arbitration award may be entered in any court
         having jurisdiction, subject to the following limitation: the
         arbitration award is binding upon the parties only if the amount does
         not exceed Four Million Dollars ($4,000,000.00); if the award exceeds
         that limit, either party may demand the right to a court trial. Such a
         demand must be filed with the Administrator within thirty (30) days
         following the date of the arbitration award; if such a demand is not
         made within that time period, the amount of the arbitration award shall
         be binding. The computation of the total amount of an arbitration award
         shall include amounts awarded for attorneys' fees and costs,
         arbitration administration fees and costs, and arbitrator(s)' fees.

         (e) No provision of this arbitration clause, nor the exercise of any
         rights hereunder, shall limit the right of any party to: (1) judicially
         or non-judicially foreclose against any real or personal property
         collateral or other security; (2) exercise self-help remedies,
         including but not limited to repossession and setoff rights; or (3)
         obtain from a court having jurisdiction thereover any provisional or
         ancillary remedies, including but not limited to injunctive relief,
         foreclosure, sequestration, attachment, replevin, garnishment, or the
         appointment of a receiver. Such rights can be exercised at any time,
         before or during initiation of an arbitration proceeding, except to the
         extent such action is contrary to the arbitration award. The exercise
         of such rights shall not constitute a waiver of the right to submit any
         Dispute to arbitration, and any claim or controversy related to the
         exercise of such rights shall be a Dispute to be resolved under the
         provisions of this arbitration clause. Any party may initiate
         arbitration with the Administrator; however, if any party initiates
         litigation and another party disputes any allegation in that
         litigation, the disputing party--upon the request of the initiating
         party--must file a demand for arbitration with the Administrator and
         pay the Administrator's filing fee. The parties may serve by mail a
         notice of an initial motion for an order of arbitration.

         (f) Notwithstanding the applicability of any other law to this
         agreement, the arbitration clause, or Related Documents between or
         among the parties, the Federal Arbitration Act, 9 U.S.C. Section 1 et
         seq., shall apply to the construction and interpretation of this
         arbitration clause.

         Caption Headings. Caption headings in this Agreement are for
         convenience purposes only and are not to be used to interpret or define
         the provisions of this Agreement.

         Consent to Loan Participation. Borrower agrees and consents to Lender's
         sale or transfer, whether now or later, of one or more participation
         interests in the Loans to one or more purchasers, whether related or
         unrelated to Lender, provided that Lender must obtain Borrower's prior
         written approval so long as no default is outstanding, which approval
         shall not be unreasonably withheld. Lender may provide, without any
         limitation whatsoever, to any one or more purchasers, or potential
         purchasers, any information or knowledge Lender may have about Borrower
         or about any other matter relating to the Loan, and Borrower hereby
         waives any rights to privacy it may have with respect to such matters.
         Borrower additionally waives any and all notices of sale of
         participation interests, as well as all notices of any repurchase of
         such participation interests. Borrower also agrees that the purchasers
         of any such participation interests will be considered as the absolute
         owners of such interests in the Loans and will have all the rights
         granted under the participation agreement or agreements governing the
         sale of such participation interests. Borrower further waives all
         rights of offset or counterclaim that it may have now or later against
         Lender or against any purchaser of such a participation interest and
         unconditionally agrees that either Lender or such purchaser may enforce
         Borrower's obligation under the Loans irrespective of the failure or
         insolvency of any holder of any interest in the Loans. Borrower further
         agrees that the purchaser of any such participation interests may
         enforce its interests irrespective of any personal claims or defenses
         that Borrower may have against Lender.

         Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
         expenses, including without limitation reasonable attorneys' fees,
         incurred in connection with the preparation, execution, enforcement,
         modification and collection of this Agreement or in connection with the
         Loans made pursuant to this Agreement. Lender may pay someone else to
         help collect the Loans and to enforce this Agreement, and Borrower will
         pay that amount. This includes, subject to any limits under applicable
         law, Lender's

<PAGE>

         reasonable attorneys' fees and Lender's legal expenses, whether or not
         there is a lawsuit, including reasonable attorneys' fees for bankruptcy
         proceedings (including efforts to modify or vacate any automatic stay
         or injunction), appeals, and any anticipated post-judgment collection
         services. Borrower also will pay any court costs, in addition to all
         other sums provided by law.

