Document:

EX-10.61
RIVER HILL PURCHASE AGREEMENT W/ COVOL

                               RIVER HILL PROJECT

                               PURCHASE AGREEMENT

                                 by and between

                             DTE RIVER HILL, L.L.C.

                                       and

                            COVOL TECHNOLOGIES, INC.

                                 August 27, 1999

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                                TABLE OF CONTENTS

                                                                          Page

RECITALS................................................................... 1

ARTICLE I DEFINITIONS.......................................................1

         1.1. Affiliate.....................................................1
         1.2. Agreement.....................................................1
         1.3. As-Built Drawings.............................................2
         1.4. Assets........................................................2
         1.5. Assignment and Assumption Agreement...........................2
         1.6. Assumed Liabilities...........................................2
         1.7. Bill of Sale..................................................2
         1.8. Books and Records.............................................2
         1.9. Business......................................................2
         1.10. Buyer's Closing Certificate..................................2
         1.11. Closing......................................................2
         1.12. Closing Date.................................................3
         1.13. Code.........................................................3
         1.14. Confidentiality Agreement....................................3
         1.15. Construction Agreements......................................3
         1.16. Contracts....................................................3
         1.17. Covol Plant..................................................3
         1.18. Covol Process................................................3
         1.19. Effective Time...............................................3
         1.20. Excluded Assets..............................................3
         1.21. Facility.....................................................3
         1.22. Fixed Assets.................................................3
         1.23. Fun Enterprises..............................................4
         1.24. Fun Indebtedness.............................................4
         1.25. GAAP.........................................................4
         1.26. Ground Lease.................................................4
         1.27. HSR Act......................................................4
         1.28. Improvements.................................................4
         1.29. Improvements Deed............................................4
         1.30. Inventory....................................................4
         1.31. IRS..........................................................4
         1.32. Knowledge of Buyer...........................................4
         1.33. Knowledge of Seller..........................................4
         1.34. Law..........................................................4

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                                                                          Page

         1.35. License and Binder Purchase Agreement........................4
         1.36. Lien.........................................................5
         1.37. Loss.........................................................5
         1.38. Material Adverse Effect......................................5
         1.39. Modification Agreement.......................................5
         1.40. O&M Agreement................................................5
         1.41. Opinion of Seller's Counsel..................................5
         1.42. Performance Payments.........................................5
         1.43. Performance Thresholds.......................................5
         1.44. Permits......................................................5
         1.45. Permitted Liens..............................................5
         1.46. Plans and Specifications.....................................6
         1.47. Product......................................................6
         1.48. Purchase Consideration.......................................6
         1.49. Real Property................................................6
         1.50. Required Consents............................................6
         1.51. Requirements Supply Agreement................................6
         1.52. RHC..........................................................6
         1.53. Sales Agency Agreement.......................................6
         1.54. Section 29 Product...........................................6
         1.55. Seller's Closing Certificate.................................6
         1.56. Transaction Documents........................................6

ARTICLE II PURCHASE AND SALE................................................7

         2.1. Purchase and Sale; Assignment and Assumption..................7
         2.2. Payment of the Purchase Consideration.........................7
         2.3. Deliveries at Closing.........................................7
         2.4. Allocation of Purchase Price..................................8
         2.5. No Assumption of Liabilities..................................8
         2.6. Prorations....................................................8
         2.7. Performance Payments..........................................8
         2.8. Sales Tax Exemption...........................................9

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER........................9

         3.1. Corporate Standing............................................9
         3.2. Authorizations; Binding Agreements............................9
         3.3. No Actions Affecting Enforcement of the Agreement and
              the other Transaction Documents..............................10

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                                                                          Page

         3.4. Taxes........................................................10
         3.5. Brokers or Finders Fees......................................10
         3.6. No Imposition of Liens.......................................11
         3.7. Applicable Contracts and Permits.............................11
         3.8. Title to Assets..............................................11
         3.9. Condition of Assets..........................................11
         3.10. Inventory...................................................11
         3.11. Pending Litigation..........................................11
         3.12. Compliance with Laws........................................12
         3.13. Status of Contracts.........................................12
         3.14. Consents....................................................12
         3.15. Ground Lease................................................12
         3.16. No Fee Property.............................................12
         3.17. Books and Records...........................................13
         3.18. Environmental Conditions....................................13
         3.19. Liabilities.................................................14
         3.20. Agreements with Related Persons.............................14
         3.21. Adequacy of the Purchased Assets............................14
         3.22. Production Capacity.........................................14
         3.23. Section 29 Issues...........................................14

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER.........................14

         4.1. Organization and Standing....................................14
         4.2. Authorizations; Binding Agreements...........................15
         4.3. Brokers or Finders Fees......................................15
         4.4. No Actions Affecting Enforcement of the Agreement
              and the other Transaction Documents..........................15

ARTICLE V CERTAIN UNDERSTANDINGS AND AGREEMENTS............................16

         5.1. Conduct of Seller Prior to Closing...........................16
         5.2. Exclusivity..................................................16
         5.3. Access to Information........................................16
         5.4. Best Efforts.................................................17
         5.5. Public Announcements.........................................17
         5.6. Confidentiality..............................................17
         5.7. Negative Covenants...........................................17
         5.8. Taxes........................................................18
         5.9. Private Letter Ruling........................................18

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                                                                          Page

ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER................19

         6.1. Compliance with Agreement....................................19
         6.2. Proceedings and Instruments Satisfactory.....................19
         6.3. No Litigation................................................19
         6.4. Representations and Warranties...............................19
         6.5. Material Damage to Assets....................................20
         6.6. Permits......................................................20
         6.7. Consents.....................................................20
         6.8. Lien Waivers and Estoppel Certificates.......................20

ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER..............20

         7.1. Compliance with Agreement....................................20
         7.2. Proceedings and Instruments Satisfactory.....................21
         7.3. No Litigation................................................21
         7.4. Representations and Warranties...............................21
         7.5. Required Consents............................................21

ARTICLE VIII INDEMNITIES AND ADDITIONAL COVENANTS..........................21

         8.1. Seller's Indemnity...........................................21
         8.2. Buyer's Indemnity............................................23
         8.3. Bulk Sales Compliance........................................24
         8.4. Additional Instruments.......................................24
         8.5. Access to Books, Records and Employees.......................24

ARTICLE IX TERMINATION.....................................................25

         9.1. Termination..................................................25
         9.2. Rights on Termination; Waiver................................25

ARTICLE X MISCELLANEOUS....................................................26

         10.1. Entire Agreement; Amendment.................................26
         10.2. Expenses....................................................26
         10.3. Governing Law; Consent to Jurisdiction......................26
         10.4. Assignment..................................................27
         10.5. Notices.....................................................27
         10.6. Counterparts; Headings......................................28

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                                                                          Page

         10.7. Interpretation..............................................28
         10.8. Severability................................................28
         10.9. No Reliance.................................................28
         10.10. Parties in Interest........................................29
         10.11. Specific Performance.......................................29

                                       v

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                             EXHIBITS AND SCHEDULES

SCHEDULE 1.6      Exclusions from Assumed Liabilities
SCHEDULE 1.16     Contracts
SCHEDULE 1.20     Excluded Assets
SCHEDULE 1.22     Fixed Assets
SCHEDULE 1.32     Knowledge of Buyer
SCHEDULE 1.33     Knowledge of Seller
SCHEDULE 1.41     Opinion of Seller's Counsel
SCHEDULE 1.44     Permits
SCHEDULE 1.45     Permitted Liens
SCHEDULE 1.49     Real Property
SCHEDULE 1.50     Required Consents
SCHEDULE 3.5      Brokers or Finders Fees of Seller
SCHEDULE 3.8      Title
SCHEDULE 3.11     Pending Litigation
SCHEDULE 3.15     Ground Lease Exceptions
SCHEDULE 3.18     Environmental Matters
SCHEDULE 3.20     Agreements with Related Persons
SCHEDULE 4.3      Brokers or Finders Fees of Buyer
SCHEDULE 5.9      Post-Closing Conditions

EXHIBIT A         Assignment and Assumption Agreement
EXHIBIT B         Bill of Sale
EXHIBIT C         Buyer's Closing Certificate
EXHIBIT D         [Reserved]
EXHIBIT E         Improvements Deed
EXHIBIT F         O&M Agreement
EXHIBIT G         Performance Thresholds
EXHIBIT H         Seller's Closing Certificate
EXHIBIT I         License and Binder Purchase Agreement
EXHIBIT J         Allocation of Purchase Price
EXHIBIT K         Estoppel Certificate
EXHIBIT L         Modification Agreement

                                       vi

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                              PURCHASE AGREEMENT

                  PURCHASE AGREEMENT, made as of August 27, 1999, by and between
DTE RIVER HILL,  L.L.C., a Delaware limited  liability  company  ("Buyer"),  and
COVOL TECHNOLOGIES, INC., a Delaware corporation ("Seller").

                                    RECITALS

                  WHEREAS,  Seller has constructed and owns the Assets comprised
principally  of a processing  facility to produce solid  synthetic  fuel pellets
from coal fines located near Karthus, Clearfield County, Pennsylvania; and

                  WHEREAS,  Seller  desires to sell the Assets and the Contracts
to Buyer and Buyer desires to purchase the Assets from Seller,  all on the terms
and subject to the conditions set forth herein.

                  NOW,  THEREFORE,  in  consideration of the Recitals and of the
mutual covenants,  conditions and agreements set forth herein and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged, it is hereby agreed that:

                                    ARTICLE I
                                   DEFINITIONS

         When  used in this  Agreement,  the  following  terms  shall  have  the
meanings specified:

         1.1 Affiliate shall mean, as to any person,  any other person or entity
that, directly or indirectly through one or more  intermediaries,  controls,  is
controlled by or is under common control with such person.

         1.2.  Agreement shall mean this Purchase  Agreement,  together with the
Exhibits and Schedules  attached hereto, as the same may be amended from time to
time in accordance with the terms hereof.

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         1.3.  As-Built   Drawings  shall  mean  as-built  drawings   reflecting
necessary revisions on the original tracings of the Plans and Specifications and
related  drawings  relating to the  Facility  necessary  to indicate  such field
changes as may have been found necessary to suit conditions at the Real Property
and any other revisions made in the course of construction of the Facility.

         1.4. Assets shall mean, collectively, all of the assets, other than the
Contracts and the Excluded Assets, owned by Seller and relating primarily to the
Business, and comprising, used in or necessary for the operation of the Facility
as of the Effective Time, including,  without limitation, the Improvements,  the
Books and  Records,  the Fixed  Assets,  and the  Inventory,  together  with all
goodwill associated with the Facility.

         1.5. Assignment and Assumption  Agreement shall mean the Assignment and
Assumption  Agreement between Seller and Buyer relating to the Contracts and the
Assumed Liabilities, in the form of Exhibit A attached hereto.

         1.6.  Assumed  Liabilities  shall mean the obligations to be assumed by
Seller pursuant to the Modification  Agreement and those  obligations of Seller,
if any, arising under the Contracts which, pursuant to the terms thereof, relate
to  periods  and  become  due from and  after the  Effective  Time,  other  than
obligations under those Contracts listed in Schedule 1.6 attached hereto.

         1.7.  Bill of Sale  shall  mean the Bill of Sale  from  Seller to Buyer
relating to the Assets, in the form of Exhibit B attached hereto.

         1.8. Books and Records shall mean original or true and complete  copies
of all of the books, records,  files, data and information of Seller relating to
the design,  construction  and  operation of the  Facility and  operation of the
business prior to the Effective  Time,  which are relevant to Buyer's use of the
Assets,  performance  under the  Contracts and operation of the Facility and the
Business  after the  Effective  Time,  including  without  limitation  Plans and
Specifications,  all original  tracings of the related  drawings and designs and
the As-Built Drawings.

