AMENDMENT NO. 3 TO FORM S-4

Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

The address of each of the additional registrants is c/o Ply Gem Industries, Inc., 303 West Major Street, Kearney, Missouri 64060, (800) 800-2244.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


•	We are offering to exchange $225,000,000 of our outstanding 9% Senior Subordinated Notes due 2012, which were issued on February 12, 2004 and which we refer to as the initial notes, for a like aggregate amount of our registered 9% Senior Subordinated Notes due 2012, which we refer to as the exchange notes. The exchange notes will be issued under an indenture dated as of February 12, 2004.

•	The exchange notes will mature on February 15, 2012. We will pay interest on the exchange notes on February 15 and August 15, beginning on August 15, 2004.

•	The exchange notes are guaranteed on a senior subordinated unsecured basis by our parent, Ply Gem Holdings, Inc., and our domestic subsidiaries.


•	The exchange notes will be our unsecured senior subordinated obligations. They will be subordinated to our existing and future senior debt, including borrowings under our senior credit facilities, and effectively subordinated to any secured debt and to any indebtedness of our subsidiaries that are not guarantors. We will be permitted to incur additional indebtedness, including senior debt, in the future under the terms of the indenture.


•	It will expire at 5:00 p.m., New York City time, on 2004, unless we extend it.

•	If all the conditions to this exchange offer are satisfied, we will exchange all of our outstanding initial notes, which are validly tendered and not withdrawn, for exchange notes.

•	You may withdraw your tender of initial notes at any time before the expiration of this exchange offer.

•	The exchange notes that we will issue you in exchange for your initial notes will be substantially identical to your initial notes except that, unlike your initial notes, the exchange notes will have no transfer restrictions or registration rights.

•	The exchange notes that we will issue you in exchange for your initial notes are new securities with no established market for trading.

Before participating in this exchange offer, please refer to the section in this prospectus entitled “Risk Factors” commencing on page 23.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Industry data and other statistical information used throughout this prospectus are based on independent industry publications, government publications, reports by market research firms or other published independent sources. Some data are also based on our good faith estimates, which are derived from our review of internal surveys, as well as the independent sources listed above. Although we believe these sources are reliable, we have not independently verified the information.

We own all of the following trademarks and brands: Ambassador^TM, American, ’76 Collection®, American Comfort®, American Herald®, American Splendor®, American Tradition®, Camden Pointe®, Cedar Select®, Chateau®, Consul^TM, Contractor’s Choice®, Durabuilt®, Duragrain®, Diplomat^TM, Envoy^TM, Great Lakes®, Great Lakes Gold^TM, Hampton III®, Millbridge^TM, Monitor^TM, Napco®, Napco Premium 2000^TM, Napco Premium 3000^TM, Napco Prime^TM, Nostalgia Series®, Olde Providence®, Ply Gem^TM, Premier^TM, Regency^TM, Timber Oak®, Uniframe®, Varigrain Preferred® and Victoria Harbor®.

As part of our acquisition of MWM Holding, Inc. we will acquire Patriot^TM, Jefferson, Ultratilt®, MW®, The Smart Choice ^TM, Freedom®, Smart Choices—Superior Service^TM, MW Classic®, MW Heritage^TM Unity®, The Freedom Window®, Jefferson®, Twinseal®, V-Wood® and MW Pro®.

Castle Ridge®, Cedar Lane®, Chatham Ridge^TM, Forest Ridge®, Heritage Hill^TM, New World Scallops^TM, Oakside®, Parkridge®, Parkside^TM, Rough Sawn Cedar^TM, Somerset^TM and Vision Pro® are trademarks and brands owned by Georgia-Pacific Corporation.

All other trademarks or service marks referred to in this prospectus are the property of their respective owners and are not our property.

Ply Gem Industries, Inc., which we also refer to in this prospectus as “Ply Gem,” is a Delaware corporation incorporated in 1987. Ply Gem is a wholly owned subsidiary of Ply Gem Holdings, Inc., a Delaware corporation, which we refer to in this prospectus as “Ply Gem Holdings.” Ply Gem Holdings is a wholly owned subsidiary of Ply Gem Investment Holdings, Inc., a Delaware corporation, which we refer to in this prospectus as “Ply Gem Investment Holdings,” an entity formed by Caxton-Iseman Capital, Inc. and its affiliates.

Prior to the Ply Gem Acquisition, as described in this prospectus, we were a wholly-owned subsidiary of WDS LLC, a limited liability company. WDS LLC is a wholly-owned subsidiary of Nortek, Inc., which we refer to in this prospectus as “Nortek,” or our former parent. Nortek is a wholly-owned subsidiary of Nortek Holdings, Inc., which we refer to as “Nortek Holdings.” Prior to the Ply Gem Acquisition, we were known as the Windows, Doors and Siding division of Nortek.

MWM Holding, Inc., which we also refer to in this prospectus as “MWM Holding,” is a Delaware corporation incorporated in 2002. MWM Holding, Inc. is the sole owner of all of the outstanding shares of capital stock of MW Manufacturers Holdings Corp., which is the sole owner of all of the outstanding shares of capital stock of MW Manufacturers Inc., which we refer to in this prospectus as “MW.” Upon completion of the MW Acquisition described in this prospectus, MWM Holding, Inc. will be a wholly owned subsidiary of Ply Gem. Prior to the MW Acquisition, MWM Holding, Inc. was owned by Investcorp SA, which we refer to in this prospectus as “Investcorp,” and its affiliates and members of MW management.

PROSPECTUS SUMMARY

This summary may not contain all of the information that may be important to you. You should read this prospectus carefully in its entirety before making an investment decision. In particular, you should read the section entitled “Risk Factors” and the consolidated financial statements and notes related to those statements included elsewhere in this Prospectus. The terms “our company,” “we,” “us” and “our” refer to the issuer of the notes, Ply Gem Industries, Inc., a wholly-owned subsidiary of Ply Gem Holdings, Inc., and its consolidated subsidiaries or “Ply Gem” (not including MWM Holding, Inc. or its subsidiaries, unless the context otherwise requires). “MW” or “MW Manufacturers” refers to MW Manufacturers Inc., an indirect, wholly-owned subsidiary of MWM Holding, Inc. Unless stated otherwise, references to statements as being “pro forma” or “on a pro forma basis” mean after giving effect to the Ply Gem Transactions, the MW Transactions and the other transactions described in our unaudited pro forma financial statements. References to statements as being “on a pro forma basis before giving effect to the MW Transactions” mean after giving effect to the Ply Gem Transactions and certain related transactions described in “The Transactions” and our unaudited pro forma financial statements, but not giving effect to the MW Transactions. See “Unaudited pro forma financial information.” Unless otherwise noted, references to “Ply Gem EBITDA,” “MW EBITDA,” “EBITDA,” and other financial terms have the meanings set forth in the notes to “— Summary pro forma combined and consolidated financial information,” “— Summary historical and pro forma financial information of Ply Gem,” and “— Summary historical financial information of MWM Holding.”

Our Company

We are a leading manufacturer of residential exterior building products in North America. We offer a comprehensive product line of vinyl siding and skirting, vinyl windows and doors, and vinyl and composite fencing, railing and decking that serves both the home repair and remodeling and new home construction sectors in all 50 states and Western Canada. Vinyl products, which represented approximately 88.3% of our 2003 net sales on a pro forma basis, have the leading and increasing share of sales by volume in siding and windows, and the fastest growing share of sales by volume in fencing in the U.S. We also manufacture vinyl and aluminum soffit and siding accessories, aluminum trim coil, wood windows and steel and fiberglass doors, enabling us to bundle complementary and color-matched products and accessories with our core vinyl products. We believe our broad product offering and geographically diverse manufacturing base allow us to better serve our customers and provide us with a competitive advantage over other vinyl building products suppliers. For the year ended December 31, 2003, on a pro forma basis before giving effect to the MW Transactions, we had net sales of $531.4 million, net earnings of $11.6 million, and Ply Gem EBITDA of $65.7 million. For the six months ended July 3, 2004, on a pro forma basis before giving effect to the MW Transactions, we had net sales of $266.4 million, net earnings of $5.8 million and Ply Gem EBITDA of $32.9 million. On a pro forma basis, after giving effect to the MW Transactions as described below, for the year ended December 31, 2003, we would have had net sales of $773.4 million, net earnings of $13.4 million and EBITDA of $94.4 million.

We market our products using several leading brands across multiple price points, which enables us to diversify our sales across distribution channels with minimal channel conflict. We believe this strategy allows us to reach the greatest number of end customers and provide nationwide service. Additionally, we have developed a proprietary vendor managed inventory, or “VMI,” program for certain of our siding and accessories customers, which enables us to track, forecast and place purchase orders on behalf of those customers. Customers who have implemented our VMI program have experienced higher service levels, more accurate fill rates, higher inventory turns and lower selling, general and administrative expenses. We believe we are able to compete on favorable terms and maintain our strong customer base as a result of our extensive distribution coverage, high quality, innovative and comprehensive product line, proprietary VMI program and production efficiency. We do face competition, however, from both with other vinyl building products suppliers and alternative building materials (such as wood, metal, fiber cement, masonry and aluminum). See “Risk Factors — We face competition from other vinyl exterior building products manufacturers and alternative building materials. If we are unable to compete successfully, we could lose customers and our sales could decline.”

Siding and accessories accounted for approximately 58.6% of our pro forma net sales for the year ended December 31, 2003. We sell our siding and accessories to specialty distributors (one-step distribution) and to wholesale distributors (two-step distribution). Our specialty distributors sell directly to remodeling contractors and builders. Our wholesale distributors sell to retail home centers and lumberyards who, in turn, sell to remodeling contractors, builders and consumers. In the wholesale channel, we are the sole supplier of vinyl siding and accessories to BlueLinx, formerly a distribution operation of Georgia-Pacific Corporation, the largest building products distributor in the U.S. Through BlueLinx and our BlueLinx dedicated, 22 person sales force, our vinyl siding and accessories are sold to major retail home centers, lumberyards and manufactured housing manufacturers. A portion of our siding and accessories is also sold directly to Lowe’s Home Improvement Centers under our Durabuilt brand. However, a small number of key customers accounts for a significant proportion of our sales, and changes in our key customer relationships could significantly affect our sales. See “Risk Factors — Because we depend on a core group of significant customers, our sales, cash flows from operations and results of operations may decline if our key customers reduce the amount of products they purchase from us.”

Windows and doors accounted for approximately 30.4%, and fencing, railing and decking products accounted for approximately 11.0%, of our pro forma net sales for the year ended December 31, 2003, respectively. We market our windows and doors through wholesale, millwork and specialty distributors and contractors, and we market our fencing, railing and decking primarily through a nationwide network of fabricators.

We operate a total of nine manufacturing facilities across all our product categories, strategically located near our customers. We are a low-cost manufacturer of high-quality vinyl siding. Our ability to manage our raw material costs and labor costs is integral to keeping our manufacturing costs low. See “Risk Factors — Changes in the costs and availability of raw materials, especially PVC resin and aluminum, can decrease our profit margin by increasing our costs.” We have adopted and implemented a strategy and deployed related technologies in our siding operations which we call “virtual plant,” which provides us with the flexibility to quickly move production between plants based on capacity utilization in order to maximize our manufacturing efficiency. We believe our strategically located facilities and virtual plant strategy enable us to control manufacturing and transportation costs and provide customers with reliable service and product delivery times.

The Transactions


	The Ply Gem Transactions

On February 12, 2004, Ply Gem Investment Holdings, through Ply Gem Holdings, acquired all of our outstanding shares of capital stock, in accordance with a stock purchase agreement entered into among Ply Gem Investment Holdings, Nortek and WDS LLC on December 19, 2003, for aggregate consideration of $560.0 million (less net assumed indebtedness and the aggregate value of certain management stock options cancelled or forfeited in connection with the acquisition). We refer to this stock purchase as the “Ply Gem Acquisition.” As a result, Ply Gem Holdings became our direct parent and Ply Gem Investment Holdings became our indirect parent.

Prior to the consummation of the Ply Gem Acquisition, an investor group led by Caxton-Iseman Capital and its affiliates, together with certain members of our management, made an aggregate investment of approximately $141.0 million (in cash and the value of management equity awards) in Ply Gem Investment Holdings, which in turn made an equity contribution to Ply Gem Holdings. We refer to this transaction as the “Ply Gem Equity Contribution.”

Simultaneously with the closing of the Ply Gem Acquisition, we entered into $255.0 million of senior credit facilities, consisting of a $65.0 million revolving credit facility and $190.0 million of term loan facilities. At closing, we borrowed the full amounts under the term loan facilities and approximately $3.0 million under the revolving credit facility to fund the Ply Gem Acquisition and pay related transaction costs and expenses. We refer to this transaction as the “Ply Gem Bank Financing.” Subsequent to the Ply Gem Transactions, we amended and restated our senior credit facilities on March 3, 2004 to increase our U.S. term loan facility from $160.0 million to $170.0 million and reduce our revolving credit facility from $65.0 million to $55.0 million.

We utilized the additional $10.0 million to pay down existing indebtedness under our municipal loan agreements.

As used in this prospectus, the term “Ply Gem Transactions” means, collectively:

• the Ply Gem Acquisition;

• the Ply Gem Equity Contribution;

• the Ply Gem Bank Financing; and

• the offering of the initial notes.

Recent Developments — The MW Transactions

On July 23, 2004, we entered into a stock purchase agreement with MWM Holding, Inc., and the selling stockholders listed therein, “MW Sellers,” to acquire all of the outstanding shares of capital stock of MWM Holding, Inc. for aggregate consideration of $320.0 million less the aggregate value of options to purchase the stock of MWM Holding, Inc. held by certain members of MW management cancelled or forfeited in connection with the acquisition and the amount required to pay off MW’s existing credit facility, which will be terminated upon the closing of the transactions contemplated by the stock purchase agreement. The purchase price is also subject to any adjustments based on our working capital (as defined in the stock purchase agreement) and one and one-half percent (1.5%) of the cash purchase price will be delivered to an escrow agent and is to be distributed upon the settlement of any working capital adjustments. We refer to this stock purchase as the “MW Acquisition.” The MW Acquisition is expected to close in August 2004, subject to certain customary closing conditions set forth in the stock purchase agreement.

Simultaneously with the MW Acquisition, we intend to amend and restate our senior credit facilities, increasing by $20.0 million our revolving credit facility and adding an additional term loan facility in the amount of $141.0 million. At closing, we expect to borrow the entire amount under the new term loan facility and an additional $6.0 million under the revolving credit facility to fund the MW Acquisition, fund seasonal working capital needs, and pay transaction costs and expenses related to the MW Acquisition. The senior credit facilities will generally be guaranteed by all of our material domestic subsidiaries and secured by substantially all of our U.S. domestic tangible and intangible assets and certain of our Canadian assets, as well as a pledge of 65% of the stock of certain of our foreign subsidiaries. We refer to this as the “MW Bank Financing.”

In connection with the MW Acquisition, we expect to issue additional senior subordinated notes in a private placement. We expect that the senior subordinated notes will have the same or substantially similar terms to the notes. We refer to this as the “MW Note Offering.”

In connection with the MW Acquisition, we intend to enter into a sale and leaseback transaction with respect to seven of our properties and one MW property. Under this sale and leaseback transaction, we will sell these properties for approximately $36.0 million, and simultaneously enter into long-term leases for those properties with initial annual cash rent of approximately $3.5 million. Net proceeds from the sale and leaseback transaction will be used to fund a portion of the purchase price for the MW Acquisition, and will be funded concurrently with the closing of the MW Acquisition. We refer to this transaction as the “Sale and Leaseback Transaction.”

Prior to the consummation of the MW Acquisition, we expect an investor group led by Caxton-Iseman Capital, Inc. and its affiliates, together with certain members of MW’s management, will make an aggregate investment of approximately $34.3 million (in cash and the value of management equity awards) in Ply Gem Investment Holdings, which in turn will make an equity contribution to Ply Gem Holdings, which in turn will make an equity contribution to Ply Gem Industries. We refer to this as the “MW Equity Contribution.”

Collectively, the MW Acquisition and the financings associated therewith are referred to as the “MW Transactions”. For more information regarding our proposed additional senior credit facility, see “Description of other indebtedness — Our Senior Credit Facilities.”

The following table summarizes the estimated sources and uses of funds for the MW Transactions, assuming the closing occurred as of July 3, 2004. The actual amounts may differ at the time of the actual completion of the MW Transactions.


Sources (dollars in millions)


Cash	$	10.8
Revolving credit facility(1)		6.0
Term loan facilities		141.0
Additional senior subordinated notes expected to be offered		105.0
Proceeds from Sale and Leaseback Transaction		36.0
Sponsor and management equity(2)		34.3

Total sources	$	333.1


Uses (dollars in millions)


Purchase price(3)	$	317.5
Cancellation of MW management stock options(4)		2.5
Estimated transaction costs and expenses(5)		13.1

Total uses	$	333.1

(1)     Represents an incremental $6.0 million of which will be drawn on our $75.0 million revolving credit facility at closing to fund the MW Acquisition and pay related costs and expenses. We have already drawn $9.0 million of our revolving credit facility, in connection with the Ply Gem Transactions and our seasonal working capital needs.

(2)     Includes cash contributions and the value of management equity awards granted in connection with the MW Acquisition.

(3)     Consists of $320.0 million, subject to adjustment for working capital, less approximately $2.5 million aggregate value of options to purchase stock of MWM Holding Inc. held by certain members of MW management cancelled or forfeited in connection with the MW Acquisition. Approximately $82.5 million of the purchase price will be used to repay the amount outstanding under MWM Holding’s existing credit facility and 1.5% of the purchase price will be placed in escrow. See “The Transactions — The MW Transactions MW Acquisition.”

(4)     Includes amounts related to cancellation/forfeiture of options to purchase stock of MWM Holding Inc. held by certain members of MW management in connection with the MW Acquisition.

(5)     Transaction costs include estimated commitment, placement, and other transaction fees and legal, accounting and other costs payable in connection with the MW Transactions.

Ownership Structure

The chart below summarizes our ownership and corporate structure upon completion of the MW Acquisition.

(CHART)

(1) Subsequent to the Ply Gem Transactions, we amended and restated our new senior credit facilities on March 3, 2004, to reduce our revolving credit facility from $65.0 million to $55.0 million.

(2) Subsequent to the Ply Gem Transactions, we amended and restated our new senior credit facilities on March 3, 2004, to increase our U.S. term loan facility from $160.0 million to $170.0 million.

Our Equity Sponsor

Caxton-Iseman Capital is a New York-based private equity investment firm specializing in leveraged buyouts. The firm’s investment vehicles currently have equity capital in excess of $1.8 billion available for buyout investments. The firm was founded in 1993 by Frederick Iseman and Caxton Corporation. Caxton Corporation is a New York-based investment management firm managing funds currently in excess of $7.5 billion. Since the firm’s inception in 1993, Caxton-Iseman Capital has made equity investments in the following industries: restaurants, food service, information technology services, leisure and gaming, print and database publishing, defense, medical devices and hotel management.

Current and prior portfolio holdings include: Anteon International Corporation, Buffets Holdings, Inc., Cremascoli Ortho, Deanco, Franklin Hotels, Glass’s Information Service, Leisure Link Group and Magnavox Electronic Systems.

Our company is incorporated under the laws of the State of Delaware. Our principal executive offices are located at 303 West Major Street, Kearney, Missouri 64060. Our telephone number is (800) 800-2244.

Summary of the Exchange Offer

We are offering to exchange $225,000,000 aggregate principal amount of our exchange notes for a like aggregate principal amount of our initial notes. In order to exchange your initial notes, you must properly tender them and we must accept your tender. We will exchange all outstanding initial notes that are validly tendered and not validly withdrawn.


Exchange Offer		We will exchange our exchange notes for a like aggregate principal amount at maturity of our initial notes.

Expiration Date		This exchange offer will expire at 5:00 p.m., New York City time, on , 2004, unless we decide to extend it.

Conditions to the Exchange Offer		We will complete this exchange offer only if:

		• the exchange offer does not violate applicable law or any applicable interpretation of the staff of the Commission,

		• no action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer, and no material adverse development shall have occurred in any existing action or proceeding with respect to us, and

		• all governmental approvals shall have been obtained, which approvals we deem necessary for the consummation of the exchange offer.

		Please refer to the section in this prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer.”

Procedures for Tendering Initial Notes		To participate in this exchange offer, you must complete, sign and date the letter of transmittal or its facsimile and transmit it, together with your initial notes to be exchanged and all other documents required by the letter of transmittal, to U.S. Bank National Association, as exchange agent, at its address indicated under “The Exchange Offer — Exchange Agent.” In the alternative, you can tender your initial notes by book-entry delivery following the procedures described in this prospectus. For more information on tendering your notes, please refer to the section in this prospectus entitled “The Exchange Offer — Procedures for Tendering Initial Notes.”

Special Procedures for Beneficial Owners		If you are a beneficial owner of initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your initial notes in the exchange offer, you should contact the registered holder promptly and instruct that person to tender on your behalf.

Guaranteed Delivery Procedures		If you wish to tender your initial notes and you cannot get the required documents to the exchange agent on time, you may tender your notes by using the guaranteed delivery procedures described under the section of this prospectus entitled “The Exchange Offer — Procedures for Tendering Initial Notes — Guaranteed Delivery Procedure.”


Withdrawal Rights		You may withdraw the tender of your initial notes at any time before 5:00 p.m. New York City time, on the expiration date of the exchange offer. To withdraw, you must send a written or facsimile transmission notice of withdrawal to the exchange agent at its address indicated under “The Exchange Offer — Exchange Agent” before 5:00 p.m., New York City time, on the expiration date of the exchange offer.

Acceptance of Initial Notes and Delivery of Exchange Notes		If all the conditions to the completion of this exchange offer are satisfied, we will accept any and all initial notes that are properly tendered in this exchange offer on or before 5:00 p.m., New York City time, on the expiration date. We will return any initial note that we do not accept for exchange to you without expense promptly after the expiration date. We will deliver the exchange notes to you promptly after the expiration date and acceptance of your initial notes for exchange. Please refer to the section in this prospectus entitled “The Exchange Offer — Acceptance of Initial Notes for Exchange; Delivery of Exchange Notes.”

Federal Income Tax Considerations Relating to the Exchange Offer		Exchanging your initial notes for exchange notes will not be a taxable event to you for United States federal income tax purposes. Please refer to the section of this prospectus entitled “U.S. Federal Income Tax Considerations.”

Exchange Agent		U.S. Bank National Association is serving as exchange agent in the exchange offer.

Fees and Expenses		We will pay all expenses related to this exchange offer. Please refer to the section of this prospectus entitled “The Exchange Offer — Fees and Expenses.”

Use of Proceeds		We will not receive any proceeds from the issuance of the exchange notes. We are making this exchange offer solely to satisfy certain of our obligations under our registration rights agreement entered into in connection with the offering of the initial notes.

Consequences to Holders Who Do Not Participate in the Exchange Offer		If you do not participate in this exchange offer:

		• except as set forth in the next paragraph, you will not necessarily be able to require us to register your initial notes under the Securities Act,

		• you will not be able to resell, offer to resell or otherwise transfer your initial notes unless they are registered under the Securities Act or unless you resell, offer to resell or otherwise transfer them under an exemption from the registration requirements of, or in a transaction not subject to, the Securities Act, and

		• the trading market for your initial notes will become more limited to the extent other holders of initial notes participate in the exchange offer.


		You will not be able to require us to register your initial notes under the Securities Act unless:

		• changes in applicable law or the interpretations of the staff of the Commission do not permit us to effect the exchange offer,

		• for any reason the exchange offer is not consummated by September 9, 2004,

		• any holder notifies us prior to the 30th day following consummation of this exchange offer that it is prohibited by law or Commission policy from participating in the exchange offer,

		• in the case of any holder who participates in the exchange offer, such holder notifies us prior to the 30th day following the consummation of the exchange offer that it did not receive exchange notes that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours within the meaning of the Securities Act), or

		• any initial purchaser of the notes so requests with respect to initial notes that have, or that are reasonably likely to be determined to have, the status of unsold allotments in an initial distribution.

		In these cases, the registration rights agreement requires us to file a registration statement for a continuous offering in accordance with Rule 415 under the Securities Act for the benefit of the holders of the initial notes described in this paragraph. We do not currently anticipate that we will register under the Securities Act any notes that remain outstanding after completion of the exchange offer.

		Please refer to the section of this prospectus entitled “The Exchange Offer — Your failure to participate in the exchange offer will have adverse consequences.”

Resales		It may be possible for you to resell the notes issued in the exchange offer without compliance with the registration and prospectus delivery provisions of the Securities Act, subject to the conditions described under “— Obligations of Broker-Dealers” below.

		To tender your initial notes in this exchange offer and resell the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act, you must make the following representations:

		• you are authorized to tender the initial notes and to acquire exchange notes, and that we will acquire good and unencumbered title thereto,

		• the exchange notes acquired by you are being acquired in the ordinary course of business,

		• you have no arrangement or understanding with any person to participate in a distribution of the exchange notes and are not participating in, and do not intend to participate in, the distribution of such exchange notes,


		• you are not an “affiliate,” as defined in Rule 405 under the Securities Act, of ours, or you will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,

		• if you are not a broker-dealer, you are not engaging in, and do not intend to engage in, a distribution of exchange notes, and

		• if you are a broker-dealer, initial notes to be exchanged were acquired by you as a result of market-making or other trading activities and you will deliver a prospectus in connection with any resale, offer to resell or other transfer of such exchange notes.

		Please refer to the sections of this prospectus entitled “The Exchange Offer — Procedure for Tendering Initial Notes — Proper Execution and Delivery of Letters of Transmittal,” “Risk Factors — Risks Relating to the Exchange Offer — Some persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes” and “Plan of Distribution.”

Obligations of Broker-Dealers		If you are a broker-dealer (1) that receives exchange notes, you must acknowledge that you will deliver a prospectus in connection with any resales of the exchange notes, (2) who acquired the initial notes as a result of market making or other trading activities, you may use the exchange offer prospectus as supplemented or amended, in connection with resales of the exchange notes, or (3) who acquired the initial notes directly from the issuers in the initial offering and not as a result of market making and trading activities, you must, in the absence of an exemption, comply with the registration and prospectus delivery requirements of the Securities Act in connection with resales of the exchange notes.

Summary of the Terms of the Exchange Notes

The following summary is not intended to be complete. For a more detailed description of the notes, see “Description of the notes.”


Issuer		Ply Gem Industries, Inc.

Exchange Notes		$225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012. The form and terms of the exchange notes are the same as the form and terms of the initial notes, except that the issuance of the exchange notes is registered under the Securities Act, the exchange notes will not bear legends restricting their transfer and the exchange notes will not be entitled to registration rights under our registration rights agreement. The exchange notes will evidence the same debt as the initial notes, and both the initial notes and the exchange notes will be governed by the same indenture.

Interest		The notes will accrue interest from the date of their issuance at the rate of 9% per year. Interest on the notes will be payable semi-annually in arrears on February 15 and August 15 of each year, starting on August 15, 2004.

Maturity Date		February 15, 2012.


Optional Redemption		We may redeem the notes, in whole or part, at any time on or after February 15, 2008 at a redemption price equal to 100% of the principal amount plus a premium declining ratably to par, plus accrued and unpaid interest.

		At any time prior to February 15, 2007, we may redeem up to 35% of the aggregate principal amount of the notes with the proceeds of qualified equity offerings at a redemption price equal to 109% of the principal amount, plus accrued and unpaid interest; provided that:

		• at least 65% of the aggregate principal amount of the notes remains outstanding immediately after the occurrence of such redemption; and

		• such redemption occurs within 90 days of the date of the closing of any such qualified equity offering.


Change of Control		If we experience a change of control, we may be required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest. We might not be able to pay you the required price for notes you present to us at the time of a change of control because our senior credit facilities or other indebtedness may prohibit payment or we might not have enough funds at that time. Following any such offer to purchase, under certain circumstances, prior to February 15, 2008, we may redeem all, but not less than all, of the notes not tendered in such offer at a price equal to 101% of the principal amount, plus accrued and unpaid interest. In addition, if we experience a change of control prior to February 15, 2008, we may redeem all, but not less than all, of the notes at a redemption price equal to 100% of the principal amount plus a “make-whole” premium.



Ranking; Guarantees		The notes will be unsecured and will be subordinated in right of payment to all of our existing and future senior debt, including borrowings under our senior credit facilities. Our indebtedness under our senior credit facilities is secured by substantially all of our assets. The notes will be effectively subordinated to all indebtedness and other liabilities (including trade payables) of our subsidiaries that are not guarantors.



		Our parent company, Ply Gem Holdings, and each of our existing and future restricted subsidiaries that guarantee our senior credit facilities, subject to certain exceptions, will jointly and severally guarantee the notes on a senior subordinated basis. The guarantees will be general unsecured obligations of the guarantors and will be subordinated in right of payment to all existing and future senior debt of the guarantors, which includes their guarantees of our senior credit facilities.



		As of July 3, 2004, on a pro forma basis, we and the guarantors would have had approximately $371.0 million of senior debt, and we would have approximately an additional $40.8 million available to be borrowed under the revolving portion of our senior credit facilities. As of July 3, 2004, we and the guarantors would have had no debt ranking pari passu with the notes offered hereby. In connection with the MW Acquisition we expect to issue



		$105.0 million of additional senior subordinated notes which would rank pari passu with the notes offered hereby. Our Canadian subsidiary would have had an additional $6.2 million of liabilities (including trade payables), to which the notes would have been effectively subordinated.



Certain Covenants		The indenture governing the notes will contain covenants that will limit our ability and the ability of our subsidiaries to, among other things:


		• incur additional indebtedness;

		• pay dividends or make other distributions or repurchase or redeem our stock;

		• make investments;

		• sell assets;

		• incur certain liens;

		• enter into agreements restricting our subsidiaries’ ability to pay dividends;

		• enter into transactions with affiliates; and

		• consolidate, merge or sell all or substantially all of our assets.

		These covenants are subject to important exceptions and qualifications, which are described under the heading “Description of the notes” in this prospectus.

Absence of a Public Market		The exchange notes are new securities and there is currently no established market for them. We cannot assure you as to the development or liquidity of any market for the exchange notes. Please refer to the section of this prospectus entitled “Risk Factors — Risks Relating to the Exchange Offer — There may be no active or liquid market for the exchange notes.”

Use of Proceeds		We will not receive any proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes.

Form of the Exchange Notes		The exchange notes will be represented by one or more permanent global securities in registered form deposited on behalf of The Depository Trust Company with U.S. Bank National Association as custodian. You will not receive exchange notes in certificated form unless one of the events described in the section of this prospectus entitled “Description of Notes — Book Entry; Delivery and Form” occurs. Instead, beneficial interests in the exchange notes will be shown on, and transfers of these exchange notes will be effected only through, records maintained in book-entry form by The Depository Trust Company with respect to its participants.


Risk Factors		See “Risk Factors” beginning on page 23 for discussion of factors you should carefully consider before deciding to invest in the notes.

SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The summary historical financial information presented below under the captions “Statement of operations data” and “Other financial data” for the periods ended February 11, 2004, July 3, 2004 and July 5, 2003 have been derived from our unaudited financial statements, which are included elsewhere in this prospectus, that, in the opinion of management, include all adjustments consisting only of normal recurring accruals, necessary to present fairly the data for such periods. The results of operations for the interim periods are not necessarily indicative of the operating results that may be expected for the entire year or any future period. The summary historical financial information for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and for each of the two years in the period ended December 31, 2002, are derived from our audited financial statements, which are included elsewhere in this prospectus together with the reports thereon.

On January 9, 2003, our former indirect parent, Nortek Holdings, was acquired in a recapitalization transaction, or the “Nortek Recapitalization,” by certain affiliates and designees of Kelso & Company L.P. and certain members of management of our former parent, Nortek. The Nortek Recapitalization was accounted for as a purchase and resulted in a new valuation of the assets and liabilities of Nortek Holdings and its subsidiaries, including us.

As a result of the consummation of the Ply Gem Transactions on February 12, 2004, we applied purchase accounting to the period February 12, 2004 through July 3, 2004. We have reflected, on a pro forma basis before giving effect to the MW Transactions, the effect of purchase accounting on the predecessor periods and have combined the periods to present a full six months ended July 3, 2004 (the predecessor period January 1, 2004 through February 11, 2004 combined with the period January 23, 2004 through July 3, 2004) and a full six months ended July 5, 2003 (the Pre-Nortek Recapitalization period January 1, 2003 through January 9, 2003 combined with the Post-Nortek Recapitalization period January 10, 2003 through July 5, 2003). We have also presented, on a pro forma basis before giving effect to the MW Transactions, the results of operations for the full year ended December 31, 2003 (the Pre-Nortek Recapitalization period January 1, 2003 through January 9, 2003 combined with the Post-Nortek Recapitalization Period January 10, 2003 to December 31, 2003). During the period January 23, 2004 through February 11, 2004, there were no operations of Ply Gem Holdings, Inc., which ultimately acquired Ply Gem Industries, Inc. We believe this presentation facilitates the comparison of our results. The adjusted pro forma results for the full six months ended July 3, 2004 and July 5, 2003 and the full year ended December 31, 2003 may not reflect the actual results we would have achieved absent the adjustments and may not be predictive of future results of operations. Any references to full six months ended July 3, 2004 and July 5, 2003 and the full year ended December 31, 2003 refer to such periods.

The summary unaudited pro forma financial data set forth below give effect to the Ply Gem Transactions and the other matters described under “Unaudited pro forma financial information,” before giving effect to the MW Transactions, included elsewhere in this prospectus, as if the Ply Gem Transactions occurred on the first day of each such period in the case of the unaudited pro forma statement of operations data. The unaudited pro forma information does not purport to represent what our results of operations or financial position would have been if the Ply Gem Transactions and such other matters had occurred as of the dates indicated or what those results will be for future periods.

We have also presented summary pro forma combined and consolidated information below, and this information gives effect to the Ply Gem Transactions, the MW Transactions and such other matters described under “Unaudited pro forma financial information” included elsewhere in this offering memorandum, as if those transactions occurred on the first day of each such period presented in the unaudited pro forma statement of operations data. The unaudited pro forma combined and consolidated information does not purport to represent what our actual results of operations or financial position would have been if the Ply Gem Transactions, the MW Transactions and such other matters had occurred as of the dates indicated or what those results will be for future periods. In addition, the unaudited pro forma combined and consolidated financial information combines data across periods that have different accounting bases and are not directly comparable.



	Pre-Nortek Recapitalization(1)												Unaudited

										Post-Nortek			Pro Forma
										Recapital-			Before Giving
										ization(1)			Effect to
													the MW			Pro Forma
	Fiscal Year Ended												Transactions			Full Year
	December 31,						Jan. 1, 2003			Jan. 10, 2003			Full Year Ended			Ended
							to Jan. 9,			to Dec. 31,			Dec. 31,			Dec. 31,
	2001			2002			2003			2003			2003			2003
(Dollars in thousands)
Statement of operations data:
Net sales	$	484,973		$	508,953		$	8,824		$	522,565		$	531,389		$	773,401
Costs and expenses:
Cost of products sold		363,187			368,802			7,651			393,674			400,894			579,048
Selling, general and administrative expense		71,943			79,625			1,529			73,933			75,462			112,402
Amortization of goodwill and intangible assets(2)		10,648			3,118			70			3,837			3,907			9,652

		445,778			451,545			9,250			471,444			480,263			701,102

Operating earnings (loss)		39,195			57,408			(426	)		51,121			51,126			72,299
Interest expense, net		(26,195	)		(33,508	)		(974	)		(32,921	)		(31,861	)		(49,475	)

Earnings (loss) before provision (benefit) for income taxes		13,000			23,900			(1,400	)		18,200			19,265			22,824
Provision (benefit) for income taxes		6,200			8,100			(500	)		7,200			7,637			9,424

Earnings (loss) from continuing operations		6,800			15,800			(900	)		11,000			11,628			13,400
Earnings (loss) from discontinued operations(3)		(21,800	)		3,400			—			—			—			—

Net earnings (loss)	$	(15,000	)	$	19,200		$	(900	)	$	11,000		$	11,628		$	13,400

Other financial data:
Ply Gem EBITDA(4)	$	38,439		$	74,879		$	(99	)	$	65,823		$	65,724		$	—
EBITDA(5)		—			—			—			—			—			94,431
Net cash provided by (used in) operating activities(6)		43,918			24,147			1,853			24,205			26,058			18,133
Net cash provided by (used in) investing activities(6)		(15,699	)		67,076			(312	)		(7,973	)		(8,285	)		(187,126	)
Net cash provided by (used in) financing activities(6)		(28,399	)		(144,993	)		(4,706	)		(11,443	)		(16,149	)		171,927
Capital expenditures		(13,819	)		(9,397	)		(349	)		(7,687	)		(8,036	)		(15,902	)
Depreciation and amortization expense(2)		21,044			14,071			327			14,702			14,598			22,132
Ratio of earnings to fixed charges(7)		1.4	x		1.6	x		N/A			1.5	x		1.6	x		1.4	x



				Unaudited

				Post-
				Nortek			Pro Forma
	Pre-Nortek			Recapital-			Before Giving									Pro Forma Before
	Recapital-			ization(1)			Effect to the									Giving Effect to
	ization(1)			Jan. 10,			MW Transactions						Ply Gem			the MW			Pro Forma
	Jan. 1, 2003			2003 to			Six Months			Ply Gem			Holdings			Transactions			Six Months
	to Jan. 9,			July 5,			Ended July 5,			Jan. 1, 2004 to			Jan. 23, 2004 to			Six Months Ended			Ended
	2003			2003			2003			Feb. 11, 2004			July 3, 2004			July 3, 2004			July 3, 2004

(Dollars in
thousands)
Statement of operations data:
Net sales	$	8,824		$	253,598		$	262,422		$	40,612		$	225,775		$	266,387		$	404,666
Costs and expenses:
Cost of products sold		7,651			193,763			201,198			33,611			171,215			204,776			306,030
Selling, general and administrative expense		1,529			37,485			39,014			8,345			25,690			34,035			53,686
Amortization of goodwill and intangible assets(2)		70			2,058			2,128			201			1,026			1,227			4,286

		9,250			233,306			242,340			42,157			197,931			240,038			364,002

Operating earnings (loss)		(426	)		20,292			20,082			(1,545	)		27,844			26,349			40,664
Interest expense, net		(974	)		(15,992	)		(16,264	)		(3,655	)		(13,004	)		(16,722	)		(25,529	)

Earnings (loss) before provision (benefit) for income taxes		(1,400	)		4,300			3,818			(5,200	)		14,840			9,627			15,135
Provision (benefit) for income taxes		(500	)		1,600			1,449			(1,850	)		5,639			3,784			5,872

Earnings (loss) from continuing operations		(900	)		2,700			2,369			(3,350	)		9,201			5,843			9,263
Earnings (loss) from discontinued operations(3)		—			—			—			—			—			—			—

Net earnings (loss)	$	(900	)	$	2,700		$	2,369		$	(3,350	)	$	9,201		$	5,843		$	9,263

Other financial data:
Ply Gem EBITDA(4)	$	(99	)	$	27,364		$	27,265		$	(172	)	$	33,061		$	,32,889		$	—
EBITDA(5)		—			—			—			—			—			—			51,077
Net cash provided by (used in) operating activities(6)		1,853			(14,899	)		(13,046	)		1,648			9,171			10,819			19,515
Net cash provided by (used in) investing activities(6)		(312	)		(4,417	)		(4,729	)		395			(554,566	)		(554,171	)		(557,694	)
Net cash provided by (used in) financing activities(6)		(4,706	)		18,119			13,413			(7,451	)		556,216			548,765			554,565
Capital expenditures		(349	)		(4,386	)		(4,735	)		(718	)		(2,370	)		(3,088	)		(6,611	)
Depreciation and amortization expense(2)		327			7,072			7,183			1,373			5,217			6,540			10,413
Ratio of earnings to fixed charges(7)		N/A			—			1.2	x		N/A			2.1	x		1.5	x		1.5	x

Balance sheet

July 3,

data (at

2004

period end):

Cash and cash equivalents

10,821

Working capital(8)

48,629

Total assets

739,864

Total debt, including current maturities

448,964

Stockholders’ equity

150,085

(1) On January 9, 2003, our former indirect parent, Nortek Holdings, was acquired in a recapitalization transaction by certain affiliates and designees of Kelso & Company L.P. and certain members of management of our former parent, Nortek. The Nortek Recapitalization was accounted for as a purchase and resulted in a new valuation of assets and liabilities of Nortek Holdings and its subsidiaries, including us. See Note 1 of the notes to our combined financial statements included elsewhere in this offering memorandum.

