Document:

PROMISSORY NOTE

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

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

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

                              Initial Rate:10.50%

Principal Amount:$8,000,000.00                     Date of Note:October 18, 2000

PROMISE TO PAY. HEADWATERS INCORPORATED ("Borrower") promises to pay to ZIONS
FIRST NATIONAL BANK ("Lender"), or order, in lawful money of the United States
of America, the principal amount of Six Million & 00/100 Dollars ($6,000,000.00)
or so much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated from
the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay in one payment of all outstanding principal plus all
accrued unpaid interest on January 31, 2002. In addition, Borrower will pay
regular monthly payments of accrued unpaid interest beginning December 1, 2000,
and all subsequent interest payments are due on the same day of each month after
that. The annual interest rate for this Note is computed on a 365/360 basis;
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs and any late charges, then to any
unpaid interest, and any remaining amount to principal.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the ZIONS FIRST NATIONAL BANK
PRIME RATE (the "Index"). "PRIME RATE" MEANS AN INDEX WHICH IS DETERMINED DAILY
BY THE PUBLISHED COMMERCIAL LOAN VARIABLE RATE INDEX HELD BY ANY TWO OF THE
FOLLOWING BANKS: CHASE MANHATTAN BANK, WELLS FARGO BANK N.A., AND BANK OF
AMERICA, N.A. IN THE EVENT NO TWO OF THE ABOVE BANKS HAVE THE SAME PUBLISHED
RATE, THE BANK HAVING THE MEDIAN RATE WILL ESTABLISH LENDERS' PRIME RATE. IF,
FOR ANY REASON BEYOND THE CONTROL OF LENDER, ANY OF THE AFOREMENTIONED BANKS
BECOMES UNACCEPTABLE AS A REFERENCE FOR THE PURPOSE OF DETERMINING THE PRIME
RATE USED HEREIN, LENDER MAY, FIVE DAYS AFTER POSTING NOTICE IN LENDERS OFFICES,
SUBSTITUTE ANOTHER COMPARABLE BANK FOR THE ONE DETERMINED UNACCEPTABLE. AS USED
IN THIS PARAGRAPH, "COMPARABLE BANK" SHALL MEAN ONE OF THE TEN LARGEST
COMMERCIAL BANKS HEADQUARTERED IN THE UNITED STATES OF AMERICA. THIS DEFINITION
OF PRIME RATE IS TO BE STRICTLY INTERPRETED AND IS NOT INTENDED TO SERVE ANY
PURPOSE OTHER THAN PROVIDING AN INDEX TO DETERMINE THE VARIABLE INTEREST RATE
USED HEREIN. IT IS NOT THE LOWEST RATE AT WHICH LENDER MAY MAKE LOANS TO ANY OF
ITS CUSTOMERS, EITHER NOW OR IN THE FUTURE.. Lender will tell Borrower the
current Index rate upon Borrower's request. Borrower understands that Lender may
make loans based on other rates as well. The interest rate change will not occur
more often than each DAY. The Index currently is 9.500% per annum. The interest
rate to be applied to the unpaid principal balance of this Note will be at a
rate of 1.00 percentage points over the Index, resulting in an initial rate of
10.50% per annum. NOTICE: Under no circumstances will the interest rate on this
Note be more than the maximum rate allowed by applicable law.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued unpaid interest.
Rather, they will reduce the principal balance due.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired. (h) Lender in good faith deems itself insecure. If any
default, other than a default in payment, is curable, it may be cured (and no
event of default will have occurred) if Borrower, after receiving written notice
from Lender demanding cure of such default: (a) cures the default within thirty
(30) days; or (b) if the cure requires more than thirty (30) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be sufficient
to cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.

LENDER'S RIGHTS. Upon default which remains uncured, Lender may declare the
entire unpaid principal balance on this Note and all accrued unpaid interest
immediately due, without notice, and then Borrower will pay that amount. Upon
default, including failure to pay upon final maturity, Lender, at its option,
may also, if permitted under applicable law, increase the variable interest rate
on this Note to 4.750 percentage points over the Index. The interest rate will
not exceed the maximum rate permitted by applicable law. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's reasonable attorneys' fees and Lender's legal expenses
whether or not there is a lawsuit, including reasonable attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. If not prohibited by applicable law, Borrower also will pay
any court costs, in addition to all other sums provided by law. This Note has
been delivered to Lender and accepted by Lender in the State of Utah.

