Exhibit
10.96


 


 


 


 


26 October   2007


 


Mr. Steven G. Stewart


2134523 S. Sunset Circle


Bountiful, UT 
84010


 


Re:                          Employment Agreement


 


Dear Steve:


 


I am pleased to confirm your employment as Chief
Financial Officer of Headwaters Incorporated (“the Company”) and offer terms
and conditions of employment as set forth in this letter agreement (this “Agreement”).  This Agreement supersedes the terms of the
Employment Transition Agreement between you and the Company dated 1 October
2005 (“Transition Agreement”).  You may
accept this Agreement by signing and returning a copy of this Agreement as
provided below.


 


1.             Term of Employment.    Your new employment assignment as CFO commenced
effective 4 September 2007 (“CFO Start Date”) and shall continue under this
Agreement until 30 September 2010, unless it is terminated earlier either by
you or the Company or is extended by both you and the Company in a signed
writing (“Transition Date”), and then for an additional 24 months (“Separation
Date”).  Your employment under this
Agreement is terminable at will by you or the Company at any time (for any
reason or for no reason) subject to the provisions of Section 3.   This Agreement is personal to you and you
may not assign or delegate any of your rights or obligations hereunder.


 


2.             Position and Duties. 
Between the CFO Start Date and the Transition Date (“CFO Service Period”),
you shall report to the Chief Executive Officer of the Company.  Your duties shall include the duties set
forth in the bylaws of the Company for your position and as customarily
performed by the CFO of Headwaters and any other duties the Board and the Chief
Executive Officer of the Company may delegate to you from time to time.  You will be expected to commit your attention
and efforts to the position on a full-time basis.  During the CFO Service Period, you may serve
on two boards, either corporate, civic, or charitable, as long as such
activities do not materially conflict with the performance of your duties under
this Agreement.  Between the Transition Date
and the Separation Date (“Transition Period”), you will be employed as the
Director of Financial Affairs of the company to work on such projects as
determined by the Chief Executive Officer or Chief Financial Officer of the
Company.


 

















 


 


3.             Compensation and Benefits.  In consideration for your services to the
Company during the time period in which this Agreement is effective, you shall
receive the following compensation and benefits:


 


                (a)           Base Salary.  During the CFO Service Period, the
Company shall pay you an annual base salary at the rate of $304,685 per
year.  Your salary will be reviewed on an
annual basis during the CFO Service Period, and may be increased at the
discretion of the Company.  During the
Transition Period, the Company shall pay you an annual base salary at the rate
of $120,000 per year.  At all times, your
salary shall be paid in installments according to the Company’s regular payroll
policy.  The Company shall withhold and
deduct all applicable federal and state income and employment and disability
taxes from your salary and other compensation payable under this Agreement or
otherwise, as required by applicable laws.


 


                (b)           Annual Incentive Opportunity.  During the CFO Service
Period, you shall be eligible to participate in any bonus plan which the
Company may maintain or establish for its executives on the terms of such plan
and the awards thereunder.  Currently, the
Company maintains a Short Term Incentive Bonus Plan (“STIB Plan”).  You will be eligible to participate in the
STIB Plan effective 1 October 2007 with a Bonus Percent of 40 percent and subject
to other terms of the STIB Plan, as may be amended.  In lieu of participating in the FY2007 STIB
Plan, you have received a bonus payment in September 2007 in the amount of
$88,700.  On the appropriate future date
or dates consistent with the STIB Plan and awards thereunder, you will be paid
any banked bonus amounts.


 


                (c)           Retention Bonus.  Conditioned upon your remaining continuously
employed as CFO through 31 December 2008 and that you perform your duties in a
manner acceptable to the CEO, you will be paid a retention bonus amount of
$90,000 (less taxes and applicable withholdings) in the first full pay period
of January 2009.


 


                (d)           Long Term Incentives.  During the CFO Service Period, you shall be
eligible to participate in future long term incentive programs which the
Company may establish for its executives, on the terms of such programs and
grants thereunder.


 


                (e)           Section 401(k) Plan and ESPP. During the CFO Service Period, you will be eligible to
participate in the Company’s 401(k) Plan and Employee Stock Purchase Plan, subject
to the terms of those plans.