         Notices. All notices required to be given under this Agreement shall be
         given in writing, may be sent by telefacsimile (unless otherwise
         required by law), and shall be effective when actually delivered or
         when deposited with a nationally recognized overnight courier or
         deposited in the United States mail, first class, postage prepaid,
         addressed to the party to whom the notice is to be given at the address
         shown above. Any party may change its address for notices under this
         Agreement by giving formal written notice to the other parties,
         specifying that the purpose of the notice is to change the party's
         address. To the extent permitted by applicable law, if there is more
         than one Borrower, notice to any Borrower will constitute notice to all
         Borrowers. For notice purposes, Borrower will keep Lender informed at
         all times of Borrower's current address(es).

         Severability. If a court of competent jurisdiction finds any provision
         of this Agreement to be invalid or unenforceable as to any person or
         circumstance, such finding shall not render that provision invalid or
         unenforceable as to any other persons or circumstances. If feasible,
         any such offending provision shall be deemed to be modified to be
         within the limits of enforceability or validity; however, if the
         offending provision cannot be so modified, it shall be stricken and all
         other provisions of this Agreement in all other respects shall remain
         valid and enforceable.

         Subsidiaries and Affiliates of Borrower. To the extent the context of
         any covenant of this Agreement makes it appropriate, the word
         "Borrower" as used herein shall include all subsidiaries and affiliates
         of Borrower. Notwithstanding the foregoing however, under no
         circumstances shall this Agreement be construed to require Lender to
         make any Loan or other financial accommodation to any subsidiary or
         affiliate of Borrower.

         Successors and Assigns. All covenants and agreements contained by or on
         behalf of Borrower shall bind its successors and assigns and shall
         inure to the benefit of Lender, its successors and assigns. Borrower
         shall not, however, have the right to assign its rights under this
         Agreement or any interest therein, without the prior written consent of
         Lender.

         Survival. All warranties, representations, and covenants made by
         Borrower in this Agreement or in any certificate or other instrument
         delivered by Borrower to Lender under this Agreement shall be
         considered to have been relied upon by Lender and will survive the
         making of the Loan and delivery to Lender of the Related Documents,
         regardless of any investigation made by Lender or on Lender's behalf.

         Time Is of the Essence. Time is of the essence in the performance of
         this Agreement.

         Waiver. Lender shall not be deemed to have waived any rights under this
         Agreement unless such waiver is given in writing and signed by Lender.
         No delay or omission on the part of Lender in exercising any right
         shall operate as a waiver of such right or any other right. A waiver by
         Lender of a provision of this Agreement shall not prejudice or
         constitute a waiver of Lender's right otherwise to demand strict
         compliance with that provision or any other provision of this
         Agreement. No prior waiver by Lender, nor any course of dealing between
         Lender and Borrower, or between Lender and any Grantor, shall
         constitute a waiver of any of Lender's rights or of any obligations of
         Borrower or of any Grantor as to any future transactions. Whenever the
         consent of Lender is required under this Agreement, the granting of
         such consent by Lender in any instance shall not constitute continuing
         consent in subsequent instances where such consent is required, and in
         all cases such consent may be granted or withheld in the sole
         discretion of Lender.

FINAL AGREEMENT. Borrower understands that this Agreement and the related loan
documents are the final expression of the agreement between Lender and Borrower
and may not be contradicted by evidence of any alleged oral agreement.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF OOCTOBER 18, 2000.

BORROWER:

HEADWATERS INCORPORATED

By: /s/ Kirk A. Benson
   ------------------------------
   KIRK A. BENSON, CHAIRMAN & CEO

LENDER:

ZIONS FIRST NATIONAL BANK

By: /s/ Tracy A. Groll
   -----------------------------
   Authorized Officer

================================================================================

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