Document:

PROMISSORY NOTE

$1,750,000.00                                                         LEHI, UTAH
                                                                January 26, 2001

         FOR VALUE RECEIVED, Gerald M. Larson (hereinafter referred to as
"Maker"), promises to pay to the order of Headwaters Incorporated, a Delaware
corporation, or to its successors and assigns (hereinafter referred to as
"Lender") the principal sum of One Million Seven Hundred Fifty Thousand Dollars
($1,750,000.00) together with interest on the unpaid principal balance
outstanding from time to time, all as hereinafter set forth.

         Interest shall begin to accrue as of January 1, 2001 on the principal
amount outstanding from time to time until and after the maturity hereof
(whether by stated maturity, acceleration or otherwise) and shall be payable at
the rate of six percent (6%) per annum simple interest based on a three hundred
sixty (360) day year comprised of twelve (12) thirty (30) day months.

         The entire balance of principal and accrued interest shall be due and
payable in a single balloon payment on or before December 31, 2003.

         Payments of both principal and interest shall be paid in lawful money
of the United States of America in immediately available funds at such place as
Lender may from time to time designate. Except as otherwise provided in this
Note, if any payment of principal and/or interest due hereunder is not paid
within thirty (30) days after its due date ("Payment Default"), Maker shall pay
to Lender on demand a late charge equal to five percent (5%) of the amount of
such payment. Upon Payment Default continuing for ten (10) days after written
notice is given by the Lender hereof to the guarantor to cure the Payment
Default, then the entire unpaid principal sum and accrued interest due shall
become immediately due and payable. To the extent permitted by applicable law,
all amounts which are not paid when due as provided in this Note shall bear
interest at ten percent (10%) per annum, simple interest payable monthly.

         The prompt payment and performance of this Note is guaranteed by Larson
Holdings, Inc. This Note is secured by all of the outstanding common shares of
Larson Holdings, Inc. and the guaranty is secured by all of the outstanding
common shares of Larson Limestone Company, Inc. pursuant to a Stock Pledge and
Security Agreements of even date (the "Security Agreements").

         This Note may be prepaid in whole at any time or in part from time to
time without premium or penalty. Notwithstanding anything herein to the
contrary, the entire balance of principal and accrued interest shall become
immediately due and payable upon the occurrence of any one or more of the
following events:

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<PAGE>

         (i)      The sale of all or  substantially  all of the assets of Larson
                  Limestone Company, Inc. ("Limestone"), or the sale or transfer
                  (voluntarily  or  by  operation  of  law)  of  any  shares  of
                  Limestone or interest in shares of Limestone  now or hereafter
                  held by Larson Holdings, Inc. ("Holdings"), or the issuance of
                  additional  shares  by  Limestone  to any  person  other  than
                  Holdings,  or the merger or consolidation of Limestone with or
                  into  another  entity.  Notwithstanding  the above,  this Note
                  shall  not  accelerate  upon (a) the  grant to  Lender  of the
                  security interests in the Limestone shares contemplated by the
                  Security  Agreements,  (b) the grant (but not the realization,
                  foreclosure  or  execution)  of a  security  interest  in  the
                  Limestone  shares granted to third parties to secure bona fide
                  debt subject to the Security Agreements, or (c) the grant (but
                  not the  realization,  foreclosure or execution) of a security
                  interest  in  Limestone  assets  granted  to third  parties to
                  secure bona fide debt or bonding.

         (ii)     The  sale  of  all or  substantially  all  of  the  assets  of
                  Holdings, or the sale or transfer (voluntarily or by operation
                  of law) of any shares of  Holdings  or  interest  in shares of
                  Holdings  now or hereafter  held by Maker,  or the issuance of
                  additional  shares by Holdings to any person other than Maker,
                  or the merger or  consolidation  of Maker with or into another
                  entity.   Notwithstanding  the  above,  this  Note  shall  not
                  accelerate  upon  (a) the  grant  to  Lender  of the  security
                  interests in the Holdings shares  contemplated by the Security
                  Agreements,  or  (b)  the  grant  (but  not  the  realization,
                  foreclosure  or  execution)  of a  security  interest  in  the
                  Holdings  shares  granted to third parties to secure bona fide
                  debt, subject to the Security Agreements.

         (iii)    Any  default by Maker or  Holdings  pursuant  to the  Security
                  Agreements  after the  expiration  of any notice  periods  and
                  opportunities to cure expressly stated therein.

         All payments hereunder shall be applied first to the payment of accrued
and unpaid interest and the balance to the payment of principal.

         Maker agrees to pay to Lender, and reimburse Lender for, any and all
costs and expenses, including reasonable attorneys' fees and court costs, if
any, incurred by Lender in connection with the enforcement or collection hereof,
both before and after the commencement of any action by Lender. Maker and all
guarantors waive presentment, protest and demand, notice of protest, notice of
dishonor and nonpayment of this Note and expressly agree that this Note or any
payment hereunder may be extended from time to time without in any way affecting
the liability of Maker or such guarantor hereunder.

         The rights and remedies of Lender hereunder and under the Agreement
shall be cumulative and concurrent and may be pursued singularly, successively
or together at the sole discretion of Lender, and may be exercised as often as
occasion therefor shall occur, and the

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<PAGE>

failure to exercise any such right or remedy shall in no event be construed as a
waiver or release of the same or any other right or remedy.

         In the event any provision of this Note (or any part of any provision)
is held by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision (or remaining part of the affected
provision) of this Note; but this Note shall be construed as if such invalid,
illegal, or unenforceable provision (or part thereof) had not been contained in
this Note, but only to the extent it is invalid, illegal, or unenforceable.

         This Note, having been executed and delivered in the State of Utah, as
of the date first written above, is to be governed by, construed under and
enforced in all respects according to laws of the State of Utah, excluding its
principles of conflicts of laws.

         IN WITNESS WHEREOF, the Maker has executed this Promissory Note the
date and year first above written.

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

                                        3
<PAGE>

                                    GUARANTY

         The undersigned  Larson Holdings,  Inc. hereby guarantees to Headwaters
Incorporated,  its successors and assigns, the prompt payment and performance of
the  foregoing  Promissory  Note of  Gerald M.  Larson.  This is a  guaranty  of
performance,  and accordingly  the Lender need not exhaust its remedies  against
Maker before proceeding on this Guaranty. This Guaranty is secured by all of the
outstanding common shares of Larson Limestone Company,  Inc. pursuant to a Stock
Pledge and Security Agreements of even date.

         Dated this 26th day of January, 2001.

                                                     LARSON HOLDINGS, INC.

                                                     By  /s/ Gerald M. Larson

                                        4PLEDGE AND SECURITY AGREEMENT

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

                                    RECITALS

                  Pledgor has guaranteed a Promissory Note (the "Note") of even
date from Gerald M. Larson, as maker, to Secured Party 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 its guaranty of 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 50,000
common shares of Larson Limestone Company Incorporated (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.

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<PAGE>

                  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 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' 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

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<PAGE>

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 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:

                  Larson Holdings, Inc.
                  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
Gerald Larson'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.

                                         LARSON HOLDINGS,  INC.

                                         By:  /s/ Gerald M. Larson
                                             -----------------------------------
                                             Gerald M. Larson, President

                                         HEADWATERS INCORPORATED

                                         By: /s/ Steven G. Stewart
                                            ------------------------------------

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