 


                (f)            Health,
Welfare, and other Benefits.  Subject
to the terms of such other plans, you shall be eligible to receive through the
Separation Date such other benefits or rights as may be provided under any
employee benefit plans provided by the Company to its executives that are now
or hereafter will be in effect, including participation in life, medical,
disability, and dental insurance plans, and participation in the Company
Vehicle Policy.


 


 


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                (g)           Extended
Medical Benefit.  Conditioned
upon your remaining continuously employed as CFO through 30 September 2010
(provided that this condition shall not apply in the case of termination
without Cause or for Good Reason if Section 3(i)(2) is applicable), you and
your spouse (Paula Stewart) will be eligible to participate in the medical
benefit plan provided by the Company to its regular, full-time executives through
the dates that you and your spouse individually become eligible for federal
Medicare, at the Company’s regular level of expense contribution.  Each year at open enrollment, you will be
notified of changes in medical plan benefits and you will be given the same election
options available to the Company’s regular, full-time executives.  The foregoing extended medical benefit shall
begin after the termination of COBRA benefits following the Separation Date. During
the COBRA period, all COBRA premiums will be paid by the Company.  The Company will be responsible to pay the
cost of your participation and your spouse’s participation in the extended
medical benefit plan through the date that you become eligible for Medicare
benefits.  You will be responsible to pay
the cost of your spouse’s participation after the date that you become eligible
for Medicare benefits.  The benefits
provided by the Company under this provision will be reported on Form W-2 or
Form 1099, as applicable, and you will be responsible for any associated tax
obligation.  If for any reason, the
Company ceases to offer medical benefits to its regular, full-time executives,
the Company shall be under no obligation to continue the foregoing extended
medical benefit to you or your spouse.  In
such case, the Company shall pay you a lump sum payment equal to the fair value
of the Company’s past level of expense contribution for benefits that you would
have received, but not more than $50,000.


 


                (h)           Vacation and Sick Leave.  You shall be entitled to four weeks paid
vacation plus sick leave on the same basis as all other executives of the
Company in accordance with the terms and conditions of the Company’s vacation
and sick leave policies.


 


                (i)            Termination and
Change in Control.


 


                                (1)           Termination for any Reason.  In the event that your employment with the
Company is terminated for any reason (including Cause, as defined in section
3(j)(1) below), then you (or your estate, if applicable) shall be entitled to
payment of your accrued but unpaid salary and vacation pay through the date of
the termination of your employment.


 


                                (2)           Termination Without Cause or for Good
Reason.   In the event that
your employment is terminated by the Company without Cause or is terminated by
you for a Good Reason prior to the Separation Date and no later than six months
following the initial existence of the condition constituting Good Reason,
then, provided that you execute and deliver within 45 days of termination an
effective release in a form to be provided by the Company with terms
substantially as set forth in the attached Exhibit A, you shall be entitled to:


 


(A)                          continued
participation in the medical benefit plan provided by the Company to its
executives then in effect as provided in section 3(g) above;


 


 


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(B)           payment in a lump sum 60 days
following termination of the product of two multiplied by the sum of:


                                                                                (i)            your annual base salary at the rate
in effect as of your termination of employment, or, if higher, the highest rate
in effect during the two-year period prior to the date of termination, and


                                                                                (ii)           the highest amount of any additional
cash incentive compensation, including but not limited to any sums awarded
under the Company’s STIB Plan (or any replacement or successor plans), awarded
to you for either (but not both) of the two preceding fiscal years most
recently ended.


                (C)           the continued use for sixty days of the Company vehicle on
similar terms.


                                (3)           Change
in Control.   The Company will
enter into a change in control agreement with you effective as of the CFO Start
Date, which agreement is incorporated by reference.  In the event you become eligible to receive
the severance payments and benefits under the change in control agreement, such
as in the event your employment with the Company is terminated within the
protection period prior to and following a “Change in Control” as defined in
the change in control agreement, then any severance payments and benefits to be
provided to you by the Company shall be made under the change in control
agreement in lieu of severance payments and benefits under this Agreement, except
that upon a Change in Control, you will be entitled to the extended medical
benefit provided under section 3(g) above, notwithstanding anything in the
change in control agreement to the contrary, and the provisions of the change
in control agreement pertaining to the your employment and post-termination
covenants and arbitration as provided in the change in control agreement shall
apply to you instead of the provisions herein pertaining to your employment and
post-termination covenants and arbitration set forth in Sections 5 and 9,
respectively.


