EX-10.61.2
MOD. AGREE; RIVER HILL & FUN ENTERPRISES & COVOL


                             MODIFICATION AGREEMENT


         THIS MODIFICATION  AGREEMENT,  dated as of the 27 day of August,  1999,
between  DTE  RIVER  HILL,   L.L.C.,  a  Delaware  limited   liability   company
("Borrower"),  FUN  ENTERPRISES  PTY  LIMITED  (ACN  056  689  304),  a  company
incorporated in New South Wales,  Australia ("Lender"),  and COVOL TECHNOLOGIES,
INC., a Delaware corporation ("Covol").

RECITALS:

         By Loan and  Security  Agreement  dated as of March 20, 1998 (the "Loan
Agreement"), Lender agreed to make a loan of up to $5,800,000.00 (the "Loan") to
Covol  to be  used  for the  construction  and  financing  of a  synthetic  fuel
production  facility  located at the River  Hill Coal  Company,  Inc.  coal mine
facilities near Karthus,  Clearfield County,  Pennsylvania (the "Project").  The
Loan was evidenced by a Secured  Draw-down  Promissory Note dated March 20, 1998
(the  "Note")  made by Covol,  payable to the order of Lender,  in the  original
principal sum of up to $5,800,000.00, plus interest, and secured by the Security
Agreement comprising part of the Loan Agreement. As further compensation for the
Loan,  Covol and the Lender  entered into that certain Net Quarterly  Production
Royalty Payment  Agreement dated as of March 20, 1998 (the "Royalty  Agreement')
whereby Covol agreed to pay certain  additional  contingent  payments to Lender.
The Note, the Loan Agreement,  the Royalty Agreement and all other documents and
instruments evidencing and securing the Loan are sometimes referred to herein as
the "Loan Documents."

         Borrower and Covol have entered into that certain Purchase Agreement of
even date herewith (the "Purchase  Agreement"),  whereby  Borrower has agreed to
purchase from Covol,  and Covol has agreed to sell to Borrower,  the Project and
related assets,  pursuant to the terms contained in the Purchase Agreement. As a
condition  to  such  transaction  and as  part  of the  consideration  therefor,
Borrower has agreed to assume  certain  modified  obligations of Covol under the
Loan. Borrower and Lender have agreed, simultaneous with such assumption and the
consummation  of such  purchase,  and the early payment by Borrower to Lender of
$4,000,000.00  in partial  satisfaction  of the Loan, to modify the Loan and the
Loan Documents as set forth herein.

MODIFICATION AND ASSUMPTION AGREEMENT:

         FOR and in consideration of the sum of $4,000,000.00  cash in hand paid
by Borrower to Lender in advance of the due date for the same and the assumption
of the  obligations of Covol under the Loan  Documents,  as modified and amended
hereby, and other good and valuable  consideration,  the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

         1.       Modification and Assumption of Loan Agreement.

                  (a) Upon  satisfaction  of  the  "Assumption  Conditions"  (as
                      hereinafter   defined),   the  Loan  Agreement  is  hereby
                      modified as follows:

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                           (i)      The introductory paragraph, the Recitals and
                                    Section 1 are hereby modified to reflect the
                                    assumption    of   the    obligations    and
                                    indebtedness  (as modified  hereby) of Covol
                                    Technologies, Inc. by DTE River Hill, L.L.C.
                                    as the  "Company"  under the terms  thereof,
                                    and the principal  amount of the Loan, after
                                    the reduction  effectuated  by the aforesaid
                                    $4,000,000.00 payment and this modification,
                                    to be $945,892.00  bearing interest at a per
                                    annum  rate of 5.5  percent.  No  release of
                                    Covol with  respect to the  obligations  for
                                    the Loan is hereby  intended or  effectuated
                                    and Covol shall remain  obligated  under the
                                    Loan   Documents   (excluding   the  Royalty
                                    Agreement),  as hereby  modified and amended
                                    in  accordance  with the terms  described in
                                    Section 1(b)(ii) hereof.

