Document:

PLEDGE AND SECURITY AGREEMENT

         THIS PLEDGE AND SECURITY AGREEMENT is made and entered into this 26th
day of January, 2001 by and between Gerald M. Larson, an individual ("Pledgor")
and Headwaters Incorporated, a Delaware corporation ("Secured Party").

                                    RECITALS

         Pledgor has delivered to Secured Party Pledgor's Promissory Note (the
"Note") of even date in the original principal amount of $1,750,000.00. Pledgor
has agreed to grant Secured Party a security interest in certain collateral
described below to secure the Note.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the premises, the covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

         1. Pledge of Securities.

                  (a) Pledgor hereby pledges, assigns and delivers to Secured
Party and grants to Secured Party a security interest in 10,000 common shares of
Larson Holdings, Inc. (the "Corporation"), together with all proceeds and
substitutions of any thereof, all cash, stock and other monies and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and non-cash proceeds of the foregoing
(all hereinafter called the "Pledged Collateral"), as security for the prompt
repayment of the Note (collectively, the "Secured Indebtedness"). The term
Pledged Collateral shall also include any securities, instruments or
distributions of any kind issuable, issued or received by Pledgor upon
conversion of, in respect of, on account of, or in exchange or substitution for
any other Pledged Collateral, including, but not limited to, those arising from
a stock dividend, stock split, reclassification, reorganization, merger,
consolidation, sale of assets or other exchange of securities or any dividends
or other distributions of any kind upon or with respect to the Pledged
Collateral.

                  (b) Contemporaneously with the execution of this Agreement,
the certificate or certificates for the securities included in the Pledged
Collateral, duly endorsed in blank by Pledgor with signature guaranteed or
accompanied by an instrument of assignment duly executed in blank by Pledgor
with signature guarantee, have been delivered to Secured Party. Secured Party
may hold such certificate(s) for disposition pursuant to this Agreement without
transfer into its name or it may at any time cause such certificate(s) to be
transferred into its own name with or without notation of Pledgor's beneficial
interest therein.

                  (c) Pledgor warrants and represents to Secured Party that the
Pledged Collateral represents 100% of the issued and outstanding capital stock
of the Corporation.

         2. Covenants. Pledgor hereby covenants that, until all of the Secured
Indebtedness has been satisfied in full, he will not sell, convey or otherwise
dispose of any of the

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Pledged Collateral or any interest therein or create, incur or permit to exist
any pledge, mortgage, lien, charge or encumbrance or any security interest
whatsoever in or with respect to any of the Pledged Collateral other than that
created hereby.

         3. Voting Prior to Default. Unless an Event of Default hereunder shall
have occurred and be continuing, Pledgor shall be entitled to exercise any
voting rights with respect to the Pledged Collateral and to give consents,
waivers and ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement, or which would constitute
or create any violation of any of such terms.

         4. Events of Default. Each of the following shall constitute an event
of default ("Event of Default") hereunder:

                  (a) The occurrence of an event of default under the Note; or

                  (b) Failure by Pledgor to observe or perform any of the
provisions of this Agreement and such failure shall continue unremedied for a
period of 30 days after the Secured Party shall give notice to Pledgor of such
failure.

         5. Secured Party's Remedies Upon Default.

                  (a) Upon the occurrence of an Event of Default, Secured Party
shall have the right to exercise all such rights as a secured party under the
Uniform Commercial Code of Utah (the "U.C.C.") as he, in his sole judgment,
shall deem necessary or appropriate, without demand of performance or other
demand, advertisement, or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon Pledgor or any other
person (all of which are to the extent permitted by law, hereby expressly waived
by Pledgor), including the right to sell all or any part of the Pledged
Collateral at one or more public or private sales at any exchange, through any
interdealer quotation system; and any such sale or sales may be made for cash,
upon credit, or for future delivery, and in connection therewith, Secured Party
may grant options, provided that any such terms or options shall, in the best
judgment of Secured Party, be extended only in order to obtain the best possible
price. Secured Party need not give more than five days notice of the time and
place of any public sale or of the time after which a private sale or other
disposition of the Pledged Collateral may take place, which notice Pledgor
hereby deems reasonable.

