DEALER MANAGER AGREEMENT

EXHIBIT 1.1

DEALER MANAGER AGREEMENT

January [    ], 2007

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Ladies and Gentlemen:

1. Exchange Offer. Headwaters Incorporated, a Delaware corporation (the “Company”), plans to make an offer to exchange up to $172,500,000 aggregate principal amount of its currently outstanding 2 ⁷/8% Convertible Senior Subordinated Notes due 2016 (the “Old Securities”) that are convertible into shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company for (i) up to $172,500,000 aggregate principal amount of a new series of its 2 ⁷/8% Convertible Senior Subordinated Notes due 2016 (the “New Securities”) that are convertible into cash and shares of Common Stock of the Company (the “Underlying Shares”) and (ii) an exchange fee of $2.50 per $1,000 of Old Securities (such offer, as it may be amended and supplemented, the “Exchange Offer”). The Exchange Offer will be on the terms and subject to the conditions set forth in the Exchange Offer Material (as defined below). The Old Securities are issuable pursuant to the terms of an Indenture dated as of June 1, 2004 between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The New Securities are to be issued pursuant to the terms of an Indenture dated as of January [    ], 2007 between the Company and the Trustee (the “Indenture”).

2. Engagement as Dealer Manager. (a) The Company hereby engages Morgan Stanley & Co. Incorporated as exclusive Dealer Manager (the “Dealer Manager”) in connection with the Exchange Offer. As Dealer Manager, you agree, in accordance with your customary practice, to perform those services in connection with the Exchange Offer as are customarily performed by investment banking concerns in connection with exchange offers of like nature, including but not limited to soliciting tenders of Old Securities pursuant to the terms of the Exchange Offer. The performance by you of such services hereunder shall commence on the date of commencement of the Exchange Offer (the “Commencement Date”).

(b) You have been engaged to act as Dealer Manager in connection with the Exchange Offer and, in such capacity, you shall act as an independent contractor, not as an agent, with duties owed solely to the Company. In connection with the solicitation of tenders of Old Securities, no broker, dealer, commercial bank, trust company or other nominee is to be deemed to be acting as your agent or as agent of the Company, and you shall not be deemed to be an agent of the Company, any broker, dealer, commercial bank, trust company or other nominee or any other person. In soliciting or obtaining tenders, you shall not be and shall not be deemed for any purpose to act as a partner or joint venture of or a member of a syndicate or group with the Company or any of its affiliates in connection with the Exchange Offer, any acceptance of the

Old Securities, or otherwise, and none of the Company’s affiliates shall be deemed to act as your agent. The Company expressly acknowledges that all opinions and advice (written or oral) given by you to the Company in connection with your engagement are intended solely for the benefit and use of the Company (including its management, directors and attorneys) in considering the transactions to which such opinions or advice relate.

3. The Exchange Offer Material. (a) The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-4 (File No. [            ]), including a prospectus, relating to the New Securities. The registration statement as amended at the time it becomes effected under the Securities Act of 1933, as amended (the “Securities Act”), is hereinafter referred to as the “Registration Statement”. The prospectus included in the Registration Statement at the time is deemed effective is hereinafter referred to as the “Prospectus”. As used herein, the terms “Registration Statement” and “Prospectus” include all documents (including any Current Report on Form 8-K) filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), incorporated therein by reference, and shall include any documents (including any Current Report on Form 8-K) filed after the date of such Registration Statement or Prospectus and incorporated therein by reference from the date of filing of such incorporated documents (collectively, the “Incorporated Documents”).

(b) On the Commencement Date, the Company will file with the Commission under the Exchange Act and the rules and regulations promulgated thereunder a Tender Offer Statement on Schedule TO with respect to the Exchange Offer (including the exhibits thereto and any documents incorporated by reference therein, the “Schedule TO”).

(c) The Registration Statement and the Prospectus, the accompanying Letter of Transmittal (as the same may be amended, the “Letter of Transmittal”), the Schedule TO and any other documents, materials or filings relating to the Exchange Offer to be used or made by the Company in connection with the Exchange Offer, including, but not limited to, any materials hereafter incorporated by reference therein, to be distributed to holders of the Old Securities, and in each case as amended or supplemented from time to time, are referred to herein collectively as the “Exchange Offer Material”.