         1.9.  Business  shall  mean the  business  conducted  by  Seller at the
Facility,  which consists of the  ownership,  construction,  moving,  financing,
selling  and  operation  of and  otherwise  dealing  with the  Facility  and the
manufacture and sale of the Product.

         1.10.  Buyer's Closing  Certificate shall mean the certificate of Buyer
substantially in the form of Exhibit C attached hereto.

         1.11.  Closing shall mean the meeting of the parties to be held at 9:00
a.m.,  local  time,  on the Closing  Date,  at the offices of Hunton & Williams,
Riverfront Plaza, East Tower, 951 East Byrd Street, Richmond,  Virginia, or such
other time and place as the parties may mutually agree in writing.

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         1.12.  Closing Date shall mean five business days following the date on
which all  conditions  set forth in Articles VI and VII have been  satisfied  or
waived by the applicable  parties, as the case may be, or such other date as the
parties may mutually agree in writing.

         1.13.  Code shall mean the Internal  Revenue Code of 1986,  as amended,
and the regulations thereunder.

         1.14.  Confidentiality Agreement shall mean the Letter Agreement, dated
April 27, 1999, between Seller and DTE Energy Services Company.

         1.15.  Construction  Agreements shall mean all construction  agreements
relating to the Facility and the Improvements, or components thereof.

         1.16. Contracts shall mean all contracts,  agreements,  leases, license
agreements, relationships, understandings, or commitments, whether written, oral
or  implied,  to which  Seller  is a party  and which  relate  primarily  to the
construction  or operation of the  Facility and the  Business,  all as listed on
Schedule 1.16 attached hereto or as otherwise  agreed upon by Buyer prior to the
Closing  Date,  and  including,   without  limitation,  the  Ground  Lease,  the
Requirements  Supply  Agreement  and the Sales Agency  Agreement,  and excluding
those relating to the Fun Indebtedness.

         1.17. Covol Plant shall mean the Facility that produces solid synthetic
fuel  pellets  from coal fines using the Covol  Process in  accordance  with the
terms of the Technology License and Binder Supply Agreement.

         1.18. Covol Process shall mean Seller's proprietary synthetic coal fuel
production process for manufacturing  solid synthetic fuel from coal fines which
is defined in and is the subject of the  Technology  License  and Binder  Supply
Agreement.

         1.19.  Effective  Time shall  mean 12:01  a.m.,  Eastern  Time,  on the
Closing Date.

         1.20.  Excluded  Assets  shall mean the items  listed on Schedule  1.20
attached hereto

         1.21. Facility shall mean the solid synthetic fuel pellet manufacturing
facility and related support facilities owned or leased by Seller and located on
the Real Property.

         1.22. Fixed Assets shall mean all tangible personal property located at
the Real Property which  constitute  part of, or are otherwise owned and used by
Seller in the operation of, the Facility as of the Effective  Time and which are
listed on Schedule  1.22  attached  hereto,  including,  but not limited to, all
fixed assets, chattels, machinery,  equipment, leasehold improvements,  computer
hardware,  fixtures,  furniture,  furnishings,  handling equipment,  implements,
parts, tools and accessories of all kinds; provided,  however, that Fixed Assets
shall  exclude  (i) leased  items of  tangible  personal  property  that are the
subject of Contracts and (ii) the Excluded Assets.

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         1.23. Fun Enterprises shall mean Fun Enterprises PTY (ACN 056 689 304),
a company incorporated in New South Wales, Australia.

         1.24. Fun  Indebtedness  shall mean the  indebtedness  of Seller to Fun
Enterprises referenced in the Modification Agreement.

         1.25. GAAP shall mean generally accepted  accounting  principles of the
United States as applied by Seller in a manner consistent with prior periods.

         1.26. Ground Lease shall mean that certain Lease Agreement, dated as of
August  25,  1999,  by and  between  Seller  and RHC and  relating  to the  Real
Property.

         1.27. HSR Act shall mean the Hard-Scott-Rodino  Antitrust  Improvements
Act of 1976 (15 U.S.C.ss. 18a), as amended.

         1.28.   Improvements   shall  mean  the   structures,   buildings   and
improvements  now  standing  or to be  constructed  on the  Real  Property,  and
replacements thereof, including, without limitation, the following:

                  (a) the Covol Plant; and

                  (b)  all  other  plant  equipment,  apparatus,  machinery  and
fixtures of every kind and nature forming a part of such  facilities,  buildings
and improvements.

         1.29. Improvements Deed shall mean the Improvements Deed from Seller to
Buyer relating to the Improvements, in the form of Exhibit E attached hereto.

         1.30.  Inventory  shall mean all  inventories  of raw materials and all
supplies held for use at the Facility by Seller as of the Effective Time.

         1.31. IRS shall mean the Internal Revenue Service.

         1.32.  Knowledge  of Buyer shall mean the actual  knowledge,  after due
inquiry, of any person listed on Schedule 1.32 attached hereto.

         1.33.  Knowledge of Seller shall mean the actual  knowledge,  after due
inquiry, of any person listed on Schedule 1.33 attached hereto.

         1.34.  Law  shall  mean any  federal,  state,  local  or  other  law or
governmental  requirement  of any kind,  and the rules,  regulations  and orders
promulgated thereunder.

         1.35.  License and Binder  Purchase  Agreement  shall mean that certain
License and Binder  Purchase  Agreement  to be entered into by Buyer and Seller,
relating to the licensing by

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the Buyer of Seller's  proprietary  synthetic  coal fuel  extrusion,  pellet and
briquette  production  process,  and  substantially  in the  form of  Exhibit  I
attached hereto.

         1.36. Lien shall mean any interest in property  securing an obligation,
whether such interest is based on common law, statute or contract, and including
any  restriction  on the use,  voting,  transfer,  receipt  of  income  or other
exercise of any attributes of ownership,  any security  interest or lien arising
from a mortgage,  claims,  encumbrance,  pledge,  charge,  easement,  servitude,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term "Lien" shall also include reservations,
exceptions,  covenants, conditions,  restrictions,  leases, subleases, licenses,
occupancy  agreements,  pledges,  equities,  charges,  assessments,   covenants,
reservations, defects in title, encroachments and other burdens, and other title
exceptions and encumbrances affecting property of any nature, whether accrued or
unaccrued, or absolute or contingent.

         1.37.  Loss  shall  have  the  meaning  given to such  term in  Section
8.1((a)).

         1.38.  Material  Adverse Effect shall mean a material adverse effect on
the Assets and Contracts,  taken as a whole, the Business or the maintenance and
operation of the Facility.

         1.39.  Modification  Agreement shall mean that certain Modification and
Assumption  Agreement  to be entered into by Seller,  Buyer and Fun  Enterprises
relating to the Fun  Indebtedness,  and  substantially  in the form of Exhibit L
attached hereto.

         1.40. O&M Agreement shall mean that certain  Operations and Maintenance
Agreement,  of even date  herewith,  to be  entered  into by Buyer  and  Seller,
relating to the operation and maintenance of the Facility,  substantially in the
form of Exhibit F attached hereto.

         1.41.  Opinion of Seller's Counsel shall mean the opinions of Pillsbury
Madison & Sutro, LLP, counsel to Seller, and Harlan Hatfield, General Counsel of
Seller, substantially in the forms of Schedules 1.41-A and 1.41-B, respectively.

         1.42.  Performance  Payments  shall mean those  contingent  payments of
additional  Purchase  Consideration  to be paid to  Seller  by  Buyer  upon  the
achievement by the Facility of the Performance Thresholds.

         1.43.    Performance    Thresholds   shall   mean   those   levels   of
production/sales  of Section 29 Product  meeting  the  quantities  described  on
Exhibit G attached hereto.

         1.44.  Permits shall mean all governmental  approvals,  authorizations,
registrations,  permits and licenses  necessary or required for the operation of
the Facility,  including,  without limitation,  those Permits listed on Schedule
1.44 attached hereto.

         1.45.  Permitted  Liens  shall mean Liens (but only for amounts not yet
due and payable) securing taxes,  assessments or governmental charges or levies,
Liens of an immaterial nature

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which  could  not  reasonably  be  expected  to have an  adverse  effect  on the
maintenance  and operation of the Facility or the good and  marketable  title of
the  Assets or the  enforceability  of the  Contracts,  and Liens  disclosed  on
Schedule 1.45 attached hereto.

         1.46. Plans and Specifications  shall have the meaning given such terms
in the Construction Agreements.

         1.47.  Product  shall  mean the solid  synthetic  fuel  pellet  product
produced at the Facility using and pursuant to the Covol Process.

         1.48. Purchase  Consideration shall have the meaning given to such term
in Section 2.2 hereof.

         1.49. Real Property shall mean that certain parcel of land located near
Karthus,  Clearfield  County,  Pennsylvania and more  particularly  described on
Schedule 1.49 attached hereto.

         1.50.  Required  Consents  shall mean  those  consents,  approvals  and
waivers required from parties to the Contracts or from governmental  authorities
or other third  parties that are  necessary or required in order to transfer the
Assets and  Contracts  to Buyer and  otherwise  give effect to the  transactions
contemplated  herein (other than such consents,  the failure of which to obtain,
taken as a whole,  could not  reasonably be expected to have a Material  Adverse
Effect) and that are specifically identified on Schedule 1.50 attached hereto.

         1.51.  Requirements  Supply Agreement shall mean that certain Agreement
for Supply of Coal Fines dated as of August 25, 1999, entered into by Seller and
RHC, relating to the provision of feedstock to the Facility by RHC.

         1.52.  RHC shall mean River Hill Coal  Company,  Inc.,  a  Pennsylvania
corporation.

         1.53. Sales Agency Agreement shall mean that certain  Agreement for the
Sale of Synthetic Fuel, dated as of August 25, 1999,  entered into by Seller and
RHC, relating to the sale of the Product processed at the Facility.

         1.54.  Section  29  Product  shall  mean  Product  which is  reasonably
expected  to  constitute  "qualified  fuels"  pursuant  to the terms of  Section
29(c)(1)(C)  of the Code and with  respect  to which  Section  29 is  applicable
pursuant to the terms of Sections 29(f) and 29(g) of the Code.

         1.55. Seller's Closing Certificate shall mean the certificate of Seller
substantially in the form of Exhibit H attached hereto.

         1.56.  Transaction  Documents  shall mean this  Agreement,  the Bill of
Sale, the Assignment and Assumption Agreement,  the Modification Agreement,  the
Improvements  Deed and those  agreements  and  instruments  to be  executed  and
delivered as provided in Section 2.3.

                                       6

<PAGE>

                                   ARTICLE II
                                PURCHASE AND SALE

         2.1.     Purchase and Sale; Assignment and Assumption.

                  (a) Buyer and Seller  hereby  agree that at the  Closing,  and
upon all of the terms and subject to all of the  conditions  of this  Agreement,
Seller  shall  sell,  convey,  transfer  and  assign to Buyer,  and Buyer  shall
purchase and accept from Seller, all of the Assets, free and clear of all liens,
claims, mortgages or encumbrances.

                  (b) Buyer and Seller  hereby  agree that at the  Closing,  and
upon all of the terms and subject to all of the  conditions  of this  Agreement,
Seller shall assign to Buyer the  Contracts and all rights  arising  thereunder,
and Buyer shall assume from Seller all of Seller's obligations  constituting the
Assumed Liabilities.