                           (ii)     Section 3 and Section 4 are hereby  deleted.
                                    In lieu thereof Borrower and Lender make the
                                    respective    covenants,    warranties   and
                                    representations  set  forth in  APPENDIX  A,
                                    attached hereto and  incorporated  herein by
                                    this reference.

                           (iii)    Section 5.3.2 is hereby deleted.

                           (iv)     The  following new provision is hereby added
                                    to the Loan Agreement:

                                    Termination.  Borrower acknowledges that the
                           security  interest in the  Collateral  under the Loan
                           Agreement  secures the obligations under the Note and
                           the  payment of the  $800,00.00  amount  agreed to be
                           paid  by  Covol  under  that  certain  Agreement  and
                           Assignment  between  Covol  and  Lender  of even date
                           herewith.  At such time as the Note is fully paid and
                           satisfied  and Lender shall have  received  aggregate
                           payments  of  $800,000.00  from or on behalf of Covol
                           under the  assignment  of  production-based  payments
                           relating to its sale to Borrower of the Project,  the
                           lien and  security  interest  created  under the Loan
                           Agreement,  and, as to Borrower,  the Loan  Documents
                           and all further  obligations of Borrower  thereunder,
                           shall terminate and Lender shall promptly release the
                           Collateral  from such security  interest and execute,
                           deliver  and record  all  documents  and  instruments
                           necessary to effect and evidence same.


                           (v)      The   address  and   facsimile   number  for
                                    purposes  of  notice on the  signature  page
                                    shall read as follows:

                                    Address: DTE Energy Services
                                             425 South Main Street
                                             Suite 201
                                             Ann Arbor, Michigan 48107

                                    Facsimile: (734) 668-1028

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<PAGE>

                                    The   address  and   facsimile   number  for
                                    Borrower  for  purposes  of  notice  on  the
                                    signature page shall read as follows:

                                    Address:         Fun Enterprises Pty, Ltd.
                                                     ACN 056 689 304, Level 9,
                                                     131 Macquarie St. Sydney
                                                     NSW 2000 Australia.

                                    Facsimile:       61-2-9247-3144.


                  (b) The modification of the Loan Documents effectuated by this
                  Agreement  shall be conditioned  upon the  completion,  to the
                  satisfaction  of the Lender) of the following  conditions (the
                  "Assumption Conditions"):

                           (i) Payment to Lender by Covol,  in  connection  with
                  the  execution  of this  Agreement,  of all accrued and unpaid
                  interest on the Note,  together with all costs and expenses of
                  Lender  (including  reasonable  attorneys' fees, travel costs,
                  lodging and food costs  incurred by officers or  principals of
                  the Lender) in any way associated with actions in anticipation
                  of the  coming  due of the  Note or in  connection  with  this
                  Agreement  and the  closing of the  transactions  contemplated
                  hereby (the said expense payment obligations not to exceed the
                  sum of $35,000);(ii)  execution of the Purchase  Agreement and
                  the License and Binder  Purchase  agreement (as defined in the
                  Purchase  Agreement)  and  assignment  by Covol to Lender of a
                  portion of the  production-based  payments thereunder pursuant
                  to  terms  and   conditions   (including   duration,   amount,
                  percentage  and  payment  procedures)  acceptable  to  Lender,
                  including   Borrower's    acknowledgment   thereof   and   its
                  undertaking  to make payments  therefor  directly to Lender on
                  behalf   of   Covol,   together   with   the   agreement   and
                  acknowledgment of Covol (in form and substance satisfactory to
                  the  Lender)  of its  continuing  obligation  under  the  Loan
                  Documents (as modified hereby) for the indebtedness  evidenced
                  by the  Replacement  Note and the  aforesaid  production-based
                  payments,  such obligation to be unconditional  and continuing
                  regardless of any extension,  modification or amendment of the
                  same  (other  than  an  increase  in  such   obligations)  and
                  regardless  of the  release,  addition  or other  action  with
                  respect to any collateral securing the same;

