Exhibit 10.90.1


                             HEADWATERS INCORPORATED
                     NONSTATUTORY STOCK OPTION GRANT NOTICE
                            (GRANT OUTSIDE OF A PLAN)

Headwaters Incorporated, a Delaware corporation (the "Company"), hereby grants
an option (the "Option") to purchase shares of its common stock, par value
$0.001 per share ("Common Stock"), to the individual named below (the
"Optionee"). The terms and conditions of the Option are set forth in this Grant
Notice, and in the attachments, the terms of which are incorporated herein by
this reference. The Option is granted outside of any plan of the Company and is
made as an inducement to the Optionee to accept and continue employment with the
Company.

Date of Grant:                                  September 22, 2004

Name of Optionee:                     John N. Lawless, III______________________
Number of Shares Covered by Option:   One Hundred Twenty Five Thousand (125,000)
Exercise Price (Per Share):           $28.49____________________________________
Vesting Start Date:                   September 22, 2004________________________
Expiration Date:                      One Day Prior to Tenth Anniversary of Date
                                        of Grant
Permissible Forms of Payment:         Payment of the exercise price may be made
                                      in cash, check or any other method
                                        provided in the Stock Option Agreement.

Vesting Schedule: The total number of shares subject to this Option shall vest
according to the following schedule, subject to the Optionee's Continuous
Service and satisfaction of all applicable conditions to vesting and
exercisability set forth in the Stock Option Agreement.

                                                 Percentage of Total Shares
                  Vesting Date                    Vesting On Vesting Date
                  ------------                    -----------------------

                  March 31, 2005                              20%
                  March 31, 2006                              20%
                  March 31, 2007                              20%
                  March 31, 2008                              20%
                  March 31, 2009                              20%

No additional shares shall vest after your "Continuous Service" (as defined in
the attached Stock Option Agreement) has terminated except as otherwise set
forth in the Stock Option Agreement.

By signing below, you acknowledge and agree to all of the terms and conditions
set forth herein and in the attached Stock Option Agreement and Notice of
Exercise.


Optionee:
          ------------------------------------
               (Signature)

Company:
          ------------------------------------
          Steven G. Stewart (Signature)
          Title:  Chief Financial Officer

Attachments
Attachment I: Stock Option Agreement
Attachment II: Form of Notice of Exercise

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                                  ATTACHMENT I
                             STOCK OPTION AGREEMENT

                             HEADWATERS INCORPORATED
                             STOCK OPTION AGREEMENT

         Pursuant to your Stock Option Grant Notice ("Grant Notice") and this
Stock Option Agreement, Headwaters Incorporated, a California corporation (the
"Company"), has granted you an option (the "Option") to purchase the number of
shares of the Company's common stock, par value $0.001 per share ("Common
Stock"), indicated in the Grant Notice at the exercise price indicated in such
Grant Notice, subject to the terms set forth herein.

         This Option is granted in order to induce you to accept and continue
employment with the Company. This Option is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). This Option is granted outside
of, and is not subject to, the Company's 2003 Stock Incentive Plan or any other
stock plan of the Company.

         The terms of the Option are as follows:

         1. VESTING. Subject to the limitations contained herein, the Option
will vest as provided in your Grant Notice, provided that, except to the extent
expressly set forth herein, vesting will cease upon the termination of your
Continuous Service (as defined in Section 6 below).

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to the Option and your exercise price per share are set forth in
your Grant Notice and shall be adjusted for Capitalization Adjustments, if any,
as provided in Section 9 below.

         3. METHOD OF PAYMENT. Payment of the applicable exercise price is due
in full upon exercise of all or any part of the Option. You may elect to make
payment of the exercise price in cash or by check or pursuant to one of the
following methods:

                  (a) In the Company's sole discretion at the time you exercise
the Option and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, payment may be
made pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds of the shares of Common Stock underlying the Option (a
"cashless exercise").

                  (b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in THE WALL STREET JOURNAL, payment may be
made by delivery of already-owned shares of Common Stock either that you have
held for the period required to avoid a charge to the Company's reported
earnings (generally six months) or that you did not acquire, directly or
indirectly, from the Company, that are owned free and clear of any liens,
claims, encumbrances or security interests, and that are valued at Fair Market
Value on the date of exercise. "Delivery" for these purposes, in the sole
discretion of the Company at the time you exercise the Option, shall include
delivery to the Company of your attestation of ownership of such shares of
Common Stock in a form approved by the Company. Notwithstanding the foregoing,
you may not exercise the Option by tender to the Company of Common Stock to the
extent such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company's stock.

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            "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows: (i) if the Common Stock is listed on any
established stock exchange or traded on the NASDAQ National Market or the NASDAQ
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable, or (ii) in the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Board of Directors of the Company.

