Exhibit 10.60.4



August 2, 2004

Dr. Raul Deju
5 Hastings Court
Moraga, CA  94556

         Re:      Amendment of Employment Agreement and Agreement for Further
                  Employment

Dear Raul:

         This letter agreement (the "Agreement") constitutes an agreement to
amend the employment agreement dated October 14, 1997 and amended October 1,
2001 both attached hereto ("Employment Agreement") between Dr. Raul Deju ("you"
or "Employee") and JTM Industries, Inc., a company merged into ISG Resources,
Inc. (JTM industries, Inc. and ISG Resources, Inc. interchangeably referred to
in this Agreement as "ISG"), a subsidiary as of September 2002 of Headwaters
Incorporated ("Headwaters") and provides for your future services to Headwaters
and ISG. Capitalized terms used herein and not otherwise defined have the same
meaning as in the Employment Agreement.

         The terms of our Agreement are as follows:

1.       Amendment of Employment Agreement. Employee and Employer agree to amend
         the Employment Agreement so that the Term as defined therein shall end
         effective August 2, 2004.

2.       New Employment Term. The parties agree that Employee will continue his
         status as an employee of Employer under the terms of this Agreement
         effective August 3, 2004 ("Effective Date") and continuing through
         October 3, 2006 ("Period of Employment").

3.       Reassignment. Employee shall resign from his executive positions with
         Headwaters, as President of ISG, and as a member of the board of
         directors of ISG and subsidiaries of Headwaters and ISG as of the
         Effective Date. Employee will however, continue as an employee of
         Headwaters with a designated title of Vice President until the end of
         the Period of Employment. The parties anticipate that Employee's duties
         during the Period of Employment will not require efforts in excess of
         twenty hours per month. Employee will be free during the Period of
         Employment to seek and hold other employment provided it does not
         conflict with his duties hereunder or with his non-competition
         obligations under Section 8 of the Employment Agreement.

4.       Services to be Rendered. During the Period of Employment, and subject
         to mutually agreed upon scheduling, Employee agrees to perform such
         assignments as may reasonably be assigned by Headwaters' CEO including
         (i) representing Headwaters in selected trade organizations such as
         ACAA and EPRI; (ii) supporting Headwaters' Vice President of Marketing
         and Government Relations; (iii) supporting the senior officers of the
         Coal Combustion Products business unit with client relationships,

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Dr. Raul Deju
August 2, 2004
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         planning, and consulting on an as needed basis; (iv) identifying new
         opportunities for Headwaters in the areas of post-combustion fly ash
         and building products; (v) assisting Headwaters on a transition of
         responsibilities regarding Flexcrete L.C.; and (vi) delivering a
         monthly report to the CEO of pertinent activities during the past month
         and activities planned for the succeeding month.

5.       Employment Benefits. Employee and Headwaters agree to the following
         benefits through the Period of Employment:

         A.       Compensation. From the Effective Date through October 3, 2004,
                  Headwaters will pay you a gross salary of $28,333 per month,
                  and the same benefits as you are currently receiving, and from
                  October 4, 2004 through the Period of Employment, Headwaters
                  will pay you a gross salary of $10,000 per month, subject to
                  withholdings, to be paid at regular payroll periods in
                  accordance with Headwaters' customary payroll practices in
                  effect at the time such is due. In addition, you will have the
                  opportunity to earn a bonus equal to one percent of the actual
                  gross revenue from the trailing twelve months at the time of
                  acquisition or merger from a new business proposal or
                  acquisition presented by you to the CEO during the Employment
                  Period, and adopted or acquired by Headwaters during the
                  Employment Period, or at any time up to 12 months following
                  the Employment Period, up to $200,000, to be paid within sixty
                  (60) days after each such transaction is consummated.
                  Compensation for any larger proposed transactions will be
                  subject to further negotiation and agreement between the
                  parties.

         B.       Business Expenses. Upon presentation of an itemized account
                  and supporting documentation to Headwaters, you will be
                  reimbursed in a timely manner within thirty (30) days for
                  necessary and reasonable travel, meals, lodging,
                  communications and other business expenses in the course of
                  performing your employment duties.