                           (iii)  execution  by  Covol,  in form  and  substance
                  satisfactory to the Lender, of an agreement  providing for the
                  extension of those certain  warrants for common stock of Covol
                  which are described in APPENDIX B which is attached hereto and
                  incorporated  herein by this reference,  such that the warrant
                  exercise  date shall be June 30, 2000  instead of November 13,
                  1999;

                           (iv)  execution  by  Covol,  in  form  and  substance
                  satisfactory  to the Lender,  of an agreement  with respect to
                  the 95,238 $8.00 strike price warrants for the common stock of
                  Covol in favor of the Lender, which agreement shall (x) modify
                  the strike  price by marking  the same to market  price of the
                  common  stock of Covol on the date of the  closing of the sale
                  of the Project under the Purchase  Agreement and (y) extending
                  the exercise date of such warrants to June 30, 1999;

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<PAGE>

                           (v)  execution  by  Covol,   in  form  and  substance
                  satisfactory  to the Lender,  of an agreement  with respect to
                  the 15,644 $8.00 strike price warrants for the common stock of
                  Covol in favor of Stamford  Holdings,  Ltd.,  which  agreement
                  shall (x)  modify  the  strike  price by  marking  the same to
                  market  price of the common  stock of Covol on the date of the
                  closing  of  the  sale  of  the  Project  under  the  Purchase
                  Agreement and (y) extending the exercise date of such warrants
                  to June 30, 1999;

                           (vi)  execution  and  delivery  by  Borrower of UCC-3
                  modification or similar statements  reflecting the addition of
                  the Borrower as a "debtor"  under the  originally  filed UCC-1
                  financing  statements  and the  execution  and delivery of any
                  additional  UCC-1  financing  statements  deemed  necessary by
                  Lender's  counsel by reason of the addition of the Borrower as
                  the debtor  with  respect  to the  security  interests  in the
                  Project; and

                           (vii) execution and delivery of a "landlord  consent"
                  from River Hill Coal Company providing  allowing Lender access
                  to the real  property  site upon which the  Project is located
                  for  purposes  consistent  with its  rights as  secured  party
                  (including any successors or assigns or persons purchasing the
                  same  in  connection   with  a  foreclosure  of  the  security
                  interests  or other  similar  exercise of remedies  and rights
                  under the Loan Documents).


                  (c)  Except as  specifically  modified  hereby;  the terms and
                  provisions set forth in the Loan Agreement are hereby ratified
                  and  confirmed  and remain in full force and effect.  The Loan
                  Agreement,  as  modified  hereby,   continues  to  secure  the
                  obligations of Borrower  under the Loan, as modified  pursuant
                  hereto,  with the same lien priority as  immediately  prior to
                  the execution hereof.


         2.       Replacement of Note.


                  (a)      The Note is hereby  modified and restated in the form
                           set  forth  in   Exhibit  A  attached   hereto   (the
                           "Replacement Note").


                  (b)      After  this  Agreement  has been fully  executed  and
                           delivered,  the Lender shall  deliver to Borrower the
                           Note marked as fully  satisfied  in exchange  for the
                           Replacement  Note  executed and delivered by Borrower
                           to Lender.


         3.       Termination of the Royalty Agreement.


                  (a)      The Royalty  Agreement  and that  certain  Assignment
                           dated the 6th day of November, 1998 between Covol and
                           the Lender (the "License Fee  Assignment")  is hereby
                           terminated  and Borrower  shall have no obligation to
                           Lender thereunder:


         4.       Consent of Lender.  Lender executes this Agreement to evidence
                  its consent to the  modification  effected  hereby;  provided,
                  however, that such consent shall neither be nor be deemed to

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<PAGE>

                  be a consent to, or a waiver of the necessity of obtaining the
                  consent of Lender to, any future modification.