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

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and upon an event of default assigns, conveys, delivers, pledges, and transfers
to Lender all Borrower's right, title and interest in and to, Borrower's
accounts with Lender (whether checking, savings, or some other account),
including without limitation all accounts held jointly with someone else and all
accounts Borrower may

<PAGE>

open in the future, excluding however all IRA and Keogh accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on this Note against any and all such accounts.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or by an authorized person. Lender
may, but need not, require that all oral requests be confirmed in writing. All
communications, instructions, or directions by telephone or otherwise to Lender
are to be directed to Lender's office shown above. The following party or
parties are authorized to request advances under the line of credit until Lender
receives from Borrower at Lender's address shown above written notice of
revocation of their authority: KIRK A. BENSON, CHAIRMAN & CEO. Borrower agrees
to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor's guarantee of this Note or any other loan with Lender; (d)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (e) Lender in good faith deems itself
insecure under this Note or any other agreement between Lender and Borrower.

ARBITRATION DISCLOSURES:

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

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

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

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

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

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

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

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

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

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

         (e) No provision of this arbitration clause, nor the exercise of any
         rights hereunder, shall limit the right of any party to: (1) judicially
         or non-judicially foreclose against any real or personal property
         collateral or other security; (2) exercise self-help remedies,
         including but not limited to repossession and setoff rights; or (3)
         obtain from a court having jurisdiction thereover any provisional or
         ancillary remedies, including but not limited to injunctive relief,
         foreclosure, sequestration, attachment, replevin, garnishment, or the
         appointment of a receiver. Such rights can be exercised at any time,
         before or during initiation of an arbitration proceeding, except to the
         extent such action is contrary to the arbitration award. The exercise
         of such rights shall not constitute a waiver of the right to submit any
         Dispute to arbitration, and any claim or controversy related to the
         exercise of such rights shall be a Dispute to be resolved under the
         provisions of this arbitration clause. Any party may initiate
         arbitration with the Administrator; however, if any party initiates
         litigation and another party disputes any allegation in that
         litigation, the disputing party--upon the request of the initiating
         party--must file a demand for arbitration with the Administrator and
         pay the Administrator's filing fee. The parties may serve by mail a
         notice of an initial motion for an order of arbitration. (f)
         Notwithstanding the applicability of any other law to this agreement,
         the arbitration clause, or Related Documents between or among the
         parties, the Federal Arbitration Act, 9 U.S.C. Section 1 et seq., shall
         apply to the construction and interpretation of this arbitration
         clause.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made. PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS
NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER

<PAGE>

AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THE NOTE.

COLLATERAL: THIS PROMISSORY NOTE IS SECURED BY A COMMERCIAL PLEDGE AGREEMENT AND
A COMMERCIAL SECURITY AGREEMENT BOTH OF EVEN DATE.

BORROWER:  COVOL TECHNOLOGIES, INC.

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

================================================================================EMPLOYMENT AGREEMENT

                                 By and Between

                            COVOL TECHNOLOGIES, INC.

                                       And

                               Kenneth R. Frailey

                                 Effective as of

                                 January 1, 1999

<PAGE>

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this Agreement") is effective as of the
first day of January, 1999 (the "Effective Date") by and between COVOL
TECHNOLOGIES, INC. a Delaware Corporation (the "Company"), and Kenneth R.
Frailey ("Employee"). The Company and Employee are sometimes later in this
Agreement collectively referred to as the "Parties."

                                    RECITALS

         This Agreement is entered into with reference to the following facts,
definitions, and objectives:

         1.       Employee is Vice President of Operations. Employee came into
                  the employment of the Company on August 17, 1998.

         2.       Employee's services are deemed to be of value to the Company
                  and it is recognized that inducements must be offered to
                  Employee in order that the company may retain Employee's
                  services.