         2.2.     Payment of the Purchase Consideration.

                  In  consideration  of  Seller's  sale,  conveyance,  transfer,
delivery  and  assignment  of the Assets and  Contracts,  Buyer shall (a) on the
Closing  Date,  make a cash  payment to Seller in the amount of One  Million Two
Hundred  Fifty  Thousand  Dollars  ($1,250,000.00),  payable by wire transfer in
readily  available funds to First Security Bank;  Salt Lake City,  Utah; 18A 124
000012;  for the  account of Covol  Technology;  Acct.  #0600019939;  (b) on the
Closing Date,  make a cash payment,  on behalf of Seller,  to Fun Enterprises in
the amount of Four Million Dollars ($4,000,000.00),  payable by wire transfer in
accordance with the Modification Agreement; (c) on the Closing Date and pursuant
to the Modification Agreement, execute and deliver a Replacement Promissory Note
made  payable  to the order of Fun  Enterprises  in the  amount of Nine  Hundred
Forty-Five  Thousand Eight Hundred Ninety-Two Dollars  ($945,892.00) and bearing
interest  at a per  annum  rate of 5.5  percent;  and (d)  thereafter  make  the
Performance  Payments,  if any, when and as provided in Section 2.7, in the form
of cash payments to Seller,  payable by wire transfer in readily available funds
to First Security Bank; Salt Lake City, Utah; 18A 124 000012; for the account of
Covol  Technology;   Acct.  #0600019939,  or  pursuant  to  such  other  payment
instructions  delivered by written  notice given by Seller to Buyer  pursuant to
Section 10.5 hereof at least two business days prior to the due date of any such
payment (the payments described in clauses (a), (b), (c) and (d) of this Section
2.2 shall collectively be referred to herein as the "Purchase Consideration").

         2.3.     Deliveries at Closing.

                  (a) By Seller to Buyer.  At the Closing,  Seller shall deliver
the following items to Buyer, each properly executed and dated as of the Closing
Date by Seller and in form and substance reasonably acceptable to Buyer: (i) the
Assignment  and  Assumption  Agreement,   (ii)  the  Bill  of  Sale,  (iii)  the
Improvements  Deed, (iv) the License and Binder Purchase Supply  Agreement,  (v)
the O&M Agreement, (vi) estoppel certificates as required by Section 6.9,

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(vii) all Permits as  required  by Section  6.6,  (viii) all  Required  Consents
applicable to Seller, (ix) the Opinion of Seller's Counsel, (x) Seller's Closing
Certificate  and (xi) a certificate  of the corporate  secretary of Seller as to
such matters as may reasonably be requested by Buyer.

                  (b) By Buyer to Seller.  At the Closing,  Buyer shall  deliver
the Purchase  Consideration  and the  following  items to Seller,  each properly
executed  and dated as of the  Closing  Date by Buyer and in form and  substance
reasonably  acceptable to Seller:  (i) the Assignment and Assumption  Agreement,
(ii) the License and Binder Purchase  Agreement,  (iii) the O&M Agreement,  (iv)
the Modification Agreement,  (v) all Required Consents applicable to Buyer, (vi)
Buyer's Closing  Certificate and (vii) a certificate of the corporate  secretary
(or  equivalent  official)  of Buyer as to such  matters  as may  reasonably  be
requested by Seller.

         2.4.     Allocation of Purchase Price.

                  On the  Closing  Date,  or at a later  time  agreed  to by the
parties,  not to exceed 30 days  following the Closing Date,  the purchase price
shall be allocated  among the Assets and Contracts in  accordance with Exhibit J
attached  hereto.   Such  allocation  shall  be  intended  to  comply  with  the
requirements  of Section 1060 of the Code,  and no party shall take any position
inconsistent  with such allocation for income tax purposes,  except that Buyer's
cost for the Assets and Contracts may differ from the amount so allocated to the
extent necessary to reflect Buyer's capitalized acquisition costs other than the
amount realized by Seller.

         2.5.     No Assumption of Liabilities.

                  Except as  specifically  set forth  herein with respect to the
Assumed  Liabilities,  Buyer  does not and  will not  assume  any  liability  or
obligation of any kind of Seller,  or any obligation  relating to the use of the
Assets or performance by Seller under the Contracts prior to the Effective Time,
whether  absolute or contingent,  accrued or unaccrued,  asserted or unasserted,
known or unknown, or otherwise.

         2.6.     Prorations.

                  As  of  the  Closing  Date,  any  personal   property   taxes,
assessments,  water, gas, electricity and other utility charges,  lease payments
and  other  expenses  relating  to the  Business  shall  be  prorated  as of the
Effective  Time.  Such  prorations  may be  estimated  as  necessary  and  final
settlement shall be made within sixty (60) days of the Closing Date.

         2.7.     Performance Payments.

                  Within 30 days  following the date that the Facility  achieves
the  Performance  Thresholds set forth on Exhibit G attached  hereto,  the Buyer
shall pay to Seller, as provided in Section 2.2, amounts equal to the applicable
Performance Payment set forth on Exhibit G attached hereto.

                                       8

<PAGE>

         2.8.     Sales Tax Exemption.

                  To the extent applicable,  at the Closing,  Buyer will deliver
to Seller appropriate and customary sales tax exemption certificates relating to
the transfer of the Assets and the  assignment  and  assumption of the Contracts
contemplated hereby.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES
                                    OF SELLER

         Seller represents and warrants to Buyer that:

         3.1      Corporate Standing.

                  Seller is a corporation  duly  organized and validly  existing
and in good  standing  under the laws of the State of  Delaware.  Seller has the
power to own its property,  and to execute,  deliver and perform this  Agreement
and each of the  Transaction  Documents  applicable  to it,  and to carry on its
business as now being conducted.  Seller is duly qualified to do business in and
is in good standing as a foreign  corporation,  authorized to do business  under
the laws of the States of Utah and Pennsylvania.

         3.2.     Authorizations; Binding Agreements.

                  The execution,  delivery and performance of this Agreement and
the other  Transaction  Documents  by Seller  and each  conveyance,  assignment,
agreement,  and other document herein contemplated to be executed by Seller, has
been duly authorized by all necessary  corporate action.  This Agreement and the
other Transaction Documents and the conveyances,  assignments,  agreements,  and
other documents herein  contemplated to be executed,  delivered and performed by
Seller are, or will be upon execution,  legal, valid and binding  obligations of
Seller, duly enforceable against Seller in accordance with their 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). This Agreement and the
other Transaction Documents and the conveyances,  assignments,  agreements,  and
other documents herein  contemplated to be executed,  delivered and performed by
Seller  (i) do not and will not result in any  violation  of,  conflict  with or
default under the terms of any of Seller's organizational documents (nor, to the
Knowledge of Seller,  does there exist any  condition  which upon the passage of
time or the giving of notice would cause such  violation,  conflict or default),
and (ii) subject only to the  Required  Consents,  do not and will not result in
any  violation  of,  conflict  with or default  under any  Contract or any other
material permit,  lease,  venture,  indenture,  mortgage,  agreement,  contract,
judgment,  order or other obligation or restriction to which Seller, the Assets,
the  Contracts or the conduct of the  maintenance  and operation of the Facility
may be bound or encumbered (nor, to the Knowledge

                                       9

<PAGE>

of Seller,  does there exist any condition which upon the passage of time or the
giving of notice would cause such violation, conflict or default).

         3.3.     No Actions  Affecting  Enforcement of  the Agreement  and  the
other Transaction Documents.

                  There are no actions,  suits, or proceedings  pending,  or, to
the  Knowledge  of  Seller,   threatened,   against  Seller  in  any  court,  or
administrative  governmental  body or agency  which will  affect in any  adverse
manner the ability of Seller to execute,  deliver and perform this Agreement and
the other Transaction Documents.  Subject only to the Required Consents and such
consents  which the failure to obtain could not reasonably be expected to have a
Material Adverse Effect, Seller has obtained all permits, licenses,  franchises,
authorizations, variances, exemptions, concessions, leases, instruments, orders,
consents or approvals of  governmental  entities and third parties  necessary to
construct, maintain and operate the Facility and to execute, deliver and perform
this Agreement and the other Transaction Documents.

         3.4.     Taxes.

                  All tax  returns  and  reports  relating  to the  Assets,  the
Contracts and the conduct of the construction,  maintenance and operation of the
Facility required by law (including all federal,  state, and local property tax,
severance  and  franchise  tax laws) to be filed by Seller  prior to the Closing
have been timely filed or will be caused to be timely filed, including those tax
returns  relating to periods  prior to Closing that are not yet due,  except for
such  returns and  reports  which the  failure to file could not  reasonably  be
expected to have a material  adverse effect on the Assets,  the Contracts or the
maintenance  and  operation  of the  Facility.  All  taxes,  assessments,  fees,
interest,  penalties and other governmental  charges relating to the Assets, the
Contracts or the conduct of the  construction,  maintenance and operation of the
Facility  prior to Closing  have been paid when due and  payable or payment  has
been provided for, except for such taxes, assessments, fees, interest, penalties
and other governmental  charges which the failure to pay could not reasonably be
expected to have a material  adverse effect on the Assets,  the Contracts or the
construction, maintenance and operation of the Facility.

         3.5.     Brokers or Finders Fees.

                  Except as set forth in Schedule  3.5,  there are no obligation
or liability,  contingent  or otherwise,  for brokers or finders fees created by
Seller with respect to the matters  provided for in this Agreement and the other
Transaction  Documents.  No  obligation or liability for brokers or finders fees
created by Seller with respect to the matters provided for in this Agreement and
the other  Transaction  Documents shall be imposed upon Buyer, the Assets or the
Contracts.

                                       10

<PAGE>

         3.6.     No Imposition of Liens.

                  The execution,  delivery and performance of this Agreement and
the other Transaction  Documents by Seller shall not result in the imposition of
any Lien, other than Permitted Liens,  upon any of the Assets,  the Contracts or
by  which  the  maintenance  and  operation  of the  Facility  may be  bound  or
encumbered.

         3.7.     Applicable Contracts and Permits.

                  The Contracts  listed on Schedule 1.16 and the Permits  listed
on Schedule 1.41 are the only material agreements,  contracts,  leases, permits,
or licenses  necessary  for the  ownership,  maintenance  and  operation  of the
Facility and the Business after the Effective Time.

         3.8.     Title to Assets.

                  Except as set forth on Schedule  3.8,  as of the date  hereof,
Seller owns,  and as of the Effective  Time,  Seller will own,  good,  valid and
marketable  title to all of the  Assets,  free and  clear of any and all  Liens,
except for Permitted Liens. As of the Effective Time and upon Buyer's payment of
the Purchase  Consideration pursuant hereto, good, valid and marketable title to
the Assets,  free and clear of all Liens, except for Permitted Liens, shall pass
to Buyer.

         3.9.     Condition of Assets.

                  Except as set forth on Schedule  3.9, as of the Closing  Date,
the Fixed  Assets,  taken as a whole,  will be in good  operating  condition and
repair and  substantially fit for the production of Section 29 Product at a rate
of 360,0000 tons per year, and the Facility has been  constructed in conformance
with  that  degree  of skill  and  judgment  normally  exercised  by  recognized
engineering and construction firms of similar size and experience to that of the
contractors  under the Construction  Agreements,  and the Assets  comprising the
Facility  conform to the  standards of material and  workmanship  prevailing  in
applicable industries and are free from material defects in design, material and
workmanship and are of good quality.

         3.10.    Inventory.

                  As of the Closing  Date,  the  Inventory  will not include any
material amount of damaged, defective or obsolete items or materials and will be
useable or salable by Buyer in the ordinary course of business.

         3.11.    Pending Litigation.

                  Except as  disclosed on Schedule  3.11,  there are no actions,
suits,  arbitrations  or proceedings  currently  pending or, to the Knowledge of
Seller, threatened against the Assets or the Contracts. There are no outstanding
or unsatisfied judgments, orders or decrees to which Seller is bound.

                                       11

<PAGE>

         3.12.    Compliance with Laws.

                  To the Knowledge of Seller,  Seller is in compliance  with all
orders,  writs,  injunctions,   decrees,  judgments,  rulings,  laws,  rules  or
regulations  of any  governmental  entity  to which  Seller,  the  Assets or the
Contracts are subject,  the  violation of which could  reasonably be expected to
have a Material Adverse Effect.