(2) Amortization of goodwill and intangible assets reflects the adoption of SFAS No. 142 “Goodwill and other Intangible Assets” on January 1, 2002. Amortization of goodwill in 2001 was $7.6 million with no amortization recorded in 2002, 2003 or 2004.

(3) Discontinued operations consist of our former subsidiaries, Peachtree Doors and Windows, Inc. and SNE Enterprises, Inc. (sold in September 2001), Hoover Treated Wood Products, Inc. (sold in April 2002) and Richwood Building Products, Inc. (sold in November 2002).

(4) Ply Gem EBITDA means net earnings (loss) plus interest expense (net of investment income), provision (benefit) for income taxes and depreciation and amortization expense. Other companies may define EBITDA differently and, as a result, our measure of Ply Gem EBITDA may not be directly comparable to EBITDA of other companies. Ply Gem EBITDA is presented herein because we believe it to be relevant and useful information to our investors because it is used by our management to analyze and evaluate the operating performance of our business, to compare our operating performance with that of our competitors and to benchmark the value of our business. Management also uses Ply Gem EBITDA for planning purposes, including the preparation of annual operating budgets, to determine appropriate levels of operating and capital investments and as one of the target elements in our compensation incentive programs. Ply Gem EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use Ply Gem EBITDA as a financial measure to assess the performance of our business, the use of Ply Gem EBITDA is limited. Ply Gem EBITDA does not include: (a) interest expense, which, because we have borrowed money in order to finance our operations, is a necessary element of our costs and ability to generate revenue; (b) depreciation expense, which, because we use capital assets, is a necessary element of our costs and ability to generate revenue; and (c) taxes, the payment of which is a necessary element of our operations. Because Ply Gem EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize Ply Gem EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, Ply Gem EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as net earnings. You are cautioned not to place undue reliance on Ply Gem EBITDA. The following sets forth the reconciliation of Ply Gem EBITDA to net earnings (loss):



														Unaudited
									Post-Nortek
									Recapital-
	Pre-Nortek Recapitalization								ization							Pro Forma
														Post-Nortek		Before Giving					Ply Gem
											Pre-Nortek			Recapital-		Effect to the		Ply Gem			Holdings		Pro Forma Before		Pro Forma Before
	Fiscal Year Ended										Recapital-			ization		MW Transactions		Jan. 1,			Jan. 23,		Giving Effect to the		Giving Effect to the
	December 31,					Jan. 1, 2003			Jan. 10, 2003		ization Jan. 1,			Jan. 10, 2003		Six Months		2004 to			2004 to		MW Transactions		MW Transactions
						to Jan. 9,			to Dec. 31,		2003 to Jan. 9,			to July 5,		Ended July 5,		Feb. 11,			July 3,		Full Year Ended		Six Months Ended
(Dollars in	2001			2002		2003			2003		2003			2003		2003		2004			2004		Dec. 31, 2003		July 3, 2004
thousands)
Net earnings (loss)	$	(15,000	)	$	19,200	$	(900	)	$	11,000	$	(900	)	$	2,700	$	2,369	$	(3,350	)	$	9,201	$	11,628	$	5,843
Interest expense, net		26,195			33,508		974			32,921		974			15,992		16,264		3,655			13,004		31,861		16,722
Provision (benefit) for income taxes		6,200			8,100		(500	)		7,200		(500	)		1,600		1,449		(1,850	)		5,639		7,637		3,784
Depreciation and amortization expense		21,044			14,071		327			14,702		327			7,072		7,183		1,373			5,217		14,598		6,540

Ply Gem EBITDA	$	38,439		$	74,879	$	(99	)	$	65,823	$	99		$	27,364	$	27,265	$	(172	)	$	33,061	$	65,724	$	32,889

(a) Net earnings (loss) for historical periods have not been adjusted to eliminate Nortek’s historical allocations to Ply Gem for Nortek’s management fees and Nortek’s historical allocation to Ply Gem of corporate expenses, which have been replaced with our stand-alone costs estimated to be $2.4 million annually. Historical management fees were $5.4 million, $10.2 million and $7.2 million for the fiscal years ended December 31, 2001, 2002 and 2003, respectively. Historical allocations of corporate expenses were $(0.3) million, $3.5 million and $3.4 million for the fiscal years ended December 31, 2001, 2002 and 2003 respectively, and $2.3 million and $0.3 million for the six months ended July 5, 2003 and July 3, 2004, respectively.

(b) Ply Gem EBITDA (as defined above) has not been adjusted to exclude or include items which are or are not considered by management to be indicative of our underlying results and to give full period effect to cost savings we have achieved through facilities rationalizations and contract negotiations. Those adjustments would included the following:

           (i) the additional savings of $1.9 million, $1.4 million and $1.4 million that we would have realized from the amortization of non-cash charges of excess purchase price allocated to inventory in connection with the Nortek Recapitalization and the Ply Gem Transactions for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (ii) the additional savings of $0.3 million, $7.2 million and $2.2 million that we would have realized from the elimination of Nortek’s historical allocations to Ply Gem for Nortek’s management fee for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (iii) the additional savings of $0.1 million, $3.4 million and $2.9 million that we would have realized from the elimination of Nortek’s historical allocations to Ply Gem’s corporate expenses for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (iv) the additional costs of $0.2 million, $2.3 million and $1.2 million that we will incur due to our separation from Nortek and stemming from services previously provided by Nortek, such as legal and accounting services, to us for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (v) net losses of $0.01 million, $0.5 million and $0.2 million that we realized from the sale of the assets of our subsidiary, Thermal-Gard, Inc., in April of 2004 for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (vi) the additional savings that we estimate we would have realized of $1.9 million and $1.9 million from lower PVC resin costs that were renegotiated effective July 2003 for the entire fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (vii) the direct costs of $0.5 million, $1.9 million and $1.9 million that we incurred in establishing our new fencing business, including the net cost of the buy-out of competitors’ material, and excess manufacturing and freight costs associated with the start-up of a new fabrication process at our Fairbluff, NC facility for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (viii) the severance and direct costs of $0.1 million and $1.8 million, including removal and transfer of equipment, associated with the closure of our Butler, PA vinyl siding facility and additional savings that we estimate we would have realized from the closure of that facility in May of 2003 that it has been closed for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (ix) the severance and relocation costs of $0.5 million, $0.6 million and $0.4 million associated with the changes in senior management at a windows product subsidiary and our fencing subsidiary for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.

           (x) additional earnings that we estimate of $0.9 million that we estimate we would have realized had our price increases on our metal products been implemented at the same time as the metal cost increases for the full six months ended July 3, 2004.

           (xi) certain balance sheet adjustments of $0.9 million, $2.1 million and $0.6 million made in the second half of 2003 and the first of 2004 of our fencing products subsidiary, following management changes at that subsidiary, for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.


	(xii) our annual fee payable to Caxton-Iseman of $0.7 million for the six months ended July 3, 2004 under our general advisory agreement with Caxton-Iseman.

(5)

EBITDA means net earnings plus interest expense (net of investment income), provision for income taxes and depreciation and amortization expense. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. EBITDA is presented herein because we believe it to be relevant and useful information to our investors because it is used by our management to analyze and evaluate the operating performance of our business, to compare our operating performance with that of our competitors and to benchmark the value of our business. Management also uses EBITDA for planning purposes, including the preparation of annual operating budgets, to determine appropriate levels of operating and capital investments and as one of the target elements in our compensation incentive programs. EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use EBITDA as a financial measure to assess the performance of our business, the use of EBITDA is limited. EBITDA does not include: (a) interest expense, which, because we have borrowed money in order to finance our operations, is a necessary element of our costs and ability to generate revenue; (b) depreciation expense, which, because we use capital assets, is a necessary element of our costs and ability to generate revenue; and (c) taxes, the payment of which is a necessary element of our operations. Because EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as net earnings.


	You are cautioned not to place undue reliance on EBITDA. The following sets forth the reconciliation of EBITDA to net earnings:



	Unaudited Pro Forma

	Six Months		Full Year
	Ended		Ended
	July 3,		December 31,
	2004		2003


(dollars in thousands)
Net earnings	$	9,263	$	13,400
Interest expense, net		25,529		49,475
Provision for income taxes		5,872		9,424
Depreciation and amortization expense		10,413		22,132

EBITDA(a)	$	51,077	$	94,431


	(a)	EBITDA has not been adjusted to account for:

      (i) the series of adjustments which are listed under footnote(b) of the reconciliation of Ply Gem EBITDA to net earnings (loss) set forth in footnote 4 above.

     (ii) the series of adjustments which are listed under footnote (a) of the reconciliation of MW EBITDA to net earnings (loss) set forth in footnote 2 to “—Summary Historical Financial Information of MWM Holding.”

    (iii) cost savings that we have identified and expect to achieve subsequent to the completion of the MW transactions and include: $2.2 million of annual savings for the use by MW of PVC resin purchased and compounded by Ply Gem; $1.7 million related to labor productivity improvements at MW’s Hammonton, NJ facility; 40.7 million from insurance savings related to the inclusion of MW under Ply Gem’s insurance program; $0.7 million related to the shift from purchasing profiles to internally manufactured profiles;

SUMMARY HISTORICAL FINANCIAL INFORMATION OF MWM HOLDING

The summary historical financial information presented below under the captions “Statement of operations data” and “Other financial data” for the periods from December 28, 2003 to July 3, 2004 and January 18, 2003 to June 28, 2003 have been derived from MWM Holding’s unaudited financial statements, which are included elsewhere in this prospectus, that, in the opinion of management, include all adjustments consisting only of normal recurring accruals, necessary to present fairly the data for such periods. The results of operations for the interim periods are not necessarily indicative of the operating results that may be expected for the entire year or any future period. The summary historical financial information for the period from January 18, 2003 to December 27, 2003, the period from December 29, 2002 to January 17, 2003 and for each of the two years in the period ended December 28, 2002, are derived from MWM Holding’s audited financial statements, which are included elsewhere in this prospectus together with the reports thereon.

On January 17, 2003, MWM Holding acquired all the common stock of MW Manufacturers Holding Corporation in a transaction accounted for as a purchase. The purchase price, purchase accounting adjustments and goodwill resulting from the transaction resulted in a new basis of accounting being used to prepare the financial statements of MWM Holding (“Successor”) from that being used to prepare the financial statements of MW Manufacturers Holding Corporation (“Predecessor”) through the date of the transaction.

The audited data for the Predecessor period from December 29, 2002 to January 17, 2003 have been prepared on a different basis of accounting from the unaudited data for the Successor period from January 18, 2003 to June 28, 2003 and audited data for the Successor period from January 18, 2003 to December 27, 2003, and therefore those periods are not directly comparable.

The summary historical financial information of MWM Holding is qualified in its entirety by the more detailed information appearing in the financial statements and related notes, “Unaudited pro forma financial information” and other financial information included elsewhere in this prospectus.



																Unaudited
	Predecessor(1)
										Successor(1)						Successor(1)
	Full Year			Full Year									Predecessor(1)			Jan. 18,			Six Months
	Ended			Ended			Dec. 29, 2002			Jan. 18, 2003			Dec. 29, 2002			2003			Ended
	Dec. 29,			Dec. 28,			to Jan. 17,			to Dec. 27,			to Jan. 17,			to June 28,			July 3,
	2001			2002			2003			2003			2003			2003			2004

(dollars in thousands)
Statement of operations data:
Net sales	$	208,020		$	226,029		$	10,273		$	231,739		$	10,273		$	102,413		$	138,279
Costs and expenses:
Cost of products sold		161,716			164,693			8,064			168,285			8,064			76,243			100,352
Selling, general and administrative expense		45,215			39,197			1,814			35,126			1,814			14,766			19,651
Amortization of goodwill and intangible assets		—			—			—			5,745			—			2,779			3,059

		206,931			203,890			9,878			209,156			9,878			93,788			123,062

Operating earnings		1,089			22,139			395			22,583			395			8,625			15,217
Other expense		(2,244	)		(222	)		(25,295	)		(4,819	)		(25,295	)		(2,000	)		(250	)
Interest expense, net		(11,819	)		(11,271	)		(560	)		(9,896	)		(560	)		(4,686	)		(15,213	)

Earnings (loss) before provision (benefit) for income taxes		(12,974	)		10,646			(25,460	)		7,868			(25,460	)		1,939			(246	)
Provision (benefit) for income taxes		—			(101	)		—			3,362			—			923			(98	)

Earnings (loss) from continuing operations		(12,974	)		10,747			(25,460	)		4,506			(25,460	)		1,016			(148	)

Net earnings (loss)	$	(12,974	)	$	10,747		$	(25,460	)	$	4,506		$	(25,460	)	$	1,016		$	(148	)



																Unaudited
	Predecessor(1)
										Successor(1)						Successor(1)
	Full Year			Full Year									Predecessor(1)			Jan. 18,			Six Months
	Ended			Ended			Dec. 29, 2002			Jan. 18, 2003			Dec. 29, 2002			2003			Ended
	Dec. 29,			Dec. 28,			to Jan. 17,			to Dec. 27,			to Jan. 17,			to June 28,			July 3,
	2001			2002			2003			2003			2003			2003			2004

(dollars in thousands)
Other financial data:
MW EBITDA(2)	$	8,890		$	27,793		$	757		$	31,460		$	757		$	12,806		$	19,942
Net cash provided by (used in) operating activities(3)		10,063			20,941			1,561			(9,486	)		1,561			(22,567	)		8,696
Net cash used in investing activities(3)		(5,839	)		(1,889	)		(484	)		(178,357	)		(484	)		(173,662	)		(3,523	)
Net cash provided by (used in) financing activities(3)		(4,037	)		(19,318	)		(250	)		188,326			(250	)		199,584			(4,200	)
Capital expenditures		(5,626	)		(2,213	)		(484	)		(7,382	)		(484	)		(2,484	)		(3,523	)
Depreciation and amortization expense		7,801			5,654			362			8,877			362			4,181			4,725


	July 3, 2004

Balance sheet data (at period end):
Cash and cash equivalents	$	1,456
Working capital(4)		4,246
Total assets		265,320
Total debt, including current maturities(5)		82,500
Stockholders’ equity		119,094

(1) MWM Holding was incorporated on December 27, 2002 and began operations on January 17, 2003, when it acquired all of the common stock of MW Manufacturers Holding Corp. The acquisition was accounted for as a purchase and resulted in a new valuation of assets and liabilities of MW Manufacturers Holding Corp. and its subsidiaries.

(2) MW EBITDA means net earnings (loss) plus interest expense (net of investment income), provision (benefit) for income taxes, depreciation and amortization expense and other expense. Other companies may define EBITDA differently and, as a result, our measure of MW EBITDA may not be directly comparable to EBITDA of other companies. MW EBITDA is presented herein because we believe it to be relevant and useful information to our investors, because it is used by our management to analyze and evaluate the operating performance of our business, to compare our operating performance with that of our competitors and to benchmark the value of our business. Management also uses MW EBITDA for planning purposes, including the preparation of annual operating budgets, to determine appropriate levels of operating and capital investments and as one of the target elements in our compensation incentive programs. MW EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use MW EBITDA as a financial measure to assess the performance of our business, the use of MW EBITDA is limited. MW EBITDA does not include: (a) interest expense, which, because we have borrowed money in order to finance our operations, is a necessary element of our costs and ability to generate revenue; (b) depreciation, which, because we use capital assets, is a necessary element of our costs and ability to generate revenue; and (c) taxes, the payment of which is a necessary element of our operations. Because MW EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize MW EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, MW EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as net income. You are cautioned to not place undue reliance on MW EBITDA. The following sets forth the reconciliation of MW EBITDA to net earnings (loss):



																Unaudited
		Predecessor
											Successor		Predecessor			Successor
		Full Year			Full Year								Dec. 29,			Jan. 18,		Six Months
		Ended			Ended			Dec. 29, 2002			Jan. 18, 2003		2002			2003		Ended
		Dec. 29,			Dec. 28,			to Jan. 17,			to Dec. 27,		to Jan. 17,			to June 28,		July 3,
		2001			2002			2003			2003		2003			2003		2004

(dollars in thousands)
Net earnings (loss)		$	(12,974	)	$	10,747		$	(25,460	)	$	4,506	$	(25,460	)	$	1,016	$	(148	)
	Interest expense, net		11,819			11,271			560			9,896		560			4,686		15,213
	Provision (benefit) for income taxes		—			(101	)		—			3,362		—			923		(98	)
	Depreciation and amortization expense		7,801			5,654			362			8,877		362			4,181		4,725
	Other expense		2,244			222			25,295			4,819		25,295			2,000		250

	MW EBITDA(a)	$	8,890		$	27,793		$	757		$	31,460	$	757		$	12,806	$	19,942

(a) MW EBITDA has not been adjusted to account for:

(i)   the additional savings that MW estimates it would have realized from manufacturing process improvements, including internal extrusion of window lineals and process automation, had they been in place for the entire fiscal year ended December 27, 2003.

(ii)   the elimination of stand alone costs of $0.09 million and $0.1 million, consisting of insurance expenses of $0.03 million and board and miscellaneous expenses of $0.06 million for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003 respectively.

(iii) the elimination of consulting expenses of $0.3 million for the entire fiscal year ended December 27, 2003 and recruiting and relocation expenses of $0.2 million and $0.5 million for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003 respectively.

(iv)   the additional savings that MW expects it will realize from closing MW’s pension plan to new employees and freezing the pension plan with respect to certain existing employees for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003.

(3) Net cash provided by (used in) operating activities, provided by (used in) investing activities and provided by (used in) financing activities for MW’s total full year ended December 27, 2003, and six months ended June 28, 2003 and July 3, 2004 were calculated based on the sum of such amounts for their respective combined periods.

(4) Working capital was calculated as current assets (excluding cash and cash equivalents and deferred income taxes) less current liabilities (excluding the current portion of long-term debt and capital lease obligations).

(5) Total debt, including current maturities includes credit agreements, capital lease obligations and subordinated notes payable and excludes accrued pension costs and deferred income taxes.

Our business, operations and financial condition are subject to various risks. Some of these risks are described below, and you should take these risks into account in evaluating us or any investment decision involving us.

We have substantial indebtedness. As of July 3, 2004, we had approximately $449.0 million of indebtedness outstanding and up to $27.8 million of additional borrowing capacity under the revolving portion of our senior credit facilities. On a pro forma basis, as of July 3, 2004, on a pro forma basis, we would have had approximately $701.0 million of indebtedness outstanding and up to $40.8 million of additional borrowing capacity under the revolving portion of our senior credit facilities. The debt under our senior credit facilities is secured by liens on substantially all of our assets. The notes are not secured by any assets. In addition, on a pro forma basis, under the covenants in the indenture and our senior credit facilities, we could have incurred additional indebtedness of up to $127.0 million (which includes $40.8 million under the revolving portion of our senior debt facilities) as of July 3, 2004.

Our high level of indebtedness could have important consequences to you. For example, it could:


	•	make it more difficult for us to satisfy our obligations on the notes;


	•	make it more difficult for us to satisfy our obligations under our senior credit facilities, exposing us to the risk of defaulting on our secured debt which could result in a foreclosure on our assets, which in turn would negatively affect our ability to operate as a going concern;


	•	require us to dedicate a substantial portion of our cash flow from operations to interest and principal payments on our indebtedness, reducing the availability of our cash flow for other purposes, such as capital expenditures, acquisitions and working capital;

	•	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

	•	increase our vulnerability to general adverse economic and industry conditions;

	•	place us at a disadvantage compared to our competitors that have less debt;


	•	expose us to fluctuations in the interest rate environment because the interest rates of our senior credit facilities are at variable rates; and


	•	limit our ability to borrow additional funds.

We expect to obtain the money to pay our expenses, fund working capital and capital expenditures, and to pay the interest on the notes, our senior credit facilities and other debt from cash flow from our operations and from borrowings under our senior credit facilities. Our ability to meet our expenses thus depends on our future performance, which will be affected by financial, business, economic and other factors. We will not be able to control many of these factors, such as economic conditions in the industry in which we operate and competitive pressures. Our cash flow may not be sufficient to allow us to pay principal and interest on our debt (including the notes) and to meet our other obligations. If we do not have enough money, we may be required to refinance all or part of our existing debt (including the notes), sell assets or borrow more money. We may not be able to do so on terms acceptable to us or at all. In addition, the terms of existing or future debt agreements, including our senior credit facilities and the indenture governing the notes, may restrict us from adopting any of these alternatives. The failure to generate sufficient cash flow or to achieve such alternatives could reduce the value of the notes and limit our ability to pay principal of and interest on the notes.

The indenture for the notes and our senior credit facilities impose significant operating and financial restrictions on us. These restrictions will limit our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, make investments, sell assets, incur certain liens, enter into agreements restricting our subsidiaries’ ability to pay dividends, or merge or consolidate. In addition, our senior credit facilities require us to maintain specified financial ratios. These covenants prevent us from financing our future operations or capital needs or pursuing available business opportunities. A breach of any of these covenants or our inability to maintain the required financial ratios could result in a default under the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.

We compete with other national and regional manufacturers of vinyl exterior building products. Some of these companies are larger and have greater financial resources than us. Accordingly, these competitors may be better able to withstand changes in conditions within the industries in which we operate and may have significantly greater operating and financial flexibility than we do. These competitors could take a greater share of sales and cause us to lose business from our customers. Additionally, our products face competition from alternative materials: wood, metal, fiber cement and masonry in siding, and wood and aluminum in windows. An increase in competition from other vinyl exterior building products manufacturers and alternative building materials could cause us to lose our customers and lead to decreases in net sales.

The home repair and remodeling and new home construction sectors may be significantly affected by changes in economic and other conditions such as gross domestic product levels, employment levels, demographic trends and consumer confidence. These factors can lower the demand for and pricing of our products. More specifically, for example, demand for home repair and remodeling products may be adversely affected by material increases in interest rates and the reduced availability of financing for home improvements. Any deterioration in these factors could cause our net sales and net income to decrease.

Our principal raw materials, PVC resin and aluminum, have been subject to rapid price changes, particularly PVC resin in 2000. While we have historically been able to substantially pass on significant PVC resin and aluminum cost increases through price increases to our customers, our results of operations for individual quarters can be and have been hurt by a delay between the time of PVC resin and aluminum cost increases and price increases in our products. While we expect that any significant future PVC resin and aluminum cost increases will be offset over time by price increases to our customers, we may not be able to pass on any future price increases.

On a pro forma basis, our top ten customers together accounted for approximately 42.4% of our net sales in the year ended December 31, 2003. Our largest customer, BlueLinx, formerly a distribution operation of the Georgia-Pacific corporation which was purchased by a company owned by Cerberus Capital Management,

The loss of or a significant adverse change in our relationships with BlueLinx or any other major customer could cause a material decrease in our net sales. We expect our relationship with BlueLinx to continue and do not anticipate any material negative change in our relationship due to the change in ownership.

The loss of, or a reduction in orders from, any significant customers, losses arising from customers’ disputes regarding shipments, fees, merchandise condition or related matters, or our inability to collect accounts receivable from any major retail customer could cause a decrease in our net income and our cash flow. In addition, revenue from customers that have accounted for significant revenue in past periods, individually or as a group, may not continue, or if continued, may not reach or exceed historical levels in any period.

Markets for our products are seasonal and can be affected by inclement weather conditions. Historically, our business has experienced increased sales in the second and third quarters of the year due to increased construction during those periods. Because much of our overhead and expense are fixed throughout the year, our operating profits tend to be lower in the first and fourth quarters. Inclement weather conditions can affect the timing of when our products are applied or installed, causing reduced profit margins when such conditions exist.

We periodically make capital investments to, among other things, maintain and upgrade our facilities and enhance our production processes. As we grow our businesses, we may have to incur significant capital expenditures. If we do not have, or are unable to obtain adequate funds to make all necessary capital expenditures when required, or if the amount of future capital expenditures are materially in excess of our anticipated or current expenditures, our product offering may become dated, our productivity may decrease and the quality of our products may decline, which, in turn, could reduce our sales and profitability.

Our financial performance is affected by the availability of qualified personnel and the cost of labor. Currently, approximately 10.9% of our employees are represented by labor unions. We are subject to the risk that strikes or other types of conflicts with personnel may arise or that we may become a subject of union organizing activity. Furthermore, some of our direct and indirect suppliers have unionized work forces. Strikes, work stoppages or slowdowns experienced by these suppliers could result in slowdowns or closures of facilities where components of our products are manufactured. Any interruption in the production or delivery of our products could reduce sales of our products and increase our costs.

Since being acquired in 1997, we have operated as a division of Nortek. As a result of the Ply Gem Acquisition, we became an independent entity, which we believe will result in full incremental stand-alone selling, general and administrative expense of approximately $2.4 million in our first year. We believe that this

Under the terms of the stock purchase agreement governing the Ply Gem Acquisition, our former parent, Nortek, has agreed to indemnify us for liabilities arising from our former ownership or operation of subsidiaries or properties where such ownership or operation ceased prior to the completion of the Ply Gem Acquisition, including environmental liabilities, liabilities arising in connection with certain leases, product liability and other litigations, benefit plans, and for certain other liabilities. Our ability to seek indemnification from Nortek is, however, limited by the strength of Nortek’s own financial condition, which could change in the future. These liabilities could be significant, and if we are unable to enforce the Nortek indemnification obligation, could make it difficult to pay the interest or principal amount of the notes when due. For details on the indemnification provisions of the stock purchase agreement relating to the Ply Gem Acquisition, see “The Transactions — The Ply Gem Transactions — The Ply Gem Acquisition.”

We recently entered into an agreement to purchase MWM Holding, Inc. for $320.0 million in cash (less the aggregate value of certain management stock options cancelled or forfeited in connection with the MW Acquisition). Our ability to seek indemnification from Investcorp and the other selling stockholders of MWM Holding is restricted to breaches of a limited amount of corporate representations and warranties, and for a portion of environmental losses arising in connection with one particular site. For details on the indemnification provisions of the stock purchase agreement governing the MW Acquisition, see “The Transactions—The MW Transactions—The MW Acquisition—Indemnification.”

We may, from time to time, explore additional opportunities to acquire related businesses, some of which could be material to us. We may not be able to effectively integrate any companies we acquire, including MWM Holding and its subsidiaries, or successfully implement appropriate operational, financial and management systems and controls to achieve the benefits expected to result from such acquisitions. In particular, we may be unable to achieve some of the cost savings we anticipate from the MW Acquisition, thereby causing our EBITDA to be less than we expect and less than the amount shown on a pro forma basis elsewhere in this prospectus. We may also be subject to unexpected claims and liabilities arising from any such acquisitions we may make in the future. These claims and liabilities could be costly to defend, could be material in amount and might exceed either the limitations of any applicable indemnification provisions or the financial resources of the indemnifying parties. The diversion of management’s attention and any delays or

On July 23, 2004 we entered into a definitive agreement to purchase all of the capital stock of MWM Holding, Inc. We expect to close the MW Acquisition in August 2004, subject to certain customary closing conditions set forth in the stock purchase agreement. However, no assurance can be given that the acquisition will be consummated.

Our historical product liability claims have not been material and while management is not aware of any material product liability issues, we do face an inherent business risk of exposure to product liability claims in the event that the use of any of our products results in personal injury or property damage. In the event that any of our products prove to be defective, among other things, we may be responsible for damages related to any defective products and we may be required to recall or redesign such products. Because of the long useful life of our products, it is possible that latent defects might not appear for several years. Any insurance we maintain may not continue to be available on terms acceptable to us or such coverage may not be adequate for liabilities actually incurred. Further, any claim or product recall could result in adverse publicity against us, which could cause our sales to decline, or increase our costs.

Our continued success depends to a large extent upon the continued services of our senior management and certain key employees. We have entered into various equity-based compensation agreements with our senior executives, including Messrs. Meyer, Wayne, Poe, Watson, Sveinson and McCready, designed to encourage their retention. In addition, we expect to enter into similar arrangements with certain key employees of MW. Each member of our senior management team has substantial experience and expertise in our industry and has made significant contributions to our growth and success. We do face the risk however, that members of our senior management or that of MW may not continue in their current positions and the loss of the services of any of these individuals could cause us to lose customers and reduce our net sales, lead to employee morale problems and/or the loss of key employees, or cause disruptions to our production. Also, we may be unable to find qualified individuals to replace any of the senior executive officers who leave our company.

Our dependency upon regular deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our operations until arrangements with alternate suppliers could be made. If any of our suppliers were unable to deliver materials to us for an extended period of time, as the result of financial difficulties, catastrophic events affecting their facilities or other factors beyond our control, or if we were unable to negotiate acceptable terms for the supply of materials with these or alternative suppliers, our business could suffer. We may not be able to find acceptable alternatives, and any such alternatives could result in increased costs for us. Even if acceptable alternatives were found, the process of locating and securing such alternatives might be disruptive to our business. Extended unavailability of a necessary raw material or finished good could cause us to cease manufacturing one or more of our products for a period of time.

Our facilities are subject to numerous U.S. and Canadian federal, state, provincial and local laws and regulations relating to the presence of hazardous materials, pollution and the protection of the environment, including those governing emissions to air, discharges to water, use, storage and transport of hazardous materials, storage, treatment and disposal of waste, remediation of contaminated sites and protection of worker

health and safety. From time to time, our facilities are subject to investigation by governmental regulators. We believe we are in material compliance with all applicable requirements of such laws and regulations. However, our efforts to comply with environmental requirements do not remove the risk that we may be held liable, or incur fines or penalties, and that the amount of liability, fines or penalties may be material, for, among other things, releases of hazardous substances occurring on or emanating from current or formerly owned or operated properties or any associated offsite disposal location, or for newly-discovered contamination at any of our properties from activities conducted by previous occupants. Certain environmental laws impose strict, and under certain circumstances joint and several, liability for the cost of addressing releases of hazardous substances upon certain classes of persons, including site owners or operators and persons that disposed or arranged for the disposal of hazardous substances at contaminated sites. Under the stock purchase agreement governing the Ply Gem Acquisition, our former parent, Nortek, has agreed to indemnify us for any such liabilities arising from our former ownership or operation of subsidiaries or properties where such ownership or operation ceased prior to the completion of the Ply Gem Acquisition and for certain other properties. Our ability to seek indemnification from Nortek is however limited by the strength of Nortek’s own financial condition. For details on the indemnification provisions of the stock purchase agreement relating to the Ply Gem Acquisition, see “The Transactions — The Ply Gem Transactions — The Ply Gem Acquisition — Indemnification.”

We are currently involved in environmental proceedings involving CWD Windows and Doors, Inc. (arising from subsurface contamination discovered at our Calgary, Alberta property), and we may in the future be subject to environmental proceedings involving Thermal-Gard, Inc. (arising from groundwater contamination in Punxsutawney, Pennsylvania) and Kroy Buildings Products, Inc. (relating to contamination in a drinking water well in York, Nebraska). Under the stock purchase agreement governing the Ply Gem Acquisition, Nortek is to indemnify us for fifty percent of any liability in excess of $750,000 with respect to the Calgary contamination and to indemnify us fully for any liability in connection with the Punxsutawney contamination. Alcan Aluminum Corporation assumed the obligation to indemnify us with respect to all liabilities for environmental contamination of the York property when it sold us the property in 1998. Our former subsidiary, Hoover Treated Wood Products, Inc., is involved in an environmental proceeding in connection with a contaminated landfill site in Thomson, Georgia. While we had assumed an obligation to indemnify the purchaser of our former subsidiary when we sold Hoover Treated Wood Products Inc., our obligation has been novated and assumed by Nortek.

Under the stock purchase agreement governing the MW Acquisition, the MW Sellers have agreed to indemnify us for the first $250,000 in costs of compliance with the New Jersey Industrial Site Recovery Act at an MW facility in Hammonton, New Jersey and for 75% of any such costs in excess of $250,000 but less than $5.5 million. MW’s Rocky Mount, Virginia property is subject to an environmental investigation pursuant to the Virginia Voluntary Remediation Program, relating to contamination derived from operations prior to the sale of the stock of MW by U.S. Industries, Inc. U.S. Industries, Inc. assumed the obligations to conduct such investigation and to indemnify us, inter alia, with respect to all liabilities for environmental contamination at the Rocky Mount property when it sold MW’s stock to Fenway Partners in 1995.

Changes in environmental laws and regulations or in their enforcement, the discovery of previously unknown contamination or other liabilities relating to our properties and operations or the inability to enforce the indemnification obligations of Nortek, the MW Sellers and U.S. Industries, Inc. could result in significant environmental liabilities which could make it difficult to pay the interest or principal amount of the notes when due. In addition, we might incur significant capital and other costs to comply with increasingly stringent U.S. or Canadian environmental laws or enforcement policies which would decrease our cash flow available to service our indebtedness.

We continually review our manufacturing and assembly operations and sourcing capabilities. Effects of periodic manufacturing realignments and cost savings programs could result in a decrease in our near-term

As a company that manufactures and markets branded products, we rely heavily on trademark and service mark protection to protect our brands. We have a significant number of issued patents and rely on copyright protection for certain of our technologies. These protections may not adequately safeguard our intellectual property and we may incur significant costs to defend our intellectual property rights, which may harm our operating results. There is a risk that third parties, including our current competitors, will infringe on our intellectual property rights, in which case we would have to defend these rights. There is also a risk that third parties, including our current competitors, will claim that our products infringe on their intellectual property rights. These third parties may bring infringement claims against us or our customers.

Affiliates of, and companies managed by, Caxton-Iseman Capital, including Caxton-Iseman (Ply Gem) L.P. and Frederick Iseman, control our affairs and policies. Circumstances may occur in which the interests of these equity holders could be in conflict with the interests of the holders of the notes. In addition, these equity holders may have an interest in pursuing acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to holders of the notes. See “Management,” “Security Ownership of Certain Beneficial Owners and Management” and “Certain Relationships and Related Transactions.”

Payment on the exchange notes will be subordinated in right of payment to all of our senior debt, including our senior credit facilities. As a result, upon any distribution to our creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or our property, the holders of senior debt will be entitled to be paid in full in cash before any payment may be made on the notes. In these cases, we may not have sufficient funds to pay all of our creditors, and holders of notes may receive less, ratably, than the holders of senior debt and, due to the turnover provisions in the indenture, less, ratably, than the holders of unsubordinated obligations, including trade payables. In addition, all payments on the notes will be blocked in the event of a payment default on designated senior debt and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on designated senior debt.

As of July 3, 2004, on a pro forma basis, the notes were subordinated to approximately $371.0 million of senior debt and approximately $40.8 million ($75.0 million revolving credit facility net of (i) approximately $6.0 million drawn at closing, (ii) $9.0 million previously drawn and (iii) approximately $19.2 million of undrawn letters of credit relating to our assumed indebtedness) would have been available for borrowing as additional senior debt under the revolving portion of our senior credit facilities. In addition, under the covenants in the indenture, we could incur substantial amounts of additional indebtedness in the future, all of which may be senior debt.

Our Canadian subsidiary, CWD Windows and Doors, Inc., is not a guarantor. This non-guarantor subsidiary generated approximately 5.2% of our net sales and 6.4% of our EBITDA, on a pro forma basis, for

Upon the occurrence of a “change of control,” as defined in the indenture, each holder of the exchange notes will have the right to require us to purchase the notes at a price equal to 101% of the principal amount, together with any accrued and unpaid interest. A change of control will be deemed not to have occurred so long as the Permitted Holders (as defined in the indenture) have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the board of directors of Ply Gem. Our failure to purchase, or give notice of purchase of, the notes would be a default under the indenture, which would in turn be a default under our senior credit facilities. In addition, a change of control may constitute an event of default under our senior credit facilities. A default under our senior credit facilities would result in an event of default under the indenture if the lenders accelerate the debt under our senior credit facilities.

If a change of control occurs, we may not have enough assets to satisfy all obligations under our senior credit facilities and the indenture related to the notes. Upon the occurrence of a change of control we could seek to refinance the indebtedness under our senior credit facilities and the notes or obtain a waiver from the lenders or you as a holder of the notes. We may be unable to obtain a waiver or refinance our indebtedness on commercially reasonable terms, if at all.

The exchange notes are a new issue of securities and there is no established trading market for the notes. We do not intend to apply for the notes or any exchange notes to be listed on any securities exchange or to arrange for quotation on any automated dealer quotation systems. As a result, trading market for the notes or the exchange notes may not be very liquid.

You will be able to sell your exchange notes at a particular time or that the prices that you receive when you sell will be favorable. The trading market for the exchange notes or, in the case of any holders of notes that do not exchange them, the trading market for the notes following the offer to exchange the notes for exchange notes may not be very liquid. Future trading prices of the notes and exchange notes will depend on many factors, including:


	•	our operating performance and financial condition;

	•	the interest of securities dealers in making a market; and

	•	the market for similar securities.

Historically, the market for non-investment grade debt has been subject to disruptions that have caused volatility in prices. It is possible that the market for the notes and, if issued, the exchange notes will be subject to disruptions. Any disruptions may reduce the value of the notes, regardless of our prospects and financial performance.

Under federal and foreign bankruptcy laws and comparable provisions of state and foreign fraudulent transfer laws, a guarantee of the notes by a subsidiary guarantor could be voided, if, among other things, at the time the subsidiary guarantor issued its guarantee, the applicable subsidiary guarantor:


	•	intended to hinder, delay or defraud any present or future creditor; or

	•	received less than reasonably equivalent value or fair consideration for the incurrence of such indebtedness and:

	•	was insolvent or rendered insolvent by reason of such incurrence;

	•	was engaged in a business or transaction for which such subsidiary guarantor’s remaining assets constituted unreasonably small capital; or

	•	intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature.

The measures of insolvency for purposes of the foregoing considerations will vary depending upon the law applied in any proceeding with respect to the foregoing. Generally, however, a subsidiary guarantor in the United States would be considered insolvent if:


	•	the sum of its debts, including contingent liabilities, was greater than the saleable value of all of its assets;

	•	the present fair saleable value of its assets was less than the amount that would be required to pay its probable liabilities on its existing debts, including contingent liabilities, as they become absolute and mature; or

	•	it could not pay its debts as they become due.

To the extent the initial notes are tendered and accepted in the exchange offer, the trading market for the untendered and tendered but unaccepted initial notes could be adversely affected. Because we anticipate that most holders of the initial notes will elect to exchange their initial notes for exchange notes due to the absence of restrictions on the resale of exchange notes under the Securities Act, we anticipate that the liquidity of the market for any initial notes remaining after the completion of this exchange offer may be substantially limited. Please refer to the section in this prospectus entitled “The Exchange Offer — Your Failure to Participate in the Exchange Offer Will Have Adverse Consequences.”