         5.       No Default. As additional inducement to Borrower to assume the
                  obligations  under the Loan  Documents  and to enter into this
                  Agreement,  Lender hereby  states,  certifies and affirms that
                  the Loan Documents are in full force and have not been amended
                  or  modified  in  any  respect   whatsoever   except  for  the
                  amendments and modifications set forth herein, and constitutes
                  the  complete  agreement  between  the  Lender  and Covol with
                  respect to the Loan. There is no event of default nor any fact
                  or circumstance that, with the giving of notice or the passage
                  of time or both,  would  constitute  an event of default under
                  the Loan Documents,  and,  subject to the  $4,000,000.00  cash
                  payment  referred to herein and the  execution and delivery of
                  this Agreement and the Replacement Note, all obligations under
                  the Loan Documents  have been fully paid and satisfied  except
                  for those evidenced by the  Replacement  Note and the modified
                  terms of the Loan Agreement.


         6.       Consent of Covol.  Covol  executes this  Agreement to evidence
                  its  consent  to  the  modification  and  assumption  effected
                  hereby; and to acknowledge,  consistent with Section 1(b)(ii),
                  its  continuing  obligations  under  the  Loan  Documents  (as
                  modified  hereby)  and  under  the  Replacement  Note  and the
                  aforesaid   production-based   payments   regardless   of  any
                  extension,  modification  or amendment of the same (other than
                  an  increase  in  such  obligations)  and  regardless  of  the
                  release,   addition  or  other  action  with  respect  to  any
                  Collateral  securing same,  which  extension,  modification or
                  amendment  (so long as such action does not  increase  Covol's
                  obligations)  may be made by Borrower  and Lender  without the
                  consent of Covol or any requirement to obtain such consent.


         7.       Further Assurances. Borrower, Covol and Lender hereby covenant
                  and agree to execute and deliver,  or cause to be executed and
                  delivered,  and to do or  make,  or  cause to be done or made,
                  upon  the  reasonable  request  of  the  other,  any  and  all
                  instruments,  papers,  deeds,  acts or  things,  supplemental,
                  confirmatory  or otherwise,  as may be reasonably  required by
                  such  party for the  purpose  of  effecting  the  modification
                  described herein.


         8.       Completeness and Modification.  This Agreement constitutes the
                  entire  agreement   between  the  parties  hereto  as  to  the
                  transactions  contemplated  hereby  and  supersedes  all prior
                  discussions,  understandings or agreements between the parties
                  hereto.


         9.       Successors and Assigns. This Agreement shall bind and inure to
                  the  benefit  of  the  parties  hereto  and  their  respective
                  successors and assigns.


         10.      Governing  Law.  This  Agreement  and  all  other  instruments
                  referred  to  herein  shall  be  governed  by,  and  shall  be
                  construed according to, the laws of the State of Utah.


         11.      Counterparts.  To facilitate execution,  this Agreement may be
                  executed in as many counterparts as may be required.  It shall
                  not be necessary that the signature on behalf of the parties

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<PAGE>

                  hereto  appear  on each  counterpart  hereof,  and it shall be
                  sufficient  that the  signature on behalf of each party hereto
                  appear on one or more such counterparts.

                  All  counterparts  shall  collectively   constitute  a  single
                  agreement.


         12.      Incorporation by Reference.  All of the Exhibits or Appendices
                  attached hereto or referred to herein and all documents in the
                  nature  of  such  Exhibits  or  Appendices,  if  any,  are  by
                  reference   incorporated  herein  and  made  a  part  of  this
                  Agreement.



                                              BORROWER
                                               DTE RIVER HILL, L.L.C.



                                              By /s/ Kent McCargar
                                                 ------------------------------
                                                 Its VP



                                              COVOL
                                              COVOL TECHNOLOGIES, INC.