 


                (j)            Definitions.


 


                As
used in this Agreement, the following terms shall have the meanings set forth
below:


 


                                (1)           “Cause”
shall mean:


 


                                                (i)            your engaging in willful misconduct
against the Company that is materially injurious to the Company; provided that
any action undertaken with a reasonable and good faith belief that it is in the
best interests of the Company shall not constitute willful misconduct for
purposes of this clause (i).


 


                                                (ii)           your engaging in any activity that is
a conflict of interest or competitive with the Company;


 


 


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                                                (iii)          your engaging in any act of fraud or
dishonesty that is materially injurious to the Company or any of their subsidiaries
or any material breach of federal or state securities or commodities laws or
regulations;


 


                                                (iv)          your engaging in an act of assault or
other acts of violence in the workplace;


 


                                                (v)           your harassment of any individual in
the workplace based on age, gender, or other protected status or class or
violation of any policy of the Company regarding harassment;  or


 


                                                (vi)          your conviction, guilty plea or plea
of nolo contendre for any felony crime.


 


Provided, that upon the CEO or General
Counsel of the Company obtaining knowledge of any of the foregoing conditions,
the Company must provide written notice to you of the existence of any of the
foregoing conditions (i) through (vi) within 60 days of the knowledge of the
existence of the condition, and if you have the ability and in fact cure the
condition and harm caused thereby within thirty (30) days following the written
notice, Cause shall be deemed not to exist.


 


                                (2)             “Good Reason”  shall mean any
one of the following without your consent:


 


                                                (i)            a demotion or any action by the
Company which results in material diminution of your position, reporting
relationship, authority, duties or responsibilities (other than changes
permitted by this Agreement or any insubstantial action not taken in bad
faith);


 


                                                (ii)           requirement that you report to work
more than 50 miles from the Company’s existing headquarters (not including
normal business travel required of your position);


 


                                                (iii)          a material reduction in your base
salary or benefits (unless, in the case of a reduction in benefits only, such
reduction in benefits applies generally to executives of the Company, and not including
changes permitted by this Agreement or otherwise resulting from your change in
position upon the Transition Date pursuant to this Agreement); or


 


                                                (iv)          a material breach by the Company of
its obligations hereunder.


 


Provided, that you must provide written
notice to the Board of the existence of any of the foregoing conditions (i)
through (iv) within 60 days of the initial existence of the condition, and if
the Company cures the condition within thirty (30) days following the written
notice, Good Reason shall be deemed not to exist.


 


 


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4.             Code Section 409A Compliance.


 


                (a)           To the
fullest extent applicable, amounts and other benefits payable under this
Agreement, and amounts and benefits payable under any other agreements or plans
referenced in this Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code in
accordance with one or more of the exemptions available under the final
Treasury regulations promulgated under Section 409A.  In
this regard, each payment under this Agreement, including without limitation,
each payment other than a life annuity (within the meaning of Treasury
Regulation Section 1.409A-2(b)(2)(ii)) in a series of scheduled installments
(within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(iii)), shall
be deemed a separate payment for purposes of Code Section 409A.  To the extent that any such amount or
benefit is or becomes subject to Section 409A due to a failure to qualify for
an exemption from the definition of nonqualified deferred compensation in
accordance with such final Treasury regulations, this Agreement is intended to
comply with the applicable  requirements
of Section 409A with respect to such amounts or benefits.   This Agreement shall be interpreted and
administered to the extent possible in a manner consistent with the foregoing
statement of intent.


 


                (b)           Notwithstanding anything in this
Agreement or elsewhere to the contrary, if you are a “specified employee” as
determined by the Company’s Compensation Committee on the date of termination
of employment within the meaning of Code Section 409A, and the Company
reasonably determines that any amount or other benefit payable under this
Agreement, including Transition Period compensation and benefits, on account of
your termination of employment constitutes nonqualified deferred compensation
that will subject  you to “additional tax”
under Section 409A(a)(1)(B) of the Code (together with any interest or
penalties imposed with respect to, or in connection with, such tax, a “409A Tax”)
with respect to the payment of such amount or the provision of such benefit if
paid or provided at the time specified in the Agreement, then the payment or
provision thereof shall be postponed to the first business day of the seventh
month following the date of termination or, if earlier, the date of your death
(the “Delayed Payment Date”). You and the Company may agree to take other
actions to avoid the imposition of a 409A Tax at such time and in such manner
as permitted under Section 409A.  In the event that this Section 4 requires a
delay of any payment, such payment shall be accumulated and paid in a single
lump sum on the Delayed Payment Date.  In addition, the provisions of this Agreement
which require the commencement of payments subject to Section 409A upon a
termination of employment shall be interpreted to require that you have a “separation
from service” with the Company as defined for purposes of Code Section 409A.