Based on interpretations of the staff of the Commission contained in Exxon Capital Holdings Corp., SEC no-action letter (April 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (June 5, 1991) and Shearman & Sterling, SEC no-action letter (July 2, 1983), we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under “Plan of Distribution,” you will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer your exchange notes. In these cases, if you transfer any exchange note without delivering a prospectus meeting the requirements of the Securities Act or without an exemption from registration of your exchange notes under the Securities Act, you may incur liability under this act. We do not and will not assume, or indemnify you against, this liability.

Certain of the matters discussed in this prospectus may constitute forward-looking statements.

These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements made in connection with this prospectus which are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the “Risk Factors” and other cautionary statements included herein. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results or to changes in our expectations.

There can be no assurance that other factors will not affect the accuracy of these forward-looking statements or that our actual results will not differ materially from the results anticipated in such forward-looking statements. While it is impossible to identify all such factors, factors which could cause actual results to differ materially from those estimated by us include, but are not limited to, those factors or conditions described under “Risk factors,” and the following:


	•	our high degree of leverage and significant debt service obligations;


	•	restrictions under the indenture governing the notes and our senior credit facilities;


	•	the competitive nature of our industry;

	•	changes in interest rates, and general economic, home repair and remodeling and new home construction market conditions;

	•	changes in the price and availability of raw materials; and

	•	changes in our relationships with our significant customers.

On February 12, 2004, Ply Gem Holdings, Inc., our direct parent, acquired all of our outstanding common stock for aggregate consideration of $560.0 million, subject to any adjustments based on our working capital (as defined in the stock purchase agreement), less the aggregate principal amount of net assumed indebtedness of $29.6 million, and less the aggregate value of options to purchase stock of Nortek Holdings held by certain members of our management cancelled or forfeited in connection with the Ply Gem Acquisition, pursuant to a stock purchase agreement between Ply Gem Investment Holdings, formerly known as CI Investment Holdings, Inc., an entity formed by Caxton-Iseman Capital and its affiliates, and Nortek, our former indirect parent, and WDS LLC, our former parent and collectively with Nortek, the “Nortek Sellers.” In accordance with the terms of the stock purchase agreement, at the closing, Ply Gem Investment Holdings assigned its rights to purchase all our shares under the stock purchase agreement to its wholly-owned subsidiary, Ply Gem Holdings, Inc. We refer to this stock purchase as the “Ply Gem Acquisition.” Prior to the Ply Gem Acquisition, we were known as the Windows, Doors and Siding division of Nortek.

In addition to customary indemnification for breaches of representations, warranties and covenants, the Nortek Sellers have agreed to fully indemnify Ply Gem Investment Holdings for any losses it sustains relating to: (a) the operations of Nortek, its subsidiaries or affiliates and former subsidiaries or affiliates other than us; (b) operations we sold or otherwise discontinued prior to the Ply Gem Acquisition; (c) certain of our and our discontinued operations’ employee benefit plans; (d) certain leases under which we are a guarantor, co-tenant or other obligor that relate to our sold or discontinued operations; (e) pending litigation proceedings brought by shareholders (the shareholders have not specified damages) and a former executive (seeking approximately $1.1 million) in connection with Nortek’s acquisition of Ply Gem Industries, Inc. and pending claims relating to our discontinued operations (which we have been discharged from and have been assumed by Nortek pursuant to the novation of the contracts pursuant to which these operations were sold, as described below); (f) environmental liabilities incurred prior to the Ply Gem Acquisition in connection with the operations of a subsidiary; and (g) fifty percent of any potential environmental liability to us in excess of $750,000 arising from pentachlorophenol contamination discovered at our Calgary, Alberta operations. With the exception of the Nortek Sellers’ indemnification obligations arising out of the soil contamination at our Calgary, Alberta operations, the Nortek Sellers will only be required to indemnify Ply Gem Investment Holdings after the aggregate amount of their indemnification obligations exceeds $7,000,000, at which point, they will be required to fully indemnify Ply Gem Investment Holdings for all losses up to $50,000,000. With respect to the our Calgary, Alberta operations, we have identified contamination by pentachlorophenol and solvents in the soil and groundwater at our Calgary facility and notified Alberta Environment of the presence of this contamination. The Nortek Sellers must indemnify us for all of any liability to us for harm to human health and for fifty percent of any other liability in excess of $750,000 arising out of the contamination. We do not expect the cost of any required investigation or cleanup to exceed $200,000.

The Nortek Sellers have covenanted to use their reasonable commercial efforts to novate certain sale and lease contracts relating to discontinued operations, thereby removing us and our affiliates from certain indemnification obligations thereunder, which obligations we retained in connection with the sales of certain of our businesses. Accordingly, the Nortek Sellers have successfully novated four sale contracts relating to our discontinued operations, including our disposition of Hoover Treated Wood Products, Inc., Sagebrush Sales, Peachtree Doors and Windows and SNE Enterprises. As a consequence, we are no longer responsible for any indemnification obligations to the buyers of these former operations. We do not anticipate any remaining indemnification obligations to be material.

Nortek has also covenanted that after the Ply Gem Acquisition, it will not dispose of all or substantially all of its property and assets in a single transaction or series of related transactions, unless the acquirer of either

In addition, the Sellers will indemnify Ply Gem Investment Holdings for certain losses relating to tax liabilities arising from (i) pre-closing taxes; (ii) taxes of any members of the Nortek consolidated group other than Ply Gem and its subsidiaries; (iii) a breach of the Sellers’ tax representations, warranties, and covenants; and (iv) taxes required to be paid to any party under the Nortek tax sharing agreement by reason of being, prior to the Ply Gem Acquisition, a successor in interest or transferee.

Ply Gem Investment Holdings will indemnify the Sellers for any breach by it of representations, warranties, covenants and agreements it made under the stock purchase agreement.

Under the terms of the stock purchase agreement, Ply Gem Investment Holdings, Nortek and WDS LLC each paid their own expenses relating to the Ply Gem Acquisition.

Prior to the consummation of the Ply Gem Acquisition, an investor group led by Caxton-Iseman Capital and its affiliates, together with certain members of our management, including Messrs. Meyer, approximately $141.0 million (in cash, including from management, and the value of management equity awards) in Ply Gem Investment Holdings, which in turn made an equity contribution to Ply Gem Holdings. See “Certain relationships and related transactions.”

Simultaneously with the offering of the initial notes and the Ply Gem Acquisition, we entered into $255.0 million of senior credit facilities, consisting of a $65.0 million revolving credit facility and $190.0 million of new term loan facilities. We borrowed the full amounts under the term loan facilities and approximately $3.0 million under the revolving credit facility, to fund the Ply Gem Acquisition and pay related transaction costs and expenses. Subsequently, we amended and restated our senior credit facilities on March 3, 2004 to increase our U.S. term loan facility from $160.0 million to $170.0 million and reduce our revolving credit facility from $65.0 million to $55.0 million.

On July 23, 2004, we entered into a stock purchase agreement with MWM Holding, Inc., and the selling stockholders listed therein, the “MW Sellers,” to acquire all of the outstanding shares of capital stock of MWM Holding, Inc. for aggregate consideration of $320.0 million less the aggregate value of options to purchase the stock of MWM Holding, Inc. held by certain members of MW management cancelled or forfeited in connection with the acquisition and the amount required to pay off MW’s existing credit facility, which will be terminated upon the closing of this offering. The purchase price is also subject to any adjustments based on our working capital (as defined in the stock purchase agreement) and one and one-half percent (1.5%) of the cash purchase price will be delivered to an escrow agent and is to be distributed upon the settlement of any working capital adjustments. We refer to this stock purchase as the “MW Acquisition.”

The MW Sellers have agreed to indemnify us for losses resulting from breaches of the following limited representations and warranties by the MW Sellers and MWM Holding, Inc.: (a) the authority of the MW Sellers to enter into the MW Acquisition, (b) the authority of MWM Holding, Inc. to enter into the MW Acquisition, (c) the capitalization of MWM Holding, Inc. and (d) the existing subsidiaries of MWM

The stock purchase agreement for the MW Acquisition provides that Ply Gem and MWM Holding, Inc. will each pay their own expenses relating to the MW Acquisition.

The closing of the MW Equity Contribution, the MW Bank Financing and the MW Note Offering described below, will occur concurrently with, and each is a condition to, the closing of the MW Acquisition.

Prior to the consummation of the MW Acquisition, an investor group led by Caxton-Iseman Capital and its affiliates, together with certain members of MW’s management, including Mr. Haley, will make an aggregate investment of approximately $34.3 million (in cash, including from management, and the value of management equity awards) in Ply Gem Investment Holdings, which in turn will make an equity contribution to Ply Gem Holdings, which in turn will make an equity contribution to Ply Gem. See “Certain relationships and related transactions—The MW Acquisition.”

In connection with the MW Acquisition, we intend to enter into a sale and leaseback transaction with respect to seven of our properties and one MW property. Under this sale and leaseback transaction, we will sell these properties for approximately $36.0 million, and simultaneously enter into a long-term lease for those properties with initial annual cash rent of approximately $3.5 million. The payments on the long-term leases will be guaranteed by our parent Ply Gem Holdings, Inc. Net proceeds from the sale and leaseback transaction will be used to fund a portion of the purchase price for the MW Acquisition, and will be funded concurrently with the closing of the MW Acquisition. We refer to this transaction as the “Sale and Leaseback Transaction.”

We will also enter into an amendment to our senior credit facilities, which will increase by $20.0 million our revolving credit facility and will add an additional term loan facility in the amount of $141.0 million. At closing, we expect to borrow the entire amount under the new term loan facility and an additional $6.0 million under the revolving credit facility to fund the MW Acquisition and pay related costs and expenses.

In connection with the MW Acquisition we expect to issue $105.0 million principal amount of additional senior subordinated notes in a private placement. We expect that the senior subordinated notes will have the same or substantially similar terms as the notes.

The following table summarizes the estimated sources and uses of funds should the MW Acquisition be consummated, assuming the closing occurred as of July 3, 2004. The actual amounts may differ at the time of the actual consummation of the MW Transactions.



(1)	Represents an incremental $6.0 million of which will be drawn on our $75.0 million revolving credit facility at closing to fund the MW Acquisition and related costs and expenses. We have already drawn $9.0 million of our revolving credit facility, in connection with the Ply Gem Transactions and our seasonal working capital needs.



(2)	Includes cash contributions and the value of management equity awards granted in connection with the MW Acquisition.



(3)	Consists of $320.0 million, subject to adjustment for working capital, less approximately $2.5 million aggregate value of options to purchase stock of MWM Holding held by certain members of MW management cancelled or forfeited in connection with the MW Acquisition. Approximately $82.5 million of the purchase price will be used to repay the amount outstanding under MWM Holdings existing credit facility and 1.5% of the purchase price will be placed in escrow. See “The Transactions — The MW Acquisition.”



(4)	Includes amounts related to cancellation/forfeiture of options to purchase stock of MWM Holding held by certain members of MW management in connection with the MW Acquisition.



(5)	Transaction costs include estimated commitment, placement, and other transaction fees and legal, accounting and other costs payable in connection with the MW Transactions.

We will not receive any cash proceeds from the issuance of the exchange notes in exchange for the outstanding initial notes. We are making this exchange solely to satisfy our obligations under the registration rights agreement entered into in connection with the offering of the initial notes. In consideration for issuing the exchange notes, we will receive initial notes in like aggregate principal amount.

The gross proceeds from the offering of initial notes were $225.0 million. Concurrently with the consummation of the offering of initial notes, we entered into senior credit facilities. We used the proceeds from the offering of initial notes and borrowings under the senior credit facilities to fund the Ply Gem Acquisition and pay related transaction costs and expenses. See “The Transactions — The Ply Gem Transactions” and “Description of Other Indebtedness.”

The following table summarizes the estimated sources and uses of funds for the Ply Gem Transactions.



(1)	Represents the $65.0 million revolving credit facility, $3.0 million of which was drawn at closing. Subsequent to the Ply Gem Transactions, we amended and restated our senior credit facilities on March 3, 2004, to reduce our revolving credit facility from $65.0 million to $55.0 million.



(2)	Subsequent to the Ply Gem Transactions, we amended and restated our senior credit facilities on March 3, 2004, to increase our U.S. term loan facility from $160.0 million to $170.0 million.



(3)	Consists of outstanding principal and accrued interest under municipal loan agreements that remain outstanding following the Ply Gem Acquisition. This amount is net of restricted cash and cash equivalents of approximately $0.5 million relating to this indebtedness on our balance sheet.



(4)	Includes cash contributions and the value of management equity awards granted in connection with the Ply Gem Acquisition.



(5)	Consists of $560.0 million less assumed indebtedness of $29.1 million and $4.3 million aggregate value of options to purchase stock of Nortek Holdings held by certain members of our management cancelled or forfeited in connection with the Ply Gem Acquisition.



(6)	Includes amounts related to cancellation/forfeiture of options to purchase stock of Nortek Holdings held by certain members of our management in connection with the Ply Gem Acquisition.



(7)	Transaction costs include estimated commitment, placement, financial advisory and other transaction fees and legal, accounting and other costs payable in connection with the Ply Gem Transactions.

The following table sets forth our capitalization as of July 3, 2004, on a historical basis and on a pro forma basis, after giving effect to the MW Transactions. This table should be read in conjunction with the information contained in “Use of proceeds,” “Selected historical financial information,” “Unaudited pro forma financial information,” “Management’s discussion and analysis of financial condition and results of operations,” and our financial statements and notes thereto included elsewhere in this prospectus.



(1)	Represents the $55.0 million revolving credit facility, $9.0 million of which was drawn at July 3, 2004.



(2)	Represents the amended $75.0 million revolving credit facility, $9.0 million of which was drawn at July 3, 2004 and of which an additional $6.0 million is expected to be drawn at the closing of the MW Transactions.



(3)	Consists of outstanding principal and accrued interest on secured indebtedness under municipal loan agreements that remained outstanding following the Ply Gem Acquisition.



(4)	Represents the equity contribution of $34.3 million expected to be made in connection with the MW Acquisition.

The following unaudited pro forma financial statements are separate financial statements which have been derived from our historical financial statements and are adjusted to give pro forma effect to the Ply Gem Transactions, the MW Transactions and such other matters described in the notes to this section.

The unaudited pro forma statements of operations data presented herein give pro forma effect to each of those items as if it had occurred on the first day of each respective period presented.

The unaudited pro forma statements of operations data presented herein give pro forma effect to each of these items as if it occurred on the first day for each respective period presented. The unaudited balance sheet data at July 3, 2004 gives pro forma effect to the MW Transactions as if they occurred on July 3, 2004. For the Ply Gem Transactions, unaudited pro forma statements of operations data are presented for the full year ended December 31, 2003, the full six months ended July 5, 2003 and the full six months ended July 3, 2004. For the MW Transactions, unaudited pro forma statements of operations data are presented for the full year ended December 31, 2003, the full six months ended July 5, 2003 and the full six months ended July 3, 2004.

The pro forma adjustments are based on preliminary estimates, available information and certain assumptions that we believe are reasonable and may be revised as additional information becomes available. The pro forma adjustments and certain assumptions are described in the accompanying notes. Other information included under this heading has been presented to provide additional analysis. The Ply Gem Acquisition and the MW Acquisition have been accounted for using the purchase method of accounting. The unaudited pro forma information does not purport to represent what our actual results of operations or financial position would have been if the Ply Gem Transactions, MW Transactions and such other matters had occurred as of the dates indicated or what those results will be for future periods. In addition, the unaudited pro forma financial information combines data across periods that have different accounting bases and are not directly comparable.

The unaudited pro forma financial data set forth below should be read in conjunction with our financial statements, the notes thereto and “Management’s discussion and analysis of financial condition and results of operations” included elsewhere in this offering memorandum.



(1)	Reflects Ply Gem’s cash used as a source in connection with the MW Acquisition and the elimination of cash to be retained by MWM Holding’s current owner.



(2)	Reflects the write down of real property and the sale of those same assets in the Sale and Leaseback Transaction with net proceeds from the Sale and Leaseback Transaction being used to partially fund the MW Acquisition. The table that follows presents the adjustment to property and equipment, net:



(3)	Goodwill represents the excess of purchase price paid over the fair value of assets acquired. The fair values of MWM Holding’s assets and liabilities have not been determined, and accordingly, the estimated purchase price in excess of the net book value of MWM Holding’s assets and liabilities has been fully allocated to goodwill. Allocation of purchase price will be finalized in conjunction with a valuation of MWM Holding’s assets at the time of the consummation of the MW Transactions.



(4)	Reflects (i) the elimination of MWM Holding’s existing capitalized deferred financing cost that will be eliminated as a result of the MW Transactions, (ii) the elimination of MWM Holding’s prepaid management fee and (iii) the establishment of capitalized deferred financing cost related to the amendment to our senior credit facilities and this offering. The table that follows presents the adjustment to other assets:



(5)	Represents the elimination of MWM Holding’s existing debt as a result of the MW Transactions.



(6)	Represents (i) the elimination of MWM Holding’s existing debt as a result of the MW Transactions, and (ii) the change in our capital structure in connection with the MW Transactions.

NOTES TO UNAUDITED PRO FORMA COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS



(3)	Represents the estimated tax effect of the pro forma adjustments items at an effective rate of 38.0%.



(4)	Net earnings (loss) before general advisory fees does not include the general advisory fees that we will pay to a Caxton-Iseman party in the future for acquisition and financial advisory services because these fees are contingent upon achieving certain financial metrics in 2004. Please see “Certain relationships and related transactions — Caxton-Iseman Arrangements” for a detailed discussion of these fees.

UNAUDITED COMBINED AND CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS — (Continued)

NOTES TO UNAUDITED COMBINED AND CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS



(2)	Reflects elimination of other expense for MWM Holding’s predecessor results primarily relating to MWM Holding’s former owner’s acquisition of MW Manufacturers Holding Corp. through MWM Holding in January 2003. For the period from December 29, 2002 to January 17, 2003, other expense consisted of $19,772 of change of control payments and $5,523 to recognize the assumption of a predecessor affiliate liability. For the period from January 18, 2003 to June 28, 2003, other expense consisted of $2,000 of management fees to MWM Holding’s former owner. For the period from January 18, 2003 to December 27, 2003, other expense consisted of $4,000 of management fees to MWM Holding’s former owner and $819 of abandoned transaction costs. For the period from December 28, 2003 to July 3, 2004, other expense consisted of $250 of management fees to MWM Holding’s former owner.



(3)	The adjustments to interest expense, net reflect the elimination of historical interest incurred by MWM Holding on its indebtedness. This elimination is offset by estimated interest expense that would have been incurred for the relevant periods on the MW Bank Financing and our new notes, as well as the amortization of incremental deferred financing charges. In addition, we retain various other existing mortgage notes and other related indebtedness payable in installments. The table that follows presents the adjustments to interest expense, net.

The selected historical financial information for the periods ended February 11, 2004, July, 2004 and July, 2003 have been derived from our unaudited financial statements, which are included elsewhere in this prospectus, that, in the opinion of management, include all adjustments consisting only of normal recurring accruals, necessary to present fairly the data for such periods. The results of operations for the interim periods are not necessarily indicative of the operating results for the entire year or any future period. The selected historical financial information presented below under the captions “Statement of operations data,” and “Other financial data” for the period from January 10, 2003 through December 31, 2003, the period from January 1, 2003 through January 9, 2003, and for each of the two years in the period ended December 31, 2002, and the “Balance sheet data” as of December 31, 2003, 2002 and 2001 are derived from our audited financial statements, which are included elsewhere in this prospectus together with the report thereon. The selected historical financial information presented below under the caption “Statement of operations data” and “Other financial data” for the fiscal year ended December 31, 2000 is derived from our audited financial statements, not included in this prospectus. The selected historical financial information presented below under the captions “Statement of Operations data” and “Other financial data” for the fiscal year ended December 31, 1999, and the “Balance sheet data” as of December 31, 1999 and 2000 is derived from our unaudited financial statements not included in this prospectus.

On January 9, 2003, our former indirect parent, Nortek Holdings, was acquired in a recapitalization transaction by certain affiliates and designees of Kelso & Company L.P. and certain members of management of our former parent, Nortek. The Nortek Recapitalization was accounted for as a purchase and resulted in a new valuation of the assets and liabilities of Nortek Holdings and its subsidiaries, including us.

This selected historical financial information is qualified in its entirety by the more detailed information appearing in our financial statements and related notes and “Management’s discussion and analysis of financial condition and results of operations” and other financial information included elsewhere in this prospectus.



(1)	On January 9, 2003, our former indirect parent, Nortek Holdings was acquired in a recapitalization transaction by certain affiliates and designees of Kelso & Company L.P. and certain members of management of our former parent, Nortek. The Nortek Recapitalization was accounted for as a purchase and resulted in a new valuation of the assets and liabilities of Nortek Holdings and its subsidiaries, including us. See Note 1 of the notes to our consolidated financial statements included elsewhere in this offering memorandum.



(2)	Amortization of goodwill and intangible assets reflects the adoption of SFAS No. 142 “Goodwill and other Intangible Assets” on January 1, 2002. Amortization of goodwill included in 2000 and 2001 was $7.6 million with no amortization recorded in 2002, 2003 or 2004.



(3)	Discontinued operations consist of our former subsidiaries, Peachtree Doors and Windows, Inc. and SNE Enterprises, Inc. (sold in September 2001), Hoover Treated Wood Products, Inc. (sold in April 2002) and Richwood Building Products, Inc. (sold in November 2002).



(4)	EBITDA represents net earnings (loss) plus interest expense (net of investment income), provisions (benefit) for income taxes and depreciation and amortization. Other companies may define EBITDA differently and, as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. EBITDA is presented herein because we believe it to be relevant and useful information to our investors because it is used by our management to analyze and evaluate the operating performance of our



(5)	For the purposes of calculating the ratio of earnings to fixed charges, earnings represent earnings (loss) from continuing operations before provision for income taxes plus fixed charges. Fixed charges consist of interest expense, net plus amortization of deferred financing expense and our estimate of the interest within rental expense. Earnings for the period January 1, 2003 to January 9, 2003 and for the period January 1, 2004 to February 11, 2004 were inadequate to cover fixed charges by $2.4 million and $9.0 million, respectively.



(6)	Working capital is defined as current assets (excluding cash and cash equivalents, restricted cash and cash equivalents and unrestricted marketable securities available for sale, at fair value, and assets from discontinued operations) less current liabilities (excluding the current portion of long-term debt and liabilities from discontinued operations).

The following discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk factors” section of this offering memorandum. Actual results may differ materially from those contained in any forward-looking statements. The following discussion should be read in conjunction with “Selected historical financial information,” “Unaudited pro forma financial information” and our financial statements and the accompanying notes thereto included elsewhere in this offering memorandum.

We are a leading manufacturer of residential exterior building products in North America. We offer a comprehensive product line of vinyl siding and skirting, vinyl and composite fencing, railing and decking, and vinyl windows and doors that serves both the home repair and remodeling and new home construction sectors in all 50 states and Western Canada. We also manufacture vinyl and aluminum soffit and siding accessories, aluminum trim coil, wood windows and steel and fiberglass doors, enabling us to bundle complementary and color-matched products and accessories with our core vinyl products. We believe our broad product offering and geographically diverse manufacturing base allow us to better serve our customers and provide us with a competitive advantage over other vinyl building products suppliers. We have two reportable segments: (i) siding, fencing, railing and decking, and (ii) windows and doors. For the fiscal year ended December 31, 2003, on a pro forma basis before giving effect to the MW Transactions, we had net sales of $531.4 million, net earnings of $11.6 million and Ply Gem EBITDA of $65.7 million. For the six month period ended July 3, 2004, on a pro forma basis before giving effect to the MW Transactions, we had net sales of $266.4 million, net earnings of $5.8 million, and Ply Gem EBITDA of $32.9 million.

As a result of the Ply Gem Acquisition, we are no longer a division of Nortek, but have become a stand-alone company. Prior to the Ply Gem Acquisition, we had a fee arrangement with our former parent, Nortek, under which we reimbursed Nortek for certain parent company corporate charges and have accounted for these charges in accordance with SEC Staff Accounting Bulletin No. 55. For the fiscal years ended December 31, 2000, 2001, 2002 and 2003, our fees to Nortek for these corporate charges were $4.9 million, $5.4 million, $10.2 million and $7.2 million, respectively. This fee arrangement was terminated in connection with the acquisition. In addition, prior to the Ply Gem Acquisition, we paid an allocation of corporate expenses to Nortek based upon the specific identification method. For the fiscal years ended December 31, 2000, 2001, 2002 and 2003, Nortek’s allocations of these corporate expenses were $3.9 million, $(0.3) million, $3.5 million and $3.4 million, respectively. We estimate that in our first year as a stand-alone company, we will incur approximately $2.4 million of incremental operating expenses to pay for services, including accounting, tax, legal, insurance and treasury, which we previously received from Nortek under these arrangements. Incremental operating expenses may increase in subsequent years. See “Unaudited pro forma financial information” and Note 1 to the notes to our consolidated and combined financial statements included elsewhere in this offering memorandum.

We will in the future pay Caxton-Iseman Capital an annual advisory fee based on our EBITDA, as defined in our General Advisory Agreement. With respect to 2004 only, this fee is contingent upon achievement of certain financial performance metrics. See “Certain relationships and related transactions — Caxton-Iseman Arrangements.”

In order to finance the Ply Gem Acquisition, our parent, Ply Gem Holdings, received an equity contribution from Ply Gem Investment Holdings, and we entered into senior credit facilities and issued the existing notes. See “The Transactions — The Ply Gem Transactions.”

Assuming the MW Acquisition is consummated, MWM Holding will no longer be owned by Investcorp, but will become our subsidiary and will be included in our windows and doors segment. In connection with the MW Transactions, we will pay Caxton-Iseman Capital a transaction fee of approximately $6.4 million based on our General Advisory Agreement. See “Certain Relationships and related transactions — Caxton-Iseman Arrangements.” In order to finance the MW Acquisition, our parent, Ply Gem Holdings, will receive an equity contribution from Ply Gem Investment Holdings, and we will enter into the Sale and Leaseback Transaction, amend our senior credit facilities and issue the notes offered hereby. See “The Transactions.”

On November 22, 2002, we sold the capital stock of our Richwood Building Products, Inc. subsidiary for approximately $8.5 million of net cash proceeds and recorded a pre-tax loss of approximately $3.0 million in the fourth quarter of 2002. In accordance with SFAS No. 142, we allocated $4.2 million of goodwill to Richwood in connection with the determination of the loss on sale based upon the relative fair value of Richwood to our total fair value. The related goodwill amortization prior to January 1, 2002 and goodwill have been included in the results of discontinued operations and assets of discontinued operations, respectively, for all periods presented.

On April 2, 2002, we sold the capital stock of our Hoover Treated Woods Products, Inc. subsidiary for approximately $20.0 million of net cash proceeds and recorded a pre-tax gain of approximately $5.4 million in the second quarter of 2002. Approximately $8.5 million of the cash proceeds were used to pay down outstanding debt under our then existing credit facility in the second quarter of 2002, which was later terminated.

On September 21, 2001, we sold the capital stock of our subsidiaries, Peachtree Doors and Windows, Inc. and SNE Enterprises, Inc. for approximately $45.0 million in the aggregate in cash, and recorded a pre-tax loss on the sale of approximately $34.0 million in the third quarter of 2001, including the write-off of approximately $11.7 million of unamortized intangible assets. A portion of the cash proceeds was used to pay down approximately $20.5 million of outstanding debt under our then existing credit facility.

On January 9, 2003, Nortek Holdings, our former indirect parent, was acquired by certain affiliates and designees of Kelso & Company L.P. and certain members of management of our former parent, Nortek. Our company, Ply Gem Industries, Inc., our subsidiaries and CWD Windows and Doors, a division of Broan-Nutone Canada, Inc., Nortek and Nortek Holdings accounted for the Nortek Recapitalization as a purchase in accordance with the provisions of Statement of Financial Accounting Standards No. 141, “Business Combinations,” which resulted in a new valuation for the assets and liabilities of Nortek Holdings and its subsidiaries (including us) based upon fair values as of the date of the Nortek Recapitalization. As permitted under SEC Staff Accounting Bulletin No. 54, “Push Down Basis of Accounting Required in Certain Limited Circumstances,” we have reflected all applicable purchase accounting adjustments recorded by Nortek Holdings in our combined financial statements for all future financial statements covering periods subsequent to the Nortek Recapitalization. See Note 1 of the notes to our consolidated financial statements included elsewhere in this offering memorandum.

Net Sales. Net sales represent the selling price of our products plus certain shipping charges less applicable provisions for discounts and allowances. Allowances include cash discounts, volume rebates and gross returns among others.

Cost of products sold. Cost of products sold includes direct material and manufacturing costs, manufacturing depreciation, third-party and in-house delivery costs and product warranty expense.

Selling, general and administrative expense. Selling, general and administrative expense, or “SG&A expense,” includes all non-product related operating expenses, including selling, marketing, research and development costs, information technology and other general and administrative expenses.

Operating earnings. Operating earnings represents net sales less cost of products sold, SG&A expense and amortization of goodwill and intangible assets.

Comparability. The audited data for the Pre-Nortek Recapitalization period from January 1, 2003 through January 9, 2003 and the fiscal years ended 2002 and 2001, have been prepared on different bases of accounting due to the Recapitalization of our former parent Nortek, which took place on January 9, 2003, and therefore are not directly comparable to the post-Nortek Recapitalization information presented, including the audited information for the period from January 10, 2003 to December 31, 2003. The unaudited data presented for the six month period ended July 5, 2003 include data using different bases of accounting for the Pre-Nortek Recapitalization period from January 1, 2003 to January 9, 2003 and the Post-Nortek Recapitalization period from January 10, 2003 to July 5, 2003, and therefore those periods are not directly comparable. In addition, the unaudited data presented for the six month period ended July 3, 2004 include predecessor data for Ply Gem Industries, Inc. from January 1, 2004 to February 11, 2004 and successor data for Ply Gem Holdings, Inc. from January 23, 2004 (inception) to July 3, 2004, and therefore those periods are not directly comparable. In addition, during the period January 23, 2004 (inception) through February 11, 2004, Ply Gem Holdings, Inc., which ultimately acquired Ply Gem Industries, Inc. conducted no operations.

Our principal raw materials, PVC resin and aluminum, have historically been subject to rapid price changes. We have in the past been able to substantially pass on significant cost increases through price increases to our customers. Our results of operations for individual quarters can and have been impacted by a delay between the time of PVC resin and aluminum cost increases and decreases and related price changes that we implement in our products.

Since our building products are intended for exterior use, our sales and operating earnings tend to be lower during periods of inclement weather. Weather conditions in the first quarter of each calendar year historically result in that quarter producing significantly less sales revenue than in any other period of the year. As a result, we have historically had lower profits or losses in the first quarter, and reduced profits in the fourth quarter of each calendar year due to the weather. Our results of operations for individual quarters in the future may also be impacted by adverse weather conditions.

The following discussion and analysis of our financial condition and results of operations is based upon our combined financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. Certain of our accounting policies require the application of judgments in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. We periodically evaluate the judgments and estimates used for our critical accounting policies to ensure that such judgments and estimates are reasonable for our interim and year-end reporting requirements. These judgments and estimates are based on our historical experience, current trends and information available from other sources, as appropriate. If different conditions result than those assumptions used in our judgments, the results could be materially different from our estimates. Management believes that the two areas where different assumptions could result in materially different reported results are accounts receivable related to estimation of allowances for doubtful accounts and inventories in estimating reserves for obsolete and excess inventory. Although we believe the likelihood of a material difference in either of these two areas is very low based upon our historical experience, a 10% change in our allowance for doubtful accounts and our inventory reserve estimates at July 3, 2004 would result in a $0.76 million and $0.21 million impact upon SG&A expense and cost of products sold, respectively.

Revenue Recognition. We recognize sales based upon shipment of products to our customers net of applicable provisions for discounts and allowances. The customer takes title upon shipment and assumes the risks and rewards of ownership of the product. Revenue includes selling price of the product and all shipping costs paid by the customer. Revenue is reduced at the time of sale for estimated sales returns and all applicable allowances and discounts based on historical experience. We also provide for estimates of warranty, bad debts, shipping costs and certain sales-related customer programs at the time of sale. Shipping and warranty costs are included in cost of products sold. Bad debt expense and sales-related marketing programs are included in selling, general and administrative expense. We believe that our procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods when the estimates are reconciled to the actual amounts.

Accounts Receivable. We maintain an allowance for doubtful accounts for estimated losses from the inability of our customers to make required payments, which is provided for in bad debt expense. We determine the adequacy of this allowance by regularly reviewing our accounts receivable aging and evaluating individual customers’ receivables, considering customers’ financial condition, credit history and other current economic conditions. If a customer’s financial condition were to deteriorate which might impact its ability to make payment, then additional allowances may be required.

Inventories. Inventories in the accompanying consolidated and combined balance sheets are valued at the lower of cost or market. At July 3, 2004 and December 31, 2003, 2002 and 2001, approximately $11,069,000, $10,097,000, $13,282,000 and $13,090,000 of total inventories, respectively, were valued on the last-in, first-out method, or “LIFO.” Under the first-in, first-out method, or “FIFO,” of accounting, such inventories would have been approximately $982,000 and $752,000 lower at July 3, 2004, July 5, 2003, respectively, $402,000 higher at December 31, 2003 and $770,000 and $936,000 lower at December 31, 2002 and 2001, respectively. All other inventories were valued under the FIFO method. In connection with both LIFO and FIFO inventories, we record provisions, as appropriate, to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may cause the actual results to differ from the estimates at the time such inventory is disposed or sold.

Asset Impairment. In the third quarter of 2001, we adopted SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” or “SFAS No. 144,” which addressed financial accounting and reporting for the impairment or disposal of long-lived assets. Adoption of this accounting standard did not result in any material changes in net earnings (loss) from accounting standards previously applied. Adoption of this standard did result in the accounting for the gain (loss) on the sale of certain businesses and their related operating results as discontinued operations. The presentation of all periods presented has been reclassified to conform to the new standard. In accordance with SFAS No. 144, we evaluate the realizability of certain long-lived assets, which primarily consist of property and equipment and intangible assets, based on expectations of non-discounted future cash flows for each subsidiary having a material amount of SFAS No. 144 long-lived assets. If the sum of the expected non-discounted future cash flow is less than the carrying amount of all assets including SFAS No. 144 long-lived assets, we would recognize an impairment loss. Based upon our most recent analysis, we believe that no material impairment of SFAS No. 144 long-lived assets existed at December 31, 2003.

Insurance Liabilities. We record insurance liabilities and related expense for health, workers’ compensation, product and general liability losses and other insurance reserves and expenses in accordance with either the contractual terms of their policies or, if self-insured, the total liabilities that are estimable and probable as of the reporting date. Insurance liabilities are recorded as current liabilities to the extent they are expected to be paid in the succeeding year with the remaining requirements classified as long-term liabilities. The

Income Taxes. Federal income taxes have been recorded in our combined financial statements based upon our pro rata share of Nortek’s consolidated federal tax provision. We account for deferred income taxes using the liability method in accordance with SFAS No. 109 “Accounting for Income Taxes,” or “SFAS No. 109,” which requires that the deferred tax consequences of temporary differences between the amounts recorded in our financial statements and the amount included in our federal and state income tax returns be recognized in the balance sheet. The amount recorded in our financial statements at December 31 of each year reflects estimates of final amounts due to timing of completion and filing of actual income tax returns. Estimates are required with respect to, among other things, the appropriate state income tax rates to use in the various states that we and our subsidiaries are required to file, the potential utilization of operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realized in the future. After February 12, 2004, U.S. federal income tax returns will be prepared and filed by Ply Gem Investment Holdings, Inc. on behalf of itself, Ply Gem Holdings, Inc. Ply Gem Industries, Inc. and its subsidiaries. We have executed a tax sharing agreement with Ply Gem Holdings, Inc. and Ply Gem Investment Holdings, Inc. pursuant to which tax liabilities for each respective party are computed on a stand alone basis. U.S. subsidiaries will continue to file unitary, combined and separate state income tax returns. CWD Windows and Doors will file separate Canadian income tax returns.

The following tables set forth our results of operations based on the amounts and the percentage relationship of the items listed to net sales for the periods indicated. Our results of operations do not give effect to the MW Transactions. Furthermore, our results of operations set forth in the tables below and elsewhere in the offering memorandum may not necessarily reflect what would have occurred if we had been a separate, stand-alone entity during the periods presented or what will occur in the future. Our results of operations in future periods may differ from our historical performance due to changes in our business as discussed above under “—General.”

Our six months ended unaudited statement of operations data for the predecessor periods includes the Pre-Nortek Recapitalization period of January 1, 2003 through January 9, 2003 and the Post-Nortek Recapitalization periods of January 10, 2003 through July 5, 2003 and January 1, 2004 through February 11, 2004 for Ply Gem and the period from January 23, 2004 to July 3, 2004 for Ply Gem Holdings. The Pre-Nortek Recapitalization and Post-Nortek Recapitalization periods presented were prepared using different bases of accounting, and therefore are not directly comparable. As a result of the Ply Gem Acquisition on February 12, 2004, we applied purchase accounting to the period February 12, 2004 through July 3, 2004.

Our results for 2003 include the Pre-Nortek Recapitalization period of January 1, 2003 to January 9, 2003 and the Post-Nortek Recapitalization period of January 10, 2003 to December 31, 2003. The results for these two periods were prepared using different bases of accounting, and therefore are not directly comparable.

Our results of operations in future periods may differ from our historical performance due to changes in our business as discussed above under “—General.”

For the 2003 periods of January 1, 2003 to January 9, 2003, January 10, 2003 to July 5, 2003 and April 5, 2003 to July 5, 2003 compared to the 2004 periods of January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004 and April 3, 2004 to July 5, 2004

Net sales for the January 1 to February 11 and January 23 to July 3 2004 periods presented increased over the January 1 to January 9 and January 10 to July 5 2003 periods presented. The increase in net sales occurred in our siding, fencing, railing and decking segment, and was driven by unit volume growth with both existing and new customers. In addition, the increase in our sales reflected the positive impact of price increases that were launched in the first half of 2004 for our siding, fencing, railing and decking segment in response to PVC resin and aluminum material cost increases. Net sales in our windows and doors product segment were slightly down due to reduced housing starts.

Net sales for the 3 months ended July 3, 2004 (2004 period) declined slightly by (0.9)% over the 3 month period ended July 5, 2003 (2003 period) driven by negative unit volume in our windows and doors product segment, due to reduced housing starts. This decline was partially offset by a slight increase in net sales in our siding, fencing, railing and decking segment, and was driven by unit volume growth with both existing and new customers.

Cost of products sold for the January 1 to February 11 and January 23 to July 3 2004 periods presented were essentially in line with the January 1 to January 9 and January 10 to July 5 2003 periods presented. While raw material costs, specifically PVC resin and aluminum, increased in the 2004 periods, they were largely offset by increases in selling prices in our siding, fencing, railing and decking segment and operational efficiency improvements across both our reporting segments. The operational efficiency improvements that were realized in our siding, fencing, railing and decking segment were favorably impacted by (i) the closure of our Butler, Pennsylvania siding facility in May 2003, (ii) the elimination of one-time costs that were incurred in the 2003 periods presented for the start-up of a new fencing fabrication process to support a significant new retail customer and (iii) the renegotiation of our PVC resin pricing effective July 1, 2003. The operational efficiency improvements that were realized in our windows and doors segment were the result of the successful implementation of lean manufacturing techniques that were implemented by the new management team that was installed during 2003.