         C.       Health and Dental Benefits. You shall continue to receive
                  health and dental benefits in accordance with such benefits as
                  generally available from time-to-time to other company
                  employees. You may choose from the available health and dental
                  plans, and Headwaters shall continue to contribute to the
                  health and dental insurance premiums on your behalf as it does
                  for other employees through the Period of Employment. After
                  October 3, 2006, you may continue COBRA health insurance
                  coverage at your own expense as permitted by law.

         D.       Stock Options and Restricted Stock. Your Headwaters stock
                  options and restricted stock will continue to vest through the
                  Period of Employment and thereafter cease vesting. Your
                  Headwaters stock options vested as of the end of the Period of
                  Employment will remain exercisable until January 4, 2007, and
                  any unexercised options thereafter will expire. Your
                  restricted stock will be transferred to you as it vests
                  throughout the Period of Employment. The foregoing remains
                  subject in all respects to the terms and conditions of grant
                  and the 2002 Stock Incentive Plan and the 2003 Stock Incentive
                  Plan.

         E.       EVA Bonus. You will receive a bonus under Headwaters'
                  Incentive Bonus Plan for the full 2004 fiscal year, subject to
                  the generally applicable terms and conditions of the plan, and
                  subject to the determinations of Headwaters' Board of
                  Directors or its Compensation Committee. You will not
                  participate in the EVA bonus program after the 2004 fiscal
                  year and will therefore not be entitled to the banked portion
                  of the 2004 award or any banked portion from past years'
                  awards, except for the banked portion from the 2003 fiscal

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Dr. Raul Deju
August 2, 2004
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                  year payable in 2004 in addition to unbanked portion of the
                  fiscal year 2004 award. This Agreement does not change your
                  fiscal year 2004 EVA bonus, which shall be calculated using an
                  individual business goal multiplier of not less than 95
                  percent, based on the non-financial business targets (items
                  3-7 of the attached Individual Business Objective Plan) being
                  no less than 65 percent, and the financial objectives (items 1
                  and 2 of the attached Individual Business Objective Plan)
                  being no less than 30 percent.

         F.       Incentive Agreement. This Agreement and your change in
                  employment status as of the Effective Date do not affect or
                  change in any manner the Incentive Agreement between you and
                  Headwaters, dated November 12, 2002, a copy of which is
                  attached hereto

         G.       Other Benefits. During the Period of Employment, you will not
                  be eligible for benefits that are available to regular
                  employees such as new incentive stock awards, bonuses, or
                  benefits, except as provided Section 5 of this Agreement.
                  Ownership and title to the automobile currently assigned to
                  you will be transferred to you upon your payment to us of
                  $1,000 prior to September 30, 2004.

6.       Non-Disclosure; Headwaters Property. You agree not to disclose the
         terms of this Agreement, the benefits being paid under it or the facts
         of these payments to anyone, except that you may disclose this
         information to your spouse and those individuals who have a need to
         know in order for them to render professional, legal, or financial
         services to you, or as may be required by court order, law, rule or
         regulation. At the end of the Period of Employment, you also agree to
         return all property that belongs to Headwaters. You reaffirm the
         covenants you made in Sections 5, 6, and 7of your existing Employment
         Agreement.

7.       Release of Claims. You fully discharge and release, and agree that this
         Agreement is in full satisfaction of, any claims, liabilities, demands
         or causes of action, known or unknown, that you ever had, now have, or
         may claim to have had against Headwaters or any parents, subsidiaries,
         directors, officers, employees or agents of Headwaters for any reason
         as of the Effective Date, except (i) as specifically provided in this
         Agreement, (ii) claims for vested benefits based on your employment and
         claims for workers' compensation insurance and unemployment insurance
         benefits; and (iii) claims for defense and indemnity as an officer or
         director of ISG, Headwaters, or any subsidiaries of same. Any such
         claims whether for discrimination, including claims under the Fair
         Employment and Housing Act, Title VII of the Civil Rights Act of 1964
         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 claims are hereby released and you agree and
         promise that you will not file any lawsuit asserting any such claims.
         Except as otherwise specifically provided in this Agreement,
         Headwaters, ISG, and their subsidiaries ("Headwaters Parties") fully
         discharge and release you from, and agree that this Agreement is in
         full satisfaction of, any claims, liabilities, demands or causes of
         action, known or unknown, that the Headwaters Parties and/or their
         predecessor companies ever had, now have, or may claim to have had
         against you for any reason as of the Effective Date, including without
         limitation any issues connected with the ISG merger transactions and
         your involvement with ISG as an officer or director. The Parties each
         acknowledge that he or it have had the benefit of counsel, and have
         been advised of, understands and knowingly and specifically waives his
         or its rights under California Civil Code Section 1542 which provides