         3.13.    Status of Contracts.

                  Schedule 1.16 is a true,  correct and complete list of all the
material contracts,  leases,  mortgages,  credit agreements,  indentures,  sales
contracts, purchase orders, and other agreements entered into by Seller relating
primarily  to the  Business or the Assets.  Except as  described in the Schedule
3.11,  the Contracts are valid and in good  standing,  and there is no violation
of, conflict with or default under the Contracts, the consequence of which could
reasonably  be  expected  to have a  Material  Adverse  Effect.  Seller  has not
received  any notice from any party to any Contract  that such party  intends to
terminate,  cancel or refuse to renew  the same or that such  party  intends  to
offset any amount due  thereunder  or assert any  defense to the  enforceability
thereof.

         3.14.    Consents.

                  Schedule  1.50 is a true,  correct  and  complete  list of all
Required  Consents.  Seller has not  received  any notice  from any party to any
Permit that such party intends to terminate,  cancel or refuse to renew the same
or that such party intends to assert any defense to the enforceability thereof.

         3.15.    Ground Lease.

                  The  Ground  Lease   constitutes  all  of  the  real  property
interests  necessary for the Business and the  operation of the Facility  during
the term of such Ground Lease. Except as indicated on Schedule 3.15, there is no
violation of,  conflict with or default under the Ground Lease,  except for such
violations,   conflicts  and  defaults  the  consequences  of  which  could  not
reasonably  be  expected  to have a  Material  Adverse  Effect.  Seller  has not
received any notice from any party to the Ground  Lease that such party  intends
to  terminate,  cancel or refuse to renew the same or that such party intends to
assert any defense to the enforceability thereof.

         3.16.    No Fee Property.

                  Other than the Ground  Lease,  no interest in real property is
held or  used by  Seller  in  connection  with  the  construction,  maintenance,
ownership and operation of the Facility.

                                       12

<PAGE>

         3.17.    Books and Records.

                  As of the  Closing  Date,  the  Books  and  Records  shall  be
complete and correct in all material respects.

         3.18.    Environmental Conditions.

                  (a) Definitions. When used in this Section 3.18:

                           (i)  "Environmental  Laws" shall mean all  applicable
laws (including common law), rules, orders, regulations,  statutes,  ordinances,
codes,  decrees  and  requirements  of any  Governmental  Authority  regulating,
relating to or imposing liability  standards of conduct concerning any Hazardous
Materials or environmental protection.

                           (ii) "Governmental Authority" shall mean any federal,
state, local,  municipal or other governmental  department,  commission,  board,
bureau,   agency  or  instrumentality,   or  any  court,  in  each  case  having
jurisdiction over the applicable matter.

                           (iii) "Hazardous Materials" shall mean any solid
waste,  petroleum or petroleum  product,  hazardous  material,  hazardous waste,
infectious  medical waste, or hazardous or toxic substance  defined or regulated
as such in any Environmental Law.

                  (b) Environmental  Representations  and Warranties.  Except as
set forth on Schedule 3.18 attached hereto:

                           (i) Seller has not operated the Facility or conducted
business or other  activities  at or from the Facility,  in connection  with the
construction  of the  Facility or  otherwise,  in a manner that  constituted  or
constitutes a violation of any applicable Environmental Law;

                           (ii) There has been no off-site shipment or release
of any  Hazardous  Materials  by the Seller on,  under,  at,  from or in any way
affecting the Facility or any part thereof,  which off-site  shipment or release
gives rise to liabilities or obligations under applicable Environmental Laws;

                           (iii)  Seller has not  received any notices or claims
that it is a responsible  party in connection  with any claim or notice asserted
pursuant  to 42 U.S.C.  Section  9601 et seq.,  or any state  superfund  law, in
connection with the Facility; and

                           (iv)  Seller  has  received  all  Permits  as  may be
required under applicable  Environmental  Laws to operate the Facility as of the
Effective  Time,  and Seller is in compliance in all material  respects with the
terms and conditions of each such Permit.  Such Permits shall be transferable to
Buyer and will be effective immediately after the Closing.

                                       13

<PAGE>

         3.19.    Liabilities.

                  Except for  liabilities  underlying  any  Permitted  Liens and
Assumed  Liabilities,  the Seller has no liabilities  which could  reasonably be
expected to have a Material  Adverse Effect  following the Closing,  nor has any
condition  existed or any event occurred  which could  reasonably be expected to
give rise to any such liability.

         3.20.    Agreements with Related Persons.

                  There are no contracts,  licenses,  agreements or arrangements
with any Affiliate of Seller in connection with the  construction,  maintenance,
ownership  and  operation of the  Facility,  or ownership  and  operation of the
Business other than as disclosed on Schedule 3.20.

         3.21.    Adequacy of the Purchased Assets.

                  Except as  described  in  Schedule  3.9,  the  Assets  and the
Contracts, together with (i) the technology and know-how being licensed to Buyer
by Seller under the License and Binder Purchase Agreement, and (ii) the chemical
binder to be supplied to Buyer by Seller  under the License and Binder  Purchase
Agreement,  constitute all of the assets,  technology, raw materials (other than
feedstock raw materials) and rights reasonably  expected to be necessary for the
production by Buyer of Section 29 Product at the rate of 360,000 tons per year.

         3.22.    Production Capacity.

                  The  Facility has a rated  capacity to produce  Product at the
rate of 360,000 tons per year.

         3.23.    Section 29 Issues.

                  The  Facility was placed "in service" for purposes of the Code
prior to July 1, 1998  pursuant  to a binding  contract  entered  into  prior to
January 1, 1997 and  effective at all times  thereafter  through  completion  of
construction..

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer hereby represents and warrants to Seller that:

         4.1      Organization and Standing.

                  Buyer is a limited liability  company duly organized,  validly
existing,  and in good standing  under the laws of the State of Delaware and has
the power to own its own  property,  and to execute,  deliver  and perform  this
Agreement and each of the Transaction Documents, and to

                                       14

<PAGE>

carry on its business as now being conducted.  Buyer is qualified to do business
in and is in good standing as a foreign limited liability company  authorized to
do business under the laws of the State of Pennsylvania.

         4.2.     Authorizations; Binding Agreements.

                  The execution, delivery, and performance of this Agreement and
the other  Transaction  Documents by Buyer and of each  conveyance,  assignment,
agreement,  and other document herein  contemplated to be executed by Buyer have
been fully authorized by all necessary limited  liability  company action.  This
Agreement and the other Transaction Documents and the conveyances,  assignments,
agreements,  and other documents herein  contemplated to be executed,  delivered
and performed by Buyer are, or will be upon execution,  legal, valid and binding
obligations of Buyer,  duly  enforceable  against Buyer in accordance with their
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).  This Agreement and the other  Transaction  Documents and
the   conveyances,   assignments,   agreements,   and  other  documents   herein
contemplated  to be executed,  delivered  and  performed by Buyer (i) do not and
will not result in any violation of, conflict with or default under the terms of
Buyer's  organizational  documents,  and  (ii)  subject  only  to  the  Required
Consents,  do not and will not  result in any  violation  of,  conflict  with or
default  under  any  material  permit,  lease,  venture,  indenture,   mortgage,
agreement, contract, judgment, order or other obligation or restriction to which
Buyer is bound (nor, to the  Knowledge of Buyer,  does there exist any condition
which  upon the  passage  of time or the  giving  of  notice  would  cause  such
violation, conflict or default).

         4.3.     Brokers or Finders Fees.

                  Except  as  set  forth  on  Schedule  4.3,  no  obligation  or
liability, contingent or otherwise, for brokers or finders fees created by Buyer
with respect to the matters provided for in this Agreement shall be imposed upon
Seller.

         4.4.     No Actions  Affecting  Enforcement  of  the Agreement and  the
other Transaction Documents.

                  There are no actions,  suits, or proceedings  pending,  or, to
the  Knowledge  of  Buyer,   threatened,   against   Buyer  in  any  court,   or
administrative  governmental  body or agency  which will  affect in any  adverse
manner the ability of Buyer to execute,  deliver and perform this  Agreement and
the other Transaction Documents.

                                       15

<PAGE>

                                    ARTICLE V
                      CERTAIN UNDERSTANDINGS AND AGREEMENTS

         5.1.     Conduct of Seller Prior to Closing.

                  From the date hereof  through the Closing  Date,  Seller shall
operate  the  Facility  in the  ordinary  course  and shall not take any  action
inconsistent  therewith,  except as  otherwise  permitted  by this  Agreement or
consented to by Buyer in writing. In connection therewith,  Seller shall operate
the Fixed Assets and systems  comprising  the  Facility in a safe manner,  using
qualified,  competent, and, if necessary,  licensed personnel.  Without limiting
the generality of the foregoing,  Seller shall: (a) keep full and complete Books
and  Records in all  material  respects;  (b)  maintain in full force and effect
adequate insurance policies covering property,  casualty,  and general liability
on the Assets; (c) take such commercially  reasonable action as may be necessary
to preserve the Facility and the Assets in good condition,  normal wear and tear
excepted;  (d) use its commercially  reasonable efforts to preserve the Facility
and the Assets intact,  and to preserve for Buyer the goodwill of the suppliers,
customers and others having  business  relations with Seller in connection  with
the Facility;  and (e) comply in all material  respects with all Laws applicable
to Seller in the ownership and operation of the Facility.

         5.2.     Exclusivity.

                  From the date hereof through the Closing Date,  none of Seller
or any Affiliate shall, directly or indirectly,  through any officer or director
of Seller or any Affiliate,  any agent or otherwise,  with respect to the Assets
and the Contracts: (a) solicit,  initiate,  encourage the submission of, respond
to or discuss  inquiries,  proposals  or offers from any person  relating to any
acquisition  or  purchase  of any of the Assets or  Contracts,  or any  exchange
offer,  merger,  consolidation,  business  combination  or sale  of  substantial
assets,  sale of  securities,  or similar  transactions  involving the Assets (a
"Competing  Transaction");  (b) enter into or participate in any  discussions or
negotiations regarding a Competing  Transaction,  or furnish to any other person
any information with respect to the Assets or Contracts,  except for disclosures
which are required  under federal  securities  laws or required to meet Seller's
obligations hereunder;  or (c) otherwise cooperate in any way with, or assist or
participate  in,  facilitate  or  encourage,  any effort or attempt by any other
person to do or seek a Competing  Transaction.  Seller shall immediately  notify
Buyer of any proposal  relating to a Competing  Transaction or if any inquiry or
contact  with any person  with  respect  thereto  is made and shall  immediately
deliver  to  Buyer  copies  of any  such  written  proposal  or  offer  and  any
communications made in response thereto. It is agreed that a sale in any form of
Seller's remaining assets not associated with the Facility,  including a sale of
equity in Seller, shall not be a Competing Transaction.

         5.3.     Access to Information.

                  Between the date of this  Agreement  and the  Effective  Time,
Seller  will give Buyer and its  authorized  representatives  reasonable  access
during normal business hours to all

                                       16

<PAGE>

information,  facilities and books and records  relating to the Facility and the
Business, permit Buyer to make such inspections as it may reasonably require and
cause its officers to furnish Buyer with such  financial and operating  data and
other  information  with  respect to the  Facility and the Business as Buyer may
from time to time reasonably request, and, further,  Seller shall make available
to Buyer for  examination  the  originals or the true and correct  copies of all
documents which Buyer may reasonably request in connection with the transactions
contemplated  by this  Agreement;  provided,  however,  that all such activities
shall be conducted  during normal business hours with a view towards  minimizing
any disruption of the day-to-day business of Seller.