(d) The Company agrees to furnish you, at its own expense, with as many copies as you may reasonably request of the Exchange Offer Material and any amendments or supplements thereto. The Company agrees that, at a reasonable time prior to using or filing any Exchange Offer Material, the Company will furnish to you a reasonable number of copies of such material and will give reasonable consideration to your and your counsel’s comments, if any, thereon.

(e) Prior to and during the period of the Exchange Offer, the Company shall inform you promptly after it receives notice or becomes aware of the happening of any event, or the discovery of any fact, that would require the making of any change in any Exchange Offer Material then being used or would affect the truth or completeness of any representation or warranty contained in this Agreement if such representation or warranty were being made immediately after the happening of such event or the discovery of such fact.

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(f) The Company hereby authorizes you to use the Exchange Offer Material in connection with the Exchange Offer. The Dealer Manager hereby agrees that, without the prior consent of the Company (which consent shall not be unreasonably withheld), the Dealer Manager will not hereafter publicly disseminate any written materials to holders of Old Securities for or in connection with the solicitation of tenders of Old Securities pursuant to the Exchange Offer, other than the Exchange Offer Material.

4. Withdrawal. In the event that:

(a) the Company uses, permits the use of or files with the Commission or any other federal or other governmental agency, authority or instrumentality (each, an “Other Agency”) the Exchange Offer Material or any amendment or supplement thereto and such document (i) has not been submitted to you previously for your and your counsel’s comments or (ii) has been so submitted, and you or your counsel have made comments that have not been reflected in a manner reasonably satisfactory to you and your counsel;

(b) the Company shall have breached, in any material respect, any of its representations, warranties, agreements or covenants herein;

(c) the Exchange Offer is terminated or withdrawn for any reason by the Company or any stop order, restraining order, injunction or denial of an application for approval has been issued and not thereafter stayed or vacated with respect to, or any proceeding, litigation or investigation has been initiated that is reasonably likely to have a material adverse effect on (i) the Company’s ability to carry out the Exchange Offer, (ii) the exchange of Old Securities pursuant thereto or (iii) the performance of this Agreement; or

(d) you shall not have received (i) on the Commencement Date and on the Expiration Date (as defined in the Prospectus), the opinions of counsel described in Sections 9(a) and (d) hereof, (ii) on the Commencement Date and on the Expiration Date, the accountant’s “comfort letters” described in Section 9(b) hereof and (iii) on the Expiration Date, certificates of executive officers of the Company as described in Section 9(c) hereof,

then in any such case you shall be entitled to withdraw as Dealer Manager in connection with the Exchange Offer without any liability or penalty to you or any other Indemnified Person (as defined in Section 11 below) and without loss of any right to indemnification or contribution provided in Section 11 or right to the payment of all fees and expenses payable hereunder which have accrued to the date of such withdrawal, which fees and expenses shall be paid promptly after the date of such withdrawal. In the event of any such withdrawal by you as the Dealer Manager, for the purpose of determining the fees payable to you pursuant to Section 5, the principal amount of Old Securities tendered for exchange (and not subsequently withdrawn) pursuant to the Exchange Offer as of the close of business on the date of such withdrawal that are thereafter acquired by the Company pursuant to the Exchange Offer shall be deemed to have been exchanged as of the date of such withdrawal, and such fees accrued through the date of such withdrawal shall be paid to you promptly after such date.

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5. Fees. As compensation for your services hereunder, the Company agrees to pay to you, upon expiration of the Exchange Offer, a fee of $2.50 for each $1,000 in principal amount of Old Securities exchanged pursuant to the Exchange Offer.