Cost of products sold for the 3 months ended July 3, 2004 (2004 period) decreased $0.3 million, but increased as a percentage of sales from 73.6% to 74.1%. While raw material cost, specifically PVC resin and aluminum, increased in the 3 months ended July 3, 2004 (2004 period), they were partially offset by increases in selling prices in our siding, fencing, railing and decking segment and operational efficiency improvements across both our reporting segments. The operational efficiency improvements that were realized in our siding, fencing, railing and decking segment were favorably impacted by (i) the closure of our Butler, Pennsylvania siding facility in May 2003, (ii) the elimination of one-time costs that were incurred in the 3 months ended July 3, 2003 period (2003) presented for the start-up of a new fencing fabrication process to support a significant new retail customer and (iii) the renegotiation of our PVC resin pricing effective July 1, 2003. The operational efficiency improvements that were realized in our windows and doors segment were the result of the successful implementation of lean manufacturing techniques that were implemented by the new management team that was installed during 2003.

Our SG&A expense for the January 1 to February 11 and January 23 to July 23 2004 periods presented decreased from the January 1 to January 9 and January 10 to July 5 2003 periods presented. SG&A expense for the 2003 periods presented included Nortek’s management fee of $2.3 million and $3.4 million of allocated corporate expense compared to the 2004 periods presented, which included $0.3 million for Nortek’s management fee, $0.2 million of allocated corporate expense and $0.7 million of accrued Caxton-Iseman Capital general advisory fee expense. Furthermore, the decline in SG&A expense was impacted by the effect of severance and relocation costs of approximately $0.4 million incurred in 2003 periods presented associated with management changes in our windows and doors segment and approximately $0.6 million of costs incurred in the 2003 periods presented associated with closure of our Butler, Pennsylvania manufacturing facility in May 2003.

Our SG&A for the three months ended July 4, 2004 period decreased $2.3 million from the three months ended July 3, 2003 period and decreased to 10.7% of sales in the 2004 period from 12.1% in the 2003 period. SG&A expense for the 2003 period presented included Nortek’s management fee of $.8 million and $1.3 million of allocated corporate expense compared to the 2004 period presented, which did not include a Nortek’s management fee or allocated corporate expense, but did include $0.5 million of accrued Caxton-Iseman Capital general advisory fee expense. Furthermore, the decline in SG&A expense was impacted by the effect of severance and relocation costs of approximately $0.2 million incurred in 2003 period presented associated with management changes in our windows and doors segment and approximately $0.1 million of costs incurred in the 2003 period presented associated with closure of our Butler, Pennsylvania manufacturing facility in May 2003.

Operating earnings for the January 1 to February 11 and January 23 to July 23 2004 periods presented increased over the periods presented for the January 1 to January 9 and January 10 to July 5 2003. As discussed above, the increase in operating earnings was principally due to sales growth in our siding, fencing, railing and decking segment, manufacturing cost improvements across both of our segments and lower SG&A expense primarily due to lower corporate management charges and one-time costs that were incurred in the 2003 periods presented. Operating earnings were reduced by depreciation expense and amortization of intangible assets, which were approximately $0.3 million and $7.1 million for the 2003 periods January 1, 2003 to January 9, 2003 and January 10, 2003 to July 5, 2003, respectively, and were approximately $1.4 million and $5.2 million for the 2004 periods January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004, respectively.

Operating earnings for the three months ended July 4, 2004 presented increased 7.6% over 2003. As discussed above, the increase in operating earnings was principally due to, manufacturing cost improvements across both of our segments and lower SG&A expense primarily due to lower corporate management charges and one-time costs that were incurred in the three months ended July 5, 2003 period presented. Operating

The 2003 periods of January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003 compared with fiscal year ended December 31, 2002

Net sales for the 2003 periods presented increased over the 2002 fiscal year. The increase in net sales occurred across both our reporting segments through unit volume growth with both existing and new customers and the positive impact of price increases that were launched in the first half of 2003 in our siding, fencing, railing and decking segment in response to rising PVC resin material costs.

Cost of products sold for the 2003 periods presented increased over the 2002 fiscal year. The increase was largely driven by the increased cost in our siding, fencing, railing and decking segment related to (i) certain purchased materials, in particular, PVC resin, which we estimate negatively impacted our gross profit by $18.9 million, and (ii) certain costs we incurred totaling approximately $1.9 million in connection with the start-up of a new fabrication process to support a significant new retail customer. These costs were partially offset in the 2003 periods presented by increased selling price and specific cost improvement actions, including the renegotiation of our PVC resin pricing effective July 1, 2003. Additionally, we estimate that we realized $1.9 million in savings in our siding, fencing, decking and railing segment during the 2003 periods presented from the closure of our Butler, Pennsylvania manufacturing facility in May 2003.

Our SG&A expense for the 2003 periods presented decreased from the 2002 fiscal year. SG&A expense for fiscal year 2002 included Nortek’s management fee of $10.2 million and $3.5 million of allocated corporate expense, while the 2003 periods presented included $7.2 million of Nortek’s management fee and $3.4 million of allocated corporate expense. In addition, the decline in SG&A expense was impacted by decreased bad debt expense relating to our Thermal-Gard windows subsidiary (compared to the higher than normal bad debt expense incurred in 2002), the assets of which we subsequently sold, and lower selling and marketing expense in our siding, fencing, railing and decking segments that resulted from management’s restructuring of certain selling programs. The decrease in SG&A expense was partially offset by $0.6 million of severance and relocation costs associated with management changes in our window and doors segment and approximately

Operating earnings for the 2003 periods presented decreased from the 2002 fiscal year. As discussed above, the decrease in operating earnings was principally due to higher cost of purchased materials, particularly PVC resin, costs related to the start-up of a new fabrication process to support a significant new retail customer, the closure of our Butler, Pennsylvania facility and severance and relocation costs associated with management changes in our windows and doors segment. The cost increases were partially offset by increased selling price, specific cost improvement actions, lower selling, general and administrative expense and higher sales volume. Operating earnings were reduced by depreciation expense and amortization of intangible assets, which were approximately $14.1 million for the 2002 fiscal year and approximately $0.3 million and $14.7 million for the 2003 periods January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003, respectively.

Fiscal year ended December 31, 2002 compared with fiscal year ended December 31, 2001

Net sales increased approximately $24.0 million, or 4.9%, from $485.0 million in 2001, to $509.0 million in 2002. The increase in net sales was principally due to (i) strong new construction and remodeling activity, as well as favorable weather conditions, which created increased demand for our siding, fencing, railing and decking segment, (ii) increased sales volume by our Canadian window operations, and (iii) increased sales prices of certain window product lines, and was partially offset by lower sales volume of vinyl window products to domestic customers primarily due to outdated products at our Thermal-Gard subsidiary, the assets of which we subsequently sold.

Cost of products sold, as a percentage of net sales, decreased from 74.9% for the year ended 2001 to 72.5% for the year ended 2002. The decrease in the percentage principally resulted from reductions realized in the cost of certain purchased materials and component parts, particularly PVC resin for our siding, fencing, railing and decking segment, in part due to lower prices and the effect of cost reduction measures implemented in 2001, which provided a full year of benefits in 2002. Although PVC resin costs decreased overall, PVC resin costs in the second half of 2002 were higher than the second half of 2001. In addition, economies of scale due to increased sales volume in our siding, fencing, railing and decking segment was also a favorable factor in improving cost of products sold, as a percentage of net sales. These decreases were partially offset by material and conversion cost increases related to certain of our window product lines. In 2001, we acquired a 200,000 square foot manufacturing facility for our fencing, railing and decking manufacturing and increased

Our SG&A expense in 2002 and 2001 included the Nortek management fees of $10.2 million and $5.4 million, respectively, and an allocation of corporate expenses of $3.5 million and $(0.3) million, respectively, reference to above in “—General—The Acquisition of Ply Gem by Ply Gem Holdings.” SG&A expense increased from approximately $71.9 million, or approximately 14.8% as a percentage of net sales, in 2001 to approximately $79.6 million, or approximately 15.6% as a percentage of net sales in 2002. In 2001, SG&A expense included approximately $1.6 million of litigation expense related to our domestic window products.

Operating earnings increased $18.2 million from $39.2 million in 2001, to approximately $57.4 million in 2002. The increase in operating earnings was principally due, as discussed above, to an increase in earnings from our siding, fence, railing and decking segment, which benefited in 2002 from reduced material costs as a result of price declines and cost improvements associated with strategic sourcing activities and higher sales volume as compared to 2001. Consolidated operating earnings were reduced by depreciation expense and amortization of intangible assets of approximately $21.0 million and $14.1 million for 2001 and 2002, respectively.

Our primary cash needs are for working capital, capital expenditures and debt service. We have historically financed these cash requirements through internally generated cash flow and funds borrowed under our former credit facility (which was terminated in July 2002) and from our former parent, Nortek.

Net cash provided by operating activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003 and the fiscal years ended December 31, 2002 and 2001 was $1.9 million, $24.2 million, $24.1 million and $43.9 million, respectively. The increase in net cash from operating activities for the 2003 periods presented from the 2002 periods presented was primarily driven by the $2.6 million impact of discontinued operations in 2002 and improved working capital, partially offset by reduced earnings from continuing operations. The $19.8 million decrease in net cash from operating activities that occurred from 2001 to 2002 was driven by an $8.9 million impact from discontinued operations and increased accrued expenses, which included, among other things, $1.2 million of accrued expenses for the sale of discontinued operations of Peachtree Doors and Windows, Inc. and SNE Enterprises, Inc., and $1.8 million in higher accrued management incentives as compared to 2000. Management incentive expenses in 2000 were lower due to lower earnings performance in 2000, as well as other normal working capital fluctuations. Net cash provided by operating activities for the 2004 periods presented of January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004 was $1.7 million and $9.2 million, respectively, while net cash provided by (used in) operating activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to July 5, 2003 was $1.9 million and ($14.9) million, respectively. The increase in net cash

Net cash provided by (used in) investing activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003 was ($0.3) million and ($8.0) million, respectively. Net cash provided by investing activities was $67.1 million for the fiscal year ended December 31, 2002, and included $29.5 million of proceeds from the sale of discontinued operations and $47.4 million net proceeds from the sale and purchase of investments and marketable securities. Net cash used in investing activities was $15.7 million in 2001, and was primarily driven by capital spending of $13.8 million. In addition, 2001 included $45.0 million from the sale of discontinued operations and $47.4 million from the net purchases of investments and marketable securities. Net cash provided by (used in) investing activities for the 2004 periods presented of January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004 was $0.4 million and ($554.6) million respectively, while net cash used in investing activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to July 5, 2003 was $0.3 million and $4.4 million, respectively. The increase in cash used in investing activities during the 2004 periods presented was driven by the cash used to fund the Ply Gem Transactions.

Net cash provided by (used) in financing activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003 was ($4.7) million and ($11.4) million, respectively. Net cash used in investing activities for fiscal 2002 and 2001 was $145.0 million and $28.4 million, respectively. The increase in net cash used in financing activities in 2002 resulted from net transfers to Nortek, our former parent, consisting of interest on intercompany loans, and included the transfer of net proceeds from the sale and purchase of investments and marketable securities. All other intercompany loans owed to Nortek and its other subsidiaries at the time of the Ply Gem Transactions were repaid in full in conjunction with the Ply Gem Acquisition. Net cash provided by (used in) financing activities for the 2004 periods presented of January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004 was ($7.5) million and $556.2 million respectively, while net cash provided by (used in) financing activities for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to July 5, 2003 was ($4.7) million and $18.1 million, respectively. The increase in net cash provided by financing activities for the 2004 periods presented was driven by the cash provided from our new capital structure that resulted from the consummation of the Ply Gem Transactions, which included our senior subordinated notes, senior term loan facilities, our senior revolving credit facility and $141.0 million of sponsor and management equity, as described below.

Our capital expenditures for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to December 31, 2003, and the fiscal years ended 2002 and 2001 were $0.3 million, $7.7 million, $9.4 million and $13.8 million, respectively. Our capital expenditures for the 2004 periods presented of January 1, 2004 to February 11, 2004 and January 23, 2004 to July 3, 2004 were $0.7 million and $2.4 million, respectively, as compared to our capital expenditures for the 2003 periods presented of January 1, 2003 to January 9, 2003 and January 10, 2003 to July 5, 2003, which were $0.3 million and $4.4 million, respectively. We expect our capital expenditures in the near future to remain consistent with our expenditures in past periods.

Concurrently with the Ply Gem Acquisition, we issued the existing notes and entered into $255.0 million of senior credit facilities, consisting of a $65.0 million revolving credit facility and $190.0 million of term loan facilities. We borrowed the full amount of $190.0 million under the term loan facilities, and borrowed approximately $3.0 million under the revolving credit facility, to fund the Ply Gem Acquisition and to pay related transaction costs and expenses. Subsequent to the Ply Gem Transactions, we amended and restated our senior credit facilities on March 3, 2004 to increase our U.S. term loan facility from $160.0 million to $170.0 million and reduce our revolving credit facility from $65.0 million to $55.0 million. We utilized the additional $10.0 million to pay down existing indebtedness under our municipal loan agreements.

We intend to fund our ongoing capital expenditure and working capital requirements, including our internal growth, through a combination of cash flows from operations and, if necessary, from borrowings under the revolving credit portion of our senior credit facilities. As of July 3, 2004, on a pro forma basis, we would have had $701.0 million of indebtedness and $40.8 million of availability under our revolving credit facility. Concurrently with the MW Acquisition, we will issue the notes offered hereby and amend our senior secured credit facilities to increase the size of our revolving credit facility by $20.0 million to $75.0 million and to add a new $141.0 million term loan facility to our existing term loan facilities (thereby increasing the total size of our term loan facilities to $341.0 million). We expect to borrow the full amount under our new term loan facility and approximately $6.0 million under our revolving credit facility to fund the MW Acquisition and to pay related costs and expenses.

The borrowings under our revolving credit facility will be available until its maturity to fund our working capital requirements, capital expenditures and other general corporate needs. Our revolving credit facility will mature in February 2009 and has no scheduled amortization or commitment reductions. Our term loan facilities will mature in February 2011. Our new $141.0 million term loan facility will have no scheduled amortization. Our existing term loan facilities have quarterly scheduled amortization of $500,000 which began in the quarter ended July 3, 2004 and continue for the next 23 calendar quarters thereafter, and $47,000,000 on June 30, 2010, September 30, 2010, December 31, 2010 and on the maturity date. Interest payments on the senior subordinated notes and required principal and interest payments on borrowings under our senior credit facilities will substantially increase our cash requirements. Our significant debt service obligations following the MW Acquisition could, under certain circumstances, have material consequences to you. See “Risk factors — Risks associated with our business — Our substantial level of indebtedness may limit our cash flow available to invest in the ongoing needs of our business, which could prevent us from fulfilling our obligations on the notes.”

Our senior credit facilities and the indenture for the senior subordinated notes impose certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities. The terms of our senior credit facilities and the terms of the senior subordinated notes also significantly restrict our ability to pay dividends and otherwise distribute assets to our parent, Ply Gem Holdings. In addition, our senior credit facilities require us to comply with certain financial ratios. Indebtedness under our senior credit facilities is secured by substantially all of our assets, including our real and personal property, inventory, accounts receivable, intellectual property and other intangibles. In addition, our senior credit facilities are guaranteed by our direct parent and secured by its assets (including our equity interests), as well as guaranteed and secured by the equity interests and substantially all of the assets of our current and, if any, future subsidiaries, subject to certain exceptions. See “Description of other indebtedness — Our Senior Credit Facilities.”

Pursuant to the Sale and Leaseback Transaction, we will sell seven of our properties and one MW property for approximately $36.0 million, and simultaneously enter into long-term leases for those properties with initial annual cash rent of approximately $3.5 million. The net proceeds of the Sale and Leaseback Transaction will be used to fund a portion of the purchase price of the MW Acquisition. See “The Transactions — The MW Transactions — The MW Financings — Sale and Leaseback Transaction.”

Because of the inherent seasonality in our business and the resulting working capital requirements, our liquidity position within a given year will fluctuate. The seasonal effect that creates greatest capital needs is experienced during the first six months of the year and we anticipate the need to borrow funds under our existing revolving credit facility to support this requirement. However, we anticipate that the funds generated by operations and funds available under our senior credit facilities will be adequate to finance our ongoing operational cash flow needs, capital expenditures (as described above), debt service obligations, management incentive expenses, fees payable under our General Advisory Agreement and other contractual obligations for the foreseeable future.

The following table summarizes our contractual cash obligations under financing arrangements and lease commitments, on a pro forma basis as of July 3, 2004, including interest amounts. Except for the senior subordinated notes, the interest rates are generally variable and have been presented at the current rates. Actual rates for future periods may differ from those presented here. Additionally, we have reflected the pension obligation in future periods as being equal to the 2004 annual funding requirement, however, future amounts may vary from this estimate.

Our performance is dependent to a significant extent upon the levels of home repair and remodeling and new home construction spending, all of which are affected by such factors as interest rates, inflation, consumer confidence and unemployment.

The demand for our products is seasonal, particularly in the Northeast and Midwest regions of the United States and Western Canada where inclement weather during the winter months usually reduces the level of building and remodeling activity in both the home repair and remodeling and new home construction sectors. Our sales are usually lower during the first and fourth quarters. Since a portion of our manufacturing overhead and operating expenses are relatively fixed throughout the year, operating income and net earnings tend to be lower in quarters with lower sales levels. In addition, the demand for cash to fund our working capital is greater from late in the fourth quarter through the first quarter.

Our principal interest rate exposure relates to the term loans outstanding under our senior credit facilities. After giving effect to the MW Acquisition, we will have $340.5 million of term loans outstanding, bearing interest at a variable rate, based on an adjusted LIBOR rate plus an applicable interest margin or the base rate plus an applicable interest margin. Each quarter point increase or decrease in the interest rate on the term loans would change our interest expense by approximately $0.9 million per year. We also have a revolving credit facility which will provide for borrowings of up to $75.0 million, which will also bear interest at variable rates in the same manner as the term loan facilities. Assuming the new revolving credit facility is fully drawn, each quarter point increase or decrease in the applicable interest rate would change our interest expense by approximately $0.2 million per year. We are also party to several municipal loan agreements, some of which accrue interest at a variable rate. The aggregate net amount of principal outstanding on the municipal loans that is subject to a variable rate of interest is $15.5 million, as of July 3, 2004. Each quarter point increase or decrease in the interest rate on the municipal loans subject to variable rates of interest would change our interest expense by approximately $39,000 per year. In the future we may enter into interest rate swaps, involving exchange of floating or fixed rate interest payments, to reduce our exposure to interest rate volatility.

SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”) addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 with early adoption permitted. We adopted SFAS No. 143 on January 1, 2003. Adoption of this accounting standard was not material to our financial statements included elsewhere herein.

SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections” (“SFAS No. 145”), was issued in April 2002 and addresses the reporting of gains and losses resulting from the extinguishment of debt, accounting for sale-leaseback transactions and rescinds or amends other existing authoritative pronouncements. SFAS No. 145 requires that any gain or loss on extinguishment of debt that does not meet the criteria of APB 30 for classification as an extraordinary item shall not be classified as extraordinary and shall be included in earnings from continuing operations. The provisions of this statement related to the extinguishment of debt are effective for financial statements issued in fiscal years beginning after May 15, 2002 with early application encouraged. We adopted SFAS No. 145 on January 1, 2003 and adoption of this accounting standard was not material to the results presented in the financial statements included elsewhere herein.

Effective January 1, 2003, we adopted SFAS No. 146, “Accounting for Costs Associated with Exit of Disposal Activities” (“SFAS No. 146”), which addresses the accounting and reporting for costs associated with exit or disposal activities, nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (“EITF 94-3”) and substantially nullifies EITF Issue No. 88-10, “Costs Associated with Lease Modification or Termination” (“EITF 88-10”). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on our financial statements included elsewhere herein.

In the fourth quarter 2003, we adopted the fair value method of accounting for stock-based compensation in accordance with SFAS No. 123. We adopted SFAS No. 123 using the prospective method of transition in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation — Transaction and Disclosure” (“SFAS No. 148”). The prospective method under SFAS No. 148 required us to adopt SFAS No. 123 effective January 1, 2003 for all stock options issued during 2003. Prior to January 1, 2003, we accounted for options granted to employees using the intrinsic value method pursuant to the provisions of APB 25, under which no compensation cost was recognized since the options were granted with exercise prices equal to the fair market value of the common stock at the date of grant. The adoption of this accounting standard was not material to the results presented in the financial statements included elsewhere herein. Following the consummation of the Ply Gem Transactions on February 12, 2004, we have accounted for options granted to employees using the intrinsic value method pursuant to the provisions of APB 25.

In November 2002, the FASB issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). Along with new disclosure requirements, FIN 45 requires guarantors to recognize, at the inception of certain guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee. This differs from the prior practice to record a liability only when a loss is probable and reasonably estimable. The recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. We adopted the disclosure provisions of FIN 45 as of December 31, 2002 and adopted the entire interpretation on January 1, 2003. Adoption of FIN 45 was not material to our financial statements included elsewhere herein.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of ARB No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation requirements of FIN 46 apply to us immediately for variable interest entities created after January 31, 2003 and for existing variable interest entities no later than the end of the first annual reporting period beginning after December 15, 2003. We do not expect any material impact on our financial statements as a result.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS No. 149”), which clarifies the financial accounting and reporting proscribed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) for derivative instruments, including certain derivative instruments embedded in other contracts. Certain provisions of SFAS No. 149 related to implementation issues of SFAS No. 133 are already effective and other provisions related to forward purchases or sales are effective for both existing contracts and new contracts entered into after June 30, 2003. We had previously adopted SFAS No. 133, including the implementation issues addressed in SFAS No. 149, and the adoption of the new provisions of SFAS No. 149 on July 1, 2003 did not have a material impact on our financial statements included elsewhere herein.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“SFAS No. 150”), which addresses the accounting and reporting for the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003 and for all existing financial instruments beginning in the first interim period after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. We adopted SFAS No. 150 on July 1, 2003. Adoption of this accounting standard did not have a material impact on our financial statements included elsewhere herein.

In December 2003, the FASB issued the revised SFAS No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (“SFAS No. 132”) to require additional disclosures to those in the original SFAS No. 132 about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The revised SFAS No. 132 provides only for additional disclosures and does not change the accounting for pension and postretirement plans.

We estimate the total size of the residential exterior building products sectors in which we compete in the U.S. to be approximately $31.0 billion. Demand for exterior building products, including siding, fencing, railing and decking, and windows and doors, is primarily driven by repair and remodeling of existing homes and construction of new homes, which are affected by changes in national and local economic and demographic conditions, employment levels, availability of financing, interest rates, consumer confidence and other factors.

Since the early 1990s, demand for home repair and remodeling has remained robust as a result of strong economic growth, low interest rates and favorable demographic trends. According to the U.S. Census Bureau, expenditures for maintenance, repairs and improvements increased from $120.0 billion in 1992 to $138.3 billion in 1997 and $175.7 billion in 2002, representing a five and ten-year compound annual growth rate of 2.9% and 3.9%, respectively.

Leading drivers of home repair and remodeling expenditures include the age and size of the housing stock, the rate of existing home sales, home size and home ownership rates. According to the Census Bureau, the median age of the U.S. housing stock increased to approximately 29 years in 2000, up 16% from 25 years in 1990. Additionally, over the past fifteen years, the size of a typical new home has increased, with the current average of over 2,300 square feet. Home ownership has also been rising steadily over the past decade from 64.4% in 1992 to 68.3% in 2002.

New home construction has experienced strong growth since the early 1990s. Between 1991 and 2003, housing starts increased at a compound annual growth rate of 4.9%. With steady growth in new housing starts, the number of U.S. housing units has also increased from approximately 102.3 million in 1990 to 120.9 million by 2003.

New home construction continues to be supported by a favorable interest rate environment and strong demographic trends, as increasing immigration drives demand for starter homes, and maturing baby boomers seek second homes and trade-up properties. According to the Joint Center for Housing Studies of Harvard University, total new home construction between 2005 and 2015 is expected to reach 18.5-19.5 million units, as compared to 16.4 million units added in the 1990s.

Vinyl has taken share and continues to take share from certain alternative materials within exterior residential building products due to its low maintenance, high durability, high performance, ease of installation, energy efficiency, lower price and superior aesthetics.

U.S. siding sales have grown steadily over the past fifteen years, reaching an estimated $8.2 billion in 2002. Vinyl currently represents approximately 45% of U.S. residential siding sales by volume. According to the Freedonia Group, vinyl is expected to grow to approximately 47% of residential siding sales by volume by 2007. Vinyl siding has grown to represent nearly two-thirds of home repair and remodeling siding sales by volume, and has more than tripled sales by volume to account for approximately 30% of siding used in new home construction between 1992 and 2002.

The growing demand for vinyl siding is driven by several factors relating to product characteristics and application benefits that provide advantages relative to alternative siding materials. Vinyl’s advantages include low installed cost, high durability, low maintenance, ease of installation, and resistance to rot, mildew and insect infestations. Consumer demand for product style and diversity will support growing demand for accessories and accents such as shakes, scallops and finish trims.

While manufactured housing currently represents only 5% of vinyl siding applications, vinyl is well positioned to benefit from an expected rebound in shipments of manufactured homes. According to a 2003 industry study by the Freedonia Group, demand for siding in the production of manufactured housing is forecast to expand at a rate of 11.4% per year through 2007 (reaching six million squares), growing faster than the overall siding demand.

Demand for U.S. fencing and decking products is estimated to be $5.4 billion in 2003. Vinyl and composite materials represent 18.0% of fencing demand and 10.4% of decking sales by volume. The lasting aesthetic appeal and the low maintenance attributes of vinyl and composite fencing and decking have increased demand for the products. Demand for vinyl and composite fencing has grown by over 37% per year from 1997 to 2003, while sales by volume of vinyl and composite decking have grown by approximately 35% annually from 1998 to 2003. Demand for fencing products is expected to grow at an annual rate of 16.8% for the period 2003 to 2008, and sales by volume of vinyl and composite decking products are expected to grow at an annual rate of 17.1% for the same period. Management estimates that U.S. railing sales are approximately $1.1 billion in size and that vinyl and composite represent approximately $100.0 million, or 9.1%, of railing sales.

U.S. windows and doors demand has grown rapidly over the past ten years and was estimated in 2002 to be $24.5 billion. The primary drivers have been growth in remodeling and an increasing trend towards larger homes that require more windows and doors with more amenities. Unlike many other building products that are commodity-like in nature, windows and doors are decorative-type products with high levels of differentiation and corresponding variations in pricing. Since replacement windows in particular need to fit into pre-existing openings in a house, producers of replacement windows require significant manufacturing flexibility to produce a wide variety of custom sizes.

As with siding, vinyl has grown to become the preferred material for replacement windows, and in recent years has also achieved increased acceptance in new construction. The Freedonia Group estimates that vinyl window and door shipments will grow at a compound annual rate of 5.0% from $3.6 billion in 2002 to $5.9 billion in 2012. In 2002, vinyl windows accounted for 48.4% of the total demand for windows in the United States. Vinyl accounted for over 54% of the replacement window units sold in 2002, and 38% of the new window units sold in 2002. Vinyl demand is projected to benefit from an increase in sales by volume of replacement windows as a percent of total residential window sales. Replacement windows are estimated to grow to 59% of total window demand in 2008, and further grow to represent 62% of total window demand in 2012.

Within new home construction, builders are increasingly accepting vinyl as a viable alternative to wood in new windows, and enhancements in material aesthetics have, and are expected to continue to, support demand for new windows made from plastic materials. According to the Freedonia Group, vinyl is expected to overtake wood as the leading material in windows for new home construction by 2007.

Demand for patio doors has increased from 3.7 million units in 1999 to an estimated 4.0 million units in 2003. Vinyl accounted for approximately 36% of patio door usage in 2002 and is expected to become the leading material used for patio doors by 2004.

In Western Canada, demand for windows and doors is driven by new construction and repair and remodeling. Economic drivers specific to Western Canada include oil and natural gas exploration and production, agriculture and population inflow. Housing starts in Western Canada for 2002 grew approximately 29% from 2001 levels, driven by growth in Western Canada’s population. As of 2001, approximately 21% of all homes were built between 1971 and 1980, while only 15% were built between 1991 and 2001. Among all occupied homes, 67% were more than 20 years old.

We are a leading manufacturer of residential exterior building products in North America. We offer a comprehensive product line of vinyl siding and skirting, vinyl and composite fencing, railing and decking, and vinyl windows and doors that serve both the home repair and remodeling and new home construction sectors in all 50 states and Western Canada. Vinyl building products are the focus of the Company and represented approximately 86.4% of our 2003 net sales on a pro forma basis. Vinyl building products have the leading and increasing share of sales by volume in siding and windows, and the fastest growing share of sales by volume in fencing in the U.S. We also manufacture vinyl and aluminum soffit and siding accessories, aluminum trim coil, wood windows and steel and fiberglass doors, enabling us to bundle complementary and color-matched products and accessories with our core vinyl products. We believe our broad product offering and geographically diverse manufacturing base allow us to better serve our customers and provide us with a competitive advantage over other vinyl building products suppliers.

We market our products using several leading brands across multiple price points, which enables us to diversify our sales across distribution channels with minimal channel conflict and reach the greatest number of end customers. We believe we are able to compete on favorable terms and conditions and maintain a strong customer base as a result of our extensive distribution coverage, high quality, innovative and comprehensive product line, proprietary vendor managed inventory program and production efficiency. We are a low-cost manufacturer of high-quality vinyl siding, and currently operate a total of nine manufacturing facilities strategically located near our customers. For the year ended December 31, 2003 on a pro forma basis before giving effect to the MW Transactions, we had net sales of $531.4 million, net earnings of $11.6 million, and EBITDA of $65.7 million. On a pro forma basis, after giving effect to the MW Acquisition (as described below), for the year ended December 31, 2003, we would have had net sales of $773.4 million, net earnings of $13.4 million and EBITDA of $94.4 million.

On July 23, 2004, we signed a definitive agreement to purchase all of the outstanding shares of capital stock of MWM Holding, Inc. for aggregate consideration of $320.0 million less the aggregate value of certain management stock options cancelled or forfeited in connection with the acquisition (the “MW Acquisition”). MW is a leading, low-cost, vertically-integrated manufacturer of vinyl, vinyl clad-wood, vinyl-wood, wood and composite windows. MW also manufactures vinyl patio doors and markets steel and fiberglass exterior doors. For the year ended December 27, 2003, MW had net sales of $242.0 million, net loss of $21.0 million and MW EBITDA of $32.2 million.

Assuming the MW Acquisition is consummated, we believe it will provide us with a number of strategic, financial and operational benefits. MW is a particularly compelling addition to our existing business for the following reasons:



†	*Industry Leading Windows Platform with Strong Strategic Fit.* We believe MW is a leading supplier of vinyl windows to the new home construction market in the higher growth South Atlantic and Mid-Atlantic regions, respectively. The MW Acquisition, if it occurs, coupled with our existing windows product line, will give us a strong position in the vinyl windows market nationally as well as in the core regions of the East South Central and New England and lending market positions in the South Atlantic, Mid-Atlantic and Western Canada core regions. The MW Acquisition will increase our scale, diversify our target markets and broaden our product offering, expanding our ability to provide high quality products and customer service to both the repair and remodeling and new home construction markets in these regions, with minimal distribution channel conflict and customer overlap.



†	*Significant Cost Saving Opportunities.* We believe that our strategic sourcing and enhanced purchasing power, application of our best practice manufacturing techniques and MW’s vertical integration provide



	significant cost saving opportunities. We expect the utilization of our strategic sourcing and purchasing power to result in lower raw material and other costs to MW. In addition, we believe the application of process-based improvements achieved in our facilities will result in reduced material and production costs at MW. We believe the vertical integration of MW’s manufacturing process will enable us to successfully execute our vertical integration plans in our windows operations.



†	*Strong and Diversified Customer Relationships.* Through high quality and innovative products and superior customer service, MW has established a broad and loyal customer base of more than 800 customers across four major distribution channels. MW’s top 10 customers average over 18 years in tenure. There is minimal overlap between MW’s customers and our existing customers. Following the MW Acquisition, our largest customer will account for no more than 20% of our pro forma net sales, and no other customer will account for more than approximately 5% of our pro forma net sales.



†	*Financial Strength and Diversification of Earnings and Cash Flow.* We believe that the MW Acquisition will strengthen our earnings and cash flow while allowing us to realize overall growth in sales, earnings and cash flow. The MW Acquisition will further diversify our consolidated sales base across customers and distribution channels, and balance our window product sales to the repair and remodeling and new home construction markets. We believe that there exist numerous cross-selling opportunities, as we will be able to leverage our and MW’s respective customer bases and offer a more diverse and complete product offering. In addition, both we and MW maintain tight inventory control procedures and good supplier relationships that enable management to closely monitor and effectively manage working capital needs to improve our cash flow.



†	*Experienced and Complementary Management Team.* MW is led by an experienced senior management team which will augment our existing management team. Michael Haley, the current President and CEO of MW, and Lynn Morstad, the current COO of MW, have more than 40 years of collective manufacturing industry experience. From 2001 to 2003, Mr. Haley and Mr. Morstad have continuously improved MW’s manufacturing operations to consistently produce high-quality products at a low cost, reduced product lead times and increased customer service levels. As a result, over the same period, MW’s net sales have grown at a compound annual growth rate of 7.9%, and during the same period, MW has significantly increased its operating earnings as a percentage of net sales. In connection with the MW Acquisition, members of MW’s management team are expected to make significant investments in the equity of Ply Gem Investment Holdings, our indirect parent. They are expected to acquire stock and receive phantom stock awards representing approximately 6.2% of the common stock and 1.4% of the preferred stock of Ply Gem Investment Holdings on a fully diluted basis.

We believe we are well positioned in our industry and that our following key competitive strengths will be enhanced by the MW Acquisition should it be consummated:

We believe we are the No. 3 supplier of vinyl siding in the U.S. overall, and hold the No. 1 position manufactured housing channel and hold a strong position in the retail channel. We continue to gain volume in the one-step distribution channel of siding and accessories and have increased our unit sales within this channel by 19.0% from 2000 to 2003, which exceeds the industry rate. We believe we are the largest domestic manufacturer of vinyl skirting and the fourth largest manufacturer of metal accessories. We are also recognized as a leader and innovator in the growing fencing, railing and decking product category and believe we currently hold a strong position in vinyl fencing.



†	*High Quality Products with Strong Brand Names.* Our brands are well recognized for innovation and quality in the building trade, and we believe that they are a distinguishing factor in customer selection. We sell our high-quality products under several brand names: American Splendor, Camden Pointe, CWD, Durabuilt, Great Lakes Gold, Kroy, Monitor, Napco, Ply Gem, Regency, Timberlast, Timber Oak, Uniframe, Variform and Georgia-Pacific, among others. Additionally, MW operates under three primary brands: MW, Patriot and Twinseal, all of which are recognized by customers as high quality, high value products, supported by industry leading service. We believe there are significant opportunities to leverage our existing brands and the MW brands by targeting cross-selling opportunities, while avoiding channel conflict.



†	*Multi-Channel Distribution Network and Diversified Sales Base.* We have a multi-channel distribution network that serves both the home repair and remodeling and new home construction sectors, which exhibit different, but often counter-balancing, demand characteristics. Our multiple brand and multi-channel distribution strategy has increased our sales and penetration within these sectors. We offer a comprehensive product line to a diverse customer base in all 50 states and Western Canada. Our customer base includes distributors, retail home centers, lumberyards, remodeling contractors and builders. We have also grown our sales by establishing new distribution points. We believe our strategy minimizes channel conflict, reduces our reliance on any one channel and reaches a wide group of customers, which provides us with greater ability to sustain our financial performance through economic fluctuations.



†	*Efficient Manufacturing.* We are a low-cost manufacturer of high-quality vinyl siding. We continue to achieve manufacturing efficiencies across our product categories through strategic sourcing, process-based reductions in material, production and warranty costs, and control of selling, general and administrative expense. Our production efficiency and quality processes have historically resulted in warranty claim rates that are below the industry average, and our productivity initiatives have helped reduce our vinyl siding manufacturing cost per pound by approximately 16.2% from 2000 to 2003. We are committed to continuous improvement across product categories and have made approximately $31.3 million in capital expenditures, including upgrades to equipment, facilities and technology, over the three years ended December 31, 2003. MW has made capital expenditure improvements of approximately $15.7 million over the comparable time period, including building new manufacturing capacity, reconfiguring and standardizing its manufacturing processes and fully integrating information and operating systems. These improvements have enabled MW to develop a low-cost manufacturing platform that management believes will be further enhanced through the integration into Ply Gem.



†	*Strong Management Team with Significant Ownership.* We are led by an experienced and committed senior management team who on a combined basis have an average of over 20 years of relevant industry experience. Under our CEO, Lee Meyer, we have successfully increased our share of sales by volume within the residential exterior building products industry and have continuously improved our manufacturing operations to develop a low-cost manufacturing platform. As a result, we have significantly improved our operating earnings as a percentage of net sales, from 3.1% in 2000 to 11.1%, on a pro forma basis before giving effect to the MW Transactions, for the year ended December 31, 2003. Should the MW Acquisition be consummated, members of MW’s management team are expected to make significant investments in the equity of Ply Gem Investment Holdings, our indirect parent. After the completion of the MW Acquisition, members of our management team (including MW) are expected to hold stock and phantom stock awards representing approximately 17.9% of the common stock of Ply Gem Investment Holdings. Additionally, over time we plan to issue up to 5% of additional common stock in the form of options to our management team.



	families to cross-sell and bundle products to further leverage our channel partners and exclusive industry relationships. Should the MW Acquisition be consummated, we intend to leverage MW’s strong relationships in its core geographic markets to increase sales of all of our products, including taking advantage of cross- selling opportunities to our customers and MW’s customers. With our extensive manufacturing capabilities, product breadth and national distribution capabilities, we can provide our customers with a cost-effective, single source from which to purchase their residential exterior building product needs.



†	*Expand Brand Coverage and Product Innovation.* We intend to leverage the reputation of our brands for innovation and quality to fill in our product offerings and price points. In addition, we plan to maximize the value of our new product innovations and technologies by deploying best practices and manufacturing techniques across our product categories. For example, we believe our recent innovations and expertise in manufacturing composite materials for railing and decking have favorably positioned our siding and accessories products as the siding sector prepares for the introduction of composite materials. Together, Ply Gem and MW currently employ 22 research and development professionals dedicated to new product development, reformulation, product redesign and other manufacturing and product improvements.



†	*Further Improve Operating Efficiencies.* While we have significantly improved our vinyl siding manufacturing cost structure over the last several years, we believe that there are further opportunities for improvement. In addition, we intend to introduce similar manufacturing improvements and best practices in our other product categories, including, for example, expansion of our virtual plant strategy to our windows manufacturing facilities. We also plan to optimize product development, sales and marketing, materials procurement, operations and administrative functions across all of our product categories. A significant opportunity involves leveraging total raw material expenditures to obtain volume discounts and minimize costs. In addition, the integration of our sales and marketing efforts across our product categories provides an ongoing opportunity to significantly improve sector penetration while lowering overall selling, general and administrative expense as a percentage of sales.

Our principal product categories are siding, fencing, railing and decking, and windows and doors. Should the MW Acquisition be consummated, vinyl products will represent approximately 86.4% of our pro forma 2003 net sales. Siding, fencing, railing and decking account for approximately 47.8% of our pro forma 2003 net sales, and windows and doors account for approximately 52.2% of our pro forma 2003 net sales.