 


5.             Employment and Post
Termination Covenants.   By
accepting the terms of this Agreement and as a condition for the termination
payments and benefits you hereby agree to the following covenants in addition
to any obligations you may have by law and make the following representations:


 


 


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                (a)           Confidentiality.  You acknowledge that, in connection with your
employment by the Company, you will have access to trade secrets of the Company
and its subsidiaries and other information and materials which the Company
desires to keep confidential, including customer lists, supplier lists,
financial statements, business records and data, marketing and business plans,
and information and materials relating to the Company’s services, products,
methods of operation, key personnel, proprietary software and other proprietary
intellectual property and information disclosed to the Company of third parties
to which the Company owes a duty of nondisclosure (collectively, the “Confidential
Information”); provided, however, that Confidential Information does not
include information which (i) is or becomes publicly known other than as a
result of your actions in violation of this Agreement; (ii) is or becomes
available to you from a source (other than the Company) that you reasonably
believe is not prohibited from disclosing such information to you by a
contractual or fiduciary obligation to the Company, (iii) has been made
available by the Company, directly or indirectly, to a non-affiliated third
party without obligation of confidentiality; (iv) you are obligated to produce
as a result of a court order or pursuant to governmental action or proceeding,
provided that you give the Company prompt written notice of such requirement
prior to such disclosure and assistance in obtaining an order protecting such
Confidential Information from public disclosure; or (v) business knowledge you
have acquired unrelated to any specific proprietary information relating to the
Company.  You covenant and agree that,
both during and after the term of your employment with the Company, you will
keep secret all Confidential Information and will not disclose, reveal, divulge
or otherwise make known any Confidential Information to any person (other than
the Company or its employees or agents in the course of performing you duties
hereunder) or use any Confidential Information for your own account or for the
benefit of any other individual or entity, except with the prior written consent
of the Company.


 


                (b)           Ownership of Intellectual
Property.  You agree that
all inventions, copyrightable material, software, formulas, trademarks, trade
secrets and the like which are developed or conceived by you in the course of
your employment by the Company or on the Company’s time or property
(collectively, the “Intellectual Property”) shall be disclosed promptly to the
Company and the Company shall own all right, title and interest in and to the
Intellectual Property.  The parties
expressly agree that any and all of the Intellectual Property developed by the
Employee shall be considered works made-for-hire for the Company pursuant to
the United States Copyright Act of 1976, as amended from time to time.  In order to ensure that the Company shall own
all right, title and interest in and to the Intellectual Property in the event
that any of the Intellectual Property is not deemed a work made-for-hire (as
defined in the Copyright Act of 1976) and in any other event, you hereby sell
and assign all right, title and interest in and to all such Intellectual
Property to the Company, and you covenant and agree to affix to the
Intellectual Property appropriate legends and copyright notices indicating the
Company’s ownership of all Intellectual Property and all underlying
documentation to the extent reasonably appropriate, and shall execute such
instruments of transfer, assignment, conveyance or confirmation as the Company
reasonably considers necessary to transfer, confirm, vest, perfect, maintain or
defend the Company’s right, title and interest in and to the Intellectual Property
throughout the world. Your obligation under this Section 4(b) to 


 


 


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assign to the Company inventions created or
conceived by you shall not apply to an invention that you developed entirely on
your own time without using the Company’s equipment, supplies, facilities, or
trade secret information, provided that those inventions (i) do not or did not
relate directly, at the time of conception or reduction to practice of the
invention, to the Company’s business as conducted at such time or actual or
demonstrably anticipated research or development of the Company; and (ii) do
not or did not result from any work performed by you for the Company.