         NOW THEREFORE, in consideration of this Agreement and of the covenants
and conditions contained in this Agreement, the Parties agree as follows:

         1.       Employment and Positions. The Company employs Employee and
                  Employee accepts employment by the Company as an officer of
                  the Company with the title of "Vice President of Operations"
                  for the Period of Employment specified in Paragraph 3. The
                  duties of the position are generally described as to develop,
                  manage, and have accountability for the operations of the
                  Company. This includes synfuel operations, wash plants, and
                  may include future metals business operations and identifying,
                  acquiring and operating power generating facilities. Employee
                  will be responsible for the day to day and long term business
                  decisions including, but not limited to, operations,
                  maintenance, planning, economic, and human resource matters.
                  Such position and title including related duties and
                  responsibilities may be changed during the term of this
                  contract provided that such Employee continues as an officer
                  and provided further that compensation for services are not
                  reduced due to such title and/or position change.

<PAGE>

         2.       Services to be Rendered. The Employee shall, during the Period
                  of Employment, serve the Company in the positions set forth in
                  Paragraph 1 ("Employment and Positions") diligently,
                  competently, and in conformance with the corporate policies of
                  the Company. Employee shall have the responsibility to always
                  act in the best interest of the Company and recognizes
                  opportunities, ideas, and intellectual property relating to
                  the business of the Company that are developed as an officer
                  or employee of Covol Technologies, Inc. remain the property of
                  Company. In fulfilling his duties and responsibilities under
                  this Agreement, Employee shall report to the Senior Vice
                  President Engineered Synfuel or another senior officer
                  designated by the President.

         3.       Period of Employment. Employee's employment by the Company
                  pursuant to this Agreement shall, unless sooner terminated,
                  begin as of the Effective Date and continue for a period of
                  three (3) years from the Effective Date ("Period of
                  Employment").

         4.       Base Salary. At the commencement of the Period of Employment,
                  Employee shall be paid a minimum base salary of $80,000 for
                  the first year. In addition, the Employee shall be paid a lump
                  sum on or before January 31, 1999 of an amount that makes
                  Employee's past salary equal to the $80,000 annual rate from
                  August 17, 1998 up to the beginning of the Period of
                  Employment. Employee shall be paid a minimum base salary of
                  $100,000 for the second year, and a minimum base salary of
                  $120,000 for the third year during the Period of Employment.
                  Base salary shall be paid in equal semi-monthly installments
                  during the Period of Employment. Employee recognizes Company's
                  current financial state, and as such, accepts these minimum
                  base salary values. Company recognizes Employee's request for
                  $120,000 base salary from the beginning of this employment
                  contract and will endeavor to meet this request at the
                  earliest opportunity based upon Company's sole determination
                  of Company's financial status.

         5.       Incentive Bonus. During the Period of Employment, the Employee
                  shall be entitled to receive a bonus pursuant to the Company's
                  bonus plan, if any, as in effect from time to time. It is
                  recognized that a bonus plan, if any, is established at the
                  discretion of the Company and may be subject to variables and
                  conditions including income performance and general
                  performance evaluations.

         6.       Expense Reimbursement. The Employee shall be entitled to
                  prompt reimbursement for reasonable expenses incurred by the
                  Employee in performing services for the Company. Employee
                  shall be required to provide proof and documentation of such
                  expenditures as required by the Company.

         7.       Grant of Options. The Company may grant from time to time to
                  the Employee, in accordance with the terms of a stock option
                  agreement, the right and option to purchase shares of the
                  Company's Common Stock.

                                       2
<PAGE>

                  (1)      Stock Options Pursuant to Stock Option Plan. Any
                           Stock Options ("Stock Option") issued shall be issued
                           pursuant and subject to the provisions of the Company
                           Employee Stock Option Plan (the "Stock Option Plan")
                           or as approved by the Board of Directors. Number of
                           options, purchase price, exercise periods and vesting
                           requirements shall be included in the stock option
                           document.

                  (b)      Vesting of Options in Event of Full and Complete
                           Disability or Death. In the event of the full and
                           complete disability or the death of the employee any
                           unvested Stock Options shall vest effective as of the
                           date of the full and complete disability or the death
                           of Employee. In the event of Employee's full and
                           complete disability or death, the Employee, heirs or
                           estate of Employee, as the case may be, may exercise
                           any unexecuted options at any time subject to the
                           time limitations within which exercise of option must
                           occur.