Our siding and accessories products include vinyl siding, vinyl skirting, vinyl and aluminum soffit, aluminum trim coil, J-channels, wide crown molding, window and door trim, F-channels, H-molds, fascia, undersill trims and outside/inside corner posts. We sell our siding and accessories under our Variform and Napco brand names and under the Georgia-Pacific brand name through a private label program. We also sell our Olde Providence line of vinyl siding and accessories to Lowe’s under our Durabuilt private label brand name. Our vinyl and vinyl-composite fencing, railing and decking products are sold under our Kroy brand name and under the Georgia-Pacific and Lowe’s Fusion Fence brand names through our private label program.

Our windows and doors products include vinyl and wood windows and steel and fiberglass doors. We sell our windows and doors under our Great Lakes, Ply Gem, Uniframe, Napco and CWD brand names. Additionally, MW sells its windows and doors products under three primary brands: MW, Patriot and Twinseal.

A summary of our siding and windows and doors product lines is presented in the table below according to price point.

The breadth of our product lines and our multiple brand and price point strategy enable us to target all areas of the siding, fencing, railing, and decking and windows and doors sectors, including multiple distribution channels (wholesale, retail and manufactured housing) and end sectors (home repair and remodeling and new home construction), with minimal channel conflict.

We have a multi-channel distribution network that serves both the home repair and remodeling and new home construction sectors, which exhibit different, often counter-balancing, demand characteristics. In conjunction with our multiple brand and price point strategy, we believe our multi-channel distribution strategy enables us to increase our sales and sector penetration while minimizing channel conflict. We believe our strategy reduces our reliance on any one channel, which provides us with a greater ability to sustain our financial performance through economic fluctuations.

We sell our siding and accessories to specialty distributors (one-step distribution) and to wholesale distributors (two-step distribution). Our specialty distributors sell directly to remodeling contractors and builders. Our wholesale distributors sell to retail home centers and lumberyards who, in turn, sell to remodeling contractors, builders and consumers. In the wholesale channel we are the sole supplier of vinyl siding and accessories to BlueLinx (formerly a distribution operation of the Georgia-Pacific Corporation), the largest building products distributor in the U.S. Through BlueLinx and our BlueLinx dedicated, 22 person sales force, our Georgia-Pacific private label vinyl siding products are sold to major retail home centers, lumberyards and manufactured housing manufacturers. A portion of our siding and accessories is also sold directly to Lowe’s Home Improvement Centers under our Durabuilt brand name. Our growing customer base for fencing, railing and decking consists of distributors, retail home centers and lumberyards.

Our domestic windows and doors product lines are sold for use in home repair and remodeling and new home construction primarily through our diversified customer base of dealers and distributors. Dealers typically market directly to homeowners or contractors in connection with remodeling requirements while distributors concentrate on local independent retailers. Our Canadian windows and doors product lines are primarily sold to buying groups formed by builders (mostly for new home construction) and lumberyards through six distribution centers. We believe we have established relationships with all the key regional buying groups representing large, reputable builders and lumberyards in Canada.

MW’s product lines are sold for use in new home construction and home repair and remodeling through a highly diversified customer base, which includes independent building material dealers, large regional chains, builder direct/ OEMs, and retail homecenters. MW operates a network of vertically integrated production and distribution facilities located in Virginia, New Jersey, Mississippi and North Carolina. MW’s Rocky Mount, Virginia and Tupelo, Mississippi facilities maintain leased truck fleets operated by MW employees, while the Hammonton, New Jersey facility utilizes outsourced truck solutions.

Should the MW Acquisition be consummated, our combined company’s top ten customers together would have accounted for approximately 42% of our pro forma net sales for the year ended December 31, 2003. We expect a small number of customers may continue to account for a substantial portion of our net sales for the foreseeable future.

We are the sole supplier of vinyl siding and accessories to BlueLinx (formerly a distribution operation of Georgia-Pacific Corporation). This relationship, established in the early 1980s and made exclusive in 1988, has expanded over the years to include a broad line of products, including vinyl siding, skirting, soffit and railing and vinyl and metal accessories. The product portfolio is marketed under the Georgia-Pacific brand name for distribution through all of BlueLinx’s channels, including retail home centers such as Lowe’s, lumberyards and manufactured housing manufacturers. BlueLinx, through its numerous distribution channels, accounted for approximately 20% of our pro forma 2003 net sales.

The relationship provides us with access to the largest building products distributor in the U.S. with national distribution and logistics capability, and access to a strong brand name with a leading position in the retail home center, lumberyard and manufactured housing channels. A portion of the products we sell to BlueLinx are shipped directly to BlueLinx’s customers.

BlueLinx in turn receives substantial benefits from our unique capabilities including: a comprehensive product line; our VMI program (which allows us to track, forecast and place purchase orders based on BlueLinx’s inventory on hand and existing orders); a low cost manufacturing base (allowing for a substantial share of the highly competitive manufactured housing sector); and a BlueLinx-dedicated sales organization (which maintains strong, direct relationships with BlueLinx’s customers).

In order to meet the unique needs of each of the sectors for our various product categories, we maintain sales teams for each of our product categories and some of our brands. Should the MW Acquisition be consummated, we will employ 229 sales and marketing personnel, including a 22 person sales team that caters exclusively to the needs of BlueLinx, maintaining strong direct relationships with BlueLinx’s existing customers and establishing new customers for BlueLinx. We have created a national account manager position and a national distribution sales manager position to support our growing Lowe’s business and other retail accounts for fencing products.

Our product sales teams are headed up by sales managers, who manage our distinct, strategically positioned teams of territory sales representatives. We have developed a broad suite of support capabilities to service our customers’ needs, including teams of field service technicians and inside-technical service representatives who field issues and provide technical service support as needed.

We employ a variety of marketing and promotional materials to promote our products generally, including product sample cases, point-of-sale displays, color selection samples and product literature. Marketing materials are provided by distributors and contractors, however they are generally aimed at the end users of the products. Products are promoted through comprehensive brand specific websites. We also provide co-op advertising funds to customers to support the local promotion of our product lines.

MW’s in-house sales organization has primary responsibility for sales of the MW and Twinseal brands, whose representatives have an average tenure of more than 10 years. The Patriot brand sales organization consists of eight independent manufacturer representatives and five in-house employees that focus on larger accounts. MW provides industry-leading customer service that begins with the senior management team’s direct, in-depth, relationship with each of MW’s largest customers. This commitment has resulted in a fill rate in excess of 99% for the past 24 months.

Should the MW Acquisition be consummated, we will operate fourteen manufacturing facilities across the U.S. and in Calgary, Canada.

Vinyl siding, skirting, soffit and accessories are manufactured in our Kearney, Missouri, Martinsburg, West Virginia, and Jasper, Tennessee facilities, while all metal products are produced in our Valencia, Pennsylvania facility. Without further investment to increase capacity, our three vinyl siding plants have the necessary capacity to support our planned sales growth in vinyl siding until 2006, when we expect that we will add one new extruder for approximately $1.5 million. The metal plant has sufficient capacity to support planned levels of sales growth for the foreseeable future. Our fencing, railing and decking products are currently manufactured at our York, Nebraska and Fair Bluff, North Carolina facilities. Due to anticipated increased demand for fencing, railing and decking products, we expect additional capacity will be required in each year through 2006. We expect our capital expenditures in the near future to remain consistent with our expenditures in past periods.

Our windows and doors manufacturing facilities have benefited from our continued investment and commitment to product development and product quality combined with increasing integration of best practices across our product offerings. These initiatives have allowed us to lower production costs, shorten lead times and improve product quality. We currently have sufficient capacity to provide for expected growth in windows and doors sales through 2006. The facilities can further expand capacity in a cost effective manner by expanding production shifts. Ongoing capital investments will focus upon new product development and equipment maintenance and improvement.

MW manufactures windows and patio doors at two primary facilities in Rocky Mount, Virginia and Hammonton, New Jersey. A key internal supplier to both facilities is the vinyl extrusion facility that is located near the Rocky Mount facility. MW also has a woodcutting facility located in Fayetteville, North Carolina, that supplies wood frame components to the Rocky Mount facility. Beginning in 2003, MW significantly lowered its manufacturing cost basis by expanding its existing in-house capacity to extrude vinyl lineals used in the production of windows. MW purchased six new lineal extruders, five of which are fully operational, and the other is expected to be operational by the end of 2004. This expansion initiative is expected to increase MW’s annual extrusion capacity from 11 million pounds to 29 million pounds. Management also expects that if the MW Acquisition is consummated, MW will be able to supply manufactured lineals to Great Lakes Windows, one of our existing windows subsidiaries, at a lower cost than the price that Great Lakes Windows currently pays for its lineal needs.

We generally carry increased working capital during the first half of a fiscal year to support those months where customer demand exceeds production capacity. We believe that this is typical within the industry.

We believe we will benefit from our continued efforts to leverage product development, manufacturing capacity and manufacturing capabilities across our different products. For example, we have invested in the manufacturing of new composite fencing products that are of better quality, improved aesthetics and can be

PVC resin, aluminum and glass are major components in the production of our and MW’s products, and changes in PVC resin, aluminum and glass pricing have a direct impact on our cost of products sold. We and MW have both historically been able to pass on price increases to our customers. The results of operations for individual quarters can be negatively impacted by a delay between the time of raw material cost increases and price increases that we implement in our products, or conversely can be positively impacted by a delay between the time of a raw material price decrease and competitive pricing moves that we implement. No assurances can be given that we will be able to pass on price increases in the future. We believe that we and MW have improved our cost structure to mitigate the impact of PVC resin, aluminum and glass pricing on our operating results. Initiatives we have undertaken to improve our cost structure include: improving efficiency in vinyl material usage through process improvements and scrap reduction, identifying alternative materials and/or material sources in product development, improving product design to facilitate reductions in manufacturing and materials costs and increasing overall efficiency, and optimizing product formulation to reduce input costs while maintaining or improving overall product quality.

We have made significant efforts to establish mutually beneficial long-term relationships with suppliers. As such, we have sought to secure partnerships with only those suppliers that are prepared to provide us with high quality raw materials and that are prepared to help us maximize the value that we provide to customers.

We compete with other national and regional manufacturers of exterior building products. We are one of the largest vinyl siding manufacturers, alongside CertainTeed, Owens Corning, Alcoa and Alside. We also compete with numerous other vinyl siding manufacturers. Significant growth in vinyl fencing, railing and decking has attracted many new entrants, and the sector today is very fragmented. Our competitors include U.S. Fence, Homeland, Westech, Bufftech, Outdoor Technologies, Royal, Outdoor Advantage, Fiberon and Trex. Some of our national and regional competitors are larger in size and have greater financial resources than we do. The vinyl windows and patio doors sector in the U.S. is highly fragmented, comprised primarily of local and regional manufacturers. Our competitors include MI Home Products, Silverline Building Products, Simonton Windows, Milgard Manufacturing, Inc. (Masco Corp.) and Viking Industries, Inc. We generally compete on product performance, sales and services support and price. We also face competition from alternative materials, such as wood, aluminum, fiber cement, masonry and other metals.

We rely on patent, trademark, trade secret and other intellectual property law and protective measures to protect our proprietary rights. We have a significant number of trademarks registered in the United States covering our material brands. To date, we and MW have been granted a total of 42 patents in the United States and abroad and have a significant number of U.S. and international patent applications pending.

Although we and MW employ a variety of intellectual property in the development and manufacturing of our respective products, we believe that none of that intellectual property is individually critical to our or MW’s current operations. Taken as a whole, however, we believe our intellectual property rights are significant. We cannot assure you that our intellectual property protection measures will be sufficient to prevent misappropriation of our or MW’s technology. In addition, the laws of many foreign countries do not protect our or MW’s intellectual property to the same extent as the laws of the United States. From time to time, third parties have or may assert infringement claims against us or MW against our respective customers in connection with the use of our products.

Our corporate headquarters are located in Kearney, Missouri. After the MW Acquisition, we will operate the following facilities, except as indicated. We also own and lease several additional properties in the U.S. and Canada.



(1)	The lease for this facility expires on February 1, 2017.



(2)	The lease for this facility is currently on a monthly basis, and we have entered into a lease that will expire January 31, 2005.



(3)	We are purchasing this property pursuant to an installment sales contract, under which we will make payments through 2011.

Over the past two years, we have made a significant investment to upgrade our operating software to a common, centralized MIS platform for our siding, fencing, railing and decking products. We believe that significant potential opportunities remain for us to enhance communications and reduce administrative costs across our businesses while improving response times to potential market opportunities.

From 1999 to early 2002, MW invested in an enterprise resource planning system from PeopleSoft (formerly J.D. Edwards). Management expects that system will remain in place after the MW Acquisition and believes that no significant investment with respect to integrating the information systems at Ply Gem and MW will be required in the near term.

We are subject to Canadian and U.S. federal, state, provincial and local environmental laws and regulations that relate to the presence of hazardous materials, pollution and the protection of the environment, including those governing emissions to air, discharges to water, use, storage and transport of hazardous materials, storage, treatment and disposal of waste, remediation of contaminated sites, and protection of worker health and safety. From time to time, our facilities are subject to investigation by environmental regulators. We believe that our current operations are in substantial compliance with all applicable environmental laws and that we maintain all material permits required to operate our business.

Based on available information, we do not believe that any known compliance obligations, claims, releases or investigations will have a material adverse effect on its results of operations, cash flows or financial position. However, there can be no guarantee that these or newly discovered matters or any inability to enforce available indemnification agreements will not result in material costs.

We voluntarily comply with the Vinyl Siding Institute, or “VSI,” Certification Program with respect to our vinyl siding and accessories. Prior to 1998, there was no commonly-adopted industry certification process for vinyl siding products. Uniform minimum standards were available, but uniform compliance was not assured. In 1998, the VSI, under the leadership of our President and Chief Executive Officer, Lee Meyer, at that time the Chairman of the VSI, instituted a new industry-wide program to assure compliance with minimum product standards. All major vinyl siding manufacturers, representing over 90% of all products, now comply with these guidelines.

Under the VSI Certification Program, third party verification and certification, provided by Architectural Testing, Inc., or “ATI,” is used to ensure uniform compliance with the minimum standards set by the American Society for Testing and Materials, or “ASTM.” Those products compliant with ASTM specifications for vinyl siding will perform satisfactorily in virtually any environment. ATI initially inspects all qualifying products for compliance and inspects plants to assure effective quality control programs. In addition, compliance with advertised specifications is verified. All manufacturing plants are inspected bi-annually during unannounced visits to monitor compliance. Upon certification, products are added to the official VSI list of certified products and are eligible to bear the official VSI certification logo.

Should the MW Acquisition be consummated, we will have approximately 4,700 employees. Employees at our Valencia and Sarver, Pennsylvania metal plants are our only employees with whom we have a collective bargaining agreement. Approximately 5.5% of our employees are represented by the United Steelworkers of America, AFL-CIO-CLC, pursuant to an agreement that expires on November 30, 2006. We believe our relationships with our employees are good. We have a number of programs in place which we designed to retain, incentivize and reward our employees for performance.

In the ordinary course of our business, we are a party to a number of legal actions, none of which are expected to have a material impact on us.

The Boards of Directors of Ply Gem Investment Holdings, Ply Gem Holdings and Ply Gem are identical.

Set forth below is a brief description of the business experience of each of the members of our board of directors and our executive officers.

Since the Ply Gem Acquisition, Frederick Iseman has served as our chairman of the Board of Directors. Mr. Iseman is currently Chairman and Managing Partner of Caxton-Iseman Capital, a private equity firm which was founded by Mr. Iseman in 1993. Prior to establishing Caxton-Iseman Capital, Mr. Iseman founded Hambro-Iseman Capital Partners, a merchant banking firm. From 1988 to 1990, Mr. Iseman was a member of the Hambro International Venture Fund. Mr. Iseman is Chairman of the Board of Anteon International Corporation, Chairman of the Board of Buffets Holdings, Inc., and a member of the Advisory Board of Duke Street Capital and the Advisory Board of STAR Capital Partners Limited.

Lee D. Meyer was appointed President and Chief Executive Officer of our company in January 2002. Since the Ply Gem Acquisition, Mr. Meyer has served as a director. Mr. Meyer previously had been the President of Variform, one of our siding and accessories subsidiaries. Mr. Meyer joined Variform in 1993 as the Vice President of Manufacturing, and held successive positions as Vice President of Operations, Senior Vice President and General Manager, before he became President of Variform in 1998. Prior to joining Variform, Mr. Meyer held positions at GE Plastics, Borg Warner Chemicals and the Chemicals Division of Quaker Oats. Mr. Meyer graduated from the University of Nebraska in 1971 with a BS in Chemical Engineering and an MBA in Finance and Economics in 1979. He also received his license as a Registered Professional Engineer in 1979. Mr. Meyer has been a member of the Vinyl Siding Institute, or the “VSI,” since 1994 and is currently a member of the Executive Committee and is a member of the VSI Certification Oversight Committee, which oversees voluntary minimum standards for vinyl siding products. In June 2003, Mr. Meyer completed a tenure of approximately five years as Chairman of the Vinyl Siding Institute. Mr. Meyer is also the VSI representative to the Society of Plastics Industry and a member of the Windows and Doors Manufacturers Association.

Mr. Wayne was appointed President of our siding and accessories subsidiaries in January 2002. Mr. Wayne joined our company in 1998, and prior to his appointment to President had been Vice President of Sales and Marketing for our Variform and Napco siding and accessories subsidiaries. Prior to joining us,

Since the Ply Gem Acquisition, Mr. Poe has served as our Vice President and Chief Financial Officer. Mr. Poe was appointed Vice President of Finance of our siding and accessories subsidiaries in March 2000. Prior to joining our company, Mr. Poe held the position of Corporate Controller and various other accounting positions at Nordyne, Inc., joining the company in 1990. In addition, Mr. Poe held various accounting positions with Federal Mogul Corporation from 1984 to 1990. Mr. Poe graduated from Southeast Missouri State University in 1984 with a BBS in Accounting. Mr. Poe graduated from Fontbonne College in 1994 with an MBA.

Mr. Watson was appointed President of our Great Lakes Window Group in January 2003. Prior to becoming President, Mr. Watson was the Vice President of Sales and Marketing for our siding and accessories subsidiaries. Mr. Watson originally joined our company in 1996 as National Sales Manager of the Georgia-Pacific product line. Prior to joining us, Mr. Watson held the position of National Marketing manager with Norco Windows. Mr. Watson graduated from Western Michigan University in 1985 with a BBA in Marketing. He is also an active participant in the activities and various committees of the Window and Door Manufacturers Association.

Mr. Sveinson was appointed President of CWD Windows & Doors in April 1999. Mr. Sveinson joined our company in 1993, and prior to his appointment as President held successive positions as Controller, Vice President of Finance, and Vice President of Business Development. Prior to joining us, Mr. Sveinson held senior finance positions with a commercial printing company and a soft drink manufacturing and distribution company. Mr. Sveinson graduated from the University of Calgary in 1981 with a Bachelor of Management Degree in Finance. In addition, Mr. Sveinson is a professional accountant, having achieved a Certified Management Accountant designation in 1991. Mr. Sveinson is also a director of the Canadian Window and Door Manufacturing Association.

Mr. McCready was appointed President of our fencing, railing and decking subsidiary on January 5, 2004, after more than 20 years of experience in the building products industry. Prior to joining our company, Mr. McCready held the position of General Manager, Architectural Products at The Building Solutions division of Boise Cascade Corporation, joining the company in 2001. In addition to that, Mr. McCready held various marketing and sales positions with Armstrong World Industries, Inc., where he was employed from 1983 to 2000. Mr. McCready received a BS in Business Administration from the University of Delaware in 1983.

Since the Ply Gem Acquisition, Robert A. Ferris has served as Chairman of our Executive Committee and director. Mr. Ferris is a Managing Director of Caxton-Iseman Capital, and has been employed by Caxton-Iseman Capital since March 1998. From 1981 to February 1998, Mr. Ferris was a General Partner of Sequoia Associates (a private investment firm headquartered in Menlo Park, California). Prior to founding Sequoia Associates, Mr. Ferris was a Vice President of Arcata Corporation, a New York Stock Exchange-listed company. Mr. Ferris is a director of Anteon International Corporation and Buffets Holdings, Inc.

Since the Ply Gem Acquisition, Steven M. Lefkowitz has served as a director. Mr. Lefkowitz is a Managing Director of Caxton-Iseman Capital and has been employed by Caxton-Iseman Capital since 1993. From 1988 to 1993, Mr. Lefkowitz was employed by Mancuso & Company, a private investment firm, and served in several positions including as Vice President and as a Partner of Mancuso Equity Partners. Mr. Lefkowitz is a director of Anteon International Corporation and Buffets Holdings, Inc.

Since the Ply Gem Acquisition, Mr. Roach has served as a director. Mr. Roach is Chairman of the Board and Chief Executive Officer of Stonegate International, a private investment and advisory services company, and has been employed by Stonegate International since 2001. Mr. Roach served as Chairman of the Board, President and Chief Executive Officer of Builders FirstSource, Inc. from 1998 to 2001; and as Chairman of the Board, President and Chief Executive Officer of Fibreboard Corporation from 1991 to 1997. Mr. Roach is also Executive Chairman of the Board of Unidare US Inc., a leading wholesale supplier of products to the industrial, welding and safety markets, a director of Kaiser Aluminum Corporation and its subsidiary, Kaiser Aluminum & Chemical Corporation, a director of Material Sciences Corp., a provider of materials-based solutions, a director of URS Corporation, an engineering firm, and a director of PMI Group, Inc., a provider of credit enhancement products and lender services.

If the MW Acquisition is consummated, Mr. Haley will serve as President of MWM Holding. Mr. Haley has been the President of MW since June 2001. Prior to joining MW, Mr. Haley had been the President of American of Martinsville (a subsidiary of La-Z-Boy Inc.) from 1994 until May 2001. In addition, Mr. Haley was President of Loewenstein Furniture Group from 1988 to 1994. Mr. Haley graduated from Roanoke College in 1973 with a Bachelor’s Degree in Business Administration.

With the exception of Mr. Roach, our directors do not receive any compensation for performing their directorial duties. Mr. Roach receives $60,000 annually as compensation for serving on our board of directors.

The following table sets forth information on the compensation awarded to, earned by or paid to our President and Chief Executive Officer, Lee D. Meyer, and our four other most highly compensated executive


(1)	Includes a dividend payment of $1,004,788 in respect of stock options held by Mr. Meyer in connection with the Nortek Recapitalization and granted pursuant to a rollover stock option agreement.

(2)	Includes a $7,000 profit sharing contribution and a $6,000 matching contribution to Mr. Meyer’s account under the Variform, Inc. 401(k) Savings Plan.

(3)	Includes a $7,000 profit sharing contribution and a $6,000 matching contribution to Mr. Wayne’s account under the Variform, Inc. 401(k) Savings Plan.

(4)	Mr. Forbis, formerly President and Chief Executive Officer of our fencing, railing and decking products subsidiary, left his position with us effective January 5, 2004, and is now a paid consultant to us.

(5)	Includes a payment of a $1,000,000 retention bonus earned by Mr. Forbis by remaining employed by us through September 9, 2003 pursuant to his Retention Bonus Letter Agreement dated September 9, 1999.

(6)	Includes a dividend payment of $277,500 in respect of stock options held by Mr. Forbis in connection with the Nortek Recapitalization and granted pursuant to a rollover stock option agreement.

(7)	Includes a $3,000 profit sharing contribution and a $6,000 matching contribution to Mr. Forbis’ account under the Kroy Building Products 401(k) Profit Sharing Plan.

(8)	Includes a $73,070 payment in respect of Mr. Watson’s relocation.

(9)	Includes a $6,201 profit sharing contribution and a $6,373 matching contribution to Mr. Watson’s account under the Great Lakes Window, Inc. 401(k) Savings Plan.


(10)	Includes a $6,180 profit sharing contribution and a $5,730 matching contribution to Mr. Poe’s account under the Variform, Inc. 401(k) Savings Plan.

The table below sets forth certain options to purchase stock of Nortek Holdings, our former indirect parent, granted to our named executive officers by Nortek Holdings in 2003.



(1)	Includes 16,667 Class A options and 33,333 Class B options which were granted to Mr. Meyer on January 9, 2003 pursuant to the Nortek Holdings, Inc. 2002 Stock Option Plan. Mr. Meyer’s Class A options initially vested quarterly over the three-year period following grant and his Class B options vest upon the satisfaction of certain performance criteria set forth in the Plan. The exercise price of these options was reduced to $11.00 per share in connection with a dividend declared by Nortek Holdings, effective November 26, 2003. Nortek Holdings determined that Mr. Meyer’s Class A options fully vested in connection with the Ply Gem Acquisition and that his Class B options will survive, subject to performance criteria, as if Mr. Meyer’s employment with Nortek Holdings did not terminate upon the Ply Gem Acquisition. Mr. Meyer’s Class A options were cancelled in connection with, and at the closing of, the Ply Gem Acquisition.



(2)	Includes 6,667 Class A options and 13,333 Class B options which were granted to Mr. Wayne on January 9, 2003 pursuant to the Nortek Holdings 2002 Stock Option Plan. Mr. Wayne’s Class A options initially vested quarterly over the three-year period following grant and his Class B options vest upon the satisfaction of certain performance criteria set forth in the Plan. The exercise price of these options was reduced to $11.00 per share in connection with a dividend declared by Nortek Holdings, effective November 26, 2003. Nortek Holdings determined that Mr. Wayne’s Class A options fully vested in connection with the Ply Gem Acquisition and that his Class B options will survive, subject to performance criteria, as if Mr. Wayne’s employment with Nortek Holdings did not terminate upon the Ply Gem Acquisition. Mr. Wayne’s Class A options were cancelled in connection with, and at the closing of, the Ply Gem Acquisition.


(3)	Mr. Forbis, formerly President and Chief Executive Officer of our fencing, railing and decking products subsidiary, left his position with us effective January 5, 2004, and is now a paid consultant to us.


(4)	Includes 11,667 Class A options and 23,333 Class B options which were granted to Mr. Forbis on January 9, 2003 pursuant to the Nortek Holdings Inc. 2002 Stock Option Plan. Mr. Forbis’ Class A options initially vested quarterly over the three-year period following grant and his Class B options vest upon the satisfaction of certain performance criteria set forth in the Plan. The exercise price of these options was reduced to $11.00 per share in connection with a dividend declared by Nortek Holdings, effective November 26, 2003. Nortek Holdings determined that Mr. Forbis’ Class A options fully vested in connection with the Ply Gem Acquisition and that his Class B options will survive, subject to performance criteria, as if Mr. Forbis’ employment with Nortek Holdings did not terminate upon the Ply Gem Acquisition.



(5)	Includes 2,333 Class A options and 4,667 Class B options which were granted to Mr. Watson on January 9, 2003 pursuant to the Nortek Holdings Inc. 2002 Stock Option Plan. Mr. Watson’s Class A options initially vested quarterly over the three-year period following grant and his Class B options vest upon the satisfaction of certain performance criteria set forth in the Plan. The exercise price of these options was reduced to $11.00 per share in connection with a dividend declared by Nortek Holdings, effective November 26, 2003. Nortek Holdings determined that Mr. Watson’s Class A options fully vested in connection with the Ply Gem Acquisition and that his Class B options will survive, subject to



	performance criteria, as if Mr. Watson’s employment with Nortek Holdings did not terminate upon the Ply Gem Acquisition. Mr. Watson’s Class A options were cancelled in connection with, and at the closing of, the Ply Gem Acquisition.



(6)	Includes 2,333 Class A options and 4,667 Class B options which were granted to Mr. Poe on January 9, 2003 pursuant to the Nortek Holdings Inc. 2002 Stock Option Plan. Mr. Poe’s Class A options initially vested quarterly over the three-year period following grant and his Class B options vest upon the satisfaction of certain performance criteria set forth in the Plan. The exercise price of these options was reduced to $11.00 per share in connection with a dividend declared by Nortek Holdings, effective November 26, 2003. Nortek Holdings determined that Mr. Poe’s Class A options fully vested in connection with the Ply Gem Acquisition and that his Class B options will survive, subject to performance criteria, as if Mr. Poe’s employment with Nortek Holdings did not terminate upon the Ply Gem Acquisition. Mr. Poe’s Class A options were cancelled in connection with, and at the closing of, the Ply Gem Acquisition.

The following table sets forth certain information with respect to options to purchase stock of Nortek Holdings, our former indirect parent, held at the end of fiscal 2003 by each of our named executive officers:



(1)	The value of Nortek Holdings common stock as of December 31, 2003 used for this chart is $69.25, the value attributed to the Nortek Holdings common stock in connection with the Ply Gem Acquisition.


(2)	Mr. Forbis, formerly President and Chief Executive Officer of our fencing, railing and decking products subsidiary, left his position with us effective January 5, 2004, and is now a paid consultant to us.

Upon completion of the Ply Gem Acquisition, each of Messrs. Meyer, Wayne, Watson and Poe were granted awards under the Ply Gem Investment Holdings Phantom Stock Plan. This Plan is generally designed to provide non-qualified deferred compensation to participants. Each participant’s interest in the plan is recorded in a bookkeeping account and these accounts are deemed invested in Ply Gem Investment Holdings’ stock. No stock will initially be issued under the plan, but, upon liquidation and payment of a participant’s account under the plan, the value of the account generally may be paid to the participant either in shares of Ply Gem Investment Holdings’ stock having a market value equal to the account balance or in cash, in the discretion of Ply Gem Investment Holdings. When valuing a participant’s account for payment purposes, the following rules generally apply: if Ply Gem Investment Holdings’ stock becomes publicly traded through an initial public offering, the stock market will dictate the value of the account; if an event which triggers either “tag-along” or “drag-along” rights under the stockholders’ agreement to which the stockholders of Ply Gem Investment Holdings are parties occurs, or a “Triggering Event,” the amount paid to shareholders will dictate the value of the account; and in the event that a participant’s employment with us terminates and if neither a Triggering Event nor an initial public offering occurs prior to the time the participant is paid the value of his or her account, certain formulas described in the plan dictate the value of the account (which value differs depending upon the length of time a participant has been employed with us, the circumstances surrounding

Messrs. Meyer, Wayne, Watson and Poe were granted 112,800, 38,835, 13,590 and 13,590 Phantom Incentive Units (as defined in the plan) under the plan, respectively, and Mr. Meyer was granted 44,472 Phantom Additional Units (as defined in the plan) under the plan. Each Phantom Incentive Unit represents one share of Ply Gem Investment Holdings common stock, and each Phantom Additional Unit represents one share of Ply Gem Investment Holdings common stock and 0.4591 shares of Ply Gem Investment Holdings senior preferred stock.

In connection with the Ply Gem Acquisition, we adopted and obtained shareholder approval of the Ply Gem Investment Holdings 2004 Stock Option Plan, which provides for the grant of incentive and non-qualified stock options to our management and key employees. Stock options may be granted under the plan in respect of up to 1,410,000 common shares of Ply Gem Investment Holdings. Options awarded under the plan may have vesting conditions based on either an optionee’s continuing provision of services to us or the achievement of performance goals, in each case, as set forth in the applicable grant agreement.

Each of Messrs. Meyer and Forbis held rolled over options pursuant to a rollover stock option agreement dated January 9, 2003 to purchase capital stock of Nortek Holdings, Inc. In November 2003, Nortek Holdings, Inc. declared a dividend of $35.00 per share on each outstanding share of its capital stock. In a letter to the holders of rolled over options sent in December 2003, Nortek stated that the board of directors and compensation committee of Nortek Holdings, Inc. approved a distribution to current holders of rolled over options of $35.00 in respect of each share subject to the rolled over option, payable in a combination of cash and an exercise price adjustment. In connection with this distribution, Messrs. Meyer and Forbis each entered into a new rollover stock option agreement with Nortek Holdings, Inc. reflecting the adjusted exercise price of $10.50 per share and a total cash dividend payment of $1,004,788 and $277,500, respectively.

Each of Messrs. Meyer, Wayne, Watson and Poe and certain other members of our management team, participates in our Change in Control Severance Benefit Plan. This plan generally provides that if, during the 24 months following a Change in Control (as defined in the plan) in respect of Messrs. Wayne, Watson and Poe, or during the 36 months following a Change in Control in respect of Mr. Meyer, we terminate a participant’s employment without “Cause” (as defined in the plan) or there is a “material adverse change” (as defined in the plan) in the terms of the participant’s employment with us, the participant will be entitled to certain severance benefits. The Ply Gem Acquisition constituted a Change in Control under the plan. The plan provides for severance payments during the 24-month period following a termination described above at an annual rate equal to the sum of the participant’s 2003 base salary and performance incentive bonus, which incentive bonus is calculated on an ad hoc basis by our CEO, in conjunction with the board, for each individual. The target incentive bonus earned by each participant is a percentage of base salary and the performance measure is generally based on achievement of our EBITDA targets (70% of the incentive bonus opportunity) and cash flow targets (comprising 30% of the incentive bonus opportunity). In addition, a participant entitled to severance payments will also receive continuing medical and dental insurance coverage during the severance period, subject to the participant’s payment of any contributions required of active employees.

Pursuant to an October 31, 2003 letter agreement with Nortek, each of Messrs. Meyer, Wayne, Forbis, Watson and Poe received a payment of $1,000,000, $400,000, $400,000, $300,000 and $200,000 respectively for their continued employment, or, in the case of Mr. Forbis, provision of consulting services, through the Ply Gem Acquisition. These payments were made simultaneously with the completion of the Ply Gem Acquisition.

On January 5, 2004, John Forbis entered into a Separation, Consulting and Noncompetition Agreement with Kroy Building Products, Inc., our fencing, railing and decking products subsidiary. Pursuant to this agreement, Mr. Forbis will provide consulting services to us through December 31, 2005, earning a consulting fee of $21,500 per month. Pursuant to this agreement, Mr. Forbis agreed not to compete with us for three years after the earlier of December 31, 2005 or termination of the consulting period and released us from any claims he may have had against us as of January 19, 2004.

The Ply Gem Group Pension Plan, or our “Pension Plan,” is a qualified defined benefit pension plan that was frozen as of December 31, 1998, and no further increases in benefits may occur as a result of increases in service or compensation. The benefit payable to a participant at normal retirement equals the accrued benefit as of December 31, 1998 and will be payable as a joint and 50% survivor annuity in the case of a married employee and as a single-life annuity in the case of an unmarried employee, although lump sum payment options are available at the participant’s option. Our Pension Plan benefits generally commence upon a participant’s attainment of age 65 and equal 15% of the participant’s “average pay” (the highest total average pay, up to $100,000, during any five consecutive calendar years within the ten calendar years immediately prior to December 31, 1998) up to the social security integration level, plus 30% of average pay in excess of the social security integration level and reduced by one-twentieth for each year of benefit service less than 20 years. Early retirement benefits may commence upon a participant’s attainment of age 55 and 10 years of credited service at a reduced rate. The annual pension benefits entitled to be paid to our executive officers under our Pension Plan, beginning at age 65, are as follows: Mr. Meyer, $6,069.84 annually for life, and Mr. Watson, $1,791.24 annually for life. No other named executive officer has the right to receive a pension benefit under our Pension Plan.

Ply Gem Holdings is the sole holder of all 100 issued and outstanding shares of our common stock. Ply Gem Investment Holdings is the sole holder of all 100 issued and outstanding shares of common stock of Ply Gem Holdings.

The following table sets forth the number and percentage of the outstanding shares of common stock of Ply Gem Investment Holdings beneficially owned as of June 1, 2004 by:


	•	each named executive officer;

	•	each of our directors;

	•	each person known to us to be the beneficial owner of more than 5% of the common stock of Ply Gem Investment Holdings; and

	•	all of our executive officers and directors as a group.

Unless otherwise noted below, the address of each beneficial owner listed on the table below is c/o Ply Gem Industries, Inc., 303 West Major Street, Kearney, Missouri 64060.


(1)	Determined in accordance with Rule 13d-3 under the Exchange Act.

(2)	Ply Gem Investment Holdings also has a series of non-voting senior preferred stock.


(3)	Address is c/o Caxton-Iseman Capital, Inc., 500 Park Avenue, New York, New York 10022.



(4)	By virtue of his indirect control of Caxton-Iseman (Ply Gem) L.P., Mr. Iseman is deemed to beneficially own the 2,407,841 shares of common stock held by that entity.



(5)	In connection with the Ply Gem Acquisition, Mr. Meyer received phantom incentive stock units representing 157,272 shares of common stock, and 20,419 shares of senior preferred stock.



(6)	In connection with the Ply Gem Acquisition, Mr. Wayne received phantom incentive stock units representing 38,835 shares of common stock.



(7)	In connection with the Ply Gem Acquisition, Mr. Poe received phantom incentive stock units representing 13,590 shares of common stock.



(8)	In connection with the Ply Gem Acquisition, Mr. Watson received phantom incentive stock units representing 13,590 shares of common stock.


(9)	Address is c/o Stonegate International, 100 Crescent Court, Dallas, Texas 75201.

In connection with the Ply Gem Acquisition, certain members of our management, including Messrs. Poe, Wayne, Watson, Sveinson and McCready contributed cash of $1,594,014, in the aggregate, to Ply Gem Investment Holdings, and in return received, in the aggregate, 155,296 shares of common stock and 411 shares of preferred stock of Ply Gem Investment Holdings. In addition, Messrs. Meyer, Poe, Wayne and Watson were awarded 178,815 phantom stock units, in the aggregate, of Ply Gem Investment Holdings. Members of our management who received shares or phantom units also entered into a stockholders’ agreement with Ply Gem Investment Holdings and affiliates of Caxton-Iseman Capital, under the terms of which their shares of common stock are subject to customary transfer restrictions, including rights of first refusal, tag-along and drag-along rights, and put and call provisions. Their shares are also subject to certain pre-emptive rights, and they are subject to non-compete and non-solicit provisions. See “The Transactions—The Ply Gem Transactions—The Ply Gem Acquisition” “Management—Phantom Stock Unit Plan.”

Should the MW Acquisition be consummated, certain members of MW management, including Mr. Haley will contribute cash to Ply Gem Investment Holdings, and in return will receive shares of common stock of Ply Gem Investment Holdings. In addition, Mr. Haley will be awarded senior preferred phantom stock units of Ply Gem Investment Holdings. Members of MW management receiving shares or phantom units will also enter into a stockholders’ agreement with Ply Gem Investment Holdings and affiliates of Caxton-Iseman Capital, under the terms of which their shares of common stock will be subject to customary transfer restrictions, including rights of first refusal, tag-along and drag-along rights, and put and call provisions. Their shares will also be subject to certain pre-emptive rights, and they will be subject to non-compete and non-solicit provisions. See “The Transactions—The MW Transactions—The MW Acquisition” and “Management—Phantom Stock Unit Plan.”

Upon completion of the Ply Gem Acquisition, our management and an investor group led by Caxton-Iseman Capital and its affiliates, through Ply Gem Investment Holdings, acquired all of our outstanding shares which they hold through our parent, Ply Gem Holdings.

Ply Gem Investment Holdings obtained the funds required for the acquisition of our shares by issuing shares of common and preferred stock and subordinated notes to affiliates of Caxton-Iseman Capital and by issuing common stock to certain members of our management. The boards of directors of Ply Gem Investment Holdings and Ply Gem Holdings are identical to ours, and include, among others, affiliates of Caxton-Iseman Capital, Mr. Frederick Iseman, Mr. Robert Ferris and Mr. Steven Lefkowitz. As a result, Caxton-Iseman Capital and its affiliates control Ply Gem Holdings and our company.