 


                (c)           Non-Solicitation. 
You agree for a period of not less than twenty four (24) months
following termination of your employment or service with the Company that you
shall not solicit the services or employment or engage the services or employ
any of the employees of the Company or its affiliated companies.


 


                (d)           Non-Competition.  For a period of 24 months following the termination of your
employment or service with the Company, you agree not to compete directly or
indirectly by becoming a principal, partner, shareholder, equity holder,
limited liability company member, agent, officer, other employee, advisor,
consultant, member of a board of directors, or by becoming interested in any
other capacity, with any business that competes with any activity of the Company
or its affiliates conducted at
any time during the two years prior to termination, or conducted during the six
months period following the termination, as a result of plans initiated prior
to such termination, including acquisitions.


 


                (e)           Authorization
to Work for the Company.  You
represent that you are legally authorized to work in the United States and that
your employment with the Company shall not constitute a violation of any
contractual or other legal obligation you may have to another entity or
employer.


 


                (f)            Breach
of Terms of Section 5.  The
parties to this Agreement agree that (i) if you breach the provisions set forth
in Sections 5, 7 and 9 of this Agreement, the damage to the Company may be
substantial, although difficult to ascertain, and money damages will not afford
the Company an adequate remedy, and (ii) if you are in breach of any provisions
of Sections 5 and 7 of this Agreement or threaten a breach of any provision of
Sections 5 and 7 of this Agreement, the Company shall be entitled, in
additional to all other rights and remedies as may be provided by law, to seek
specific performance and injunctive and other equitable relief to prevent or
restrain a breach of any provision of this Sections 5 and 7 of this Agreement.


 


6.             Business Expenses. 
You shall be entitled to reimbursement by the Company for such
customary, ordinary and necessary business expenses as are incurred by you in
the performance of your duties and activities associated with promoting or
maintaining the business of the Company. 
All expenses as described in this paragraph shall be reimbursed only
upon presentation by you of such documentation as may be reasonably necessary
to substantiate that all such expenses were incurred in the performance of your
duties in accordance with the Company’s policies.


 


 


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7.             Return of Company Property.  On the Separation Date or as earlier
requested by the Company, you agree to return to the Company all Company
documents (and all copies thereof) and other Company property in your
possession or control, including, but not limited to, Company files,
correspondence, memos, notebooks, notes, drawings, records, business plans and
forecasts, financial information, specifications, computer-recorded
information, tangible property and equipment, credit cards, entry cards,
identification badges and keys; and any materials of any kind that contain or
embody any proprietary or confidential information of the Company (and all
reproductions thereof in whole or in part) (collectively, the “Company Property”).
You agree to conduct a good faith and diligent search of your belongings in
advance of the aforementioned deadline to ensure your compliance with the
provisions of this Section 7.


 


8.             Binding on Successors. 
This Agreement may be assigned by the Company to a successor by merger,
acquisition, consolidation or otherwise to the business formerly carried on by
the Company and shall be binding upon the Company and any entity which is a
successor by merger, acquisition, consolidation or otherwise to the business
formerly carried on by the Company, or an affiliate of any such entity, and
becomes your employer by reason of (or as the direct result of) any direct or
indirect sale or other disposition of the Company or substantially all of the
assets of the business currently carried on by the Company, without regard to
whether or not such person actively adopts this letter agreement.


 


9.             Arbitration.  The parties agree that any future disputes between you and
the Company under this Agreement including but not limited to disputes relating
to the Release of Claims shall be resolved by binding arbitration, except where
the law specifically forbids the use of arbitration as a final and binding
remedy as provided below, except as provided in Section 9(g) below.


 


                (a)           The
complainant shall provide the other party a written statement of the
claim.  Such statement shall identify any
supporting witnesses or documents and the relief requested.


 


                (b)           The
respondent shall furnish a statement of the relief, if any, that it is willing
to provide, and identifying supporting witnesses or documents.  If the matter is not resolved, the parties
agree to submit their dispute to a non-binding mediation paid for by the
Company, provided, however, that if the amount in dispute is $50,000 or less,
this step may be waived at the election of either party.


 


                (c)           If
the matter is not resolved, the parties agree that the dispute shall be
resolved by binding arbitration pursuant to the commercial arbitration rules of
the International Institute of Conflict Prevention and Resolution (“CPR”),
including any provisions thereof pertaining to discovery.  If the parties are not able to agree upon the
selection of an arbitrator, an arbitrator shall be selected according to the
applicable procedures established by the CPR.