                  (c)      Vesting of Options in Event of Ownership Change. In
                           the event of a change in control, all non-vested
                           Stock Options shall vest immediately prior to such
                           change in control. A change in control shall be
                           deemed to have taken place if, as the result of a
                           tender offer, merger, consolidation, sale of
                           substantially all assets, a third party purchase of a
                           controlling interest of the total outstanding shares
                           of the Company, contested election, or any
                           combination of the foregoing transactions, the
                           persons who were directors of the Company immediately
                           before the transaction shall cease to constitute a
                           majority of the board of directors of the Company or
                           any successor to the Company. The intent of this
                           section is to allow the Employee to exercise any
                           unexecuted options at the Employees discretion.

                  (4)      Stock Options Granted. As of the Effective Date, the
                           Company has granted Employee Stock Options to acquire
                           50,000 shares of Company common stock at a strike
                           price of [just higher than 12/29 closing bid] vesting
                           an equal amount each month during the Period of
                           Employment and otherwise subject to this Paragraph 7.

         8.       Other Benefits. In addition to the benefits previously set
                  forth in this Agreement, Employee shall, during the Period of
                  Employment, be entitled to the benefits described below, and
                  as concerns all such benefit programs where years of service
                  are a factor, to the extent permitted by law, Employee shall
                  be given credit for his years of service with Covol
                  Technologies, Inc. prior to the implementation of any benefit
                  program.

                                       3
<PAGE>

                  (1)      Vacation. During the Period of Employment, Employee
                           shall be entitled to not less than four (4) weeks of
                           paid vacation during each calendar year occurring
                           during the Period of Employment. Upon termination of
                           Employee's employment under this Agreement, Employee
                           shall be paid for any unused vacation in the year in
                           which the termination occurred, proportionate to the
                           amount of time employed that year.

                  (1)      Sick Leave. Leave time will be granted to the
                           Employee that is reasonable under the circumstances
                           and that is consistent with the Company's policies
                           and procedures, as the same may be changed, modified
                           or terminated for all participants from time to time.

                  (2)      Insurance. Participation in the group insurance
                           program of the Company as concerns life, disability,
                           medical and dental insurance currently available to
                           other employee's as the same may be implemented,
                           changed, modified or terminated for all participants
                           from time to time. Employee shall be required to pay
                           that portion of the premiums for coverage under such
                           insurance that is payable by other employees of the
                           Company for their insurance coverage.

                  (3)      Retirement Plan. The Employee shall participate in
                           the Company's Retirement Plans in accordance with the
                           terms and provisions and applicable laws as the same
                           may be implemented, changed, amended, or terminated
                           from time to time. Employee shall become eligible to
                           participate in the Company's Retirement Plans at date
                           of hire or as of the effective date of the
                           implementation of such plans, whichever is later.

                  (4)      Automobile Allowance. The Company will provide the
                           Employee a monthly automobile allowance. This
                           allowance is to compensate the Employee for the use
                           of his personal automobile in the amount of $550.00
                           per month beginning on the Effective Date with an
                           appropriate annual inflation adjustment each January
                           during the Employment Period.

                  (1)      Disability Insurance. The Company shall reimburse the
                           Employee for any disability insurance that is
                           currently being paid by the Employee until such time
                           that the Company implements a disability insurance
                           program for which the Employee would be covered.

                  (2)      Other Miscellaneous Benefits. The Company shall pay
                           or reimburse Employee for the following miscellaneous
                           benefits:

                  (1)      Annual dues for association membership for relevant
                           professional groups.

                                       4
<PAGE>

                           (ii)     Subscription and purchase of books,
                                    journals, and publications which relate to
                                    job duties and responsibilities.

                           Employee shall obtain authorization for payment or
                           purchases referred to in (i) and (ii) above from the
                           Chief Financial Officer of the Company before
                           incurring such costs.

         9.       Terms of Employment.

                  (1)      Term. The Company hereby agrees to continue the
                           Employee in its employ, and the Employee hereby
                           agrees to remain in the employ of the Company, in
                           accordance with the terms and provisions of this
                           Agreement, for the Period of Employment in Paragraph
                           3 above, thus terminating on the third anniversary of
                           the Effective Date of this Agreement, upon thirty
                           (30) days prior written notice from the Company to
                           the Employee. If such written notice of termination
                           is not given, then the Employee's employment under
                           this Agreement shall continue under the terms of this
                           Agreement, until the Employee is terminated by the
                           Company upon thirty (30) days prior written notice.