         4. WHOLE SHARES. You may exercise the Option only for whole shares of
Common Stock.

         5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise the Option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
of 1933, as amended (the "Securities Act"), or, if such shares of Common Stock
are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Securities
Act. The exercise of the Option must also comply with other applicable laws and
regulations governing the Option, and you may not exercise the Option if the
Company determines that such exercise would not be in material compliance with
such laws and regulations.

         6. TERM. The term of the Option commences on the Date of Grant (as
specified in your Grant Notice) and expires upon the EARLIEST of the following:

                  (a) three (3) months after the termination of your Continuous
Service for any reason other than your Disability, death or termination without
"Cause" (as defined in your employment agreement with the Company or its
affiliated corporation) or for "Good Reason" (as defined in your employment
agreement with the Company or its affiliated corporation); PROVIDED that if
during any part of such three- (3-) month period the Option is not exercisable
solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," the Option shall not expire until the earlier of
the Expiration Date indicated in your Grant Notice or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of
your Continuous Service;

                  (b) twelve (12) months after the termination of your
Continuous Service as an Employee, Director or Consultant due to your
Disability;

                  (c) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your Continuous
Service terminates;

                  (d) six (6) months after the termination of your Continuous
Service as a result of a termination of your employment without "Cause" (as
defined in your employment agreement with the Company or its affiliated
corporation) or for "Good Reason" (as defined in your employment agreement with
the Company or its affiliated corporation); or

                  (e) the Expiration Date indicated in your Grant Notice.

Notwithstanding the foregoing, the terms of this Stock Option Agreement shall be
subject to acceleration of vesting and extension of exercisability pursuant to
Section 10 and Section 12, as applicable.

For purposes of your option, "Continuous Service" means that your service with
the Company or an affiliate of the Company, whether as an employee, director or

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<PAGE>

consultant, is not interrupted or terminated. Your Continuous Service shall not
be deemed to have terminated merely because of a change in the capacity in which
you render service to the Company or an affiliate as an employee, consultant or
director or a change in the entity for which you render such service, provided
that there is no interruption or termination of your Continuous Service. For
example, a change in status from an employee of the Company directly to a
consultant of an affiliate or a director will not constitute an interruption of
Continuous Service. The Board of Directors of the Company (the "Board") or the
Compensation Committee of the Board, in each body's sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case
of any leave of absence, including sick leave, military leave or any other
personal leave.

         For purposes of your option, "Disability" means the permanent and total
disability of a person within the meaning of Section 22(e)(3) of the Code.

         7. EXERCISE.

                  (a) You may exercise all or any portion of the vested portion
of the Option during its term by delivering a Notice of Exercise (in the
attached form, or such other form as may be designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

                  (b) By exercising the Option you agree that, as a condition to
any exercise of all or part of the Option, the Company may require you to enter
into an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
the Option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise or (3) the
disposition of shares of Common Stock acquired upon such exercise.

         8. TRANSFERABILITY. The Option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise the
Option, subject to the terms and conditions otherwise applicable to such
exercise, the issuance of Common Stock pursuant to such exercise and the
subsequent transfer of such Common Stock.

         9. CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Option without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), this Stock Option Agreement will be appropriately
adjusted in the class(es) and number of shares and price per share of stock
subject to the Option. Such adjustments shall be made by the Board,
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
transaction "without receipt of consideration" by the Company.)

         10. CORPORATE SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the
event of (i) a sale of all of the securities of the Company or a consolidation
or merger of the Company with or into any other corporation or other entity or
person, or any other corporate reorganization, in which the stockholders of the
Company immediately prior to such sale, consolidation, merger or reorganization,
own less than 50% of the outstanding voting power of the surviving entity (or
its parent) following the consolidation, merger or reorganization or (ii) any

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transaction (or series of related transactions involving a person or entity, or
a group of affiliated persons or entities) in which in excess of fifty percent
(50%) of the Company's outstanding voting power is transferred, then any
surviving corporation or acquiring corporation shall continue or assume the
Option under this Agreement or shall substitute similar stock awards (including
an award to acquire the same consideration paid to the stockholders of the
Company in the transaction described in this Section 10) for the Option under
this Agreement. In the event any surviving corporation or acquiring corporation
in such transaction refuses to assume the Option under this Agreement or to
substitute similar stock awards for the Option under this Agreement, then (i)
the Company shall give written notice to you within a reasonable period of time
of not less than ten (10) days prior to the effectiveness of the transaction
that the surviving corporation or acquiring corporation has refused to assume
the Option or to substitute similar stock awards for the Option under this
Agreement, and (ii) the vesting and exercisability of the Option under this
Agreement (and, if applicable, the time during which the Option may be
exercised) shall be accelerated in full immediately prior to such transaction
provided that the transaction occurs (so that you will have the opportunity to
exercise the Option under this Agreement prior to the transaction), and the
Option under this Agreement shall terminate if not exercised (if applicable)
upon the effectiveness of such transaction.

