[Letterhead]

SMITH BARNEY, A Member of TravelersGroup.


Monday, July 08, 1996

Covol Technologies
3280 North Frontage Road
Lehi, UT 84043

Attn:  Asael T. Sorensen
       Corporate Counsel

The  purpose  of  this  letter  is  to  terminate,  effective  immediately,  the
relationship  between Smith Barney Inc. ("Smith Barney") and COVOL Technologies,
Inc.  ("COVOL") as per paragraph 4 of the  engagement  letter dated December 18,
1995 (the "Letter").  As stated in the Letter, this termination shall not affect
the indemnification,  contribution,  and confidentiality obligations of COVOL or
the right of Smith  Barney to  receive  and fees and  expenses  accrued to date.
However,  Smith Barney  agrees to terminate its right of first refusal under the
Letter and its claim on any Transaction Fee (as defined in the Letter), provided
that COVOL  discharges  in full the  accrued  fees and  expenses  owing to Smith
Barney on or before the following scheduled dates.


         $39,139.37                 in accrued expenses by July 31, 1996, and
          50,000.00                 in accrued fees by August 31, 1996.
         $89,139.37

For  reference,  included is a copy of Smith  Barney's most recent invoice dated
May 9, 1996 which has been  credited for the payment made by COVOL of $32,747.71
(which covered the first of two invoices from Andrews & Kurth for legal services
performed on COVOL's behalf).

Sincerely yours,

SMITH BARNEY, INC.

By: /s/ Peter A. Tague
Name: Peter A. Tague
Title: Vice President

Accepted and agreed to as of the date set forth above:

COVOL TECHNOLOGIES, INC.

By: /s/ Michael Midgley
Name:  Michael Midgley
Title: President

  Smith Barney, Inc.  388 Greenwich Street  New York, NY  10013  212-816-6000