Upon completion of the Ply Gem Acquisition, we entered into two advisory agreements with Caxton-Iseman Capital or one of its affiliates or related parties, or the “Caxton-Iseman Party,” which we refer to as the “Debt Financing Advisory Agreement” and the “General Advisory Agreement.”

Under the Debt Financing Advisory Agreement, we paid the Caxton-Iseman Party a debt financing arrangement and advisory fee, equal to 2.375% of the aggregate amount of the debt financing needed in connection with the Ply Gem Acquisition ($11.4 million).

Under the General Advisory Agreement, the Caxton-Iseman Party provides us with acquisition and financial advisory services as our Board of Directors shall reasonably request. In consideration of these

Should the MW Acquisition be consummated, the Caxton-Iseman party will be entitled to a transaction fee equal to 2% of the purchase price of the equity of MWM Holding, Inc. ($6.4 million).

The Caxton-Iseman Party will not be entitled to the annual fee for 2004 unless (i) our debt-to-EBITDA ratio for the last twelve months then ended is less than 5.2:1 or (ii) our EBITDA for the last twelve months then ended is at least $85.5 million. In addition, the annual fee payable in any year may not exceed the amounts permitted under our senior credit facilities or the indenture governing the notes, and the Caxton-Iseman Party is obligated to return any portion of the annual fee that has been prepaid if an event of default has occurred and is continuing under either our senior credit facilities or the indenture governing the notes.

The initial term of the General Advisory Agreement is 10 years, and is automatically renewable for consecutive one-year extensions, unless we or the Caxton-Iseman Party provide notice of termination. In addition, the General Advisory Agreement may be terminated by the Caxton-Iseman Party at any time, upon the occurrence of specified change of control transactions or upon an initial public offering of our shares or shares of any of our parent companies. If the General Advisory Agreement is terminated for any reason prior to the end of the initial term, we will pay to the Caxton-Iseman Party an amount equal to the present value of the annual advisory fees that would have been payable through the end of the initial term, based on our cost of funds to borrow amounts under our senior credit facilities.

As a result of the Ply Gem Acquisition, Ply Gem Investment Holdings is the common parent of an affiliated group of corporations that will include Ply Gem Holdings, Ply Gem and their subsidiaries. Ply Gem Investment Holdings will elect to file consolidated federal income tax returns on behalf of the group. Accordingly, Ply Gem Investment Holdings, Ply Gem and Ply Gem Holdings have entered into a Tax Sharing Agreement, under which Ply Gem and Ply Gem Holdings will make payments to Ply Gem Investment Holdings. These payments will not be in excess of the tax liabilities of Ply Gem, Ply Gem Holdings, and their respective subsidiaries, if these tax liabilities had been computed on a stand-alone basis.

Under the terms of the stock purchase agreement governing the Ply Gem Acquisition, we entered into a Transition Services Agreement with Nortek, pursuant to which Nortek would continue to provide to us and our subsidiaries a number of support services it had provided to us prior to the Ply Gem Acquisition, for up to six months following the closing of the Ply Gem Acquisition. We agreed to pay Nortek an escalating monthly fee (no fees were paid for the first two months, $10,000 was paid for the third month and $20,000 was paid for the fourth month in which transition services were provided). We also agreed to reimburse Nortek for any actual and direct reasonable expenses it incurs in providing these transitional services to us. This agreement was terminated effective June 10, 2004.

As a result of the Ply Gem Acquisition, we are no longer a division of Nortek, but are a stand-alone company. Prior to the Ply Gem Acquisition, we had a fee arrangement with our former parent, Nortek, under which we reimbursed Nortek for certain parent company corporate charges and have accounted for those charges in accordance with SEC Staff Accounting Bulletin No. 55. For the fiscal years ended December 31, 2001, 2002 and 2003, our fees to Nortek for these corporate charges were $5.4 million, $10.2 million and $7.2 million, respectively. This fee arrangement was terminated in connection with the Ply Gem Acquisition. In addition, prior to the Ply Gem Acquisition, we paid an allocation of corporate expenses to Nortek based upon the specific identification method. For the fiscal years ended December 31, 2001, 2002 and 2003, Nortek’s allocations of these corporate expenses were $(0.3) million, $3.5 million and $3.4 million, respectively. We estimate that in our first year as a stand-alone company, we will incur approximately $2.4 million of incremental operating expenses to pay for services, including accounting, tax, legal, insurance and treasury, which we previously received from Nortek under these arrangements. These incremental operating expenses are included in our pro forma unaudited statements of operations included elsewhere in this offering memorandum, but are not reflected in any of our historical results or the results of operations discussion as set forth below. Incremental operating expenses may differ from our estimates, and increase, in subsequent years. See “Unaudited pro forma financial information” and note 1 to the notes to our consolidated financial statements included elsewhere in this offering memorandum.

As of December 31, 2003, we had approximately $394.7 million of outstanding intercompany debt, owed to our former parent, Nortek, and its wholly-owned subsidiaries. This debt consisted of notes, mortgage notes and obligations payable, and included notes payable to a subsidiary of Nortek, relating to dividends payable to Nortek declared during prior years of approximately $360.8 million, and borrowings related to our acquisition of our subsidiary, Kroy Building Products, Inc., in 1999 of approximately $33.9 million. These notes were payable on demand and carried interest rates of 8% for a $280 million note and 9% for the other notes totaling $114.7 million. Pursuant to the terms of the stock purchase agreement governing the Ply Gem Acquisition, all such intercompany loans to which we were a party were cancelled prior to the Ply Gem Acquisition.

Payments to Officers and Directors in Connection with the Ply Gem Acquisition and the Nortek Recapitalization

Our executive officers (other than Mr. Forbis) have the right to the protections described in the section “Management—Change of Control Arrangements.” All of our officers received phantom stock awards as described in the section “Management—Phantom Stock Unit Plan” and bonuses as described in the section entitled “Management—Incentive Bonus Arrangements,” in each case in connection with the Ply Gem Acquisition. In addition, Messrs. Meyer and Forbis received the dividends described in the section “Management Dividends paid on Rolled Over Options” in connection with the Nortek Recapitalization.

In connection with the Ply Gem Transactions, we entered into a credit agreement with a syndicate of financial institutions and institutional lenders to provide us with senior secured credit facilities in the amount of up to $255.0 million. Set forth below is a summary of the terms of our existing senior credit facilities.

Our senior credit facilities consist of $190.0 million of term loan facilities with a maturity of seven years that were drawn in full in connection with the consummation of the Ply Gem Acquisition and a $65.0 million revolving loan facility, including a letter of credit subfacility and a $10.0 million swingline subfacility, with a maturity of five years. The term loan facilities have two tranches, a $160.0 million tranche under which Ply Gem is the U.S. borrower, and a $30.0 million tranche under which our Canadian subsidiary, CWD Windows and Doors, Inc., is the Canadian borrower. The senior credit facilities permit us to incur up to $50.0 million in additional term loans under the term loan facilities (including through additional tranches of term loans) which will have the benefit of the guarantees, and the collateral, described below. Such an increase in the term loan facilities will occur at our option if certain conditions are satisfied, including meeting our financial covenants, a senior leverage ratio on a pro forma basis and receipt of commitments from lenders for such additional amount.

All borrowings under our senior credit facilities are subject to the satisfaction of customary conditions, including absence of a default and material accuracy of representations and warranties.

Proceeds of the term loans, together with $3.0 million of the revolving loan facility and the other sources of funds described under “Use of proceeds” were used to finance the Ply Gem Acquisition and pay related fees and expenses. Proceeds of revolving loans borrowed after the closing date of the Ply Gem Acquisition are to be used to provide financing for working capital and general corporate purposes, including acquisitions.

Subsequent to the Ply Gem Transactions, we amended and restated our senior credit facilities on March 3, 2004, to increase our U.S. term loan facility from $160.0 million to $170.0 million and reduce our revolving credit facility from $65.0 million to $55.0 million. We have utilized $4.9 million of the additional $10.0 million in term loan borrowings to pay down existing indebtedness under our municipal loan agreements and intend to use the remaining $5.1 million in term loan borrowings to further reduce our municipal loans.

The interest rates per annum applicable to loans under our senior credit facilities are, at our option, equal to either a base rate plus an applicable interest margin, or an adjusted LIBOR rate plus an applicable interest margin.

The base rate is the greater of the (1) federal funds effective rate as published by the Federal Reserve Bank of New York plus 0.50% and (2) corporate base rate of UBS AG, as established from time to time at its Stamford Branch. The adjusted LIBOR rate is determined by reference to the London Interbank Offered Rate for corresponding deposits of U.S. dollars at the start of each interest period and is fixed through each period. The applicable margin percentage (following the March 2004 amendment and restatement) is a percentage per annum equal to (1) 1.50% for base rate term loans, (2) 2.50% for adjusted LIBOR rate term loans, (3) no more than 1.50% for base rate revolving loans and (4) no more than 2.50% for adjusted LIBOR rate revolving loans. Commencing with the delivery of our financial statements for quarter ending September 30, 2004, the applicable interest margins for the revolving loan facility will be determined pursuant to a grid based on our total leverage ratio.

On the last business day of each calendar quarter and on the date the revolving commitments terminate, we are required to pay each lender a 0.50% per annum commitment fee in respect of the average daily unused commitments of such lender under the revolving loan facility, subject to adjustment based on our total leverage ratio, commencing with the delivery of our financial statements for the quarter ending September 30, 2004.

We are also required to pay participation and fronting fees in connection with letters of credit as well as a yearly fee to the Administrative Agent.

Subject to exceptions, our senior credit facilities require mandatory prepayments of the term loan in amounts equal to: (1) 100% of the net cash proceeds from asset sales by our parent or any of its subsidiaries, (2) 100% of the net cash proceeds from the issuance of debt or preferred equity securities by our parent or any of its subsidiaries, (3) 50% of the net cash proceeds from the issuance of common equity securities by, or equity contributions to, our parent or Ply Gem Investment Holdings, (4) 100% of all casualty and condemnation net cash proceeds received by our parent or any of its subsidiaries in excess of amounts reinvested within specific periods, and (5) 50% of our excess cash flow, subject to a step down based on our senior leverage ratio. There are certain limits on the amount of the term loans that the Canadian Borrower is required to prepay in the first five years from the closing date. If the term loan facilities have been repaid in full, any additional repayments shall be applied to reduce commitments under the revolving credit facility. Asset sale, debt issuance and casualty and condemnation proceeds received by the Canadian borrower or its subsidiaries will first be used to prepay loans to such borrower and such proceeds received by us or our other subsidiaries will first be used to prepay loans of the U.S. borrower.

Voluntary prepayments of loans under our senior credit facilities and voluntary reductions of revolving loan commitments are permitted, in whole or in part, with prior notice but without premium or penalty (except LIBOR breakage costs) and including accrued and unpaid interest in minimum amounts as set forth in the credit agreement.

Our senior credit facilities (following the March 2004 amendment and restatement) require scheduled quarterly payments on the term loan facilities of $500,000 beginning in the quarter ending June 30, 2004 and for the next 23 calendar quarters thereafter, and payments of $47,000,000 on June 30, 2010, September 30, 2010, December 30, 2010 and on the maturity date, allocated pro rata between the two tranches.

The indebtedness of the U.S. borrower under our senior credit facilities is guaranteed by our parent, Ply Gem Holdings, and all of our existing and future direct and indirect subsidiaries, subject to exceptions for foreign subsidiary guarantees of the U.S. borrower’s obligations to the extent such guarantees are prohibited by applicable law or would result in materially adverse tax consequences and other exceptions. The indebtedness of the Canadian borrower under our senior credit facilities is guaranteed by Ply Gem Holdings, the U.S. borrower and all of the Canadian borrower’s future direct and indirect subsidiaries and is effectively guaranteed by all subsidiaries guaranteeing the U.S. borrower’s obligations under our senior credit facilities. All indebtedness under our senior credit facilities is secured, subject to certain exceptions, by a perfected first priority pledge of all of our equity interests and those of our direct and indirect subsidiaries, and, subject to certain exceptions, perfected first priority security interests in, and mortgages on, all tangible and intangible assets (including, without limitation, accounts receivable, inventory, equipment, general intangibles, intercompany notes, insurance policies, investment property, intellectual property, certain real property, cash and proceeds of the foregoing); provided that all tangible and intangible assets of the Canadian borrower and its subsidiaries are pledged to secure debt only of the Canadian borrower.

Our senior credit facilities require that we comply on a quarterly basis with the following financial covenants:

Total Leverage Ratio. We may not permit the total leverage ratio, at any date during any period set forth in the table below, to exceed the ratio set forth opposite such period in the table below:

Minimum Interest Coverage Ratio. We may not permit the consolidated interest coverage ratio, for any test period ending during any period set forth in the table below, to be less than the ratio set forth opposite such period in the table below:

Limitation on Capital Expenditures. We may not permit, subject to carryover exempted amounts, the aggregate amount of capital expenditures made in any period set forth below, to exceed the amount set forth opposite such period below:

In addition, our senior credit facilities include negative covenants, subject to exceptions, restricting or limiting our ability and the ability of our parent and our subsidiaries, to, among other things: sell assets, alter

Our senior credit facilities contain certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy and insolvency, certain events under ERISA, material judgments, invalidity of any guaranty or security document supporting our senior credit facilities and change of control. If such an event of default occurs, the lenders under our senior credit facilities would be entitled to take various actions, including the acceleration of amounts due under our senior credit facilities and all actions commonly permitted to be taken by a secured creditor.

Should the MW Acquisition be consummated, we intend to amend and restate our senior secured credit facilities. The following is a summary of the expected terms of our amended senior credit facilities. As the final terms of our amended senior credit facilities have not been agreed upon, the final terms and amounts may differ from those set forth herein and, in certain cases, such differences may be significant. The amended and senior secured credit facilities will consist of the two existing tranches of term loans in the aggregate amount of $200.0 million, a new $141.0 million term loan tranche and a $75 million revolving loan facility, which includes a $20 million increase to the existing revolving loan facility of $55.0 million. We intend to use the entire $141.0 million of our new term loan tranche and $6.0 million of our revolving loan facility to fund the MW Acquisition. Our senior credit facilities, as amended, will provide for senior secured financing of up to $416.0 million, consisting of $341.0 million of term loan facilities maturing in February 2011 that will be drawn in full following the consummation of the MW Acquisition and a $75.0 million revolving loan facility, including a letter of credit subfacility and a $15.0 million swingline subfacility, maturing in February 2009. Our amended senior credit facilities will permit us to incur up to $100.0 million in additional term loans under our existing and new term loan tranches or through the addition of subsequent term loan tranches, which will have the benefit of the guarantees, and the collateral, described below. Such an increase in our term loan facilities will occur at our option if certain conditions are satisfied, including meeting our financial covenants, a senior leverage ratio on a pro forma basis and receipt of commitments from lenders for such additional amount.

In addition, should the MW Acquisition be consummated, we intend to enter into a sale and leaseback transaction with respect to seven of our properties and one MW property. Under this sale and leaseback transaction, we will sell these properties for approximately $36.0 million, and simultaneously enter into a long-term lease for those properties with initial annual cash rent of approximately $3.5 million.

While the amounts and ratios applicable to the covenants, including the financial covenants, in our amended and restated senior credit facility will be adjusted to reflect the increased size of our senior credit facilities, we expect that most of the other terms and conditions of our amended senior credit facilities will be substantially similar to those of our existing senior credit facilities. In particular, we intend that the interest rates per annum applicable to term loans and revolving loans will remain the same. Additionally, we intend that our new term loan tranche will have no scheduled amortization and will accrue interest at the same rates applicable to the two existing tranches of term loans.

We are party to several municipal loan agreements used to finance the development of some of our project facilities. We have entered into most of these municipal loan agreements pursuant to industrial/ economic revenue bond, or “IRB,” arrangements where a municipality issued IRBs and, pursuant to a loan agreement, loaned us the proceeds from such issuance. Our loan agreements provide for variable interest rates

We are offering to exchange our exchange notes for a like aggregate principal amount of our initial notes.

The exchange notes that we propose to issue in this exchange offer will be substantially identical to our initial notes except that, unlike our initial notes, the exchange notes will have no transfer restrictions or registration rights. You should read the description of the exchange notes in the section in this prospectus entitled “Description of the Notes.”

We reserve the right in our sole discretion to purchase or make offers for any initial notes that remain outstanding following the expiration or termination of this exchange offer and, to the extent permitted by applicable law, to purchase initial notes in the open market or privately negotiated transactions, one or more additional tender or exchange offers or otherwise. The terms and prices of these purchases or offers could differ significantly from the terms of this exchange offer.

This exchange offer will expire at 5:00 p.m., New York City time, on , 2004, unless we extend it in our reasonable discretion. The expiration date of this exchange offer will be at least 20 business days after the commencement of the exchange offer in accordance with Rule 14e-1(a) under the Exchange Act.

We expressly reserve the right to extend or terminate this exchange offer and not accept any initial notes that we have not previously accepted if any of the conditions described below under ” — Conditions to the Exchange Offer” have not been satisfied or waived by us. We will notify the exchange agent of any extension by oral notice promptly confirmed in writing or by written notice. We will also notify the holders of the initial notes by a press release or other public announcement communicated before 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date unless applicable laws require us to do otherwise.

We also expressly reserve the right to amend the terms of this exchange offer in any manner. If we make any material change, we will promptly disclose this change in a manner reasonably calculated to inform the holders of our initial notes of the change including providing public announcement or giving oral or written notice to these holders. A material change in the terms of this exchange offer could include a change in the timing of the exchange offer, a change in the exchange agent and other similar changes in the terms of this exchange offer. If we make any material change to this exchange offer, we will disclose this change by means of a post-effective amendment to the registration statement which includes this prospectus and will distribute an amended or supplemented prospectus to each registered holder of initial notes. In addition, we will extend this exchange offer for an additional five to ten business days as required by the Exchange Act, depending on the significance of the amendment, if the exchange offer would otherwise expire during that period. We will promptly notify the exchange agent by oral notice, promptly confirmed in writing, or written notice of any delay in acceptance, extension, termination or amendment of this exchange offer.

To tender your initial notes in this exchange offer, you must use one of the three alternative procedures described below:


	(1) Regular Delivery Procedure: Complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal. Have the signatures on the letter of transmittal guaranteed if required by the letter of transmittal. Mail or otherwise deliver the letter of transmittal or the facsimile together with the certificates representing the initial notes being tendered and any other required documents to the exchange agent on or before 5:00 p.m., New York City time, on the expiration date.

	(2) Book-entry Delivery Procedure: Send a timely confirmation of a book-entry transfer of your initial notes, if this procedure is available, into the exchange agent’s account at The Depository Trust


	Company in accordance with the procedures for book-entry transfer described under “— Book-Entry Delivery Procedure” below, on or before 5:00 p.m., New York City time, on the expiration date.

	(3) Guaranteed delivery procedure: If time will not permit you to complete your tender by using the procedures described in (1) or (2) above before the expiration date and this procedure is available, comply with the guaranteed delivery procedures described under “— Guaranteed Delivery Procedure” below.

The method of delivery of the initial notes, the letter of transmittal and all other required documents is at your election and risk. Instead of delivery by mail, we recommend that you use an overnight or hand-delivery service. If you choose the mail, we recommend that you use registered mail, properly insured, with return receipt requested. In all cases, you should allow sufficient time to assure timely delivery. You should not send any letters of transmittal or initial notes to us. You must deliver all documents to the exchange agent at its address provided below. You may also request your broker, dealer, commercial bank, trust company or nominee to tender your initial notes on your behalf.

Only a holder of initial notes may tender initial notes in this exchange offer. A holder is any person in whose name initial notes are registered on our books or any other person who has obtained a properly completed bond power from the registered holder.

If you are the beneficial owner of initial notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender your notes, you must contact that registered holder promptly and instruct that registered holder to tender your notes on your behalf. If you wish to tender your initial notes on your own behalf, you must, before completing and executing the letter of transmittal and delivering your initial notes, either make appropriate arrangements to register the ownership of these notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time.

You must have any signatures on a letter of transmittal or a notice of withdrawal guaranteed by:


	(1) a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc.,

	(2) a commercial bank or trust company having an office or correspondent in the United States, or

	(3) an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act, unless the initial notes are tendered:


	(1) by a registered holder or by a participant in The Depository Trust Company whose name appears on a security position listing as the owner, who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal and only if the exchange notes are being issued directly to this registered holder or deposited into this participant’s account at The Depository Trust Company, or

	(2) for the account of a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934.


	(1) the recordholder(s) of the initial notes tendered: the signature must correspond with the name(s) written on the face of the initial notes without alteration, enlargement or any change whatsoever.

	(2) a participant in The Depository Trust Company: the signature must correspond with the name as it appears on the security position listing as the holder of the initial notes.

	(3) a person other than the registered holder of any initial notes: these initial notes must be endorsed or accompanied by bond powers and a proxy that authorize this person to tender the initial notes on behalf of the registered holder, in satisfactory form to us as determined in our sole discretion, in each case, as the name of the registered holder or holders appears on the initial notes.


	(4) trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity: these persons should so indicate when signing. Unless waived by us, evidence satisfactory to us of their authority to so act must also be submitted with the letter of transmittal.

To tender your initial notes in this exchange offer, you must make the following representations:


	(1) you are authorized to tender, sell, assign and transfer the initial notes tendered and to acquire exchange notes issuable upon the exchange of such tendered initial notes, and that we will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by us,

	(2) any exchange notes acquired by you pursuant to the exchange offer are being acquired in the ordinary course of business, whether or not you are the holder,

	(3) you or any other person who receives exchange notes, whether or not such person is the holder of the exchange notes, has no arrangement or understanding with any person to participate in a distribution of such exchange notes within the meaning of the Securities Act and is not participating in, and does not intend to participate in, the distribution of such exchange notes within the meaning of the Securities Act,

	(4) you or such other person who receives exchange notes, whether or not such person is the holder of the exchange notes, is not an “affiliate,” as defined in Rule 405 of the Securities Act, of ours, or if you or such other person is an affiliate, you or such other person will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable,

	(5) if you are not a broker-dealer, you represent that you are not engaging in, and do not intend to engage in, a distribution of exchange notes, and

	(6) if you are a broker-dealer that will receive exchange notes for your own account in exchange for initial notes, you represent that the initial notes to be exchanged for the exchange notes were acquired by you as a result of market-making or other trading activities and acknowledge that you will deliver a prospectus in connection with any resale, offer to resell or other transfer of such exchange notes.

You must also warrant that the acceptance of any tendered initial notes by the issuers and the issuance of exchange notes in exchange therefor shall constitute performance in full by the issuers of its obligations under the registration rights agreement relating to the initial notes.

To effectively tender notes through The Depository Trust Company, the financial institution that is a participant in The Depository Trust Company will electronically transmit its acceptance through the Automatic Tender Offer Program. The Depository Trust Company will then edit and verify the acceptance and send an agent’s message to the exchange agent for its acceptance. An agent’s message is a message transmitted by The Depository Trust Company to the exchange agent stating that The Depository Trust Company has received an express acknowledgment from the participant in The Depository Trust Company tendering the notes that this participant has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce this agreement against this participant.

Any financial institution that is a participant in The Depository Trust Company’s systems may make book-entry deliveries of initial notes by causing The Depository Trust Company to transfer these initial notes into the exchange agent’s account at The Depository Trust Company in accordance with The Depository Trust Company’s procedures for transfer. To effectively tender notes through The Depository Trust Company, the financial institution that is a participant in The Depository Trust Company will electronically transmit its acceptance through the Automatic Tender Offer Program. The Depository Trust Company will then edit and verify the acceptance and send an agent’s message to the exchange agent for its acceptance. An agent’s message is a message transmitted by The Depository Trust Company to the exchange agent stating that The Depository Trust Company has received an express acknowledgment from the participant in The Depository Trust Company tendering the notes that this participation has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce this agreement against this participant. The exchange agent

A delivery of initial notes through a book-entry transfer into the exchange agent’s account at The Depository Trust Company will only be effective if an agent’s message or the letter of transmittal or a facsimile of the letter of transmittal with any required signature guarantees and any other required documents is transmitted to and received by the exchange agent at the address indicated below under “— Exchange Agent” on or before the expiration date unless the guaranteed delivery procedures described below are complied with. Delivery of documents to The Depository Trust Company does not constitute delivery to the exchange agent.

If you are a registered holder of initial notes and desire to tender your notes, and (1) these notes are not immediately available, (2) time will not permit your notes or other required documents to reach the exchange agent before the expiration date or (3) the procedures for book-entry transfer cannot be completed on a timely basis and an agent’s message delivered, you may still tender in this exchange offer if:


	(1) you tender through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution within the meaning of Rule 17Ad-15 under the Exchange Act,

	(2) on or before the expiration date, the exchange agent receives a properly completed and duly executed letter of transmittal or facsimile of the letter of transmittal, and a notice of guaranteed delivery, substantially in the form provided by us, with your name and address as holder of the initial notes and the amount of notes tendered, stating that the tender is being made by that letter and notice and guaranteeing that within three New York Stock Exchange trading days after the expiration date the certificates for all the initial notes tendered, in proper form for transfer, or a book-entry confirmation with an agent’s message, as the case may be, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent, and

	(3) the certificates for all your tendered initial notes in proper form for transfer or a book-entry confirmation as the case may be, and all other documents required by the letter of transmittal are received by the exchange agent within three New York Stock Exchange trading days after the expiration date.

Your tender of initial notes will constitute an agreement between you and us governed by the terms and conditions provided in this prospectus and in the related letter of transmittal.

We will be deemed to have received your tender as of the date when your duly signed letter of transmittal accompanied by your initial notes tendered, or a timely confirmation of a book-entry transfer of these notes into the exchange agent’s account at The Depository Trust Company with an agent’s message, or a notice of guaranteed delivery from an eligible institution is received by the exchange agent.

All questions as to the validity, form, eligibility, including time of receipt, acceptance and withdrawal of tenders will be determined by us in our sole discretion. Our determination will be final and binding.

We reserve the absolute right to reject any and all initial notes not properly tendered or any initial notes which, if accepted, would, in our opinion or our counsel’s opinion, be unlawful. We also reserve the absolute right to waive any conditions of this exchange offer or irregularities or defects in tender as to particular notes with the exception of conditions to this exchange offer relating to the obligations of broker dealers, which we will not waive. If we waive a condition to this exchange offer, the waiver will be applied equally to all note holders. Our interpretation of the terms and conditions of this exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of initial notes must be cured within such time as we shall determine. We, the exchange agent or any other person will be under no duty to give notification of defects or irregularities with

If all the conditions to the exchange offer are satisfied or waived on the expiration date, we will accept all initial notes properly tendered and will issue the exchange notes promptly thereafter. Please refer to the section of this prospectus entitled “— Conditions to the Exchange Offer” below. For purposes of this exchange offer, initial notes will be deemed to have been accepted as validly tendered for exchange when, as and if we give oral or written notice of acceptance to the exchange agent.

We will issue the exchange notes in exchange for the initial notes tendered pursuant to a notice of guaranteed delivery by an eligible institution only against delivery to the exchange agent of the letter of transmittal, the tendered initial notes and any other required documents, or the receipt by the exchange agent of a timely confirmation of a book-entry transfer of initial notes into the exchange agent’s account at The Depository Trust Company with an agent’s message, in each case, in form satisfactory to us and the exchange agent.

If any tendered initial notes are not accepted for any reason provided by the terms and conditions of this exchange offer or if initial notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged initial notes will be returned without expense to the tendering holder, or, in the case of initial notes tendered by book-entry transfer procedures described above, will be credited to an account maintained with the book-entry transfer facility, promptly after withdrawal, rejection of tender or the expiration or termination of the exchange offer.

By tendering into this exchange offer, you will irrevocably appoint our designees as your attorney-in-fact and proxy with full power of substitution and resubstitution to the full extent of your rights on the notes tendered. This proxy will be considered coupled with an interest in the tendered notes. This appointment will be effective only when, and to the extent that we accept your notes in this exchange offer. All prior proxies on these notes will then be revoked and you will not be entitled to give any subsequent proxy. Any proxy that you may give subsequently will not be deemed effective. Our designees will be empowered to exercise all voting and other rights of the holders as they may deem proper at any meeting of note holders or otherwise. The initial notes will be validly tendered only if we are able to exercise full voting rights on the notes, including voting at any meeting of the note holders, and full rights to consent to any action taken by the note holders.

Except as otherwise provided in this prospectus, you may withdraw tenders of initial notes at any time before 5:00 p.m., New York City time, on the expiration date.

For a withdrawal to be effective, you must send a written or facsimile transmission notice of withdrawal to the exchange agent before 5:00 p.m., New York City time, on the expiration date at the address provided below under “— Exchange Agent” and before acceptance of your tendered notes for exchange by us.


	(1) specify the name of the person having tendered the initial notes to be withdrawn,

	(2) identify the notes to be withdrawn, including, if applicable, the registration number or numbers and total principal amount of these notes,

	(3) be signed by the person having tendered the initial notes to be withdrawn in the same manner as the original signature on the letter of transmittal by which these notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to permit the trustee for the initial notes to register the transfer of these notes into the name of the person having made the original tender and withdrawing the tender,

	(4) specify the name in which any of these initial notes are to be registered, if this name is different from that of the person having tendered the initial notes to be withdrawn, and


	(5) if applicable because the initial notes have been tendered through the book-entry procedure, specify the name and number of the participant’s account at The Depository Trust Company to be credited, if different than that of the person having tendered the initial notes to be withdrawn.

We will determine all questions as to the validity, form and eligibility, including time of receipt, of all notices of withdrawal and our determination will be final and binding on all parties. Initial notes that are withdrawn will be deemed not to have been validly tendered for exchange in this exchange offer.

The exchange agent will return without cost to their holders all initial notes that have been tendered for exchange and are not exchanged for any reason, promptly after withdrawal, rejection of tender or expiration or termination of this exchange offer.

You may retender properly withdrawn initial notes in this exchange offer by following one of the procedures described under “— Procedures for Tendering Initial Notes” above at any time on or before the expiration date.


	•	the exchange offer does not violate applicable law or any applicable interpretation of the staff of the Commission,

	•	no action or proceeding shall have been instituted or threatened in any court or by any governmental agency which might materially impair our ability to proceed with the exchange offer, and no material adverse development shall have occurred in any existing action or proceeding with respect to us, and

	•	all governmental approvals shall have been obtained, which approvals we deem necessary for the consummation of the exchange offer.

These conditions are for our sole benefit. We may assert any one of these conditions regardless of the circumstances giving rise to it and may also waive any one of them, in whole or in part, at any time and from time to time, if we determine in our reasonable discretion that it has not been satisfied, subject to applicable law. Notwithstanding the foregoing, all conditions to the exchange offer must be satisfied or waived before the expiration of this exchange offer. If we waive a condition to this exchange offer, the waiver will be applied equally to all note holders. We will not be deemed to have waived our rights to assert or waive these conditions if we fail at any time to exercise any of them. Each of these rights will be deemed an ongoing right which we may assert at any time and from time to time.

If we determine that we may terminate this exchange offer because any of these conditions is not satisfied, we may:


	•	refuse to accept and return to their holders any initial notes that have been tendered,

	•	extend the exchange offer and retain all notes tendered before the expiration date, subject to the rights of the holders of these notes to withdraw their tenders, or

	•	waive any condition that has not been satisfied and accept all properly tendered notes that have not been withdrawn or otherwise amend the terms of this exchange offer in any respect as provided under the section in this prospectus entitled “— Expiration Date; Extensions; Amendments; Termination.”

We will record the exchange notes at the same carrying value as the initial notes as reflected in our accounting records on the date of the exchange. Accordingly, we will not recognize any gain or loss for accounting purposes. We will amortize the costs of the exchange offer and the unamortized expenses related to the issuance of the exchange notes over the term of the exchange notes.

We have appointed U.S. Bank National Association as exchange agent for this exchange offer. You should direct all questions and requests for assistance on the procedures for tendering and all requests for additional copies of this prospectus or the letter of transmittal to the exchange agent as follows:


	By mail or hand/overnight delivery:

	U.S. Bank National Association
	EP-MN-WS2N
	60 Livingston Avenue
	St. Paul, MN 55107

	Facsimile Transmission:

	U.S. Bank National Association
	(651) 495-8158

	Confirm by Telephone: (800) 934-6802

	Attention: Specialized Finance Department

We will bear the expenses of soliciting tenders in this exchange offer, including fees and expenses of the exchange agent and trustee and accounting, legal, printing and related fees and expenses.

We will not make any payments to brokers, dealers or other persons soliciting acceptances of this exchange offer. However, we will pay the exchange agent reasonable and customary fees for its services and will reimburse the exchange agent for its reasonable out-of-pocket expenses in connection with this exchange offer. We will also pay brokerage houses and other custodians, nominees and fiduciaries their reasonable out-of-pocket expenses for forwarding copies of the prospectus, letters of transmittal and related documents to the beneficial owners of the initial notes and for handling or forwarding tenders for exchange to their customers.

We will pay all transfer taxes, if any, applicable to the exchange of initial notes in accordance with this exchange offer. However, tendering holders will pay the amount of any transfer taxes, whether imposed on the registered holder or any other persons, if:


	•	certificates representing exchange notes or initial notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the notes tendered,

	•	tendered initial notes are registered in the name of any person other than the person signing the letter of transmittal, or

	•	a transfer tax is payable for any reason other than the exchange of the initial notes in this exchange offer.

If you do not submit satisfactory evidence of the payment of any of these taxes or of any exemption from this payment with the letter of transmittal, we will bill you directly the amount of these transfer taxes.

Your Failure to Participate in the Exchange Offer Will Have Adverse Consequences

The initial notes were not registered under the Securities Act or under the securities laws of any state and you may not resell them, offer them for resale or otherwise transfer them unless they are subsequently registered or resold under an exemption from the registration requirements of the Securities Act and applicable state securities laws. If you do not exchange your initial notes for exchange notes in accordance with this exchange offer, or if you do not properly tender your initial notes in this exchange offer, you will not be able to resell, offer to resell or otherwise transfer the initial notes unless they are registered under the Securities Act or unless you resell them, offer to resell or otherwise transfer them under an exemption from

In addition, except as set forth in this paragraph, you will not be able to obligate us to register the initial notes under the Securities Act. You will not be able to require us to register your initial notes under the Securities Act unless:


	(1) changes in law or the applicable interpretations of the staff of the Commission do not permit us to effect the exchange offer,

	(2) for any reason the exchange offer is not consummated within 210 days of the date of the issuance of the initial notes,

	(3) any holder notifies us prior to the 30th day following consummation of this exchange offer that it is prohibited by law or applicable interpretations of the staff of the Commission from participating in the exchange offer,

	(4) in the case of any holder who participates in the exchange offer, such holder notifies us prior to the 30th day following the consummation of the exchange offer that it did not receive exchange notes that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours within the meaning of the Securities Act), or

	(5) any initial purchaser so requests with respect to initial notes that have, or that are reasonably likely to be determined to have, the status of unsold allotments in an initial distribution.

in which case the registration rights agreement requires us to file a registration statement for a continuous offer in accordance with Rule 415 under the Securities Act for the benefit of the holders of the initial notes described in this sentence. We do not currently anticipate that we will register under the Securities Act any notes that remain outstanding after completion of the exchange offer.

Each broker-dealer that receives exchange notes for its own account in exchange for initial notes, where such initial notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

The initial notes were issued and the exchange notes will be issued under the indenture, dated as of February 12, 2004, among us, our parent, Ply Gem Holdings, our domestic subsidiaries and U.S. Bank National Association, as trustee (the “Indenture”). When we refer to the notes in this “Description of Notes,” we mean the initial notes and the exchange notes.

The following summary does not purport to be complete, and is subject to, and is qualified in its entirety by reference to, all of the provisions of the notes and the Indenture. We urge you to read the Indenture and the form of the notes, which you may obtain from us upon request. As used in this description, all references to “our company,” “we,” “us” or “our” mean Ply Gem Industries, Inc., excluding, unless otherwise expressly stated or the context otherwise requires, its subsidiaries.

The Notes will mature on February 15, 2012. The Notes will bear interest at the rate shown on the cover page of this prospectus, payable on February 15 and August 15 of each year, commencing on August 15, 2004, to Holders of record at the close of business on February 1 or August 1, as the case may be, immediately preceding the relevant interest payment date. Interest on the Notes will be computed on the basis of a 360-day year of twelve 30-day months.

The Notes will be issued in registered form, without coupons, and in denominations of $1,000 and integral multiples of $1,000.

An aggregate principal amount of Notes equal to $225.0 million is being issued in this offering. The Issuer may issue additional Notes having identical terms and conditions to the Notes being issued in this offering, except for issue date, issue price and first interest payment date, in an unlimited aggregate principal amount (the “Additional Notes”), subject to compliance with the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness.” Any Additional Notes will be part of the same issue as the Notes being issued in this offering and will be treated as one class with the Notes being issued in this offering, including for purposes of voting, redemptions and offers to purchase. For purposes of this “Description of the Notes,” except for the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness,” references to the Notes include Additional Notes, if any.

If a Holder has given wire transfer instructions to the Issuer at least ten Business Days prior to the applicable payment date, the Issuer will make all payments on such Holder’s Notes by wire transfer of immediately available funds to the account specified in those instructions. Otherwise, payments on the Notes will be made at the office or agency of the paying agent (the “Paying Agent”) and registrar (the “Registrar”) for the Notes within the City and State of New York unless the Issuer elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

The payment of all Obligations on or relating to the Notes will be subordinated in right of payment to the prior payment in full in cash or cash equivalents of all Obligations due in respect of Senior Debt of the Issuer, including all Obligations with respect to the Credit Facilities, whether outstanding on the Issue Date or incurred after that date.

The holders of Senior Debt will be entitled to receive payment in full in cash or cash equivalents of all Obligations due in respect of Senior Debt before the Holders of Notes will be entitled to receive any payment


	•	in a total or partial liquidation, dissolution or winding up of the Issuer;

	•	in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuer or its assets;

	•	in an assignment for the benefit of creditors; or

	•	in any marshalling of the Issuer’s assets and liabilities.

In addition, the Issuer may not make any payment or distribution of any kind or character with respect to any Obligations on or relating to the Notes or acquire any Notes for cash or assets or otherwise (other than, in either case, Permitted Junior Securities), if:


	•	a payment default on any Senior Debt occurs and is continuing; or

	•	any other default occurs and is continuing on any Designated Senior Debt that permits holders of such Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Representative of such Designated Senior Debt.

Payments on and distributions with respect to any Obligations on or with respect to the Notes may and shall be resumed:


	•	in the case of a payment default, upon the date on which all payment defaults are cured or waived; and

	•	in case of a nonpayment default, the earliest of (1) the date on which all such nonpayment defaults are cured or waived, (2) 179 days after the date on which the applicable Payment Blockage Notice is received or (3) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Debt has been accelerated.

No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the effectiveness of the immediately prior Payment Blockage Notice.

No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 consecutive days. Any subsequent action or any breach of any financial covenants for a period ending after the date of delivery of the initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing will constitute a new default for this purpose.

Notwithstanding anything to the contrary, payments and distributions made from the trusts established pursuant to the provisions described under “— Legal Defeasance and Covenant Defeasance” or “— Satisfaction and Discharge” will be permitted and will not be subordinated so long as the payments into the trusts were made in accordance with the requirements described under “— Legal Defeasance and Covenant Defeasance” or “— Satisfaction and Discharge” and did not violate the subordination provisions when they were made.