         5.4.     Best Efforts.

                  Subject to the terms and conditions  herein provided,  each of
the parties hereto agrees to use its commercially reasonable efforts to take, or
cause to be  taken,  all  action,  and to do,  or cause to be done,  all  things
necessary, proper and advisable under applicable Law, and to obtain the Required
Consents,   necessary  to  consummate  and  make   effective  the   transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further  action is  necessary  or  desirable  to carry out the  purposes of this
Agreement,  the proper  officers and  directors of each party to this  Agreement
shall  take all such  necessary  action.  Buyer  and  Seller  will  execute  any
additional  instruments  necessary to consummate the  transactions  contemplated
hereby.

         5.5.     Public Announcements.

                  Buyer and Seller will consult  with each other before  issuing
any press release or otherwise  making any public statement with respect to this
Agreement and the transactions contemplated herein, and shall not issue any such
press release or make any such public statement prior to such consultation or as
to which the other party reasonably objects, except as may be required by Law or
by obligations  pursuant to any listing  agreement with any national  securities
exchange or inter-dealer quotation system.

         5.6.     Confidentiality.

                  Notwithstanding   the   execution  of  this   Agreement,   the
confidentiality provisions of the Confidentiality Agreement shall remain in full
force and effect and shall survive the Closing.

         5.7.     Negative Covenants.

                  During the period from the date hereof and the Effective Time,
Seller shall:

                  (a) not sell,  lease,  assign,  hypothecate  or agree to sell,
lease,  assign,  hypothecate  or otherwise  transfer or dispose of, any material
component of the Assets, except as contemplated by the Permitted Liens;

                                       17

<PAGE>

                  (b) not enter into any lease, contract, agreement, commitment,
arrangement or transaction  relating to the Assets or the Facility except in the
normal course of operation of the Facility and in accordance with past practice,
or  terminate,  cancel or modify or in any way  impair any of the  Contracts  or
Permits other than in the normal course of operation of the Facility;

                  (c) not subject to any Lien,  other than Permitted  Liens, any
of the Assets,  and shall use commercially  reasonable  efforts not to permit or
allow any of the  Assets to become  subject to any Lien,  other  than  Permitted
Liens; and

                  (d) not enter into any lease, contract, agreement, commitment,
arrangement or  transaction  or do any other act or omit to do any  commercially
reasonable act that might  reasonably be expected to adversely affect the Assets
or  the  construction,   maintenance  and  operation  of  the  Facility  or  the
consummation  of the  transactions  contemplated by this Agreement and the other
Transaction Documents.

         5.8.     Taxes.

                  Following  Closing,  Seller  shall timely file all tax returns
and  reports  relating  to the  Assets,  the  Contracts  and the  conduct of the
construction,  maintenance  and operation of the Facility prior to Closing which
have not been filed or were not yet due to be filed prior to Closing, and Seller
shall  timely  pay  all  taxes,  assessments,   fees,  interest,  penalties  and
governmental charges relating to the Assets, the Contracts or the conduct of the
construction,  maintenance  and operation of the Facility prior to Closing which
have not been paid or were not yet due and payable prior to Closing.

         5.9.     Private Letter Ruling.

                  (a) Following  Closing,  Buyer plans to seek a Private  Letter
Ruling from the IRS as to matters relating to the Facility and Section 29 of the
Code.  Seller shall cooperate with and assist Buyer, as reasonably  requested by
Buyer, in connection with seeking such Private Letter Ruling.  In the event that
Buyer does seek such a Private  Letter  Ruling  and the IRS  refuses or fails to
issue it in a form that is satisfactory  in the sole and absolute  discretion of
Buyer,  Buyer shall be entitled to elect (by giving  written notice to Seller to
such effect) to terminate the obligation to make further royalty  payments under
Section 3 of the  License  and Binder  Purchase  Agreement  and,  in such event,
Seller shall have the option to purchase, within one year following such notice,
the Assets and Contracts (and assume obligations under the Contracts) from Buyer
at the greater of (i) the amount of Purchase  Consideration  theretofore paid by
Buyer plus the amount of any capital  expenditures  made by Buyer in  connection
with the  Facility  and Assets plus any  obligations  of Buyer in respect of the
Facility  and the Assets and  Contracts,  or (ii) the fair market  value of such
Assets and Contracts.

                  (b) Notwithstanding anything to the contrary contained in this
Agreement  or the  License  and Binder  Purchase  Agreement,  Buyer shall not be
obligated to make any payments

                                       18

<PAGE>

after the Effective Time in respect of the Purchase  Consideration  or royalties
until the  conditions  set forth in Schedule 5.9 are  satisfied,  other than any
such condition,  the failure of which to obtain could not reasonably be expected
to have a Material  Adverse Effect on the ownership and operation of the Assets,
Contracts, Facility and Business after the Effective Time.

                                   ARTICLE VI
                CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER

         Each and every  obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:

         6.1      Compliance with Agreement.

                  Seller  shall have  performed  and  complied  in all  material
respects  with all of its  obligations  under  this  Agreement  which  are to be
performed or complied with by it prior to or on the Closing Date.

         6.2.     Proceedings and Instruments Satisfactory.

                  All proceedings,  corporate or other, to be taken by Seller in
connection  with  the  transactions  contemplated  by  this  Agreement,  and all
documents  incident  thereto,  shall  be  reasonably  satisfactory  in form  and
substance to Buyer.

         6.3.     No Litigation.

                  No  investigation,  suit, action or other proceedings shall be
threatened  or  pending  before  any court or  governmental  agency  that  seeks
restraint,  prohibition,  damages  or  other  relief  in  connection  with  this
Agreement or the consummation of the transactions contemplated hereby.

         6.4.     Representations and Warranties.

                  The  representations  and  warranties  made by  Seller in this
Agreement shall be true and correct in all respects (as to  representations  and
warranties  qualified or limited by the term "Material Adverse Effect," the word
"material,"  or phrases of like  import),  and in all  material  respects (as to
representations  and  warranties  not so qualified or limited) as of the Closing
Date  with  the same  force  and  effect  as  though  said  representations  and
warranties had been made on the Closing Date.

                                       19

<PAGE>

         6.5.     Material Damage to Assets.

                  Between the date of this  Agreement and the Closing Date,  the
Assets shall not have been  materially  and adversely  affected by reason of any
loss,  taking,  condemnation,  destruction  or physical  damage,  whether or not
insured against.

         6.6.     Permits.

                  All Permits  required to operate the Facility as  contemplated
hereby shall have been obtained by, or transferred to Buyer, other than (i) such
Permits, the failure of which to obtain could not reasonably be expected to have
a Material  Adverse Effect and, (ii) a  non-temporary  Pennsylvania  Air Quality
Permit as referenced in Section 1.41.

         6.7.     Consents.

                  All  Required  Consents  applicable  to Seller shall have been
obtained.

         6.8.     Lien Waivers and Estoppel Certificates.

                  Seller  shall  have  delivered  to Buyer:  (a)  waivers of any
statutory  landlord or lessor  liens with  respect to the Real  Property and any
material  item  of  leased  tangible   personal   property;   and  (b)  estoppel
certificates,  substantially  in the  form  of  Exhibit  K  attached  hereto  or
otherwise  reasonably  satisfactory  in form and  substance  to Buyer,  from the
landlord of the Real  Property  and the lessor of each  material  item of leased
tangible personal property.

                                   ARTICLE VII
                CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER

         Each and every obligation of Seller to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:

         7.1      Compliance with Agreement.

                  Buyer  shall  have  performed  and  complied  in all  material
respects  with all of its  obligations  under  this  Agreement  which  are to be
performed or complied with by it prior to or on the Closing Date.

                                       20

<PAGE>

         7.2.     Proceedings and Instruments Satisfactory.

                  All  proceedings,  corporate or other, to be taken by Buyer in
connection  with  the  transactions  contemplated  by  this  Agreement,  and all
documents  incident  thereto,  shall  be  reasonably  satisfactory  in form  and
substance to Seller.

         7.3.     No Litigation.

                  No  investigation,  suit,  action or other proceeding shall be
threatened  or  pending  before  any court or  governmental  agency  that  seeks
restraint,  prohibition,  damages  or  other  relief  in  connection  with  this
Agreement or the consummation of the transactions contemplated hereby.

         7.4.     Representations and Warranties.

                  The  representations  and  warranties  made by  Buyer  in this
Agreement shall be true and correct in all respects (as to  representations  and
warranties  qualified or limited by the term "Material Adverse Effect," the word
"material,"  or phrases of like  import),  and in all  material  respects (as to
representations  and  warranties  not so qualified or limited) as of the Closing
Date  with  the same  force  and  effect  as  though  such  representations  and
warranties had been made on the Closing Date.

         7.5.     Required Consents.

                  All  Required  Consents  applicable  to Buyer  shall have been
obtained.

                                  ARTICLE VIII
                      INDEMNITIES AND ADDITIONAL COVENANTS

         8.1.     Seller's Indemnity.

                  (a) Seller hereby  indemnifies  and holds Buyer  harmless from
and against,  and agrees to defend promptly Buyer from, and reimburse Buyer for,
any and all losses,  damages,  costs,  expenses,  liabilities,  obligations  and
claims of any kind,  including,  without limitation,  environmental  liabilities
(whether  involving personal injury or property damage),  reasonable  attorneys'
fees and other legal costs and expenses (hereinafter referred to collectively as
"Losses"),  that  Buyer and any  Affiliate  of Buyer  may at any time  suffer or
incur,  or become  subject  to, as a result of or in  connection  with:  (i) any
breach or inaccuracy of any of the representations and warranties made by Seller
in this  Agreement  or any other  agreement  or  instrument  delivered by Seller
pursuant hereto;  (ii) any failure of Seller to carry out, perform,  satisfy and
discharge  any  of  its  covenants,  agreements,  undertakings,  liabilities  or
obligations  under this Agreement or under any of the agreements and instruments
delivered by Seller  pursuant to this  Agreement;  (iii) claims by third parties
(including governmental authorities)

                                       21

<PAGE>

against Buyer relating to the construction, operation and ownership by Seller of
the Assets and the  performance by Seller under the Contracts in each case under
this clause (iii) for the period prior to the  Effective  Time;  (iv) any of the
matters  referenced in Schedules 3.5 and 3.11; (v) any violations of, or failure
to operate in accordance  with,  necessary  Permits prior to the effective time;
(vi) failure by Seller to satisfy and perform any of the  obligations  set forth
in Schedule 5.9 and any cost incurred to satisfy and perform any such obligation
or resulting  from any  additional  or modified  terms under any  Contracts  (or
substitute  contracts)  required  for or  resulting  from the  satisfaction  and
performance  of  such  obligations;  and  (vii)  any  and  all  liabilities  and
obligations  of  Seller  which are not  expressly  assumed  by Buyer as  Assumed
Liabilities pursuant hereto;

                  (b) In the  event a claim  against  Buyer  arises  that  Buyer
reasonably  believes is covered by the indemnity  provisions of Section 8.1((a))
of this Agreement,  notice shall be given promptly by Buyer to Seller containing
detail reasonably  sufficient for Seller to identify the nature and basis of the
claim.  Provided  that  Seller  admits in  writing  to Buyer  that such claim is
covered by the indemnity  provisions of Section  8.1((a))  hereof,  Seller shall
have the right to contest and defend by all appropriate  legal  proceedings such
claim and to control all settlements  (unless Buyer agrees to assume the cost of
settlement and to forgo such indemnity) and to select lead counsel to defend any
and all such claims at the sole cost and expense of Seller;  provided,  however,
that Seller may not effect any settlement that could result in any cost, expense
or liability to Buyer unless Buyer  consents in writing to such  settlement  and
Seller  agrees  to  indemnify  Buyer  therefor.  Buyer  may  select  counsel  to
participate  with Seller's  counsel in any such defense,  in which event Buyer's
counsel shall be at its own sole cost and expense.  In connection  with any such
claim,  action or  proceeding,  the parties shall  cooperate with each other and
provide  each  other  with  access  to  relevant  books  and  records  in  their
possession.