                  (b) Pledgor recognizes that Secured Party may be unable to
effect a public sale of all or a part of the Pledged Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Act"), so that Secured Party may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire the Pledged Collateral for their own account, for
investment and without a view to the distribution or resale thereof. Pledgor
understands that private sales so made may be at prices and on other terms less
favorable to the seller than if the Pledged Collateral were sold at public
sales, and agrees that Secured Party has no obligation to delay the sale of any
of the Pledged Collateral for the period necessary to register such securities
for sale under the Act. Pledgor agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. On any sale of the Pledged Collateral, Secured Party is
hereby authorized to comply with any limitation or restriction, compliance with
which is necessary, in the

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<PAGE>

view of Secured Party's counsel, in order to avoid any violation of applicable
law or in order to obtain any required approval of the purchaser by any
applicable governmental authority.

                  (c) After the sale of any of the Pledged Collateral, Secured
Party may deduct all reasonable legal and other expenses and attorney's fees for
preserving, collecting, selling and delivering the Pledged Collateral and for
enforcing his rights with respect to the Note and shall apply the residue of the
proceeds to, or hold it as a reserve against, the amount owing under the Note in
such manner as Secured Party in his sole discretion shall determine, and shall
pay the balance, if any, to Pledgor in proportion to his respective interests in
the Pledged Collateral. To facilitate the exercise of Secured Party's remedies
following an Event of Default, Pledgor hereby appoints Secured Party as his
attorney-in-fact to collect and receive all payments in respect of the Pledged
Collateral, and to endorse the name of Pledgor thereto for such purpose, and to
apply such receipts to the amount owed under the Note and to execute on behalf
of Pledgor all financing statements and other documents necessary to perfect and
maintain Secured Party's security interest in the Pledged Collateral. The
remedies provided herein in favor of Secured Party shall not be deemed
exclusive, but shall be cumulative, and shall be in addition to all other legal
and equitable remedies which Secured Party may have, and no delay on the part of
Secured Party in exercising any of his powers or rights, or any partial or
single exercise thereof, shall constitute a waiver thereof.

         6. Release of Pledged Collateral. When the Note has been paid in full,
Secured Party will return to Pledgor the Pledged Collateral.

         7. Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered, telegraphed or
mailed by certified or registered mail:

         To Secured Party:

                  Headwaters, Incorporated
                  11778 S. Election Drive, Suite 210
                  Salt Lake City, UT 84020

         To Pledgor:

                  Gerald M. Larson
                  3398 N. Frontage Road
                  Lehi, UT 84043

         8. Miscellaneous.

         (a) Other than the exercise of reasonable care to assure the safe
physical custody of the Pledged Collateral while held by Secured Party
hereunder, Secured Party shall have no duty or liability, including without
limitation, any obligation or duty to collect any sums due in respect thereof or
to protect or preserve any rights against prior parties or any other rights
pertaining thereto and shall be relieved of all responsibility for the Pledged
Collateral upon surrendering it or tendering surrender of it to Pledgor.

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<PAGE>

                  (b) Pledgor, at his expense, will execute, acknowledge and
deliver all such instruments in form satisfactory to Secured Party and take all
such action as Secured Party from time to time may reasonably require in order
further to effectuate the purposes of this Agreement and to carry out the terms
hereof.

                  (c) This Agreement shall inure to the benefit of and shall be
binding upon the heirs, personal representatives and successors of the parties
hereto.

                  (d) This Agreement and the rights and obligations hereunder
shall be construed in accordance with and governed by the laws of the State of
Utah without regard to principles of conflicts of law.

                  (e) The paragraph headings used herein are for convenience
only and do not affect or modify the terms and conditions hereof.

                  (f) If any provision hereof is found by a court of competent
jurisdiction to be prohibited or unenforceable, it shall be ineffective only to
the extent of such prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision to the
extent it is not prohibited or enforceable, nor invalidate the other provisions
hereof.

                  (g) This Agreement, together with the Note Restructure
Agreement, Restructured Note, Larson Holdings, Inc.'s Guaranty, and Larson
Holdings, Inc.'s Stock Pledge and Security Agreement (together, the "Transaction
Documents") contain all covenants, terms, provisions, and agreements between the
parties hereto or thereto relating to the subject matter of the Transaction
Documents. No prior agreement with respect to the same shall be of any force or
effect, and no covenant, term, provision, or agreement of any Transaction
Document may be modified except in a writing executed by all parties to the
Transaction Documents.