6. Expenses. In addition to your compensation for your services as Dealer Manager, the Company shall (a) reimburse brokers and dealers (including yourself), commercial banks, trust companies and other nominees for their customary mailing and handling expenses incurred in forwarding the Exchange Offer Material to their customers, (b) pay all fees and expenses relating to the preparation, filing, printing, mailing and publishing of the Exchange Offer Material and any other material prepared in connection with the Exchange Offer, all advertising expenses relating to the Exchange Offer, the fees and expenses of the Exchange Agent, the Information Agent (each as defined in Section 7 below) and the Trustee and all other fees and expenses incurred by the Company or any of its affiliates in connection with the Exchange Offer, (c) pay all expenses incident to the preparation, issuance and delivery of the New Securities, the qualification of the New Securities under state securities or “blue sky” laws in accordance with the provisions of Section 10(g), including the reasonable fees and disbursements of your counsel in connection therewith, (d) pay any fees charged by rating agencies for the rating of the New Securities and the filing fees and expenses, if any, incurred with respect to any filing with the National Association of Securities Dealers, Inc. made in connection with the offering of the New Securities, (e) pay all fees and expenses incident to listing the Underlying Shares on the New York Stock Exchange, (f) reimburse you for all out-of-pocket expenses incurred by you in connection with your services as Dealer Manager including, but not limited to, the legal fees and expenses of Shearman & Sterling LLP incurred in connection with the Exchange Offer and the preparation of this Agreement (which fees and expenses will be paid directly to Shearman & Sterling LLP), (g) pay the document production charges and expenses associated with printing this Agreement and (h) pay all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. All payments to be made by the Company pursuant to this Section 6 shall be made promptly after the expiration or termination of the Exchange Offer (or when required pursuant to Section 4). The Company shall perform its obligations as set forth in this Section 6 whether or not the Exchange Offer is commenced or any Old Securities are tendered for exchange pursuant to the Exchange Offer.

7. Securities Lists; Exchange Agent; Information Agent. (a) The Company shall provide you, or cause the Trustee and The Depository Trust Company (“DTC”) to provide you, with copies of the records or other lists showing the names and addresses of, and principal amounts of Old Securities held by, the holders of Old Securities as of a recent date and shall, from and after such date, use its best efforts to cause you to be advised from day to day during the pendency of the Exchange Offer of all transfers of Old Securities, such notification consisting of the name and address of the transferor and transferee of any Old Securities and the date of such transfer.

(b) The Company has appointed and authorizes you to communicate with Global Bondholder Services Corporation, in its capacity as exchange agent (the “Exchange Agent”), in connection with the Exchange Offer. The Company will instruct the Exchange Agent to advise you at least daily as to such matters relating to the Exchange Offer as you may reasonably request and to furnish you with any written reports concerning any such information as you may reasonably request.

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(c) The Company will arrange for Global Bondholder Services Corporation to serve as information agent (the “Information Agent”) in connection with the Exchange Offer and, as such, to advise you as to such matters relating to the Exchange Offer as you may reasonably request and to furnish you with any written reports concerning any such information as you may reasonably request.

8. Representations and Warranties and Certain Agreements. The Company represents and warrants to you, and agrees with you, that:

(a) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the state of Delaware, has the corporate power and authority to own its property and to conduct its business as described in each Offering Document and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and under the Exchange Offer and to consummate the Exchange Offer in accordance with its terms.

(b) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Offering Document and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and nonassessable and are owned directly by the Company (except for (a) FlexCrete Building Systems, L.C., in which Headwaters Resources, Inc. owns a 90% limited company interest, (b) Blue Flint Ethanol LLC, in which the Company owns a 51% limited liability company interest) and (c) Florida N-Viro L.P., in which VFL Technologies, Inc. owns a 51.5% limited partnership interest, (d) Florida N-Viro Management LLC, in which VFL Technologies, Inc. owns a 52% limited liability company interest, (e) Degussa Headwaters LLP, in which Headwaters Incorporated owns a 50% membership interest and (f) Degussa Headwaters Korea Co., Ltd., in which Headwaters Incorporated owns a 50% membership ineterest), free and clear of all liens, encumbrances, equities or claims except for the security interests granted under the senior secured credit agreement, dated September 8, 2004, as amended, between the Company and various lenders and Morgan Stanley Senior Funding, Inc., as administrative agent.

(c) The Exchange Offer and all other actions by the Company contemplated in the Exchange Offer Material and this Agreement have been duly and validly authorized by all necessary corporate action by the Company, and no other corporate proceedings by the Company are necessary to authorize any such actions.

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(d) This Agreement has been duly authorized, executed and delivered by the Company.

(e) The New Securities have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

(f) The Underlying Shares have been duly authorized and, when issued and delivered upon conversion of the New Securities, will be validly issued, fully paid and non-assessable, and the issuance of such Underlying Shares will not be subject to any preemptive or similar rights. As of the Expiration Date, the Underlying Shares will have been approved for listing on the New York Stock Exchange, subject to official notice of issuance.

