DEALER MANAGER AGREEMENT

January [    ], 2007

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Ladies and Gentlemen:

1. Exchange Offer. Headwaters Incorporated, a Delaware corporation (the Company), plans to make an offer to exchange up to $172,500,000 aggregate principal amount of its currently outstanding 2 ⁷/8% Convertible Senior Subordinated Notes due 2016 (the Old Securities) that are convertible into shares of common stock, par value $0.001 per share (the Common Stock), of the Company for (i) up to $172,500,000 aggregate principal amount of a new series of its 2 ⁷/8% Convertible Senior Subordinated Notes due 2016 (the New Securities) that are convertible into cash and shares of Common Stock of the Company (the Underlying Shares) and (ii) an exchange fee of $2.50 per $1,000 of Old Securities (such offer, as it may be amended and supplemented, the Exchange Offer). The Exchange Offer will be on the terms and subject to the conditions set forth in the Exchange Offer Material (as defined below). The Old Securities are issuable pursuant to the terms of an Indenture dated as of June 1, 2004 between the Company and Wells Fargo Bank, National Association, as trustee (the Trustee). The New Securities are to be issued pursuant to the terms of an Indenture dated as of January [    ], 2007 between the Company and the Trustee (the Indenture).

2. Engagement as Dealer Manager. (a) The Company hereby engages Morgan Stanley & Co. Incorporated as exclusive Dealer Manager (the Dealer Manager) in connection with the Exchange Offer. As Dealer Manager, you agree, in accordance with your customary practice, to perform those services in connection with the Exchange Offer as are customarily performed by investment banking concerns in connection with exchange offers of like nature, including but not limited to soliciting tenders of Old Securities pursuant to the terms of the Exchange Offer. The performance by you of such services hereunder shall commence on the date of commencement of the Exchange Offer (the Commencement Date).

(b) You have been engaged to act as Dealer Manager in connection with the Exchange Offer and, in such capacity, you shall act as an independent contractor, not as an agent, with duties owed solely to the Company. In connection with the solicitation of tenders of Old Securities, no broker, dealer, commercial bank, trust company or other nominee is to be deemed to be acting as your agent or as agent of the Company, and you shall not be deemed to be an agent of the Company, any broker, dealer, commercial bank, trust company or other nominee or any other person. In soliciting or obtaining tenders, you shall not be and shall not be deemed for any purpose to act as a partner or joint venture of or a member of a syndicate or group with the Company or any of its affiliates in connection with the Exchange Offer, any acceptance of the

Old Securities, or otherwise, and none of the Companys affiliates shall be deemed to act as your agent. The Company expressly acknowledges that all opinions and advice (written or oral) given by you to the Company in connection with your engagement are intended solely for the benefit and use of the Company (including its management, directors and attorneys) in considering the transactions to which such opinions or advice relate.

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