                                              By /s/ Kirk A. Benson
                                                 ------------------------------
                                                 Its CEO




                                              LENDER
                                              FUN ENTERPRISES PTY LIMITED



                                              By /s/ Nick Wright
                                                 ------------------------------
                                                 Its Director

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<PAGE>

                                    EXHIBIT A

         THIS NOTE MAY ONLY BE SOLD,  ASSIGNED OR  OTHERWISE  TRANSFERRED  TO AN
         "ACCREDITED INVESTOR," AS DEFINIED IN RULE 501(a)(1),  (2) OR (3) UNDER
         REGULATION D OF THE  SECURITIES ACT OF 1933.  NOTWITHSTANDING  ANYTHING
         CONTAINED  HEREIN TO THE CONTRARY,  WITHOUT THE WRITTEN  CONSENT OF THE
         COMPANY,  THIS NOTE  SHALL NOT BE  HYPOTHECATED  OR BROKEN UP INTO MORE
         THAN ONE NOTE AND THERE SHALL ONLY BE ONE NOTEHOLDER.


                           REPLACEMENT PROMISSORY NOTE


$945,892.00

                                                             Ann Arbor, Michigan
                                                                 August __, 1999

         FOR  VALUE  RECEIVED,  DTE  RIVER  HILL,  L.L.C.,  a  Delaware  limited
liability  company (the  "Company"),  hereby promises to pay to the order of FUN
ENTERPRISES  PTY LIMITED (ACN 056 689 304), a company  incorporated in New South
Wales,  Australia  (the  "Lender"),  at Westpac  Banking  Corporation,  79 Queen
Street,  Auckland,  New Zealand,  account  number:  279224-USD-3740-01,  account
party:  Fun  Enterprises,  or at such other place as the Lender may designate in
writing,  the principal amount of Nine Hundred Forty Five Thousand Eight Hundred
Ninety Two Dollars ($945,892.00), in lawful money of the United States, together
with  interest  thereon at a per annum rate of 5.5 percent,  such  principal and
interest being payable in four equal  installments  of principal and interest of
$250,000, payable on April 30, 2000, July 31, 2000, October 31, 2000 and January
31, 2001.

1.   Undefined  Terms.  All terms not defined in this Note are used as set forth
     in the Loan and Security Agreement of even date between the parties.

2.   Prepayment.  The Company  shall have the right to prepay all or any portion
     of the  Loan  prior to  maturity  without  the  payment  of any  prepayment
     penalty.

3.   Security.  As  security for  the obligations  under the  Note, the  Company
     shall,  pursuant to the Loan and Security Agreement,  dated March 20, 1998,
     as modified  pursuant to that certain  Modification  Agreement of even date
     herewith (such Loan and Security Agreement as so modified being referred to
     herein as the "Loan and Security Agreement"), by and between the Lender and
     the Company, grant, convey, and assign to the Lender a security interest in
     the  Collateral.  The Company agrees to take any and all  reasonable  steps
     required by the Lender,  including  without  limitation  the  execution and
     filing of appropriate  UCC-1  financing  statement(s),  and UCC-2 financing

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<PAGE>

     statement change form(s) to perfect and maintain perfection of the Lender's
     continuing  security  interest  in  the  Collateral.   Notwithstanding  the
     foregoing, recourse by the Lender against the Company is not limited to the
     Collateral,  and the  Company  will be  responsible  for  the  entire  Loan
     obligation, including principal and interest.