                  (c)  Seller  shall  not be  required  to  indemnify  and  hold
harmless  Buyer  pursuant  to  Section  8.1((a))(i)  hereof  in  respect  of the
representations  and  warranties  made by Seller  herein  unless  such  right to
indemnification  is asserted by Buyer  (whether or not such Losses have actually
been incurred) by notice to Seller within 12 months after the Closing Date, with
the exception of (i) the  representations  and  warranties set forth in Sections
3.4 and 3.23,  which must be asserted by Buyer within the applicable  statute of
limitations  or any  extensions  thereof  required by any  applicable  authority
relating to the taxes or assessments giving rise to the Loss, plus 60 days, (ii)
the  representations  and  warranties  set forth in Section 3.12,  which must be
asserted by Buyer within the applicable statute of limitations for the violation
of the  underlying law that forms the basis of such claim,  plus 60 days,  (iii)
the  representations  and  warranties  set forth in Sections  3.1, 3.2, and 3.8,
which  shall be  without  time  limitation,  and (iv)  the  representations  and
warranties  set forth in Section 3.18 hereof,  which must be asserted  within 24
months after the Closing Date.

                  (d)  Notwithstanding  the  foregoing,   Seller  shall  not  be
required  to  indemnify  Buyer  under  Section  8.1((a))(i)  in  respect  of the
representations  and  warranties  made by Seller unless the amount of all Losses
for which  indemnification is sought by Buyer under Section 8.1((a))(i) exceeds,
in the aggregate, $250,000, in which event, Seller's indemnity obligation

                                       22

<PAGE>

hereunder  would apply to all such Losses.  Seller's  aggregate  indemnification
obligation pursuant to Section 8.1((a))(i) shall in no event exceed the Purchase
Consideration  described in Section 2.2((a)),  together with that portion of the
Purchase  Consideration  described  in  Section  2.2((b))  which  ultimately  is
released to Seller.

                  (e)  The   indemnification   provided  in  this  Section  8.1,
including the limitations  with respect  thereto,  shall be the exclusive remedy
for Buyer  with  respect  to Losses  as a result  of or in  connection  with the
matters described in Section 8.1((a))(i), notwithstanding any provisions in this
Agreement or any other such agreement or instrument to the contrary.

         8.2.     Buyer's Indemnity.

                  (a) Buyer hereby  indemnifies  and holds Seller  harmless from
and against, and agrees to defend promptly Seller from and reimburse Seller for,
any and all  Losses  that  Seller  may at any time  suffer or  incur,  or become
subject to, as a result of or in connection  with:  (i) any breach or inaccuracy
of any of the  representations and warranties made by Buyer in this Agreement or
any other agreement or instrument  delivered by Buyer pursuant hereto;  (ii) any
failure  by  Buyer to carry  out,  perform,  satisfy  and  discharge  any of its
covenants,  agreements,  undertakings,  liabilities  or  obligations  under this
Agreement  or under any of the  agreements  and  instruments  delivered by Buyer
pursuant  to this  Agreement;  and  (iii)  claims  by third  parties  (including
governmental authorities) against Seller relating to the operation and ownership
by Buyer of the Assets and the  performance by Buyer under the Contracts in each
case under this clause (iii) for the period following the Effective Time.

                  (b) In the event a claim against Seller arises that is covered
by the indemnity provisions of Section 8.2.((a)) of this Agreement, notice shall
be given promptly by Seller to Buyer containing detail reasonably sufficient for
Buyer to identify the nature and basis of the claim.  Provided that Buyer admits
in writing to Seller that such claim is covered by the  indemnity  provisions of
Section  8.2.((a))  hereof,  Buyer shall have the right to contest and defend by
all  appropriate  legal  proceedings  such claim and to control all  settlements
(unless  Seller  agrees  to  assume  the cost of  settlement  and to forgo  such
indemnity)  and to select lead  counsel to defend any and all such claims at the
sole cost and expense of Buyer; provided, however, that Buyer may not effect any
settlement that could result in any cost,  expense or liability to Seller unless
Seller  consents in writing to such  settlement  and Buyer  agrees to  indemnify
Seller  therefor.  Seller may select counsel to participate with Buyer's counsel
in any such defense,  in which event Seller's  counsel shall be at the sole cost
and expense of Seller. In connection with any such claim,  action or proceeding,
the parties shall  cooperate  with each other and provide each other with access
to relevant books and records in their possession.

                  (c) Buyer shall not be required to indemnify and hold harmless
Seller pursuant to Section 8.2.((a))(i) hereof in respect of the representations
and  warranties  made by Buyer herein  unless such right to  indemnification  is
asserted by Seller  (whether or not such Losses have actually been  incurred) by
notice to the Buyer within 12 months after the Closing Date, with the

                                       23

<PAGE>

exception of the  representations  and  warranties set forth in Sections 4.1 and
4.2 hereof, which shall be without time limitation.

                  (d) Notwithstanding the foregoing, Buyer shall not be required
to indemnify Seller under Section 8.2.((a))(i) in respect of the representations
and  warranties  made by  Buyer  unless  the  amount  of all  Losses  for  which
indemnification is sought by Seller under Section  8.2.((a))(i)  exceeds, in the
aggregate,  $250,000,  in which event,  Buyer's indemnity  obligation  hereunder
would apply to all such Losses.

                  (e)  The   indemnification   provided  in  this  Section  8.2,
including the limitations  with respect  thereto,  shall be the exclusive remedy
for  Seller  with  respect  to Losses as a result of or in  connection  with the
matters described in Section 8.2((a))(i), notwithstanding any provisions in this
Agreement or any other such agreement or instrument to the contrary.

         8.3.     Bulk Sales Compliance.

                  To the extent  applicable,  Buyer hereby waives  compliance by
Seller with the provisions of the bulk sales law of any U.S.  jurisdiction,  and
in any event,  Seller  covenants  and agrees to pay and  discharge  when due all
claims of any governmental entities and creditors of Seller and its subsidiaries
that could be asserted  against Buyer by reason of such  non-compliance.  Seller
agrees to indemnify and hold Buyer harmless from and against and shall on demand
reimburse  Buyer for any and all Losses  suffered by Buyer by reason of Seller's
failure to pay and discharge any such claims.

         8.4.     Additional Instruments.

                  At any time and from time to time after the Closing, at either
party's request and without further consideration,  Seller or Buyer, as the case
may be, shall  execute and deliver  such other  instruments  of sale,  transfer,
conveyance,  assignment and confirmation and take such other action as Seller or
Buyer may reasonably  deem  necessary or desirable in order to more  effectively
transfer, convey, and assign to Buyer, and confirm Buyer's title to and interest
in and  responsibility  and  liability  for,  the Assets and  Contracts  and the
consummation  of the  transactions  contemplated  herein.  Without  limiting the
generality  of the  foregoing,  Seller will  cooperate  with and assist Buyer in
renewing,  or  transferring,  into  Buyer's  name those  Permits for which Buyer
requests  such  assistance  and  cooperation  at the  appropriate  time for such
renewal or transfer as determined by Buyer.

         8.5.     Access to Books, Records and Employees.

                  From and after the  Closing  Date,  Buyer will  authorize  and
permit Seller and its  respective  representatives  to have access during normal
business hours, upon reasonable  notice and for reasonable  purposes and in such
manner as will not unreasonably  interfere with the conduct of Buyer's business,
to Books and Records within the control of Buyer that relate to the

                                       24

<PAGE>

Facility.  From and after the Closing  Date,  Seller will  authorize  and permit
Buyer and its  representatives to have access during normal business hours, upon
reasonable  notice and for  reasonable  purposes  and in such manner as will not
unreasonably  interfere with the conduct of Seller's business,  to all books and
records, files, documents and other correspondence related to the Facility prior
to the Effective Time, which are not included among the Books and Records. Buyer
and Seller  agree to maintain all books,  records,  files,  documents  and other
correspondence related to the Facility prior to the Effective Time in accordance
with their  respective  normal  document  retention  practices after the Closing
Date.

                                   ARTICLE IX
                                   TERMINATION

         9.1.     Termination.

                  This  Agreement  may  be  terminated   and  the   transactions
contemplated  hereby may be abandoned  as follows:  (a) at any time prior to the
Closing Date by mutual written  agreement of Seller and Buyer;  or (b) by either
Seller  or Buyer if the  Effective  Time  shall not have  occurred  on or before
August 31, 1999, provided,  however,  that the right to terminate this Agreement
pursuant to this clause (b) shall not be available to any party whose failure to
fulfill any  obligation  under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur prior to such date.

         9.2.     Rights on Termination; Waiver.

                  (a) If this  Agreement is terminated  pursuant to Section 9.1,
all further obligations of the parties under or pursuant to this Agreement shall
terminate.

                  (b) If any of the  conditions  set forth in Article VI of this
Agreement have not been satisfied,  Buyer may  nevertheless  elect to waive such
conditions and proceed with the  consummation of the  transactions  contemplated
hereby. If any of the conditions set forth in Article VII of this Agreement have
not been satisfied,  Seller may nevertheless  elect to waive such conditions and
proceed with the  consummation  of the  transactions  contemplated  hereby.  The
election  by Buyer or Seller to  terminate  this  Agreement  pursuant to Section
9.1(b)  shall not in any way affect the rights of such party  against  the other
party for any breach or default under this Agreement.

                                       25

<PAGE>

                                    ARTICLE X
                                  MISCELLANEOUS

         10.1.    Entire Agreement; Amendment.

                  This Agreement and the documents  referred to herein and to be
delivered  pursuant hereto  constitute the entire agreement  between the parties
pertaining  to  the  subject  matter   hereof,   and  supersede  all  prior  and
contemporaneous agreements, understandings,  negotiations and discussions of the
parties,  whether oral or written, and there are no warranties,  representations
or other  agreements  between the parties in connection  with the subject matter
hereof,  except as  specifically  set forth  herein or  therein.  No  amendment,
supplement,  modification,  waiver or  termination  of this  Agreement  shall be
binding unless  executed in writing by the party to be bound thereby.  No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other  provision of this  Agreement,  whether or not similar,  nor
shall such waiver  constitute a continuing  waiver  unless  otherwise  expressly
provided.  The  representations  and  warranties  of each party  hereto shall be
deemed to be  material  and to have been  relied  upon by the other  party.  The
representations,  warranties,  covenants  and  agreements  of  Seller  and Buyer
contained  herein shall survive the execution and delivery of this Agreement and
consummation   of  the   transactions   contemplated   hereby  and,  as  to  the
representations  and  warranties,  shall be effective  until the  relevant  time
limitation for making any indemnity  claim with respect to such  representations
and  warranties  under  Sections  8.1 and 8.2.  shall have been  reached  and no
longer.

         10.2.    Expenses.

                  Except as otherwise  specifically provided herein, each of the
parties  hereto  shall pay the fees and  expenses of their  respective  counsel,
accountants and other experts and the other expenses incident to the negotiation
and  preparation  of  this  Agreement  and   consummation  of  the  transactions
contemplated hereby.

         10.3.    Governing Law; Consent to Jurisdiction.

                  This Agreement shall be construed and interpreted according to
the laws of the State of New York,  without regard to the conflicts of law rules
thereof;  provided,  however,  that  Section  5-1401  of the  New  York  General
Obligations  Law shall apply to this Agreement.  Each of the parties hereto,  in
respect  of itself  and its  properties,  agrees to be  subject  to (and  hereby
irrevocably  submits  to) the  nonexclusive  jurisdiction  of the United  States
federal  court for the  Southern  District  of New York or New York state  court
sitting in the Borough of Manhattan, New York, in respect of any suit, action or
proceeding  arising  out of or relating to this  Agreement  or the  transactions
contemplated  herein,  and irrevocably  agrees that all claims in respect of any
such suit,  action or proceeding  may be heard and determined in any such court.
Each of the parties  hereto  irrevocably  waives,  to the fullest  extent it may
effectively do so under applicable

                                       26

<PAGE>

Law,  any  objection  to the  laying  of the venue of any such  suit,  action or
proceeding brought in any such court and any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient  forum.
Either party hereto 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  10.5  hereof.  Nothing in this
Section 10.3,  however,  shall affect the right of any party to bring any action
or proceeding arising out of or relating to this Agreement in any other court or
to serve legal process in any other manner permitted by law or in equity.