(g) The Indenture has been duly authorized by the Company and, when duly executed and delivered by the Company and the Trustee, will constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and equitable principles of general applicability.

(h) A complete and correct copy of the Exchange Offer Material has been furnished to you or will be furnished to you no later than the Commencement Date. The Registration Statement, the Prospectus, the Schedule TO and the other Exchange Offer Material, as amended and supplemented from time to time, comply or will comply in all material respects with the provisions of the Securities Act, the Exchange Act and the Trust Indenture Act and, in each case, the rules and regulations promulgated by the Commission thereunder.

(i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and the other Exchange Offer Material (other than the Registration Statement) do not and will not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that no representation or warranty is made with respect to (i) statements or omissions in the Registration Statement or the Prospectus based upon information relating to the Dealer Manager furnished to the Company in writing by the Dealer Manager expressly for use therein (it being understood that the only information so provided by the Dealer Manager expressly for use therein is the name, address and telephone numbers of Morgan Stanley & Co. Incorporated as the Dealer Manager) or (ii) that part of the Registration Statement that constitutes the Statement of Eligibility (Form T-1) under the Trust Indenture Act of the Trustee.

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(j) The Registration Statement has been filed with the Commission and is expected to become effective on or prior to the Expiration Date, and no stop order suspending the effectiveness of the Registration Statement is in effect; and no restraining order, injunction or denial of an application for approval has been issued, and no proceedings, litigation or investigations have been initiated or, to the best of the Company’s knowledge, threatened, by or before the Commission or any Other Agency (including any court) of the United States or the State of New York with respect to the commencement or consummation of the Exchange Offer.

(k) The Exchange Offer, the exchange of Old Securities for New Securities pursuant to the Exchange Offer and the execution, delivery and performance of, and the consummation by the Company of the transactions contemplated in, this Agreement comply and will comply in all material respects with all applicable requirements of the Securities Act, the Exchange Act, applicable state securities or “blue sky” laws and other applicable laws, and all applicable rules and regulations of the Commission (including, but not limited to, Sections 10 and 14 of the Exchange Act and Rules 10b-5, 14e-1, 14e-2 and 14e-3 thereunder) or any Other Agency.

(l) The Exchange Offer, the exchange of Old Securities for New Securities pursuant to the Exchange Offer, the Indenture, the New Securities and all other actions by the Company contemplated in the Exchange Offer Material, and the execution, delivery and performance of, and the consummation by the Company of the transactions contemplated in, this Agreement, do not and will not contravene any provision of applicable law or the certificate of incorporation or bylaws of the Company or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the commencement and consummation by the Company of the Exchange Offer, the issuance of the New Securities and the other transactions by the Company contemplated in the Exchange Offer Materials and this Agreement or for the performance by the Company of its obligations under this Agreement or the Indenture, except such as may be required by the securities or Blue Sky laws of the various states in connection with the Exchange Offer.

(m) Any document filed with the Commission and incorporated by reference in the Exchange Offer Material, or from which information is so incorporated by reference, subsequent to the date of this Agreement and prior to or on the Expiration Date, when so filed or becoming effective, as the case may be, shall comply in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the rules and regulations thereunder.

(n) The Company is not, nor will be as a result of the consummation of the Exchange Offer, required to register as an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), and the rules and regulations promulgated by the Commission thereunder, or controlled by an entity required to be registered under the 1940 Act as an “investment company.”

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(o) The financial statements (including the related notes and supporting schedules) included in or incorporated by reference in the Registration Statement and Prospectus present fairly in all material respects the financial position and results of operations of the entities purported to be shown thereby, at the dates and for the periods indicated, and have been prepared in conformity with U.S. generally accepted accounting principles applied on a consistent basis throughout the periods involved, except as otherwise stated therein.

(p) Subsequent to the respective dates as of which information is given in the Propsectus, (i) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, and have not entered into any material transaction not in the ordinary course of business; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its consolidated subsidiaries, except in each case as described in the Prospectus.

(q) To the knowledge of the Company, no person or corporation which is a “holding company” or a “subsidiary of a holding company”, within the meaning of such terms as defined in the Public Utility Holding Company Act of 1935,