 


 


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                (d)           The
arbitrator shall have the authority to determine whether the conduct complained
of in Section 9(a) violates the complainant’s rights under this Agreement
and, if so, to grant any relief authorized by law; subject to the provisions of
Section 9(g) below.  The arbitrator shall
not have the authority to modify, change or refuse to enforce any lawful term
of this Agreement and the Release of Claims.


 


                (e)           The
Company shall pay for the arbitrator’s fees, while each party shall pay its own
attorneys’ fees.


 


                (f)            Arbitration
shall be the exclusive final remedy for any dispute between the parties under
this Agreement and disputes involving claims for discrimination or harassment
(such as claims under the Fair Employment and Housing Act, Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act, or the Age
Discrimination in Employment Act), wrongful termination, breach of contract,
breach of public policy, physical or mental harm or distress or any other
disputes, and the parties agree that no dispute shall be submitted to
arbitration where the complainant has not complied with the preliminary steps
provided for in Sections 9(a) and (b) above.


 


                (g)           The
parties agree that the arbitration award shall be enforceable in any court
having jurisdiction to enforce this Agreement and Release of Claims, so long as
the arbitrator’s findings of fact are supported by substantial evidence on the
whole and the arbitrator has not made errors of law; however, either party may
bring an action in a court of competent jurisdiction, regarding or related to
matters involving the Company’s confidential, proprietary or trade secret information,
or regarding or related to inventions that you may claim to have developed
prior to or after joining the Company, seeking preliminary injunctive relief in
court to preserve the status quo or prevent irreparable injury before the
matter can be heard in arbitration.


 


                (h)           The arbitration shall be held at a
location within Salt Lake City, Utah unless the parties mutually agree to a
different location for the arbitration.


 


                (i)            In the event that the Company wishes
to contest or dispute a termination for Good Reason by you, it must give
written notice of such dispute within the ninety (90) calendar day period after
the date of your resignation.  If you wish
to contest or dispute a termination for Cause by the Company, or any failure to
make payments claimed to be due hereunder, you must give written notice of such
dispute within ninety (90) calendar days of receiving a Notice of
Termination.  You may, at either your or
the Company’s option, be suspended from all duties during the pendency of such
a contest or dispute.  If you prevail in
any such contest or dispute, the Company or its successor or assign shall
thereupon be liable for the full amounts due under Section 3 as of the date of
termination after adjustments for amounts already paid.


 


10.          Indemnification.  The Company has
entered into an indemnification agreement with you effective as of the CFO Start
Date, which agreement is incorporated by reference.


 


 


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11.          Miscellaneous.


 


(a)           This Agreement constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
regard to the terms and conditions of your employment with the Company and your
anticipated termination of employment. It is entered into without reliance on
any promise or representation, written or oral, other than those expressly
contained herein, and it supersedes any other such promises, warranties or
representations and any other written or oral statements concerning your rights
to any compensation, equity, or benefits from the Company, its predecessors or
successors in interest, including specifically, but not limited to, the
Transition Agreement.


 


(b)           Subject to the mandatory arbitration provided in Section 9
above, jurisdiction and venue in any action to enforce any arbitration award or
to enjoin any action that violates the terms of this Agreement shall be in the
state and federal courts serving the locality of Salt Lake City, Utah.


 


(c)           This Agreement may not be modified or amended except in a
writing signed by both you and a duly authorized officer of the Company. This
Agreement shall bind the heirs, personal representatives, successors and
assigns of both you and the Company, and inure to the benefit of both you and
the Company, their heirs, successors and assigns. If any provision of this
Agreement is determined to be invalid or unenforceable, in whole or in part,
this determination shall not affect any other provision of this Agreement and
the provision in question shall be modified by the court so as to be rendered
enforceable in a manner consistent with the intent of the parties insofar as
possible.  Headings and subheadings in
this Agreement are solely for convenience and do not constitute terms of this
Agreement.


 


(d)           This Agreement may be signed in counterparts and the
counterparts taken together shall constitute one agreement. Facsimile or
photocopied signatures shall be deemed as effective as original signatures.


 


(e)           This Agreement shall be deemed to have been entered into
and shall be construed and enforced in accordance with the laws of the State of
Utah irrespective of any conflicts of law analysis.