                  (b)      During the Period of Employment. The Employee's
                           services shall be performed at the location where the
                           Employee was employed immediately preceding the
                           Effective Date or at any office which is the
                           headquarters of the Company.

         10.      Termination of Agreement.

                  (a)      Termination of Employment by Employer. Anything in
                           this Agreement to the contrary notwithstanding, the
                           Company shall have the following rights with respect
                           to termination of Employee's employment.

                  (1)      Disability. The Company may terminate Employee's
                           employment under this Agreement if Employee shall
                           become unable to fulfill his duties under this
                           Agreement, as measured by the Company's usual
                           business activities, by reason of any medically
                           determinable physical and/or mental disability.

                           (ii)     Cause. Employee's employment may be
                                    terminated for Cause. For purpose of the
                                    Agreement, "Cause" shall mean and refer to a
                                    determination made in good faith by the
                                    Company's Board of Directors that:

                                       5
<PAGE>

                  (1)      Employee has been convicted of or has entered a plea
                           of guilty or nolo contendere to a felony or to any
                           other crime, which other crime is punishable by
                           incarceration for a period of one (1) year or longer,
                           or which is a crime involving moral turpitude; or

                  (2)      there has been a theft, embezzlement, or other
                           criminal misappropriation of funds by Employee,
                           whether from Company or any other person; or

                  (3)      Employee has willfully failed to follow reasonable
                           written policies or directives established by the
                           Board of Directors of the Company, or Employee has
                           willfully failed to attend to material duties or
                           obligations of Employee's office (other than any such
                           failure resulting from Employee's incapacity due to
                           physical or mental illness, which is a cause or
                           manifestation of Employee's disability), which
                           failure or refusal continues for thirty (30) days
                           following delivery of a written demand from the
                           Company's Chief Executive Officer for performance to
                           Employee identifying the manner in which Employee has
                           failed to follow such policies or directives or to
                           perform such duties.

                           (iii)    Termination pursuant to this Paragraph 10
                                    shall be effective as of the effective date
                                    of the notice by the Board of Directors,
                                    Chief Executive Officer, or President or to
                                    Employee that it has made the required
                                    determination, or at such other subsequent
                                    date, if any specified in such notice.

                           (iv)     Death. If Employee dies during the Period of
                                    Employment, Employee's employment shall be
                                    terminated effective as of the end of the
                                    calendar month during which Employee died.

                  (b)      Termination by Employee.

                  (i)      With Good Reason. Employee shall have the right to
                           terminate his employment under this Agreement at any
                           time for Good Reason, provided Employee has delivered
                           written notice to the Company which briefly describes
                           the facts underlying Employee's belief that "Good
                           Reason" exists and the Company has failed to cure
                           such situation within thirty (30) days after
                           effective date of such notice. For purposes of the
                           Agreement, "Good Reason" shall mean and consist of:

                                       6
<PAGE>

                  (1)      a material breach by the Company of its obligations
                           under this Agreement;

                  (2)      the assignment to Employee of duties that are
                           materially inconsistent with, or that constitute a
                           material alteration in the status of his
                           responsibilities set forth in Paragraph 1 of this
                           Agreement, as an employee of the Company;

                  (3)      a reduction by the Company of Employee's base salary
                           below the base salary set forth in Paragraph 4 above;

                  (4)      without Employee's prior written consent, the
                           transfer or relocation of Employee's place of
                           employment to any place other than the Salt Lake
                           City/Provo metropolitan area, except for reasonable
                           travel on the business of the Company; or

                  (5)      upon a change of control as defined in Paragraph 7(c)
                           above.

         11.      Confidential Information. The Employee shall hold in a
                  fiduciary capacity for the benefit of the Company all secret
                  or confidential information, knowledge or data relating to the
                  Company or any of its affiliated companies and their
                  respective businesses, which has been obtained by the Employee
                  during the Employee's employment by the Company or any of its
                  affiliated companies and which shall not be or become public
                  knowledge (other than by acts by the Employee or
                  representatives of the Employee in violation of this
                  Agreement). After termination of the Employee's employment
                  with the Company, the Employee shall not, without prior
                  written consent of the Company or as may otherwise be required
                  by law or legal process, communicate or divulge any such
                  information, knowledge or data to anyone other than the
                  Company and those designated by the Company. In no event shall
                  an asserted violation of the provisions of this Section
                  constitute a basis for deferring or withholding any amounts
                  otherwise payable to the Employee under the provisions of this
                  Agreement.