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Dr. Raul Deju
August 2, 2004
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         as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
         CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
         EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
         AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

8.       Acknowledgment of Waiver of Claims under ADEA; EEOC. You acknowledge
         that you are waiving and releasing any rights you may have under the
         Age Discrimination in Employment Act of 1967 ("ADEA") and that the
         waiver and release is knowing and voluntary. You and Headwaters agree
         that the waiver and release does not apply to any rights or claims that
         may arise under ADEA after the Effective Date. You acknowledge that the
         consideration given for the waiver and release of claims under this
         Agreement is in addition to anything of value to which you were already
         entitled. You also acknowledge that you have been advised by this
         writing that (a) you should consult with an attorney prior to executing
         the Agreement; (b) you have at least twenty one (21) days within which
         to consider the Agreement; (c) you have at least seven (7) days
         following your execution of the Agreement to revoke the Agreement; and
         (d) the Agreement shall not be effective until the revocation period
         has expired. This Agreement recognizes the rights and responsibilities
         of the Equal Employment Opportunity Commission ("EEOC") to enforce the
         statutes which come under its jurisdiction and is not intended to
         prevent you from filing a charge or participating in any investigation
         or proceeding conducted by the EEOC; provided, however, that nothing in
         this Section limits or affects the finality or the scope of the release
         provided under Section 7 or the agreement to submit claims to final and
         binding arbitration under Section 11.

9.       Confidential Information; Inventions; Non-Competition. You agree to
         abide by all Headwaters' policies, including its policy with respect to
         Headwaters confidential information and inventions both during and
         after your employment. The non-competition provisions of Section 8 of
         the existing Employment Agreement are reaffirmed with the Restricted
         Period thereof ending on October 3, 2008 and the Restricted Business
         amended to include all lines of business of ISG or its subsidiaries as
         of the Effective Date.

10.      No Cooperation; Non-Disparagement. The parties agree that they will not
         act in any manner that might damage the business or reputation of the
         other party. The parties agree that they will not counsel or assist any
         attorneys or their clients in the presentation or prosecution of any
         disputes, differences, grievances, claims, charges, or complaints by
         any third party against the other party and/or any officer, director,
         employee, agent, representative, shareholder, family member, or
         attorney of the other party, unless under a subpoena or other court
         order to do so. The parties also agree to refrain from any defamation,
         libel or slander of the other party and where applicable the other
         party's respective officers, directors, employees, investors,
         shareholders, family members, administrators, affiliates, divisions,
         subsidiaries, predecessor and successor corporations, and assigns, and
         to refrain from any tortious interference with the contracts and
         relationships of the other party and where applicable the other party's
         respective officers, directors, employees, investors, shareholders,
         family members, administrators, affiliates, divisions, subsidiaries,
         predecessor and successor corporations, and assigns.

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Dr. Raul Deju
August 2, 2004
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11.      Dispute Resolution. You agree that any future disputes between you and
         Headwaters, including but not limited to disputes arising out of or
         related to this Agreement shall be resolved by using the following
         procedures, except that the procedures in Sections 11(c) and 11(d) will
         not be followed in cases where the law specifically forbids the use of
         arbitration as a final and binding remedy, or where Section 11(d) below
         specifically allows a different remedy.

         A.       The party claiming to be aggrieved shall furnish to the other
                  party a written statement of the grievance identifying any
                  witnesses or documents that support the grievance and the
                  relief requested or proposed.

         B.       If the other party does not agree to furnish the relief
                  requested or proposed, or otherwise does not satisfy the
                  demand of the party claiming to be aggrieved, the parties
                  shall submit the dispute to nonbinding mediation before a
                  mediator to be jointly selected by the parties. Headwaters
                  will pay the cost of the mediation.