         10.4.    Assignment.

                  This Agreement and each party's  respective  rights  hereunder
may not be assigned, by operation of law or otherwise, without the prior written
consent of the other party.

         10.5.    Notices.

                  All  communications,   notices  and  disclosures  required  or
permitted by this Agreement shall be in writing and shall be deemed to have been
given at the earlier of the date (a) when  delivered  personally or by messenger
or by overnight delivery service to an officer of the other party, (b) five days
after being mailed by  registered  or  certified  United  States  mail,  postage
prepaid, return receipt requested,  or (c) when received via telecopy,  telex or
other electronic transmission,  in all cases addressed to the person for whom it
is intended  at his address set forth below or to such other  address as a party
shall have  designated  by notice in  writing  to the other  party in the manner
provided by this Section:

If to Buyer:     DTE RIVER HILL, L.L.C.
                 425 South Main Street
                 Suite 201
                 Ann Arbor, Michigan 48107
                 Fax:  (734) 668-9739
                 Attn: Gary Quantock

                                               and:
With a copy to:  DTE Energy Services           Hunton & Williams
                 425 South Main Street         Riverfront Plaza, East Tower
                 Suite 201                     951 East Byrd Street
                 Ann Arbor, Michigan 48107     Richmond, Virginia  23219
                 Fax: (734) 668-1028           Fax:  (804) 788-8218
                 Attn:  General Counsel.       Attn:  Kenneth J. Alcott, Esq.

                                       27

<PAGE>

If to Seller:    Covol Technologies, Inc.
                 3280 North Frontage Road
                 Lehi, Utah  84043
                 Fax:  (801) 768-4483
                 Attn:  Brent M. Cook

                                               and:
With a copy to:  Covol Technologies, Inc.      Pillsbury Madison & Sutro LLP
                 3280 North Frontage Road      235 Montgomery Street
                 Lehi, Utah 84043              San Francisco, CA 94104
                 Fax:  (801) 768-4483          Fax:  (415) 983-1200
                 Attn:  Harlan Hatfield, Esq.  Attn:  Nathaniel M. Cartmell III,
                                                      Esq.

         10.6.    Counterparts; Headings.

                  This Agreement may be executed in several  counterparts,  each
of which  shall be deemed an  original,  but such  counterparts  shall  together
constitute but one and the same Agreement. The Table of Contents and Article and
Section  headings in this  Agreement are inserted for  convenience  of reference
only and shall not constitute a part hereof.

         10.7.    Interpretation.

                  Unless the context requires otherwise,  all words used in this
Agreement  in the singular  number  shall extend to and include the plural,  all
words in the plural  number  shall  extend to and include the  singular  and all
words in any gender shall extend to and include all genders.  All  references to
contracts,  agreements,  leases or other  understandings  or arrangements  shall
refer to oral as well as written matters.  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.

          10.8.   Severability.

                  If any  provision,  clause or part of this  Agreement,  or the
application thereof under certain circumstances,  is held invalid, the remainder
of this Agreement,  or the  application of such provision,  clause or part under
other circumstances, shall not be affected thereby.

         10.9.    No Reliance.

                  No   third   party  is   entitled   to  rely  on  any  of  the
representations,  warranties and agreements  contained in this Agreement.  Buyer
and Seller assume no liability to any third party because of any reliance on the
representations,  warranties and agreements of Buyer or Seller contained in this
Agreement. Nothing contained in this Agreement shall be construed as creating

                                       28

<PAGE>

a partnership  or joint venture or any agency  relationship  between the parties
hereto,  or any other  relationship  other  than  buyer and  seller as  provided
herein.

         10.10.   Parties in Interest.

                  This  Agreement  shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall  confer  upon any other  person any rights,  benefits or
remedies of any nature whatsoever under or by reason of this Agreement.

         10.11.   Specific Performance.

                  The parties hereto agree that  irreparable  damage would occur
in the event any of the  provisions  of this  Agreement  were not  performed  in
accordance  with the terms  hereof and that the  parties  shall be  entitled  to
specific performance of the terms hereof, in addition to any other remedy at law
or equity.

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                                       29

<PAGE>

         IN  WITNESS  WHEREOF,  each  party  hereto  has  caused  this  Purchase
Agreement to be executed in its name by a duly authorized  officer as of the day
and year first above written.

                                               DTE RIVER HILL, L.L.C.

                                               By: /s/ Kent M. McCargar
                                                   ----------------------------
                                               Its: Vice President and Chief
                                                    Financial Officer

                                               COVOL TECHNOLOGIES, INC.

                                               By: /s/ Kirk A. Benson
                                               ---------------------------------
                                               Its: Chairman and Chief Executive
                                                    Officer

                                       30EX-10.61.1
LICENSE AND BINDER PURCHASE AGREEMENT W/ COVOL

                      LICENSE AND BINDER PURCHASE AGREEMENT

         THIS LICENSE AND BINDER PURCHASE AGREEMENT (the  "Agreement"),  is made
and entered into as of August 27, 1999 by and between DTE River Hill,  L.L.C., a
Delaware limited  liability company (the  "Licensee"),  and Covol  Technologies,
Inc., a Delaware corporation (the "Licensor").

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

         WHEREAS Licensor has constructed a synthetic fuel  manufacturing  plant
(the  "Facility")  located near Karthus,  Clearfield  County,  Pennsylvania,  on
property  leased from River Hill Coal  Company,  Inc.  and  Licensee has or will
acquire the Facility  from  Licensor as  contemplated  by that certain  Purchase
Agreement dated as of August 27, 1999, by and between Licensor and Licensee (the
"Purchase Agreement");

         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  on the  terms and  conditions  set forth in this
Agreement, 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.

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

         Section 1.  Definitions.

         "Coal Briquetting Technology" means all intellectual property,  patents
(including but not limited to United States Patent Numbers 5,599,361; 5,487,764;
and  5,453,103) and  applications  therefor,  printed and 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

                                       1
<PAGE>

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" and "Improvements"
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 derivatives,  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 Internal
Revenue Code.

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

         "Developed   Technology"   means  any  inventions,   "Improvement,"  or
technology that Licensor may conceive,  make,  invent,  or suggest in connection
with Licensor's disclosure to Licensee of the Coal Briquetting  Technology,  all
of which the  parties  hereto  acknowledge  and agree  constitutes  the sole and
exclusive   property  of  Licensor.   "Developed   Technology"  also  means  any
inventions,  "Improvement,"  or new  technology  directly  related  to the  Coal
Briquetting  Technology that Licensor or Licensee may conceive,  make, invent or
suggest  relating  to the Coal  Briquetting  Technology  during the Term of this
Agreement; provided, however, that "Developed Technology" shall not include 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.

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

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

         "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.   An
Improvement  may  comprise  alterations  or  additions  to  either  patented  or
unpatented inventions,  discoveries,  technology, or devices, and may or may not
be patentable;  provided,  however,  that  "Improvement"  shall not include 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.

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

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

         "Proprietary  Binder  Material" means and refers to the binder compound
necessary  for the  production,  by Licensee,  of synthetic  coal  briquettes as
contemplated  under the Purchase  Agreement and which  briquettes are reasonably
expected to constitute "qualified fuels" pursuant

                                       2
<PAGE>

to the  terms of  Section  29(c)(1)(C)  of the Code  and with  respect  to which
Section 29 is applicable pursuant to Section 29(f) and 29(g) of the Code.

         "Purchase Agreement" has the meaning set forth in the preamble.

         "Royalty" has the meaning set forth in Section 3.

         Section 2.  License Grant.

         2.1 General. Licensor hereby grants to Licensee a non-exclusive license
to use the Coal Briquetting  Technology,  including Developed  Technology and/or
Improvements relating to the Coal Briquetting Technology, throughout 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.

         2.2  Licensor's  Ownership  of  Developed  Technology.   All  Developed
Technology  and/or   Improvements  are  and  shall  become  Licensor's  absolute
property,  subject to the terms of this  Agreement.  Licensee  shall at any time
during the Term of this  Agreement  and  thereafter,  at  Licensor's  reasonable
request,  execute any patent papers  covering such Developed  Technology  and/or
Improvements as well as any other documents that Licensor may consider necessary
or  helpful  in the  prosecution  of  applications  for a patent  thereon  or in
connection  with  any  litigation  or  controversy  related  thereto;  provided,
however,  that all expenses  incident to the filing of such applications and the
prosecution  thereof  and the  conduct  of such  litigation  shall  be  borne by
Licensor.

         2.3  Exclusive  Technology.  Licensee  agrees  to  use  only  the  Coal
Briquetting  Technology  at the Facility and not to use any other  technology at
the Facility,  except to the extent other or additional technology is necessary.
Licensee shall not use any process or  methodology  that is not part of the Coal
Briquetting Technology, except to the extent that other or additional technology
is  necessary,  and shall not use any  materials in the  production of Synthetic
Fuel at the Facility that are not Proprietary  Binder Material as determined and
approved by Licensor.  Licensee (i) shall not make or have made  products  using
the Coal Briquetting Technology or similar technology except at the Facility and
(ii)  shall  only  make and  have  made  products  using  the  Coal  Briquetting
Technology at the Facility  under this License  Agreement,  except to the extent
other or additional technology is necessary.  Licensee further agrees to use the
Coal Briquetting  Technology only under authority of this License Agreement with
Licensor.

         2.4  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.

                                       3
<PAGE>

         2.5  Confidentiality.  Each of the parties hereby agree to maintain the
Coal  Briquetting   Technology   confidential  and  not  to  disclose  the  Coal
Briquetting  Technology,   or  any  aspect  thereof,   including  the  Developed
Technology  or  Improvements  (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),  or (iv) a party is compelled by legal process by
any court or other  authority  to disclose  shall not be subject to the terms of
this Section 2.5. 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 disclosure of Confidential Information.
At the termination of this Agreement, all copies of any Confidential Information
(including,  without limitation,  any reports or memoranda) shall be returned by
the  party  receiving  disclosure.  Nothing  in this  Agreement  shall  prohibit
Licensee  from  disclosing  the  Confidential  Information  to  others as may be
reasonably  necessary  for  Licensee  to  exploit  Licensee's  rights  under the
Purchase  Agreement,  and/or this Agreement;  provided that the recipient of any
such Confidential  Information executes a Confidentiality  Agreement restricting
further disclosure of the Confidential Information.

         2.6 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,  Developed  Technology,  and
Improvements  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 2.6;  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  (as  defined in the  Purchase
Agreement) produced at the Facility and sold during the period commencing on the
effective  date  hereof and ending on  December  31,  2000,  and a royalty in an
amount  equal to ** per ton of Section 29 Product  produced at the  Facility and
sold  during the  period  commencing  on  January  1, 2001 and  ending  upon the
expiration of the term (or earlier termination) of this Agreement.  Such royalty
shall be paid quarterly on the last day of January,  April,  July and October of
each year for the Section 29 Product sold during the previous calendar quarter.