         12.      Inventions.

                                       7
<PAGE>

                  (1)      Assignment. Without further consideration, the
                           Employee shall fully and promptly report to the
                           Company all ideas, writings, concepts, inventions,
                           discoveries, formulas, designs, and know-how
                           conceived or produced by the Employee at any time
                           during the Period of Employment relating to the
                           Company's trade or business, whether alone or with
                           others and whether or not patentable or subject to
                           copy or service rights or trademark (collectively,
                           "Inventions" pertaining directly or indirectly to the
                           business of the Company as conducted by the Employee
                           at any time during the Employment Period) and shall
                           assign and hereby does assign to the Company or its
                           nominee the Employee's entire right, title and
                           interest in and to all such Inventions.

                  (2)      Cooperation. The Employee shall take all reasonable
                           action requested by the Company to protect or obtain
                           title to any and all United States and/or foreign
                           patents on any such Inventions, including execution
                           and delivery of all applications, assignments and
                           other documents deemed necessary or desirable by the
                           Company, provided the Company shall reimburse the
                           Employee for all expenses incurred by the Employee in
                           connection with such execution and delivery.

         13.      Non-Competition after Termination.

                  (1)      Acknowledgment. The Employee acknowledges that his
                           services and responsibilities are of a particular
                           significance to the Company and that his position
                           with the Company does and will continue to give him
                           an intimate knowledge of its business. Because of
                           this, it is important to the Company that the
                           Employee be restricted from competing with the
                           Company in the event of the termination of his
                           employment.

                  (2)      Agreement. The Employee agrees that, in addition to
                           any other limitations, for a period of two (2) years
                           after the termination of his employment under this
                           Agreement, the Employee will not directly or
                           indirectly compete with the Company or its business.

         14.      Severance Pay. Except for termination (1) for Cause under
                  Paragraph 10(a)(ii) above or (2) upon 30 days notice at the
                  end of the three year Period of Employment under Paragraph 3
                  above, if the Employee does not continue in the employ of the
                  Company after the termination of this Agreement, whether or
                  not the Employee is offered continued employment by the
                  Company, Company shall pay to Employee, no later than thirty
                  (30) days, the sum of one year's annual base wages. The
                  Employee shall not be required to mitigate the amount of the
                  payment provided for in this section by seeking other
                  employment or otherwise; nor shall the amount of the payment
                  be reduced by any compensation earned by the Employee as the
                  result of employment by another employer after termination or
                  otherwise.

                                       8
<PAGE>

         15.      Indemnification. Subject to the Company's Certificate of
                  Incorporation, as amended, the Company shall release,
                  indemnify and hold harmless the Employee against and from any
                  and all loss, claims, actions or suits, including costs and
                  attorney's fees, both at trial and on appeal, resulting from,
                  or arising out of or in any way connected with the Employee's
                  acts as an employee of the Company.

         16.      Miscellaneous. Any notice or other communications required or
                  permitted to be given to the parties hereto shall be deemed to
                  have been given when received, addressed as follows (or at
                  such other address as the party addressed may have substituted
                  by notice pursuant to this Section):

                  (a)      If to the Company:

                           3280 North Frontage Road
                           Lehi, Utah 84043
                           Attention: President or CEO

                  (b)      If to Employee:

                           Kenneth R. Frailey
                           263 North First East
                           Tooele, Utah  84074

         17.      Governing Law. This Agreement shall in all respects be
                  interpreted, construed and governed by and in accordance with
                  the laws of the State of Utah.

                  Effective the first day of January, 1999.

                  Covol Technologies, Inc.:             Employee

                  /s/ Brent M. Cook                     /s/ Kenneth R. Frailey
                  -----------------                     ----------------------
                  By: Brent M. Cook                     Kenneth R. Frailey
                  Title: President

                                       9

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