                  IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                                      /s/ Gerald M. Larson
                                                     ---------------------
                                                     Gerald M. Larson

                                                     HEADWATERS INCORPORATED

                                                     By: /s/ Steven G. Stewart

                                       -4-FIRST AMENDMENT TO5 LOAN AGREEMENT

         This FIRST Amendment to Loan Agreement (the "Amendment") is executed
this 1ST day of FEBRUARY, 2001, by and between HEADWATERS INCORPORATED,
("Borrower") and ZIONS FIRST NATIONAL BANK (the "Lender").

         WHEREAS, Borrower and Lender entered into that certain Loan Agreement
dated October 18, 2000, which provided, among other things, for Lender to extend
a Revolving Line of Credit in the maximum principal amount of EIGHT MILLION and
 .00/100 Dollars ($8,000,000.00) (the "Loan Agreement"); and

         WHEREAS, Borrower has requested Lender to renew and increase the
Revolving Line of Credit to TEN MILLION and 00/100 ($10,000,000.00) and amend
certain financial covenants, and;

         WHEREAS, Lender has agreed to such request provided, among other
things, Borrower executes and delivers this Amendment.

         NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Loan Agreement is hereby amended as
follows:

         1.       The section  entitled  Borrowing Base is hereby deleted in its
                  entirety and replace with the following:

                  Borrowing Base. The words "Borrowing Base" mean, as determined
                  by Lender from time to time, the lesser of (a) $10,000,000.00;
                  or (b) 80.000% of the aggregate amount of royalties receivable
                  from license agreements,  earned for the most recent month-end
                  times two; plus (ii) 80% of monthly accounts receivable earned
                  from sale of binder, plus (iii) 50% of the aggregate amount of
                  the  outstanding  principal  balance  of the  Promissory  Note
                  between Covol Technologies, Inc. and Birmingham Synfuel, LLC.

         2.       The  section  entitled  Earnings,  is  hereby  deleted  in its
                  entirety.

         3.       A new section  entitled Net Worth, is hereby added to the Loan
                  Agreement as follows:

                  Net  Worth:   Borrower   shall   maintain  a  ratio  of  total
                  liabilities  divided by tangible  net worth not to exceed 2:1,
                  measured quarterly.

         4.       A new paragraph entitled Loans, Acquisitions and Guaranties is
                  hereby  added to the section  entitle  Negative  Covenants  as
                  follows:

                  Loans, Acquisitions and Guaranties. Following the date of this

<PAGE>

                  amendment, (a) Loan, invest in or advance money or assets, (b)
                  purchase, create or acquire any interest in any other
                  enterprise or entity in aggregate amount of more than
                  $2,000,000.00, or (c) incur any obligation as surety or
                  guarantor in excess of $2,000,000.00 other than in the
                  ordinary course of business.

         5.       A new section  entitled  Account Debtor is hereby added to the
                  Loan Agreement as follows:

                  Account Debtor.  Any bankruptcy  from any account  debtor,  or
                  account  debtor  parent  would  result  in  the  exclusion  of
                  receivables or notes from the borrowing base described herein.

         6.       A new section entitled  Additional Event of Default, is hereby
                  added to the Loan Agreement as follows

                  Additional Event of Default. Borrower acknowledges that an
                  additional event of default under this agreement shall occur
                  in the event that any change in Section 29 of the US Internal
                  Revenue Code that would result in a material adverse impact on
                  Borrower's business. Such determination shall be made by
                  Lender's sole discretion.

         7.       The section entitled Royalty Revenues is hereby deleted in its
                  entirety and replace with the following:

                  Royalty Revenues. Borrower shall maintain Royalty Revenue from
                  Licensees   and   Gross   Binder   Profit  of  not  less  than
                  $1,200,000.00 per month.

         Except as amended  herein,  all other terms and  conditions of the Loan
Agreement remain in full force and effect and are applicable to this Amendment.

         IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment as
of the date and year first above written.

HEADWATERS INCORPORATED                         Zions First National Bank

By: /s/ Kirk A. Benson                          By: /s/ Tracy Groll
   ------------------------------                  ----------------------------
   Kirk A. Benson, Chairman & CEO                  Tracy Groll, Vice President

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