 


If this Agreement is acceptable to you,
please sign below and return the original, fully executed Agreement to Harlan
M. Hatfield, General Counsel.  A copy of
the Agreement is also being provided to you for your records.


 


 


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I look forward to your future contributions
to the Company.


 


	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HEADWATERS INCORPORATED

  	
   

  	
  AGREED AND ACCEPTED:

  
	
   

  	
   

  	
   

  
	
      /s/
  Kirk A. Benson

  	
   

  	
      /s/
  Steven G. Stewart

  
	
  Kirk
  A. Benson

  	
   

  	
  Steven
  G. Stewart

  
	
  Chief Executive Officer

  	
   

  	
  Date: 10-26-07

  



 


 


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EXHIBIT A


GENERAL
RELEASE LANGUAGE


 


Executive agrees, for himself, his spouse, heirs,
executor or administrator, assigns, insurers, attorneys and other persons or
entities acting or purporting to act on his behalf (the “Executive’s Parties”),
to irrevocably and unconditionally release, acquit and forever discharge the
Company, its parent, affiliates, subsidiaries, directors, officers, employees,
shareholders, partners, agents, representatives, predecessors, successors,
assigns, insurers, attorneys, benefit plans sponsored by the Company and said
plans’ fiduciaries, agents and trustees (the “Company’s Parties”), from any and
all actions, cause of action, suits, claims, obligations, liabilities, debts,
demands, contentions, damages, judgments, levies and executions of any kind,
whether in law or in equity, known or unknown, which the Executive’s Parties
have, have had, or may in the future claim to have against the Company’s
Parties by reason of, arising out of, related to, or resulting from Executive’s
employment with the Company or the termination thereof.  This release specifically includes without
limitation any claims arising in tort or contract, any claim based on wrongful
discharge, any claim based on breach of contract, any claim arising under
federal, state or local law prohibiting race, sex, age, religion, national
origin, handicap, disability or other forms of discrimination, any claim
arising under federal, state or local law concerning employment practices, and
any claim relating to compensation or benefits. 
This specifically includes, without limitation, any claim which the
Executive has or has had under Title VII of the Civil Rights Act of 1964, as
amended, the Age Discrimination in Employment Act, as amended, the Americans
With Disabilities Act, as amended, and the Employee Retirement Income Security Act
of 1974, as amended.  It is understood
and agreed that the waiver of benefits and claims contained in this section
does not include a waiver of the right to payment of any vested, nonforfeitable
benefits to which the Executive or a beneficiary of the Executive may be
entitled under the terms and provisions of any employee benefit plan of the
company which have accrued as of the separation date and does not include a
waiver of the right to benefits and payment of consideration to which Executive
may be entitled under this Agreement or any of the agreements contemplated
hereby (including the indemnification agreement and the stock option
agreements).  Executive acknowledges that
he is only entitled to the severance benefits and compensation set forth in
this Agreement, and that all other claims for any other benefits or
compensation are hereby waived, except those expressly stated in the preceding
sentence.


 


The Company agrees to irrevocably and unconditionally
release, acquit and forever discharge Executive from any and all actions, cause
of action, suits, claims, obligations, liabilities, debts, demands,
contentions, damages, judgments, levies and executions of any kind, whether in
law or in equity, known or unknown, which the Company has, has had, or may in
the future claim to have against the Executive, liability for which the Company
would otherwise be obligated to indemnify the Executive under Delaware law, the
Certificate of Incorporation of the Company, the bylaws of the Company, or the
Executive’s indemnification agreement with the Company by reason of, arising
out of, related to, or resulting from Executive’s employment with the Company
or the termination thereof (the “Company’s Release”), provided that (i)
Executive shall have 


 


 


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acted in good faith and in a manner that Executive
reasonably believed to be in or not opposed to the best interest of the
Company, and shall not have engaged in willful misconduct or breach of an
agreement with the Company; and (ii) the Company’s Release shall not extend to
any acts or omissions of the Executive for which the Company would be
prohibited from indemnifying the Executive under Delaware Law,  the provisions of the Certificate of
Incorporation, or  the Bylaws of the
Company then in effect or which would excuse, negate, or invalidate the
obligations of the insurer under any director and officer liability policy
procured by the Company and covering the Executive.


 


 


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