4.   Usury Laws. Notwithstanding anything to the contrary contained herein or in
     the Loan and Security Agreement, all agreements between the Company and the
     Lender are hereby  expressly  limited  so that in no  contingency  or event
     whatsoever  shall  the  total  liability  for  payments  in the  nature  of
     interest,  additional  interest,  and other charges  exceed the  applicable
     limits  imposed  by the usury  laws of the State of  Michigan  or any other
     applicable  jurisdiction.  If any  payments  in  the  nature  of  interest,
     additional interest,  or other charges made hereunder or under the Loan and
     Security  Agreement  are  held to be in  excess  of the  applicable  limits
     imposed by the usury laws of the State of Michigan, or any other applicable
     jurisdiction,  it is agreed that any such amount held to be in excess shall
     be  considered  payment  of  principal  hereunder,   and  the  indebtedness
     evidenced  hereby  shall ipso  facto be reduced by such  amount so that the
     total  liability  for  payments  in  the  nature  of  interest,  additional
     interest,  and other charges shall not exceed the applicable limits imposed
     by the  usury  laws of the  State  of  Michigan,  or any  other  applicable
     jurisdiction, in compliance with the desires of the Company and the Lender.
     This provision  shall never be superseded or waived and shall control every
     other  provision of this Note and all related  agreements  (as set forth in
     Section 5.3 of the Loan and  Security  Agreement),  between the Company and
     Lender or their respective successors or the Lender's assigns.

5.   Default.  For purposes of this Note, the occurrence of the following  shall
     constitute  an "Event of Default"  which shall permit the Lender to declare
     all  principal of this Note to be  immediately  due and payable and to also
     exercise the other rights provided in the Loan Agreement:

     (a) Any  petition  is  filed  by or  against  the  Company  under  any  law
         pertaining  to  reorganization, insolvency  or  rescheduling  of  debts
         which is not dismissed within thirty (30) days, or the Company makes an
         assignment  for the  benefit  of  creditors  or admits in  writing  its
         inability to pay its debts generally as they become due;

     (b) Any garnishment, attachment or levy is issued against the Collateral by
         any party other than Lender  which is not  removed  within  thirty (30)
         days of such action;

     (c) Any default  occurs in payment  under the  provisions  of this Note, or
         under any other agreement,  contract, instrument or document evidencing
         or  related  to the Loan  including,  but not  limited  to the Loan and
         Security Agreement;

     (d) Any  default  occurs  in  the  performance  of any  obligations  of the
         Company,  under the  provisions  of this Note or the Loan and  Security
         Agreement  other than the payment  provisions  referenced in (c) above;
         provided,  however,  that any such default shall not be deemed an Event
         of Default until the Company receives written notice of such event, and
         if curable,  the Company fails to cure such default  within thirty (30)
         days after receipt of such notice.

6.   Acceleration,  Waiver.  Upon the  occurrence  of an Event of  Default,  the
     Lender in its sole,  absolute and unfettered  discretion,  may declare this
     Note immediately due and payable.

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<PAGE>

7.   Securities Laws. This Note has not been registered under the Securities Act
     of 1933, as amended (the "Act"),  or registered or otherwise  qualified for
     sale under the securities laws of any state.  The Lender by receipt of this
     Note acknowledges that it is an "accredited investor" within the meaning of
     Regulation D of the Act and that the Lender has had the  opportunity to ask
     questions  of  the  Company  regarding  its  business  activities  and  its
     activities relating to the Plant.

8.   Notices.  Notices  under  this  Note  shall be given  and  governed  by the
     provisions of Section 5.7 of the Loan and Security Agreement.

9.   Necessary  Documents.  Each party  agrees to execute  and  provide,  at the
     request of the other party,  any and all other documents or other necessary
     written  instruments  as may be  reasonably  necessary  to  effectuate  the
     purposes of this Note.

10.  Governing  Law.  This Note shall be construed  and  enforced in  accordance
     with,  and the rights of the parties  shall be governed by, the laws of the
     State of Michigan.


         IN WITNESS  WHEREOF,  the Company has executed this Note as of the date
first written above.

                                             DTE RIVER HILL, L.L.C.



                                             By: ____________________________
                                             Title: _________________________

                                             Address:
                                             P.O. Box 8614
                                             425 South Main Street, Suite 201
                                             Ann Arbor, Michigan 48107

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