The Issuer must promptly notify the Representative of the Designated Senior Debt if payment of the Notes is accelerated because of an Event of Default.

As a result of the subordination provisions described above in the event of a bankruptcy, liquidation or reorganization of the Issuer, Holders of the Notes may recover less ratably than creditors of the Issuer who are holders of Senior Debt. See “Risk Factors — Risks Associated with the Offering — Your right to receive payment on the notes and guarantees is subordinated to our and the guarantors’ senior debt.”

As of July 3, 2004, on a pro forma basis, the Issuer would have had approximately $371.0 million aggregate principal amount of Senior Debt and approximately $40.8 million would have been available for borrowing as additional Senior Debt under the revolving portion of the Credit Agreement.

Each Guarantee will be subordinated to Guarantor Senior Debt on the same basis as the Notes are subordinated to Senior Debt.

The Issuer’s obligations under the Notes and the Indenture will be jointly and severally guaranteed on a senior subordinated basis (the “Note Guarantees”) by (1) Parent, (2) each Restricted Subsidiary that guarantees any Indebtedness under any Credit Facility (other than any Foreign Subsidiary that guarantees Indebtedness of only other Foreign Subsidiaries under any such Credit Facility) and (3) each other Restricted Subsidiary that the Issuer shall otherwise cause to become a Guarantor pursuant to the terms of the Indenture.

Not all of our Subsidiaries will guarantee the Notes. Unrestricted Subsidiaries and Foreign Subsidiaries will not be Guarantors. In the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, these non-guarantor Subsidiaries will pay the holders of their debts and their trade creditors before they will be able to distribute any of their assets to us. For the full six months ended July 3, 2004, our Canadian subsidiary represented approximately 8.0% of our pro forma net sales and 8.0% of our EBITDA. In addition, as of July 3, 2004, on a pro forma basis, it would have held 6.1% of our assets and had $36.2 million of liabilities (including trade payables), to which the Notes would have been effectively subordinated, including term loans of $30.0 million under the Credit Agreement, which are guaranteed by the Issuer and therefore constitute Senior Debt.

As of the date of the Indenture, all of our Subsidiaries will be “Restricted Subsidiaries.” However, under the circumstances described below under the subheading “— Certain Covenants — Designation of Unrestricted Subsidiaries,” the Issuer will be permitted to designate some of our Subsidiaries as “Unrestricted Subsidiaries.” The effect of designating a Subsidiary as an “Unrestricted Subsidiary” will be:


	•	an Unrestricted Subsidiary will not be subject to many of the restrictive covenants in the Indenture;

	•	a Subsidiary that has previously been a Guarantor and that is designated an Unrestricted Subsidiary will be released from its Note Guarantee; and

	•	the assets, income, cash flow and other financial results of an Unrestricted Subsidiary will not be consolidated with those of the Issuer for purposes of calculating compliance with the restrictive covenants contained in the Indenture.

The obligations of each Subsidiary Guarantor under its Note Guarantee will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor (including, without limitation, any guarantees under the Credit Agreement permitted under clause (1) of “— Certain Covenants — Limitations on Additional Indebtedness”) and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Note Guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of such Subsidiary Guarantor under its Note Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Subsidiary Guarantor that makes a payment for distribution under its Note Guarantee will be entitled to a contribution from each other Subsidiary Guarantor in a pro rata amount based on adjusted net assets of each Subsidiary Guarantor.

A Subsidiary Guarantor shall be released from its obligations under its Note Guarantee:


	(1) in the event of a sale or other disposition of all or substantially all of the assets of such Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the Equity Interests of such Subsidiary Guarantor then held by the Issuer and the Restricted Subsidiaries;


	(2) if such Subsidiary Guarantor is designated as an Unrestricted Subsidiary or otherwise ceases to be a Restricted Subsidiary, in each case in accordance with the provisions of the Indenture, upon effectiveness of such designation or when it first ceases to be a Restricted Subsidiary, respectively; or

	(3) if such Subsidiary Guarantor shall not guarantee any Indebtedness under any Credit Facility (other than if such Subsidiary Guarantor no longer guarantees any Indebtedness under any Credit Facility as a result of payment under any guarantee of any such Indebtedness by any Subsidiary Guarantor); provided that a Subsidiary Guarantor shall not be permitted to be released from its Note Guarantee if it is an obligor with respect to Indebtedness that would not, under “— Certain Covenants — Limitations on Additional Indebtedness,” be permitted to be incurred by a Restricted Subsidiary that is not a Guarantor.

Except as set forth below, the Notes may not be redeemed prior to February 15, 2008 (the “First Call Date”). At any time on or after the First Call Date, the Issuer, at its option, may redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon, if any, to the date of redemption, if redeemed during the 12-month period beginning February 15 of the years indicated:

At any time prior to February 15, 2007, the Issuer may redeem at its option on any one or more occasions up to 35% of the aggregate principal amount of the Notes issued under the Indenture with the net cash proceeds of one or more Qualified Equity Offerings at a redemption price equal to 109% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest thereon, if any, to the date of redemption; provided that (1) at least 65% of the aggregate principal amount of Notes issued under the Indenture remains outstanding immediately after the occurrence of such redemption and (2) the redemption occurs within 90 days of the date of the closing of any such Qualified Equity Offering.

At any time prior to First Call Date, the Notes may also be redeemed, in whole but not in part, at the Issuer’s option, upon the occurrence of a Change of Control, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued but unpaid interest, if any, to, the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date). Such redemption may be made upon notice mailed by first-class mail to each Holder’s registered address, not less than 30 nor more than 60 days prior to the date of redemption (but in no event more than 90 days after the occurrence of such Change of Control). The Issuer may provide in such notice that payment of such price and performance of the Issuer’s obligations with respect to such redemption may be performed by another Person. Any such notice may be given prior to the occurrence of the related Change of Control, and any such redemption or notice may, at the Issuer’s discretion, be subject to the satisfaction of one or more conditions precedent, including but not limited to the occurrence of the related Change of Control.

“Applicable Premium” means, with respect to a Note at any redemption date, the greater of:


	(a) the present value at such redemption date of (1) the redemption price of such Note on the First Call Date (such redemption price being that described in the first paragraph of this “Optional Redemption” section) plus (2) all required remaining scheduled interest payments due on such Note through the First Call Date, other than accrued interest to such redemption date, computed using a discount rate equal to the Treasury Rate plus 75 basis points per annum, discounted on a semi-annual bond equivalent basis, over

	(b) the principal amount of such Note on such redemption date.

Calculation of the Applicable Premium will be made by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee.

“Treasury Rate” means, with respect to a redemption date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two Business Days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to the First Call Date; provided, however, that if the period from such redemption date to the First Call Date is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from such redemption date to the First Call Date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

At any time prior to the First Call Date, after the completion of a Change of Control Offer that was accepted by Holders of not less than 75% of the aggregate principal amount of Notes then outstanding, the Issuer may redeem all, but not less than all, of the Notes not validly tendered in the Change of Control Offer, at a redemption price equal to 101% of the principal amount, and accrued and unpaid interest, if any, to the date of redemption; provided that such redemption occurs within 90 days after the completion of such Change of Control Offer.

The Issuer may acquire Notes by means other than a redemption, whether pursuant to an issuer tender offer, open market purchase or otherwise, so long as the acquisition does not otherwise violate the terms of the Indenture.

In the event that less than all of the Notes are to be redeemed at any time pursuant to an optional redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national security exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part. In addition, if a partial redemption is made pursuant to the provisions described under “— Optional Redemption — Redemption with Proceeds from Equity Offerings,” selection of the Notes or portions thereof for redemption shall be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis as is practicable (subject to the procedures of The Depository Trust Company), unless that method is otherwise prohibited.

Notice of redemption will be mailed by first-class mail at least 30 but not more than 60 days before the date of redemption to each Holder of Notes to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a redemption date if the notice is issued in connection with a satisfaction and discharge of the Indenture. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount of the Note to be redeemed. A new Note in a principal amount equal to the unredeemed portion of the Note will be issued in the name of the Holder of the Note upon cancellation of the original Note. On and after the date of redemption, interest will cease to accrue on Notes or portions thereof called for redemption so long as the Issuer has deposited with the paying agent for the Notes funds in satisfaction of the redemption price (including accrued and unpaid interest on the Notes to be redeemed) pursuant to the Indenture.

Upon the occurrence of any Change of Control, each Holder will have the right to require that the Issuer purchase that Holder’s Notes for a cash price (the “Change of Control Purchase Price”) equal to 101% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest thereon, if any, to the date of purchase.

Within 30 days following any Change of Control, the Issuer will mail, or caused to be mailed, to the Holders a notice:


	(1) describing the transaction or transactions that constitute the Change of Control;

	(2) offering to purchase, pursuant to the procedures required by the Indenture and described in the notice (a “Change of Control Offer”), on a date specified in the notice (which shall be a Business Day not earlier than 30 days nor later than 60 days from the date the notice is mailed) and for the Change of Control Purchase Price, all Notes properly tendered by such Holder pursuant to such Change of Control Offer; and

	(3) describing the procedures that Holders must follow to accept the Change of Control Offer. The Change of Control Offer is required to remain open for at least 20 Business Days or for such longer period as is required by law.

The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the date of purchase.

The agreements governing our outstanding Senior Debt currently prohibit us from purchasing any Notes, and also provide that some change of control events with respect to us would constitute a default under these agreements. Any future credit agreements or other agreements relating to Senior Debt to which the Issuer becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Issuer is prohibited from purchasing Notes, the Issuer could seek the consent of our senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain the prohibition. If the Issuer does not obtain a consent or repay the borrowings, the Issuer will remain prohibited from purchasing Notes. In that case, our failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the Senior Debt. In these circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

If a Change of Control Offer is made, there can be no assurance that the Issuer will have available funds sufficient to pay for all or any of the Notes that might be delivered by Holders seeking to accept the Change of Control Offer.

The provisions described above that require us to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Issuer purchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

The Issuer’s obligation to make a Change of Control Offer will be satisfied if a third party makes the Change of Control Offer in the manner and at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer.

With respect to any disposition of assets, the phrase “all or substantially all” as used in the Indenture (including as set forth under “— Certain Covenants — Limitations on Mergers, Consolidations, Etc.” below) varies according to the facts and circumstances of the subject transaction, has no clearly established meaning under New York law (which governs the Indenture) and is subject to judicial interpretation. Accordingly, in certain circumstances there may be a degree of uncertainty in ascertaining whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Issuer, and therefore it may be unclear as to whether a Change of Control has occurred and whether the Holders have the right to require the Issuer to purchase Notes.

The Issuer will comply with applicable tender offer rules, including the requirements of Rule 14e-l under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Change of Control” provisions of the Indenture, the Issuer shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the “Change of Control” provisions of the Indenture by virtue of this compliance.

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur any Indebtedness; provided that the Issuer or any Guarantor may incur additional Indebtedness, and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if, after giving effect thereto, the Consolidated Interest Coverage Ratio would be at least 2.00 to 1.00 (the “Coverage Ratio Exception”).

Notwithstanding the above, each of the following shall be permitted (the “Permitted Indebtedness”):


	(1) Indebtedness of the Issuer or any Guarantor under the Credit Facilities in an aggregate amount at any time outstanding not to exceed the greater of (a) $250.0 million less, to the extent a permanent repayment and/or commitment reduction is required thereunder as a result of such application, the aggregate amount of Net Available Proceeds applied to repayments under the Credit Facilities in accordance with the covenant described under “— Limitations on Asset Sales” (provided that the amount under this clause (a) shall in no event be reduced to below $65.0 million) and (b) the amount that is 2.5 times Consolidated Cash Flow for the Four-Quarter Period;

	(2) the Notes issued on the Issue Date and the Note Guarantees and the Exchange Notes and the Note Guarantees in respect thereof to be issued pursuant to the Registration Rights Agreement;

	(3) Indebtedness of the Issuer and the Restricted Subsidiaries to the extent outstanding on the Issue Date (other than Indebtedness referred to in clauses (1) and (2) above, and after giving effect to the intended use of proceeds of the Notes);

	(4) Indebtedness under Hedging Obligations of the Company or any Restricted Subsidiary not for the purpose of speculation; provided that if such Hedging Obligations are of the type described in clause (1) of the definition thereof, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by this covenant, and (b) the notional principal amount of such Hedging Obligations at the time incurred does not exceed the principal amount of the Indebtedness to which such Hedging Obligations relate;

	(5) Indebtedness of the Issuer owed to a Restricted Subsidiary and Indebtedness of any Restricted Subsidiary owed to the Issuer or any other Restricted Subsidiary; provided, however, that upon any such


	Restricted Subsidiary ceasing to be a Restricted Subsidiary or such Indebtedness being owed to any Person other than the Issuer or a Restricted Subsidiary, the Issuer or such Restricted Subsidiary, as applicable, shall be deemed to have incurred Indebtedness not permitted by this clause (5);

	(6) Indebtedness in respect of bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances issued for the account of the Issuer or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of the Issuer or any Restricted Subsidiary with respect to letters of credit supporting such bid, performance, surety bonds and workers’ compensation claims, self-insurance obligations and bankers acceptances;

	(7) Purchase Money Indebtedness incurred by the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed at any time outstanding $25.0 million;

	(8) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;

	(9) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business;

	(10) Refinancing Indebtedness with respect to Indebtedness incurred pursuant to the Coverage Ratio Exception, clause (2), (3), (11)(B) or (13)(B) of this paragraph or this clause (10);

	(11) (A) Acquired Indebtedness of the Issuer or any Restricted Subsidiary, and Refinancing Indebtedness thereof, in an aggregate amount not to exceed $20.0 million at any time outstanding and (B) Acquired Indebtedness of the Issuer or any Restricted Subsidiary assumed or acquired in connection with a transaction governed by, and effected in accordance with, the first paragraph of the covenant described under “— Limitations on Mergers, Consolidations, Etc.”;

	(12) indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business or assets of the Issuer or any Restricted Subsidiary or Equity Interests of a Restricted Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing any such acquisition; provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (12) shall at no time exceed (a) in the case of an acquisition, $10.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of the Issuer or any Restricted Subsidiary (e.g., the amount of such liability shall be deemed to be zero if no amount is reflected on such balance sheet)) and (b) in the case of a disposition, the gross proceeds actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;

	(13) (A) Indebtedness of Foreign Subsidiaries in an aggregate amount not to exceed $30.0 million at any time outstanding and (B) Indebtedness of Foreign Subsidiaries if, after giving effect thereto the Consolidated Interest Coverage Ratio (with the references to the Issuer and the Restricted Subsidiaries in the definitions used in the calculation thereof being to Foreign Subsidiaries (other than Unrestricted Subsidiaries)) of all Foreign Subsidiaries would be at least 2.00 to 1.00; provided that Indebtedness under this clause (13) may be incurred under any Credit Facility;

	(14) Indebtedness of the Issuer or any Restricted Subsidiary incurred in the ordinary course of business under guarantees of Indebtedness of suppliers, licensees, franchisees or customers in an aggregate amount, together with the aggregate amount of Investments under clause (13) of the definition of “Permitted Investments,” not to exceed $5.0 million at any time outstanding; and

	(15) Indebtedness of the Issuer or any Restricted Subsidiary in an aggregate amount not to exceed $25.0 million at any time outstanding.

For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (1) through (15) above or is entitled to be incurred pursuant to the Coverage Ratio Exception, the Issuer shall classify and may reclassify, in its sole discretion, such item of Indebtedness and may divide, classify and reclassify such Indebtedness in more than one of the types of Indebtedness described, except that Indebtedness incurred under the Credit Facilities on the Issue Date shall be deemed to have been incurred under clause (1) above. In addition, for purposes of determining any particular amount of Indebtedness under this covenant, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the determination of such particular amount shall not be included so long as incurred by a Person that could have incurred such Indebtedness.

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, incur or suffer to exist any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) senior in right of payment to the Notes or the Note Guarantee of such Restricted Subsidiary and subordinated in right of payment to any other Indebtedness of the Issuer or of such Restricted Subsidiary, as the case may be.

For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of the Issuer or any Restricted Subsidiary solely by virtue of being unsecured or secured by a junior priority lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, make any Restricted Payment if at the time of such Restricted Payment:


	(1) a Default shall have occurred and be continuing or shall occur as a consequence thereof;

	(2) the Issuer cannot incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception; or

	(3) the amount of such Restricted Payment, when added to the aggregate amount of all other Restricted Payments made after the Issue Date (other than Restricted Payments made pursuant to clause (2), (3), (4), (5), (6), (7), (8) or (9) of the next paragraph), exceeds the sum (the “Restricted Payments Basket”) of (without duplication):


	(a) 50% of Consolidated Net Income for the period (taken as one accounting period) commencing on the first day of the fiscal quarter in which the Issue Date occurs to and including the last day of the fiscal quarter ended immediately prior to the date of such calculation for which consolidated financial statements are available (or, if such Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit), plus

	(b) 100% of the aggregate net cash proceeds received by the Issuer and 100% of the Fair Market Value at the time of receipt of assets other than cash, if any, received by the Issuer, either (x) as contributions to the common equity of the Issuer after the Issue Date or (y) from the issuance and sale of Qualified Equity Interests after the Issue Date, other than (A) any such proceeds which are used to redeem Notes in accordance with the second paragraph under “— Optional Redemption — Redemption with Proceeds from Equity Offerings” or (B) any such proceeds or assets received from a Subsidiary of the Issuer, plus

	(c) the aggregate amount by which Indebtedness (other than any Subordinated Indebtedness) incurred by the Issuer or any Restricted Subsidiary subsequent to the Issue Date is reduced on the Issuer’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Issuer)


	into Qualified Equity Interests (less the amount of any cash, or the fair value of assets, distributed by the Issuer or any Restricted Subsidiary upon such conversion or exchange), plus

	(d) in the case of the disposition or repayment of or return on any Investment that was treated as a Restricted Payment made after the Issue Date, an amount (to the extent not included in the computation of Consolidated Net Income) equal to the lesser of (i) 100% of the aggregate amount received by the Issuer or any Restricted Subsidiary in cash or other property (valued at the Fair Market Value thereof) as the return of capital with respect to such Investment and (ii) the amount of such Investment that was treated as a Restricted Payment, plus

	(e) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the lesser of (i) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (ii) the aggregate amount of the Issuer’s Investments in such Subsidiary to the extent such Investments reduced the Restricted Payments Basket and were not previously repaid or otherwise reduced.


	(1) the payment by the Issuer or any Restricted Subsidiary of any dividend within 60 days after the date of declaration thereof, if on the date of declaration the payment would have complied with the provisions of the Indenture;

	(2) the redemption of any Equity Interests of the Issuer or any Restricted Subsidiary in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests;

	(3) the redemption of Subordinated Indebtedness of the Issuer or any Restricted Subsidiary (a) in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Equity Interests, (b) in exchange for, or out of the proceeds of the substantially concurrent incurrence of, Refinancing Indebtedness permitted to be incurred under the “Limitations on Additional Indebtedness” covenant and the other terms of the Indenture or (c) upon a Change of Control or in connection with an Asset Sale to the extent required by the agreement governing such Subordinated Indebtedness but only if the Issuer shall have complied with the covenants described under “— Change of Control” and “— Limitations on Asset Sales” and purchased all Notes validly tendered pursuant to the relevant offer prior to redeeming such Subordinated Indebtedness;

	(4) payments by the Issuer or to Parent to permit Parent or Holdings, and which are used by Parent or Holdings, to redeem Equity Interests of the Issuer, Parent or Holdings held by officers, directors or employees or former officers, directors or employees (or their transferees, estates or beneficiaries under their estates), upon their death, disability, retirement, severance or termination of employment or service; provided that the aggregate cash consideration paid for all such redemptions shall not exceed the sum of (A) $5.0 million during any calendar year (with unused amounts being available to be used in the following calendar year, but not in any succeeding calendar year) plus (B) the amount of any net cash proceeds received by or contributed to the Issuer from the issuance and sale after the Issue Date of Qualified Equity Interests of Holdings, Parent or the Issuer to its officers, directors or employees that have not been applied to the payment of Restricted Payments pursuant to this clause (4), plus (C) the net cash proceeds of any “key-man” life insurance policies that have not been applied to the payment of Restricted Payments pursuant to this clause (4);

	(5) payments to Parent permitted pursuant to clauses (3) and (4) of the covenant described under “— Limitations on Transactions with Affiliates”;

	(6) repurchases of Equity Interests deemed to occur upon the exercise of stock options if the Equity Interests represent a portion of the exercise price thereof;

	(7) to the extent that the Net Available Proceeds (without duplication of any amount that increased the Restricted Payments Basket) of any Permitted Sale and Leaseback Transaction exceed the Permitted Sale and Leaseback Transaction Amount, payments of such excess amount to Parent to permit Parent or Holdings, and the subsequent use of such payments by Parent or Holdings, to pay a dividend to


	the holders of Equity Interests of Parent or Holdings or a distribution to the holders of Indebtedness of Parent or Holdings;

	(8) distributions to Parent in order to enable Parent or Holdings to pay customary and reasonable costs and expenses of an offering of securities of Parent or Holdings that is not consummated; or

	(9) additional Restricted Payments of $20.0 million;

provided that (a) in the case of any Restricted Payment pursuant to clause (3)(c) or (7) above, no Default shall have occurred and be continuing or occur as a consequence thereof and (b) no issuance and sale of Qualified Equity Interests pursuant to clause (2), (3) or (4)(B) above shall increase the Restricted Payments Basket.


		*Limitations on Dividend and Other Restrictions Affecting Restricted Subsidiaries*

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:


	(a) pay dividends or make any other distributions on or in respect of its Equity Interests;

	(b) make loans or advances or pay any Indebtedness or other obligation owed to the Issuer or any other Restricted Subsidiary; or

	(c) transfer any of its assets to the Issuer or any other Restricted Subsidiary;


	(1) encumbrances or restrictions existing under or by reason of applicable law, regulation or order;

	(2) encumbrances or restrictions existing under the Indenture, the Notes and the Note Guarantees;

	(3) non-assignment provisions of any contract or any lease entered into in the ordinary course of business;

	(4) encumbrances or restrictions existing under agreements existing on the date of the Indenture (including, without limitation, the Credit Facilities) as in effect on that date;

	(5) restrictions relating to any Lien permitted under the Indenture imposed by the holder of such Lien;

	(6) restrictions imposed under any agreement to sell assets permitted under the Indenture to any Person pending the closing of such sale;

	(7) any instrument governing Acquired Indebtedness, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person or the properties or assets of the Person so acquired;

	(8) any other agreement governing Indebtedness entered into after the Issue Date that contains encumbrances and restrictions that are not materially more restrictive with respect to any Restricted Subsidiary than those in effect on the Issue Date with respect to that Restricted Subsidiary pursuant to agreements in effect on the Issue Date;

	(9) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture, asset sale and stock sale agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person;


	(10) Purchase Money Indebtedness incurred in compliance with the covenant described under “— Limitations on Additional Indebtedness” that impose restrictions of the nature described in clause (c) above on the assets acquired;

	(11) restrictions on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business;

	(12) encumbrances or restrictions contained in security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such encumbrances or restrictions restrict the transfer of assets subject to such security agreements or mortgages;

	(13) encumbrances or restrictions contained in Indebtedness of Foreign Subsidiaries, or municipal loan or related agreements entered into in connection with the incurrence of industrial revenue bonds, permitted to be incurred under the Indenture; provided that any such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being incurred under the relevant circumstances and do not, in the good faith judgment of the Board of Directors of the Issuer, materially impair the Issuer’s ability to make payment on the Notes when due; and

	(14) any encumbrances or restrictions imposed by any amendments or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (13) above; provided that such amendments or refinancings are no more materially restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing.

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its assets to, or purchase any assets from, or enter into any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate (an “Affiliate Transaction”), unless:


	(1) such Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction at such time on an arm’s-length basis by the Issuer or that Restricted Subsidiary from a Person that is not an Affiliate of the Issuer or that Restricted Subsidiary; and

	(2) the Issuer delivers to the Trustee:


	(a) with respect to any Affiliate Transaction involving aggregate value in excess of $5.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (1) above and (x) a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by a majority of the directors of the Issuer who are disinterested with respect to such Affiliate Transaction, approving such Affiliate Transaction or (y) if there are no such disinterested directors, a written opinion described in clause (b) below; and

	(b) with respect to any Affiliate Transaction involving aggregate value of $20.0 million or more, the certificates described in the preceding clause (a) and a written opinion as to the fairness of such Affiliate Transaction to the Issuer or such Restricted Subsidiary from a financial point of view issued by an Independent Financial Advisor to the Board of Directors of the Issuer.


	(1) transactions exclusively between or among (a) the Issuer and one or more Restricted Subsidiaries or (b) Restricted Subsidiaries; provided, in each case, that no Affiliate of the Issuer (other than another Restricted Subsidiary) owns Equity Interests of any such Restricted Subsidiary;

	(2) reasonable director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans), indemnification arrangements, compensation, employment and severance agreements, in each case approved by the Board of Directors;


	(3) the entering into of a tax sharing agreement, or payments pursuant thereto, between the Issuer and/or one or more Subsidiaries, on the one hand, and any other Person with which the Issuer or such Subsidiaries are required or permitted to file a consolidated tax return or with which the Issuer or such Subsidiaries are part of a consolidated group for tax purposes, on the other hand, which payments by the Issuer and the Restricted Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis;

	(4) payments by the Issuer to or on behalf of Parent in an amount sufficient to pay out-of-pocket legal, accounting and filing and other general corporate overhead costs of Parent actually incurred by Parent, in any case in an aggregate amount not to exceed $500,000 in any calendar year;

	(5) loans and advances permitted by clause (3) of the definition of “Permitted Investments”;

	(6) payments to Sponsor or an Affiliate or Related Party thereof in respect of management and consulting services rendered to the Issuer and the Restricted Subsidiaries in the amounts and at the times specified or permitted in the Advisory Agreement, as in effect on the Issue Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Holders in any material respect than such agreement as it was in effect on the Issue Date; provided that no Default described in clause (1), (2), (3), (7) or (8) of the definition of “Event of Default” shall have occurred and be continuing or occur as a consequence thereof;

	(7) any Restricted Payments which are made in accordance with the covenant described under “— Limitations on Restricted Payments”;

	(8) entering into an agreement that provides registration rights to the shareholders of the Issuer, Parent or Holdings or amending any such agreement with shareholders of the Issuer, Parent or Holdings and the performance of such agreements;

	(9) any transaction with a joint venture or similar entity which would constitute an Affiliate Transaction solely because the Issuer or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture or similar entity; provided that no Affiliate of the Issuer or any of its Subsidiaries other than the Issuer or a Restricted Subsidiary shall have a beneficial interest in such joint venture or similar entity;

	(10) any merger, consolidation or reorganization of the Issuer with an Affiliate, solely for the purposes of (a) reorganizing to facilitate an initial public offering of securities of the Issuer, Parent, Holdings or other holding company, (b) forming a holding company or (c) reincorporating the Issuer in a new jurisdiction;

	(11) (a) any transaction with an Affiliate where the only consideration paid by the Issuer or any Restricted Subsidiary is Qualified Equity Interests or (b) the issuance or sale of any Qualified Equity Interests;

	(12) (a) any agreement in effect on the Issue Date (other than the Advisory Agreement) and disclosed in this prospectus, as in effect on the Issue Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Holders in any material respect than such agreement as it was in effect on the Issue Date or (b) any transaction pursuant to any agreement referred to in the immediately preceding clause (a); or

	(13) any Investment in an Unrestricted Subsidiary; provided that no Affiliate of the Issuer or any of its Subsidiaries other than the Issuer or a Restricted Subsidiary shall have a beneficial interest in such Unrestricted Subsidiary.

The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or permit or suffer to exist any Lien of any nature whatsoever against any assets of the Issuer or any Restricted Subsidiary (including Equity Interests of a Restricted Subsidiary), whether owned at the Issue


	(1) in the case of any Lien securing an obligation that ranks pari passu with the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, at least equally and ratably with or prior to such obligation with a Lien on the same collateral; and

	(2) in the case of any Lien securing an obligation that is subordinated in right of payment to the Notes or a Note Guarantee, effective provision is made to secure the Notes or such Note Guarantee, as the case may be, with a Lien on the same collateral that is prior to the Lien securing such subordinated obligation,

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, consummate any Asset Sale (other than a Permitted Sale and Leaseback Transaction) unless:


	(1) the Issuer or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale; and

	(2) either (x) at least 75% of the total consideration received in such Asset Sale consists of cash or Cash Equivalents or (y) the cash or Cash Equivalents portion (without giving effect to clause (c) of the next paragraph) of the total consideration received in such Asset Sale shall be no less than an amount equal to the product of (A) 5.25 and (B) the portion of Consolidated Cash Flow for the Four-Quarter Period directly attributable to the assets included in such Asset Sale.


	(a) the amount (without duplication) of any Indebtedness (other than Subordinated Indebtedness) of the Issuer or such Restricted Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Issuer or such Restricted Subsidiary, as the case may be, is unconditionally released by the holder of such Indebtedness,

	(b) the amount of any obligations received from such transferee that are within 90 days converted by the Issuer or such Restricted Subsidiary to cash (to the extent of the cash actually so received), and

	(c) the Fair Market Value of (i) any assets (other than securities) received by the Issuer or any Restricted Subsidiary to be used by it in the Permitted Business, (ii) Equity Interests in a Person that is a Restricted Subsidiary or in a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the acquisition of such Person by the Issuer or (iii) a combination of (i) and (ii).

If at any time any non-cash consideration received by the Issuer or any Restricted Subsidiary, as the case may be, pursuant to clause (b) above in connection with any Asset Sale is repaid or converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such repayment, conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this covenant.

If the Issuer or any Restricted Subsidiary engages in an Asset Sale (other than a Permitted Sale and Leaseback Transaction), the Issuer or such Restricted Subsidiary shall, by no later than 12 months following the later of the consummation thereof and the Issuer’s or Restricted Subsidiary’s receipt of the Net Available Proceeds, have applied all or any of the Net Available Proceeds therefrom to:


	(1) repay Senior Debt or Guarantor Senior Debt, and in the case of any such repayment under any revolving credit facility, effect a permanent reduction in the availability under such revolving credit facility;


	(2) repay any Indebtedness which was secured by the assets sold in such Asset Sale; and/or

	(3) (A) invest in the purchase of assets (other than securities) to be used by the Issuer or any Restricted Subsidiary in the Permitted Business, (B) acquire Equity Interests in a Person that is a Restricted Subsidiary or in a Person engaged in a Permitted Business that shall become a Restricted Subsidiary immediately upon the consummation of such acquisition or (C) a combination of (A) and (B); provided that the Issuer or such Restricted Subsidiary shall be deemed to have applied Net Available Proceeds in accordance with this clause (3) within such 12-month period if, within such 12-month period, it has entered into a binding commitment or agreement to invest such Net Available Proceeds and continues to use all reasonable efforts to so apply such Net Available Proceeds as soon as practicable thereafter; provided, further, that upon any abandonment or termination of such commitment or agreement, the Net Available Proceeds not applied will constitute Excess Proceeds (as defined below). In addition, following the entering into of a binding agreement with respect to an Asset Sale and prior to the consummation thereof, cash (whether or not actual Net Available Proceeds of such Asset Sale) used for the purposes described in subclause (A), (B) and (C) of this clause (3) that are designated as uses in accordance with this clause (3), and not previously or subsequently so designated in respect of any other Asset Sale, shall be deemed to be Net Available Proceeds applied in accordance with this clause (3).

The amount of Net Available Proceeds not applied or invested as provided in this paragraph will constitute “Excess Proceeds.”

When the aggregate amount of Excess Proceeds equals or exceeds $15.0 million, the Issuer will be required to make an offer to purchase from all Holders and, if applicable, redeem (or make an offer to do so) any Pari Passu Indebtedness of the Issuer the provisions of which require the Issuer to redeem such Indebtedness with the proceeds from any Asset Sales (or offer to do so), in an aggregate principal amount of Notes and such Pari Passu Indebtedness equal to the amount of such Excess Proceeds as follows:


	(1) the Issuer will (a) make an offer to purchase (a “Net Proceeds Offer”) to all Holders in accordance with the procedures set forth in the Indenture, and (b) redeem (or make an offer to do so) any such other Pari Passu Indebtedness, pro rata in proportion to the respective principal amounts of the Notes and such other Indebtedness required to be redeemed, the maximum principal amount of Notes and Pari Passu Indebtedness that may be redeemed out of the amount (the “Payment Amount”) of such Excess Proceeds;

	(2) the offer price for the Notes will be payable in cash in an amount equal to 100% of the principal amount of the Notes tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest thereon, if any, to the date such Net Proceeds Offer is consummated (the “Offered Price”), in accordance with the procedures set forth in the Indenture and the redemption price for such Pari Passu Indebtedness (the “Pari Passu Indebtedness Price”) shall be as set forth in the related documentation governing such Indebtedness;

	(3) if the aggregate Offered Price of Notes validly tendered and not withdrawn by Holders thereof exceeds the pro rata portion of the Payment Amount allocable to the Notes, Notes to be purchased will be selected on a pro rata basis; and

	(4) upon completion of such Net Proceeds Offer in accordance with the foregoing provisions, the amount of Excess Proceeds with respect to which such Net Proceeds Offer was made shall be deemed to be zero.

To the extent that the sum of the aggregate Offered Price of Notes tendered pursuant to a Net Proceeds Offer and the aggregate Pari Passu Indebtedness Price paid to the holders of such Pari Passu Indebtedness is less than the Payment Amount relating thereto (such shortfall constituting a “Net Proceeds Deficiency”), the Issuer may use the Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the provisions of the Indenture.

In the event of the transfer of substantially all (but not all) of the assets of the Issuer and the Restricted Subsidiaries as an entirety to a Person in a transaction covered by and effected in accordance with the

The Issuer will comply with applicable tender offer rules, including the requirements of Rule 14e-1 under the Exchange Act and any other applicable laws and regulations in connection with the purchase of Notes pursuant to a Net Proceeds Offer. To the extent that the provisions of any securities laws or regulations conflict with the “Limitations on Asset Sales” provisions of the Indenture, the Issuer shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the “Limitations on Asset Sales” provisions of the Indenture by virtue of this compliance.

The Issuer may designate any Subsidiary (including any newly formed or newly acquired Subsidiary) of the Issuer as an “Unrestricted Subsidiary” under the Indenture (a “Designation”) only if:


	(1) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; and

	(2) either (A) the Subsidiary to be so Designated has total assets of $1,000 or less; or (B) the Issuer would be permitted to make, at the time of such Designation, (x) a Permitted Investment or (y) an Investment pursuant to the first paragraph of “— Limitations on Restricted Payments” above, in either case, in an amount (the “Designation Amount”) equal to the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary on such date.

No Subsidiary shall be Designated as an “Unrestricted Subsidiary” if such Subsidiary or any of its Subsidiaries owns (i) any Equity Interests (other than Qualified Equity Interests) of the Issuer or (ii) any Equity Interests of any Restricted Subsidiary that is not a Subsidiary of the Subsidiary to be so Designated.

If, at any time, any Unrestricted Subsidiary fails to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of the Subsidiary and any Liens on assets of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary as of the date and, if the Indebtedness is not permitted to be incurred under the covenant described under “— Limitations on Additional Indebtedness” or the Lien is not permitted under the covenant described under “— Limitations on Liens,” the Issuer shall be in default of the applicable covenant.

The Issuer may redesignate an Unrestricted Subsidiary as a Restricted Subsidiary (a “Redesignation”) only if:


	(1) no Default shall have occurred and be continuing at the time of and after giving effect to such Redesignation; and

	(2) all Liens, Indebtedness and Investments of such Unrestricted Subsidiary outstanding immediately following such Redesignation would, if incurred or made at such time, have been permitted to be incurred or made for all purposes of the Indenture.

All Designations and Redesignations must be evidenced by resolutions of the Board of Directors of the Issuer, delivered to the Trustee, certifying compliance with the foregoing provisions.

The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, sell or issue any shares of Equity Interests of any Restricted Subsidiary except (1) to the Issuer, a Restricted Subsidiary or the minority stockholders of any Restricted Subsidiary, on a pro rata basis, (2) to the extent such shares represent directors’ qualifying shares or shares required by applicable law to be held by a Person other than the

The Issuer will not, directly or indirectly, in a single transaction or a series of related transactions, (a) consolidate or merge with or into another Person (other than a merger with an Affiliate solely for the purpose of and with the effect of changing the Issuer’s jurisdiction of incorporation to another State of the United States or forming a holding company for the Issuer), or sell, lease, transfer, convey or otherwise dispose of or assign all or substantially all of the assets of the Issuer or the Issuer and the Restricted Subsidiaries (taken as a whole) or (b) adopt a Plan of Liquidation unless, in either case:


	(a) the Issuer will be the surviving or continuing Person; or

	(b) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a corporation, limited liability company or limited partnership organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Successor expressly assumes, by supplemental indenture in form and substance reasonably satisfactory to the Trustee, all of the obligations of the Issuer under the Notes, the Indenture and the Registration Rights Agreement;


	(2) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, no Default shall have occurred and be continuing; and

	(3) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (1)(b) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, (a) the Issuer or the Successor, as the case may be, could incur $1.00 of additional Indebtedness pursuant to the Coverage Ratio Exception or (b) the Consolidated Interest Coverage Ratio of the Issuer or the Successor, as the case may be, would be not less than the Consolidated Coverage Ratio of the Issuer immediately prior to such transaction.

For purposes of this covenant, any Indebtedness of the Successor which was not Indebtedness of the Issuer immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction.

Parent will not, directly or indirectly, in a single transaction or a series of related transactions, (a) consolidate or merge with or into another Person, or sell, lease, transfer, convey or otherwise dispose of or


	(a) Parent will be the surviving or continuing Person; or

	(b) the Person formed by or surviving such consolidation or merger or to which such sale, lease, conveyance or other disposition shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Parent Successor”) is a corporation, limited liability company or limited partnership organized and existing under the laws of any State of the United States of America or the District of Columbia, and the Parent Successor (unless the Parent Successor is the Issuer) expressly assumes, by supplemental indenture in form and substance reasonably satisfactory to the Trustee, all of the obligations of Parent under the Notes, the Indenture and the Registration Rights Agreement; and


	(2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing.

Except as provided in the fifth paragraph under the caption “— Note Guarantees,” no Guarantor (other than Parent) may consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, unless:


	(a) such Guarantor will be the surviving or continuing Person; or

	(b) the Person formed by or surviving any such consolidation or merger assumes, by supplemental indenture in form and substance reasonably satisfactory to the Trustee, all of the obligations of such Guarantor under the Note Guarantee of such Guarantor, the Indenture and the Registration Rights Agreement, and, in the case of a consolidation or merger with Parent, is a corporation, limited liability company or limited partnership organized and existing under the laws of any State of the United States of America or the District of Columbia; and


	(2) immediately after giving effect to such transaction, no Default shall have occurred and be continuing.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of the Issuer, will be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer or Parent, as the case may be.

Upon any consolidation, combination or merger of the Issuer or a Guarantor, or any transfer of all or substantially all of the assets of the Issuer or Parent in accordance with the foregoing, in which the Issuer or such Guarantor is not the continuing obligor under the Notes or its Note Guarantee, the surviving entity formed by such consolidation or into which the Issuer or such Guarantor is merged or the Person to which the conveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every right and power of, the Issuer or such Guarantor under the Indenture, the Notes and the Note Guarantees with the same effect as if such surviving entity had been named therein as the Issuer or such Guarantor and, except in the case of a lease, the Issuer or such Guarantor, as the case may be, will be released from the obligation to pay the principal of and interest on the Notes or in respect of its Note Guarantee, as the case may be, and all of the Issuer’s or such Guarantor’s other obligations and covenants under the Notes, the Indenture and its Note Guarantee, if applicable.