         3.2 Royalty Advance  Payment Option.  At any time prior to July 1, 2000
at which  Licensor  demonstrates  to  Licensee's  reasonable  satisfaction  that
Purchase  Commitments  (as  defined  below)  for  Section  29  Product  (whether
delivered as a blended product or otherwise) are

**       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.

                                       4
<PAGE>

in place for  minimum  annual  tonnage in excess of ** tons,  Licensor  shall be
entitled to exercise an option  (the  "Option")  to receive an advance  lump-sum
payment of a portion of the  royalties  provided in Section  3.1 (the  "Lump-Sum
Royalty Payment") as provided herein. For purposes hereof, "Purchase Commitment"
shall mean a binding  contract  whereby  the  customer  is  required to purchase
Section 29 Product (whether delivered as a blended product or otherwise),  which
contract has a duration of at least three years,  and contains force majeure and
other terms,  conditions and product  specifications that are  industry-standard
and customary for coal purchase contracts in the central Pennsylvania region and
which can  reasonably  be  expected  to be met by the  product  produced  at the
Facility, when blended with River Hill Coal Company supplied coal, if applicable
all as determined by Licensee to its reasonable satisfaction.  The Option may be
exercised  more than once but must be  exercised,  if at all, by written  notice
given by Licensor to Licensee of such  exercise,  together with such  supporting
evidence and necessary  documentation,  on or before June 30, 2000.  The maximum
amount of the Lump-Sum  Royalty  Payment  available  upon exercise of the Option
shall  be (i)  **,  to the  extent  that  Licensor  demonstrates  to  Licensee's
satisfaction  (pursuant to testing and operating  procedures or protocols agreed
to by the  parties)  production  of 10,000  tons of  Section  29  Product at the
Facility within any ten consecutive day period (the "Ten Day  Threshold"),  less
(ii) an amount  equal to ** times the  aggregate  number of tons of  Section  29
Product  produced at the Facility  prior to the initial  exercise of the Option,
for which  royalties were  previously  paid pursuant to Section 3.1 hereof.  The
maximum Lump-Sum Royalty Payment  available upon exercise of the Option prior to
achieving the Ten Day Threshold shall be ** (the "Initial Cap"). At any time the
Option is exercised,  the Lump-Sum Royalty Payment will equal (i) the product of
(X) **  reduced by ** times the  aggregate  number of tons of Section 29 Product
produced at the Facility prior to the initial exercise of the Option,  for which
royalties  were  previously  paid  pursuant  to  Section  3.1  hereof  and (Y) a
fraction,  the  numerator  of which is the  aggregate  amount by which  Purchase
Commitments  exceed ** tons and the  denominator  of which is **;  less (ii) the
aggregate amount already paid in respect of any previous exercise of the Option;
provided, however, that such aggregate amounts shall not exceed the Initial Cap,
if  applicable.  Upon  achievement  of the Ten Day  Threshold,  the Cap shall be
eliminated  as to the  calculation  of the  Lump-Sum  Royalty  Payment  for  any
exercise  of the  Option  following  such  achievement,  and the  portion of the
Lump-Sum  Royalty Payment not previously paid by reason of the Initial Cap shall
then become payable.  Upon initial exercise of the Option,  the royalty payments
provided  for in  Section  3.1  shall be  reduced  to ** per ton for the  period
commencing on the  effective  date hereof and ending on December 31, 2000 and **
per ton for the period  commencing on January 1, 2001 ending upon the expiration
of the term (or earlier termination) of this Agreement.

         3.3  Termination by Licensee.  Licensees'  obligations to pay royalties
under this  Section 3 are  subject to the terms of Section  5.9 of the  Purchase
Agreement.

         Section 4.  Sales of Binder.

         4.1 Sale and Purchase.  Licensor  shall sell to Licensee,  and Licensee
shall  purchase from  Licensor,  all of Licensee's  requirements  of Proprietary
Binder  Material  required to operate the Facility.  Licensor  shall deliver the
Proprietary  Binder  Material at such times and in such  amounts as requested by
Licensee.  Licensor  shall  invoice  Licensee for  Proprietary  Binder  Material
monthly.  Payments for Proprietary  Binder Material delivered by Licensor during
any

                                       5
<PAGE>

calendar month shall be due and payable to Licensor on the tenth business day of
the immediately succeeding month.

         4.2  Price.  The price  which  Licensee  shall pay for the  Proprietary
Binder Material delivered by Licensor shall be an amount equal to (i) Licensor's
direct and actual costs  (including,  but not limited to,  material,  labor, and
transportation  costs) and a percentage of the total  overhead costs of Licensor
reasonably  reflecting  the  ratio  of  the  administrative  costs  incurred  in
connection  with the  manufacture  and sale of the  Proprietary  Binder Material
(estimated at the date hereof to be ** per unit of Proprietary  Binder  Material
necessary to create one (1) ton of synthetic  fuel  product),  payable within 30
days of  receipt of an invoice  therefor,  plus (ii) ** per unit of  Proprietary
Binder  Material  necessary  to create one (1) ton of  synthetic  fuel  product,
payable for the preceding  calendar  quarter on the last day of January,  April,
July and October of each year.

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

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

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

                  (c) At Licensee's reasonable request,  Licensor shall replace,
         or refund the purchase price of, all non-conforming Proprietary Binding
         Material.

                  (d) Proper use of the Coal Briquetting  Technology,  including
         use at an adequate, qualified facility and with adequate feedstocks and
         other raw materials, will enable Licensor to produce a product which is
         reasonably  expected to constitute  "qualified  fuels"  pursuant to the
         terms of Section 29(c)(1)(C) of the Code.

         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 24 hours). Such
purchase  orders  shall be sent to  Licensor at such  address as Licensor  shall
direct.

         4.5 Delivery and Acceptance.  All Proprietary Binder Material purchased
hereunder shall be delivered F.O.B. the Facility. Licensor shall arrange for any
necessary  transportation  of the  Proprietary  Binder Material to the Facility.
Licensee shall bear the expense of unloading of 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,  and Licensee
shall not be

                                       6
<PAGE>

deemed or required to accept any such  Proprietary  Binder Material prior to the
completion of such sampling.

         4.6 Delivery Of Binder Material.  If Licensor's  ability to deliver the
Proprietary  Binder  Material to Licensee will be  interrupted or terminated for
any  reason,  Licensor  shall  give not less than  ninety  (90)  days  notice to
Licensee.  Subject to giving notice of its inability to deliver the  Proprietary
Binder  Material to Licensee  (or,  in the  absence of such  notice,  the actual
failure to deliver the Proprietary Binder Material for at least twenty (20) days
after  Licensee  gives written  notice of  non-delivery  to Licensor),  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 the license granted to
Licensee under this Section 4.6 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 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
for the Buyer under the Purchase Agreement entering into the 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  located  in  the  Detroit/Ann  Arbor,  Michigan  region
designated by Licensee and 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.

         Section 5.  Records;  Inspection;  Confidentiality.  Each party  hereto
shall keep accurate  records  containing  all data  reasonably  required for the
computation and verification of the amounts to be paid by the respective parties
under  this  Agreement,  and shall  permit  each other

                                       7
<PAGE>

party or an  independent  accounting  firm  designated  by such  other  party to
inspect and/or audit such records during normal  business hours upon  reasonable
advance  notice.  All costs and expenses  incurred by a party in connection with
such  inspection  shall be borne by it. Each party  agrees to hold  confidential
from all third parties all  information  contained in records  examined by or on
behalf of it pursuant to this Section 5;  provided,  however,  that  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),  or (iv) a party is  compelled  by legal  process  by any court or
other authority to disclose shall not be subject to the terms of this Section 5.
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  disclosure of such  information.  At the  termination of
this Agreement,  all copies of such information (including,  without limitation,
any reports or memoranda) shall be returned by the party receiving disclosure.

         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.

         Section 7.  General Representations and Warranties.

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

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

         7.3 Intellectual  Property  Matters.  Licensor  represents and warrants
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 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  derivatives,  and, the right to freely make, use, sell and exploit
Proprietary Binder Material used in manufacturing synthetic coal fuel briquettes
from waste coal dust, coal fines and other similar coal derivatives, (ii) it has
the right and power

                                       8
<PAGE>

to grant to Licensee the licenses  granted herein,  and (iii) the sale or use of
the rights,  Proprietary  Binder  Material  and/or  licenses  granted  herein as
contemplated by this Agreement will not infringe any third-party's  intellectual
property rights.

         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,   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 breach of any of
the representations, warranties and/or covenants contained in this Agreement.

         Section  8.  Term.  The term of this  Agreement  is (a) for the  period
commencing  on the  Effective  Date of this  Agreement and ending on 31 December
2007,  (b) for the full term of Section 29 of the Code, or (c) for the full life
of the last to expire of the U.S.  patents in existence at the effective date of
this  Agreement  that disclose and claim Covol's  proprietary  Coal  Briquetting
Technology as defined  herein,  whichever  date is later.  Any extension of this
Agreement must be in writing, signed by both parties.

         Section  9.  Termination.  This  Agreement  shall  terminate  upon  the
termination  date set forth in Section 8,  unless the  Agreement  is  terminated
sooner pursuant to this Section 9.

         9.1  Termination  for Cause. In addition to any other remedies that may
exist,  either party may  terminate  this  Agreement  for cause in the event the
other party  commits a material  breach of any  provision  of this  Agreement by
giving the other  party at least  sixty (60) days prior  written  notice of such
termination, unless such default or breach is cured within said sixty (60) days.
If either party  terminates this Agreement  pursuant to this Section 9, Licensee
shall  promptly  return and cause all agents of Licensee  to promptly  return to
Licensor all Confidential  Information and all Coal Briquetting  Technology then
in Licensee's  possession,  and Licensee  shall not  thereafter  use for its own
commercial benefit or disclose to any third person any Confidential  Information
or Coal Briquetting Technology during the period ending three (3) years from the
date of such termination.  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  Licensee or its  respective  members,  agents,
employees, directors or representatives, (ii) was available to the Licensee on a
non-confidential  basis  prior  to its  receiving  disclosure  hereunder,  (iii)
lawfully becomes  available to the Licensee on a  non-confidential  basis from a
third party  source  (provided  that such source is not known by the Licensee or
its members,  agents,  employees,  directors or representatives to be prohibited
from transmitting the  information),  or (iv) the Licensee is compelled by legal
process by any court or other  authority to disclose shall not be subject to the
terms of the duty to protect Confidential Information set forth in this section.
In the case of (iv) above,  the Licensee shall give the 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.

         9.2 Termination for Insolvency or Ceasing Business.  This Agreement may
be terminated by Licensor if:

                                       9
<PAGE>

                  (a) Licensee  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

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

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

         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
                           Fax:  (801) 768-4481

         To Licensee:      DTE RIVER HILL, L.L.C.
                           425 South Main Street
                           Suite 201
                           Ann Arbor, Michigan 48107
                           Fax:  (734) 668-9739
                           Attn: Gary Quantock

                                       10
<PAGE>

         With a copy to:   DTE Energy Services
                           425 South Main Street
                           Suite 201
                           Ann Arbor, Michigan 48107
                           Fax: (734) 668-1028
                           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 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.  Governing  Law.  This  Agreement  shall  be  governed  in
accordance with the laws of the State of New York,  exclusive of its conflict of
laws rules.

         Section 16. Assignment. This Agreement may not be assigned, in whole or
in part,  by any party  without the written  consent of the other  party,  which
consent shall not be  unreasonably  withheld,  except that Licensor and Licensee
shall have the right to assign their  respective  rights and  obligations  under
this Agreement to any entity which is controlled by Licensor or Licensee, as the
case may be,  and of  which  Licensor  or  Licensee,  as the case may be,  owns,
directly  or  indirectly,  at least  fifty  percent  (50%) of each  class of its
outstanding securities,  provided that no such assignment shall release Licensor
or Licensee, as the case may be, from their respective obligations hereunder.

         Executed by the duly  authorized  representative  of the parties on the
date and year first above written.

                                       11
<PAGE>

COVOL TECHNOLOGIES, INC.                    DTE RIVER HILL, L.L.C.

By:  /s/ Kirk A. Benson                     By:   /s/ Kent McCargar
    -------------------------                    ---------------------------
Name:  Kirk A. Benson                       Name:  Kent McCargar
Title: CEO                                  Title: VP and CFO

                                       12

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