         C.       If the mediation does not produce a resolution of the dispute,
                  the parties agree that the dispute shall be resolved by final
                  and binding arbitration. The parties will attempt to agree to
                  the identity of an arbitrator, and, if they are unable to do
                  so, they will obtain a list of arbitrators from the Federal
                  Mediation and Conciliation Service and select an arbitrator by
                  striking names from that list. The arbitrator shall have the
                  authority to determine whether the conduct complained of in
                  Section 11(a) violates the rights of the complaining party
                  and, if so, to grant any relief authorized by law, subject to
                  the exclusions of Section 11(d) below. The arbitrator shall
                  not have the authority to modify, change or refuse to enforce
                  the terms of this Agreement. The hearing shall be transcribed.
                  Headwaters shall bear the costs of the arbitration if you
                  prevail. If Headwaters prevails, you will pay half the cost of
                  the arbitration. Each party shall be responsible for paying
                  its own attorneys' fees, unless the arbitrator orders
                  otherwise, pursuant to applicable law.

         D.       Arbitration shall be the exclusive final remedy for any
                  dispute between the parties, and the parties agree that no
                  dispute shall be submitted to arbitration where the party
                  claiming to be aggrieved has not complied with the preliminary
                  steps provided for above. The parties agree that the
                  arbitration award shall be enforceable in any court having
                  jurisdiction to enforce this Agreement, 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; provided however, that either party may bring an
                  action, including, but not limited to an action for injunctive
                  relief, in a court of competent jurisdiction, regarding or
                  related to matters involving Headwaters' confidential,
                  proprietary or trade secret information, or regarding or
                  related to inventions that you may claim to have developed
                  prior to joining Headwaters or after joining Headwaters, or
                  regarding or relating to your engaging in activities that
                  directly or indirectly compete with Headwaters.

12.      Severability. If any term of this Agreement is held to be invalid, void
         or unenforceable, the remainder of this Agreement shall remain in full

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Dr. Raul Deju
August 2, 2004
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         force and effect and shall in no way be affected, and the parties shall
         use their best efforts to find an alternative way to achieve the same
         result.

13.      Entire Agreement. The provisions of this Agreement set forth the entire
         agreement between you and Headwaters concerning your changes in
         employment as of the Effective Date. Any other promises, written or
         oral, are replaced by the provisions of this Agreement and are no
         longer effective unless they are contained in this Agreement.

14.      Choice of Law. The validity, interpretation, construction and
         performance of this Agreement shall be governed by the provisions of
         Section 17 of the existing Employment Agreement as if incorporated
         herein.

15.      Indemnity. Headwaters, on behalf of itself, and its affiliates,
         divisions, subsidiaries, predecessor and successor corporations, and
         their directors, officers, employees, representatives, or agents,
         hereby ratifies, adopts, and confirms the indemnification obligations
         to Employee as set out in Section 18 of the Employment Agreement.
         Further to this obligation, Headwaters shall maintain directors and
         officers liability insurance in full force and effect covering you
         unless Headwaters determines in good faith that such insurance is not
         reasonably available, in which case, Headwaters shall promptly notify
         you. Headwaters' indemnity obligation hereunder shall survive the
         termination of this Agreement and the end of the Employment Period.

16.      Ratification. Subject to the terms and conditions of grant and to the
         2002 Stock Incentive Plan and the 2003 Stock Incentive Plan, the
         parties agree that the attached list of stock options granted to
         Employee to date and the attached list of restricted stock granted to
         Employee to date, all remain in full force and effect, and are hereby
         ratified and confirmed.

17.      Counterparts. This Agreement may be executed in counterparts, and each
         counterpart shall have the same force and effect as an original and
         shall constitute an effective, binding agreement on the part of each of
         the undersigned.

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Dr. Raul Deju
August 2, 2004
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18.      Voluntary Execution of Agreement. By signing below, you acknowledge
         that you are entering into this Agreement knowingly and voluntarily. In
         addition, you acknowledge by your signature that you have carefully
         read and fully understand all the provisions of this Agreement and you
         have been represented by legal counsel in the preparation and
         negotiation of this Agreement or you have voluntarily declined to seek
         such counsel.



                                                      Sincerely,

                                                       /s/ Kirk A. Benson
                                                     ---------------------------
                                                     Kirk A. Benson
                                                     Chief Executive Officer

                                    By your signature, you agree to the terms
                                    set forth above, and you agree to this
                                    Agreement.


Date: August 2, 2004


/s/ Raul Deju
-------------------
Raul Deju