         11. OPTION NOT A SERVICE CONTRACT. The Option is not an employment or
service contract, and nothing herein shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an affiliate, or of the Company or an affiliate to continue your employment.
In addition, nothing herein shall obligate the Company or an affiliate, their
respective stockholders, Boards of Directors, officers or employees to continue
any relationship that you might have as a director or consultant for the Company
or an affiliate.

         12. ACCELERATION OF EXERCISABILITY AND VESTING. (a) Notwithstanding any
other provision herein and subject and pursuant to the terms and conditions of
the Executive Change in Control Agreement between the Company and the Optionee
effective as of September 22, 2004 (the "CIC Agreement"), in the event that a
"Change in Control" (as defined in the CIC Agreement) occurs prior to the
expiration or exercise in full of the Option, the Option shall, immediately
prior to the effectiveness of the Change in Control, vest in full and shall
become fully exercisable, and, unless the Option is terminated because the
Option is not continued, assumed or substituted for as provided in Section 10
above, the Option shall remain exercisable for a period of twenty-four (24)
months following the termination of the Optionee's employment (as determined
under the CIC Agreement). In the event the Change in Control is not consummated,
this provision shall not have any force or effect.

                  (b) The Board shall retain the power to accelerate the time at
which the Option may first be exercised or the time during which the Option or
any part thereof will vest, notwithstanding the provisions in the Grant Notice
or this Stock Option Agreement stating the time at which it may first be
exercised or the time during which it will vest.

                  (c) The Company shall give written notice to you within a
reasonable period of time of not less than ten (10) days of the expected date of
the effectiveness of the Change in Control.

         13. STOCKHOLDER RIGHTS. You shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common
Stock subject to the Option unless and until you have satisfied all requirements
for exercise of the Option pursuant to its terms.

         14. WITHHOLDING OBLIGATIONS.

                  (a) At the time you exercise the Option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless

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exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an affiliate of the Company, if any, which arise
in connection with the exercise of the Option.

                  (b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to you upon the exercise of the Option a number of
whole shares of Common Stock having a fair market value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
the Option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of the Option.

                  Notwithstanding the filing of such election, shares of Common
Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of the Option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.

                  Notwithstanding the foregoing, the Company shall not be
authorized to withhold shares of Common Stock in excess of the minimum statutory
withholding requirements for federal and state tax purposes, including payroll
taxes.

                  (c) You may not exercise the Option unless the tax withholding
obligations of the Company and/or any affiliate are satisfied. Accordingly, you
may not be able to exercise the Option when desired even though your option is
vested, and the Company shall have no obligation to issue such shares of Common
Stock.

         15. NOTICES. Any notices provided for or required in connection with
the Option shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to you, five
calendar (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.

         16. CHOICE OF LAW. This option shall be governed by, and construed in
accordance with the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such State.

         17. GOVERNING AUTHORITY. This Option is subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted by the Company. This authority shall be exercised by the Board, or by a
committee of one or more members of the Board in the event that the Board
delegates its authority to a committee. The Board, in the exercise of this
authority, may correct any defect, omission or inconsistency in this Option in a
manner and to the extent the Board shall deem necessary or desirable to make
this Option fully effective. References to the Board also include any committee
appointed by the Board to administer and interpret this option. Any
interpretations, amendments, rules and regulations promulgated by the Board
shall be final and binding upon the Company and its successors in interest as
well as you and your heirs, assigns, and other successors in interest.

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         18. AMENDMENT OF OPTION. The Board at any time, and from time to time,
may amend the terms of this Option; PROVIDED, HOWEVER, that the rights under
this Option shall not be impaired by any such amendment unless (i) the Company
requests your consent and (ii) you consent in writing.

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                                  ATTACHMENT II
                           FORM OF NOTICE OF EXERCISE

                               NOTICE OF EXERCISE


Headwaters Incorporated (the "Company")
10653 S. River Front Parkway, Suite 300
South Jordan, UT 84095                            Date of Exercise: ____________

Ladies and Gentlemen:

         This constitutes notice under my nonstatutory stock option that I elect
to purchase the number of whole shares of the common stock of the Company for
the price set forth below.

         Stock option dated:                 _______________________

         Number of shares as
         to which option is
         exercised:                          _____________________(the "Shares")

         Certificates to be
         issued in name of:                  ________________________

         Total exercise price:               $_______________________

         Cash payment delivered
         herewith:                           $_______________________

         By this exercise, I agree (i) to provide such additional documents as
you may require and (ii) to provide for the payment by me to the Company (in the
manner designated by the Company) of your withholding obligation, if any,
relating to the exercise of this option. By this exercise, I also hereby agree
to be bound by the insider trading policies of the Company and its affiliated
corporations. I warrant and represent to the Company that I have no present
intention of distributing or selling said Shares, except as permitted under the
Securities Act of 1933, as amended, and any applicable state securities laws.

         I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws. In order to enforce the foregoing
covenants, the Company may impose stop-transfer instructions with respect to my
Shares whiles such covenants are applicable.

                                                    Very truly yours,




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