Notwithstanding the foregoing, any Restricted Subsidiary may consolidate with, merge with or into or convey, transfer or lease, in one transaction or a series of transactions, all or substantially all of its assets to the Issuer or another Restricted Subsidiary.

If, after the Issue Date, (a) any Restricted Subsidiary (including any newly formed, newly acquired or newly Designated Restricted Subsidiary) guarantees any Indebtedness under any Credit Facility (other than any Foreign Subsidiary that guarantees Indebtedness of only other Foreign Subsidiaries under any such Credit Facility) or (b) the Issuer otherwise elects to have any Restricted Subsidiary become a Guarantor, then, in each such case, the Issuer shall cause such Restricted Subsidiary to:


	(1) execute and deliver to the Trustee (a) a supplemental indenture in form and substance reasonably satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee all of the Issuer’s obligations under the Notes and the Indenture and (b) a notation of guarantee in respect of its Note Guarantee; and

	(2) deliver to the Trustee one or more opinions of counsel that such supplemental indenture (a) has been duly authorized, executed and delivered by such Restricted Subsidiary and (b) constitutes a valid and legally binding obligation of such Restricted Subsidiary in accordance with its terms.

Whether or not required by the SEC, so long as any Notes are outstanding, the Issuer will furnish to the Holders of Notes, or file electronically with the SEC through the SEC’s Electronic Data Gathering, Analysis and Retrieval System (or any successor system), within the time periods that would be applicable to the Issuer if it were subject to Section 13(a) or 15(d) of the Exchange Act:


	(1) all quarterly and annual financial and other information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Issuer were required to file these Forms; and

	(2) all current reports that would be required to be filed with the SEC on Form 8-K if the Issuer were required to file these reports.

In addition, whether or not required by the SEC, the Issuer will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept the filing) and make the information available to securities analysts and prospective investors upon request.

Notwithstanding anything to the contrary, the Issuer will be deemed to have complied with its obligations in the preceding two paragraphs following the filing of the Exchange Offer Registration Statement and prior to the effectiveness thereof if the Exchange Offer Registration Statement includes the information specified in clause (1) above at the times it would otherwise be required to file such Forms. If Parent has complied with the reporting requirements of Section 13 or 15(d) of the Exchange Act, if applicable, and has furnished the Holders of Notes, or filed electronically with the SEC’s Electronic Data Gathering, Analysis and Retrieval System (or any successor system), the reports described herein with respect to Parent (including any financial information required by Regulation S-X relating to the Issuer and the Subsidiary Guarantors), the Issuer shall be deemed to be in compliance with the provisions of this covenant.

The Issuer and the Guarantors have agreed that, for so long as any Notes remain outstanding, the Issuer will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.


	(1) failure by the Issuer to pay interest on any of the Notes when it becomes due and payable and the continuance of any such failure for 30 days (whether or not such payment is prohibited by the subordination provisions of the Indenture);


	(2) failure by the Issuer to pay the principal on any of the Notes when it becomes due and payable, whether at stated maturity, upon redemption, upon purchase, upon acceleration or otherwise (whether or not such payment is prohibited by the subordination provisions of the Indenture);

	(3) failure by the Issuer to comply with any of its agreements or covenants described above under “— Certain Covenants — Limitations on Mergers, Consolidations, Etc.,” or in respect of its obligations to make a Change of Control Offer as described above under “— Change of Control” (whether or not such compliance is prohibited by the subordination provisions of the Indenture);

	(4) failure by the Issuer to comply with any other agreement or covenant in the Indenture and continuance of this failure for 60 days after notice of the failure has been given to the Issuer by the Trustee or by the Holders of at least 25% of the aggregate principal amount of the Notes then outstanding;

	(5) default under any mortgage, indenture or other instrument or agreement under which there may be issued or by which there may be secured or evidenced Indebtedness of the Issuer or any Restricted Subsidiary, whether such Indebtedness now exists or is incurred after the Issue Date, which default:


	(a) is caused by a failure to pay at final maturity (giving effect to any applicable grace periods and any extensions thereof) principal on such Indebtedness within the applicable express grace period,

	(b) results in the acceleration of such Indebtedness prior to its express final maturity or

	(c) results in the judicial authorization to foreclose upon, or to exercise remedies under applicable law or applicable security documents to take ownership of, the assets securing such Indebtedness, and

in each case, the principal amount of such Indebtedness, together with any other Indebtedness with respect to which an event described in clause (a), (b) or (c) has occurred and is continuing, aggregates $20.0 million or more;


	(6) one or more judgments or orders that exceed $20.0 million in the aggregate (net of amounts covered by insurance or bonded) for the payment of money have been entered by a court or courts of competent jurisdiction against the Issuer or any Restricted Subsidiary and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered;

	(7) the Issuer or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:


	(a) commences a voluntary case,

	(b) consents to the entry of an order for relief against it in an involuntary case,

	(c) consents to the appointment of a Custodian of it or for all or substantially all of its assets, or

	(d) makes a general assignment for the benefit of its creditors;


	(8) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:


	(a) is for relief against the Issuer or any Significant Subsidiary as debtor in an involuntary case,

	(b) appoints a Custodian of the Issuer or any Significant Subsidiary or a Custodian for all or substantially all of the assets of the Issuer or any Significant Subsidiary, or

	(c) orders the liquidation of the Issuer or any Significant Subsidiary,


	(9) any Note Guarantee of any Significant Subsidiary ceases to be in full force and effect (other than in accordance with the terms of such Note Guarantee and the Indenture) or is declared null and void and unenforceable or found to be invalid or any Guarantor denies its liability under its Note Guaran-


	tee (other than by reason of release of a Guarantor from its Note Guarantee in accordance with the terms of the Indenture and the Note Guarantee).

If an Event of Default (other than an Event of Default specified in clause (7) or (8) above with respect to the Issuer) shall have occurred and be continuing under the Indenture, the Trustee, by written notice to the Issuer, or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, by written notice to the Issuer and the Trustee, may declare (an “acceleration declaration”) all amounts owing under the Notes to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal of and accrued and unpaid interest on the outstanding Notes shall become due and payable (a) if there is no Indebtedness outstanding under any Credit Facility at such time, immediately and (b) if otherwise, upon the earlier of (x) the final maturity (after giving effect to any applicable grace period or extensions thereof) or an acceleration of any Indebtedness under any Credit Facility prior to the express final stated maturity thereof and (y) five business days after the Representative under each Credit Facility receives the acceleration declaration, but, in the case of this clause (b) only, if such Event of Default is then continuing; provided, however, that after such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of such outstanding Notes may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the nonpayment of accelerated principal and interest, have been cured or waived as provided in the Indenture. If an Event of Default specified in clause (7) or (8) with respect to the Issuer occurs, all outstanding Notes shall become due and payable without any further action or notice.

The Trustee shall, within 30 days after the occurrence of any Default with respect to the Notes, give the Holders notice of all uncured Defaults thereunder known to it; provided, however, that, except in the case of an Event of Default in payment with respect to the Notes or a Default in complying with “— Certain Covenants — Limitations on Mergers, Consolidations, Etc.,” the Trustee shall be protected in withholding such notice if and so long as a committee of its trust officers in good faith determines that the withholding of such notice is in the interest of the Holders.

No Holder will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless the Trustee:


	(1) has failed to act for a period of 60 days after receiving written notice of a continuing Event of Default by such Holder and a request to act by Holders of at least 25% in aggregate principal amount of Notes outstanding;

	(2) has been offered indemnity satisfactory to it in its reasonable judgment; and

	(3) has not received from the Holders of a majority in aggregate principal amount of the outstanding Notes a direction inconsistent with such request.

However, such limitations do not apply to a suit instituted by a Holder of any Note for enforcement of payment of the principal of or interest on such Note on or after the due date therefor (after giving effect to the grace period specified in clause (1) of the first paragraph of this “— Events of Default” section).

The Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture and, upon any Officer of the Issuer becoming aware of any Default, a statement specifying such Default and what action the Issuer is taking or proposes to take with respect thereto.

The Issuer may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors discharged with respect to the outstanding Notes (“Legal Defeasance”). Legal Defeasance means that the Issuer and the Guarantors shall be deemed to have paid and discharged the entire indebtedness represented by the Notes and the Note Guarantees, and the Indenture shall cease to be of further effect as to all outstanding Notes and Note Guarantees, except as to


	(1) rights of Holders to receive payments in respect of the principal of and interest on the Notes when such payments are due from the trust funds referred to below,


	(2) the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or agency for payment and money for security payments held in trust,

	(3) the rights, powers, trust, duties, and immunities of the Trustee, and the Issuer’s obligation in connection therewith, and

	(4) the Legal Defeasance provisions of the Indenture.

In addition, the Issuer may, at its option and at any time, elect to have its obligations and the obligations of the Guarantors released with respect to most of the covenants under the Indenture, except as described otherwise in the Indenture (“Covenant Defeasance”), and thereafter any omission to comply with such obligations shall not constitute a Default. In the event Covenant Defeasance occurs, certain Events of Default (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) will no longer apply. The Issuer may exercise its Legal Defeasance option regardless of whether it previously exercised Covenant Defeasance.


	(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without reinvestment) in the opinion of a nationally recognized firm of independent public accountants selected by the Issuer, to pay the principal of and interest on the Notes on the stated date for payment or on the redemption date of the principal or installment of principal of or interest on the Notes,

	(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States confirming that:


	(a) the Issuer has received from, or there has been published by the Internal Revenue Service, a ruling, or

	(b) since the date of the Indenture, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon this opinion of counsel shall confirm that, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of the Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred,


	(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if the Covenant Defeasance had not occurred,

	(4) no Default shall have occurred and be continuing on the date of such deposit (other than a Default resulting from the borrowing of funds to be applied to such deposit),

	(5) the Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a Default under the Indenture or a default under any other material agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound (other than any such Default or default resulting solely from the borrowing of funds to be applied to such deposit),

	(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by it with the intent of preferring the Holders over any other of its creditors or with the intent of defeating, hindering, delaying or defrauding any other of its creditors or others, and

	(7) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an opinion of counsel, each stating that the conditions provided for in, in the case of the Officers’ Certificate, clauses (1)


	through (6) and, in the case of the opinion of counsel, clauses (2) and/or (3) and (5) of this paragraph have been complied with.

If the funds deposited with the Trustee to effect Covenant Defeasance are insufficient to pay the principal of and interest on the Notes when due, then our obligations and the obligations of Guarantors under the Indenture will be revived and no such defeasance will be deemed to have occurred.

The Indenture will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of Notes which shall survive until all Notes have been canceled) as to all outstanding Notes when either


	(1) all the Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from this trust) have been delivered to the Trustee for cancellation, or

	(2) (a) all Notes not delivered to the Trustee for cancellation otherwise have become due and payable, will become due and payable, or may be called for redemption, within one year or have been called for redemption pursuant to the provisions described under “— Optional Redemption,” and the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds in trust sufficient to pay and discharge the entire Indebtedness (including all principal and accrued interest) on the Notes not theretofore delivered to the Trustee for cancellation,


	(b) the Issuer has paid all sums payable by it under the Indenture, and

	(c) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the date of redemption, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an opinion of counsel stating that all conditions precedent to satisfaction and discharge have been complied with.

A Holder will be able to register the transfer of or exchange Notes only in accordance with the provisions of the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Without the prior consent of the Issuer, the Registrar is not required (1) to register the transfer of or exchange any Note selected for redemption, (2) to register the transfer of or exchange any Note for a period of 15 days before a selection of Notes to be redeemed or (3) to register the transfer or exchange of a Note between a record date and the next succeeding interest payment date.

The Notes will be issued in registered form and the registered Holder will be treated as the owner of such Note for all purposes.

Subject to certain exceptions, the Indenture or the Notes may be amended with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing Default under, or compliance with any provision of, the Indenture may be waived (other than any continuing Default in the payment of the principal or interest on the Notes) with the consent (which may include consents obtained in connection with a tender offer or exchange offer for Notes) of the Holders of a majority in principal amount of


	(1) reduce, or change the maturity, of the principal of any Note;

	(2) reduce the rate of or extend the time for payment of interest on any Note;

	(3) reduce any premium payable upon optional redemption of the Notes or change the date on, or the circumstances under, which any Notes are subject to redemption (other than provisions relating to the purchase of Notes described above under “— Change of Control” and “— Certain Covenants — Limitations on Asset Sales,” except that if a Change of Control has occurred, no amendment or other modification of the obligation of the Issuer to make a Change of Control Offer relating to such Change of Control shall be made without the consent of each Holder of the Notes affected);

	(4) make any Note payable in money or currency other than that stated in the Notes;

	(5) modify or change any provision of the Indenture or the related definitions affecting the subordination of the Notes or any Note Guarantee in a manner that adversely affects the Holders;

	(6) reduce the percentage of Holders necessary to consent to an amendment or waiver to the Indenture or the Notes;

	(7) waive a default in the payment of principal of or premium or interest on any Notes (except a rescission of acceleration of the Notes by the Holders thereof as provided in the Indenture and a waiver of the payment default that resulted from such acceleration);

	(8) impair the rights of Holders to receive payments of principal of or interest on the Notes on or after the due date therefor or to institute suit for the enforcement of any such payment on the Notes;

	(9) release any Guarantor that is a Significant Subsidiary from any of its obligations under its Note Guarantee or the Indenture, except as permitted by the Indenture; or

	(10) make any change in these amendment and waiver provisions.

Notwithstanding the foregoing, the Issuer and the Trustee may amend the Indenture, the Note Guarantees or the Notes without the consent of any Holder, to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuer’s obligations to the Holders in the case of a merger, consolidation or sale of all or substantially all of the assets in accordance with “— Certain Covenants — Limitations on Mergers, Consolidations, Etc.,” to add any Subsidiary of the Issuer as a Guarantor, to release any Guarantor from any of its obligations under its Note Guarantee or the Indenture (to the extent permitted by the Indenture), to make any change that does not materially adversely affect the rights of any Holder or, in the case of the Indenture, to maintain the qualification of the Indenture under the Trust Indenture Act.

No amendment of, or supplement or waiver to, the Indenture shall adversely affect the rights of any holder of Senior Debt or Guarantor Senior Debt under the subordination provisions of the Indenture, without the consent of such holder or, in accordance with the terms of such Senior Debt or Guarantor Senior Debt, the consent of the agent or representative of such holder or the requisite holders of such Senior Debt or Designated Senior Debt.

No director, officer, employee, incorporator or stockholder of the Issuer or any Guarantor will have any liability for any obligations of the Issuer under the Notes or the Indenture or of any Guarantor under its Note Guarantee or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees. The waiver will not be effective to waive liabilities under the federal securities laws. It is the view of the SEC that this type of waiver is against public policy.

U.S. Bank National Association is the Trustee under the Indenture and has been appointed by the Issuer as Registrar and Paying Agent with regard to the Notes. The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on certain assets received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest (as defined in the Indenture), it must eliminate such conflict or resign.

The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that, in case an Event of Default occurs and is not cured, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to the Trustee.

The Indenture, the Notes and the Note Guarantees will be governed by, and construed in accordance with, the laws of the State of New York.

Set forth below is a summary of certain of the defined terms used in the Indenture. Reference is made to the Indenture for the full definition of all such terms.

“Acquired Indebtedness” means (1) with respect to any Person that becomes a Restricted Subsidiary after the Issue Date, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary that was not incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary and (2) with respect to the Issuer or any Restricted Subsidiary, any Indebtedness of a Person (other than the Issuer or a Restricted Subsidiary) existing at the time such Person is merged with or into the Issuer or a Restricted Subsidiary, or Indebtedness expressly assumed by the Issuer or any Restricted Subsidiary in connection with the acquisition of an asset or assets from another Person, which Indebtedness was not, in any case, incurred by such other Person in connection with, or in contemplation of, such merger or acquisition.

“Acquisition” means the acquisition on the Issue Date of all of the outstanding Equity Interests of the Issuer by Parent pursuant to the Stock Purchase Agreement, dated as of December 19, 2003, as amended on January 23, 2004, by and among Holdings, Nortek, Inc. and WDS LLC.

“Additional Interest” has the meaning set forth in the Registration Rights Agreement.

“Advisory Agreement” means the advisory agreement to be entered into between the Issuer and Sponsor or an Affiliate or Related Party thereof in connection with the Acquisition.

“Affiliate” of any Person means any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person. For purposes of the covenant described under “— Certain Covenants — Limitations on Transactions with Affiliates” only, Affiliates shall be deemed to include, with respect to any Person, any other Person (1) which beneficially owns 10% or more of any class of the Voting Stock of the referent Person or (2) of which 10% or more of the Voting Stock is beneficially owned by the referenced Person. For purposes of this definition and the definition of “Permitted Holder”, “control” of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

“amend” means to amend, supplement, restate, amend and restate or otherwise modify; and “amendment” shall have a correlative meaning.


	(1) an Investment by the Issuer or any Restricted Subsidiary of the Issuer in any other Person if, as a result of such Investment, such Person shall become a Restricted Subsidiary of the Issuer, or shall be merged with or into the Issuer or any Restricted Subsidiary of the Issuer, or

	(2) the acquisition by the Issuer or any Restricted Subsidiary of the Issuer of all or substantially all of the assets of any other Person or any division or line of business of any other Person.

“Asset Sale” means any sale, issuance, conveyance, transfer, lease, assignment or other disposition by the Issuer or any Restricted Subsidiary to any Person other than the Issuer or any Restricted Subsidiary (including by means of a sale and leaseback transaction or a merger or consolidation) (collectively, for purposes of this definition, a “transfer”), in one transaction or a series of related transactions, of any assets of the Issuer or any of its Restricted Subsidiaries other than in the ordinary course of business. For purposes of this definition, the term “Asset Sale” shall not include:


	(1) transfers of cash or Cash Equivalents;

	(2) transfers of assets (including Equity Interests) that are governed by, and made in accordance with, the covenant described under “— Certain Covenants — Limitations on Mergers, Consolidations, Etc.”;

	(3) Permitted Investments and Restricted Payments permitted under the covenant described under “— Certain Covenants — Limitations on Restricted Payments”;

	(4) the creation or realization of any Lien permitted under the Indenture;

	(5) transfers of damaged, worn-out or obsolete equipment or assets that, in the Issuer’s reasonable judgment, are no longer used or useful in the business of the Issuer or its Restricted Subsidiaries;

	(6) sales or grants of licenses or sublicenses to use the patents, trade secrets, know-how and other intellectual property, and licenses, leases or subleases of other assets, of the Issuer or any Restricted Subsidiary to the extent not materially interfering with the business of Issuer and the Restricted Subsidiaries; and

	(7) any transfer or series of related transfers that, but for this clause, would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the assets transferred in such transaction or any such series of related transactions does not exceed $2.5 million.

“Bank Financing” means the Issuer’s entry into the Credit Agreement on or about the Issue Date and its initial borrowings thereunder in connection with the funding of the Acquisition.

“Bankruptcy Law” means Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors.

“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, other than for purposes of the definition of “Change of Control,” any duly authorized committee of such body.

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions in New York are authorized or required by law to close.

“Capitalized Lease” means a lease required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a Capitalized Lease, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.


	(1) marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof), maturing within 360 days of the date of acquisition thereof;

	(2) demand and time deposits and certificates of deposit or acceptances, maturing within 360 days of the date of acquisition thereof, of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million and is assigned at least a “B” rating by Thomson Financial BankWatch;

	(3) commercial paper maturing no more than 180 days from the date of creation thereof issued by a corporation that is not the Issuer or an Affiliate of the Issuer, and is organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s;

	(4) repurchase obligations with a term of not more than ten days for underlying securities of the types described in clause (1) above entered into with any commercial bank meeting the specifications of clause (2) above; and

	(5) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (1) through (4) above.

“Change of Control” means the occurrence of any of the following events:


	(1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, except that in no event shall the parties to the Stockholders’ Agreement be deemed a “group” solely by virtue of being parties to the Stockholders’ Agreement), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause that person or group shall be deemed to have “beneficial ownership” of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the voting power of the total outstanding Voting Stock of the Issuer; provided, however, that such event shall not be deemed to be a Change of Control so long as one or more of the Permitted Holders have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Issuer;

	(2) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election to such Board of Directors or whose nomination for election by the stockholders of the Issuer was approved by a vote of the majority of the directors of the Issuer then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Issuer;

	(3) (a) all or substantially all of the assets of the Issuer and the Restricted Subsidiaries are sold or otherwise transferred to any Person other than a Wholly-Owned Restricted Subsidiary or one or more Permitted Holders or (b) the Issuer consolidates or merges with or into another Person or any Person consolidates or merges with or into the Issuer, in either case under this clause (3), in one transaction or a series of related transactions in which immediately after the consummation thereof Persons beneficially owning (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing in the aggregate a majority of the total voting power of the Voting Stock of the Issuer immediately prior to such consummation do not beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing a majority of the total voting


	power of the Voting Stock of the Issuer or the surviving or transferee Person; provided that it shall not constitute a Change of Control under this clause (3)(b) if, after giving effect to such transaction, one or more of the Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, Voting Stock representing (i) 35% or more of the total voting power of the Voting Stock of the Issuer or the surviving or transferee Person in such transaction immediately after such transaction and (ii) a greater percentage of the total voting power of the Voting Stock of the Issuer than any other “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act); or

	(4) the Issuer shall adopt a plan of liquidation or dissolution or any such plan shall be approved by the stockholders of the Issuer.

For purposes of this definition, (i) a Person shall not be deemed to have beneficial ownership of securities subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement and (ii) any holding company whose only significant asset is Equity Interests of Parent or the Issuer shall not itself be considered a “person” or “group” for purposes of clause (1) or (3) above.

“Consolidated Amortization Expense” for any period means the amortization expense of the Issuer and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated Cash Flow” for any period means, without duplication, the sum of the amounts for such period of


	(1) Consolidated Net Income, plus

	(2) in each case only to the extent (and in the same proportion) deducted in determining Consolidated Net Income and with respect to the portion of Consolidated Net Income attributable to any Restricted Subsidiary (other than any Foreign Subsidiary) only if a corresponding amount would be permitted at the date of determination to be distributed to the Issuer by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial revenue bonds), instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its stockholders,


	(a) Consolidated Income Tax Expense,

	(b) Consolidated Amortization Expense (but only to the extent not included in Consolidated Interest Expense),

	(c) Consolidated Depreciation Expense,

	(d) Consolidated Interest Expense,

	(e) Restructuring Expenses,

	(f) payments pursuant to the Advisory Agreement, and

	(g) all other non-cash items reducing the Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period,

in each case determined on a consolidated basis in accordance with GAAP, minus


	(3) the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period, plus or minus

	(4) without duplication of amounts included as Restructuring Expenses, with respect to any part of a Four-Quarter Period covered by the section “Summary historical and pro forma financial information” in this prospectus, the pro forma adjustments to net earnings and the adjustments to “EBITDA” to derive “Adjusted EBITDA” set forth in such section.

“Consolidated Depreciation Expense” for any period means the depreciation expense of the Issuer and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Consolidated Income Tax Expense” for any period means the provision for taxes of the Issuer and the Restricted Subsidiaries, determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Coverage Ratio” means the ratio of Consolidated Cash Flow during the most recent four consecutive full fiscal quarters for which financial statements are available (the “Four-Quarter Period”) ending on or prior to the date of determination (the “Transaction Date”) to Consolidated Interest Expense for the Four-Quarter Period. For purposes of this definition, Consolidated Cash Flow and Consolidated Interest Expense shall be calculated after giving effect on a pro forma basis for the period of such calculation to:


	(1) the incurrence of any Indebtedness or the issuance of any Preferred Stock of the Issuer or any Restricted Subsidiary (and the application of the proceeds thereof) and any repayment of other Indebtedness or redemption of other Preferred Stock (and the application of the proceeds therefrom) (other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to any revolving credit arrangement) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such incurrence, repayment, issuance or redemption, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four-Quarter Period; and

	(2) any Asset Sale or Asset Acquisition (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Issuer or any Restricted Subsidiary (including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring Acquired Indebtedness and also including any Consolidated Cash Flow (including any Pro Forma Cost Savings) associated with any such Asset Acquisition) occurring during the Four-Quarter Period or at any time subsequent to the last day of the Four-Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence of, or assumption or liability for, any such Indebtedness or Acquired Indebtedness) occurred on the first day of the Four-Quarter Period.

In calculating Consolidated Interest Expense for purposes of determining the denominator (but not the numerator) of this Consolidated Interest Coverage Ratio:


	(1) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on this Indebtedness in effect on the Transaction Date;

	(2) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four-Quarter Period; and

	(3) notwithstanding clause (1) or (2) above, interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to accrue at the rate per annum resulting after giving effect to the operation of these agreements.

“Consolidated Interest Expense” for any period means the sum, without duplication, of the total interest expense (less interest income) of the Issuer and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and including without duplication,


	(1) imputed interest on Capitalized Lease Obligations,

	(2) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations, bankers’ acceptance financing and receivables financings,

	(3) the net costs associated with Hedging Obligations,

	(4) the interest portion of any deferred payment obligations,


	(5) all other non-cash interest expense,

	(6) capitalized interest,

	(7) the product of (a) all dividend payments on any series of Disqualified Equity Interests of the Issuer or any Preferred Stock of any Restricted Subsidiary (other than any such Disqualified Equity Interests or any Preferred Stock held by the Issuer or a Wholly-Owned Restricted Subsidiary or to the extent paid in Qualified Equity Interests), multiplied by (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of the Issuer and the Restricted Subsidiaries, expressed as a decimal,

	(8) all interest payable with respect to discontinued operations, and

	(9) all interest on any Indebtedness described in clause (7) or (8) of the definition of “Indebtedness”; provided that such interest shall be included in Consolidated Interest Expense only to the extent that the amount of the related Indebtedness is reflected on the balance sheet of the Issuer or any Restricted Subsidiary,

less, to the extent included in such total interest expense, (A) the amortization during such period of capitalized financing costs associated with the Transactions and (B) the amortization during such period of other capitalized financing costs; provided, however, that, in the case of clause (B), the aggregate amount of amortization relating to such capitalized financing costs deducted in calculating Consolidated Interest Expense shall not exceed 5% of the aggregate amount of the financing giving rise thereto.

Consolidated Interest Expense shall be calculated excluding unrealized gains and losses with respect to Hedging Obligations.

“Consolidated Net Income” for any period means the net income (or loss) of the Issuer and the Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (or loss) (to the extent otherwise included therein), without duplication:


	(1) the net income (or loss) of any Person (other than a Restricted Subsidiary) in which any Person other than the Issuer and the Restricted Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to any such income has actually been received by the Issuer or any of its Wholly-Owned Restricted Subsidiaries during such period;

	(2) except to the extent includible in the consolidated net income of the Issuer pursuant to the foregoing clause (1), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Issuer or any Restricted Subsidiary or (b) the assets of such Person are acquired by the Issuer or any Restricted Subsidiary;

	(3) the net income of any Restricted Subsidiary (other than any Foreign Subsidiary) during such period to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial revenue bonds), instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period, except that the Issuer’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining Consolidated Net Income;

	(4) for the purposes of calculating the Restricted Payments Basket only, in the case of a successor to the Issuer by consolidation, merger or transfer of its assets, any income (or loss) of the successor prior to such merger, consolidation or transfer of assets;

	(5) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by the Issuer or any Restricted Subsidiary upon


	(a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the Issuer or any Restricted Subsidiary or (b) any Asset Sale by the Issuer or any Restricted Subsidiary;

	(6) gains and losses due solely to fluctuations in currency values and the related tax effects according to GAAP;

	(7) unrealized gains and losses with respect to Hedging Obligations;

	(8) the cumulative effect of any change in accounting principles;

	(9) any amortization or write-offs of debt issuance or deferred financing costs, premiums and prepayment penalties, and other costs and expenses, in each case, paid during such period to the extent attributable to the Transactions and the Exchange Offer pursuant to the Registration Rights Agreement;

	(10) gains and losses realized upon the refinancing of any Indebtedness of the Issuer or any Restricted Subsidiary;

	(11) any extraordinary or nonrecurring gain (or extraordinary or nonrecurring loss), together with any related provision for taxes on any such extraordinary or nonrecurring gain (or the tax effect of any such extraordinary or nonrecurring loss), realized by the Issuer or any Restricted Subsidiary during such period;

	(12) non-cash compensation charges or other non-cash expenses or charges arising from the grant of or issuance or repricing of Equity Interests or other equity-based awards or any amendment or substitution of any such Equity Interests or other equity-based awards;

	(13) any non-cash goodwill or non-cash asset impairment charges subsequent to the Issue Date;

	(14) any expenses or reserves for liabilities to the extent that the Issuer or any Restricted Subsidiary is entitled to indemnification therefor under binding agreements; provided that any liabilities for which the Issuer or such Restricted Subsidiary is not actually indemnified shall reduce Consolidated Net Income in the period in which it is determined that the Issuer or such Restricted Subsidiary will not be indemnified; and

	(15) so long as the Issuer and the Restricted Subsidiaries file a consolidated tax return, or are part of a consolidated group for tax purposes, with Parent, Holdings or any other holding company, the excess of (a) the Consolidated Income Tax Expense for such period over (b) all tax payments payable for such period by the Issuer and the Restricted Subsidiaries to Parent, Holdings or such other holding company under a tax sharing agreement or arrangement.


	(a) Consolidated Net Income shall be reduced by the amount of any payments to or on behalf of Parent made pursuant to clause (4) of the last paragraph of the covenant described under “— Certain Covenants — Limitations on Transactions with Affiliates”; and

	(b) any return of capital with respect to an Investment that increased the Restricted Payments Basket pursuant to clause (3)(d) of the first paragraph under “— Certain Covenants — Limitations on Restricted Payments” or decreased the amount of Investments outstanding pursuant to clause (17), (18) or (19) of the definition of “Permitted Investments” shall be excluded from Consolidated Net Income for purposes of calculating the Restricted Payments Basket.

For purposes of this definition of “Consolidated Net Income,” “nonrecurring” means, with respect to any cash gain or loss, any gain or loss as of any date that is not reasonably likely to recur within the two years following such date; provided that if there was a gain or loss similar to such gain or loss within the two years preceding such date, such gain or loss shall not be deemed nonrecurring.

“Consolidated Net Tangible Assets” means the aggregate amount of assets of the Issuer (less applicable reserves and other properly deductible items) after deducting therefrom (to the extent otherwise included therein) (a) all current liabilities (other than the obligations under the Indenture or current maturities of

“Coverage Ratio Exception” has the meaning set forth in the proviso in the first paragraph of the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness.”

“Credit Agreement” means the Credit Agreement dated on or about the Issue Date by and among the Issuer, as Borrower, UBS AG, Stamford Branch, as administrative and collateral agent, UBS Securities LLC and Deutsche Bank Securities Inc., as joint lead arrangers, CIBC World Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as co-arrangers, Deutsche Bank AG Cayman Islands Branch, as syndication agent, Canadian Imperial Bank of Commerce and Merrill Lynch Capital Corporation, as co-documentation agents, the lenders named therein and the guarantors party thereto, including any notes, guarantees, collateral and security documents, instruments and agreements executed in connection therewith (including Hedging Obligations related to the Indebtedness incurred thereunder), and in each case as amended or refinanced from time to time.

“Credit Facilities” means one or more debt facilities (which may be outstanding at the same time and including, without limitation, the Credit Agreement) providing for revolving credit loans, term loans, letters of credit, receivables financing, commercial paper or any other form of senior debt securities and, in each case, as such agreements may be amended, amended and restated, supplemented, modified, extended, refinanced, replaced or otherwise restructured, in whole or in part from time to time (including increasing the amount of available borrowings thereunder or adding Subsidiaries of the Issuer as additional borrowers or guarantors thereunder) with respect to all or any portion of the Indebtedness under such agreement or agreements or any successor or replacement agreement or agreements and whether by the same or any other agent, lender or group of lenders.

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

“Default” means (1) any Event of Default or (2) any event, act or condition that, after notice or the passage of time or both, would be an Event of Default.

“Designated Senior Debt” means (1) Senior Debt and Guarantor Senior Debt under or in respect of the Credit Facilities and (2) any other Indebtedness constituting Senior Debt or Guarantor Senior Debt which, at the time of determination, has an aggregate principal amount of at least $25.0 million and is specifically designated in the instrument evidencing such Senior Debt as “Designated Senior Debt.”

“Designation” has the meaning given to this term in the covenant described under “— Certain Covenants — Limitations on Designation of Unrestricted Subsidiaries.”

“Designation Amount” has the meaning given to this term in the covenant described under “— Certain Covenants — Limitations on Designation of Unrestricted Subsidiaries.”

“Disqualified Equity Interests” of any Person means any class of Equity Interests of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Notes; provided, however, that any class of Equity Interests of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Equity Interests that are not Disqualified Equity Interests, and that is not convertible, puttable or exchangeable for Disqualified Equity Interests or Indebtedness, will not be deemed to be Disqualified Equity Interests so long as such Person satisfies its obligations with respect thereto solely by the delivery of Equity Interests that are not Disqualified Equity Interests; provided, further, however, that any Equity Interests that would not constitute Disqualified Equity Interests but for provisions thereof giving

“Equity Contribution” means the contribution of approximately $141.0 million (in cash and management equity awards) by Sponsor, its affiliates and Related Parties, certain other Persons and certain members of the Issuer’s management to Holdings in return for Equity Interests in Holdings, and the contribution of cash by Holdings to Parent in connection with the funding of the Acquisition.

“Equity Interests” of any Person means (1) any and all shares or other equity interests (including common stock, preferred stock, limited liability company interests and partnership interests) in such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such shares or other interests in such Person.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Exchange Offer Registration Statement” has the meaning given to such term in the Registration Rights Agreement.

“Fair Market Value” means, with respect to any asset, the price (after taking into account any liabilities relating to such asset) that would be negotiated in an arm’s-length transaction for cash between a willing seller and a willing and able buyer, neither of which is under any compulsion to complete the transaction. Fair Market Value (other than of any asset with a public trading market) in excess of $5.0 million shall be determined by the Board of Directors of the Issuer acting reasonably and in good faith and shall be evidenced by a board resolution delivered to the Trustee. Fair Market Value (other than of any asset with a public trading market) in excess of $20.0 million shall be determined by an Independent Financial Advisor, which determination shall be evidenced by an opinion addressed to the Board of Directors of the Issuer and delivered to the Trustee.

“Foreign Subsidiary” means any Restricted Subsidiary of the Issuer which (i) is not organized under the laws of (x) the United States or any state thereof or (y) the District of Columbia and (ii) conducts substantially all of its business operations outside the United States of America.

“Four-Quarter Period” has the meaning given to such term in the definition of “Consolidated Interest Coverage Ratio.”

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“guarantee” means a direct or indirect guarantee by any Person of any Indebtedness of any other Person and includes any obligation, direct or indirect, contingent or otherwise, of such Person: (1) to purchase or pay (or advance or supply funds for the purchase or payment of) Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm’s-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise); or (2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); “guarantee,” when used as a verb, and “guaranteed” have correlative meanings.

“Guarantor Senior Debt” means, with respect to any Guarantor, the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on and all Obligations of any Indebtedness of such Guarantor, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes.

Without limiting the generality of the foregoing, “Guarantor Senior Debt” shall also include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of:


	(1) all monetary obligations of every nature of such Guarantor under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

	(2) all Hedging Obligations in respect of the Credit Facilities;


	(1) any Indebtedness of such Guarantor to Parent or any of its Subsidiaries;

	(2) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services;

	(3) Indebtedness represented by Disqualified Equity Interests;

	(4) any liability for taxes owed or owing by such Guarantor;

	(5) that portion of any Indebtedness incurred in violation of the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness” (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (5) if the holder(s) of such obligation or their representative shall have received an officers’ certificate of the Issuer to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture);

	(6) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Guarantor; and

	(7) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of such Guarantor.

“Guarantors” means (1) Parent, (2) each Restricted Subsidiary of the Issuer on the Issue Date (other than CWD Windows and Doors, Inc., a Canadian corporation) and (3) each other Person that is required to, or at the election of the Issuer does, become a Guarantor by the terms of the Indenture after the Issue Date, in each case, until such Person is released from its Note Guarantee in accordance with the terms of the Indenture.

“Hedging Obligations” of any Person means the obligations of such Person under swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies.

“Holdings” means Ply Gem Investment Holdings, Inc., a Delaware corporation, and its successors and assigns.

“incur” means, with respect to any Indebtedness or Obligation, incur, create, issue, assume, guarantee or otherwise become directly or, indirectly liable, contingently or otherwise, with respect to such Indebtedness or Obligation; provided that (1) the Indebtedness of a Person existing at the time such Person became a Restricted Subsidiary shall be deemed to have been incurred by such Restricted Subsidiary and (2) the accrual of interest, the accretion of original issue discount or the accretion or accumulation of dividends on any Equity Interests shall not be deemed to be an incurrence of Indebtedness.


	(1) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof);

	(2) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

	(3) all reimbursement obligations of such Person in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions;

	(4) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services;

	(5) the amount of all Disqualified Equity Interests of such Person calculated in accordance with GAAP (whether classified as debt, equity or mezzanine);

	(6) all Capitalized Lease Obligations of such Person;

	(7) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person;

	(8) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Issuer or its Subsidiaries that is guaranteed by the Issuer or the Issuer’s Subsidiaries shall only be counted once in the calculation of the amount of Indebtedness of the Issuer and its Subsidiaries on a consolidated basis;

	(9) to the extent not otherwise included in this definition, Hedging Obligations of such Person; and

	(10) all obligations of such Person under conditional sale or other title retention agreements relating to assets purchased by such Person, except trade payables incurred by such Person in the ordinary course of business.

The amount of any Indebtedness which is incurred at a discount to the principal amount at maturity thereof as of any date shall be deemed to have been incurred at the accreted value thereof as of such date. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (7), the lesser of (a) the Fair Market Value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (b) the amount of the Indebtedness secured.

Notwithstanding the foregoing, Indebtedness shall not include any liability for Federal, state, local or other taxes owed or owing to any governmental entity

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Issuer’s Board of Directors, disinterested and independent with respect to the Issuer and its Affiliates.

“interest” means, with respect to the Notes, interest and Additional Interest, if any, on the Notes.


	(1) all direct or indirect investments by such Person in any other Person in the form of loans, advances or capital contributions or other credit extensions constituting Indebtedness of such other Person, and any guarantee of Indebtedness of any other Person;

	(2) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Equity Interests or other securities of any other Person (other than any such purchase that constitutes a Restricted Payment of the type described in clause (2) of the definition thereof);

	(3) all other items that would be classified as investments on a balance sheet of such Person prepared in accordance with GAAP; and

	(4) the Designation of any Subsidiary as an Unrestricted Subsidiary.

Except as otherwise expressly specified in this definition, the amount of any Investment (other than an Investment made in cash) shall be the Fair Market Value thereof on the date such Investment is made. The amount of Investment pursuant to clause (4) shall be the Designation Amount determined in accordance with the covenant described under “— Certain Covenants — Limitations on Designation of Unrestricted Subsidiaries.” If the Issuer or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary, or any Restricted Subsidiary issues any Equity Interests, in either case, such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Issuer shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Equity Interests of and all other Investments in such Restricted Subsidiary retained. Notwithstanding the foregoing, purchases or redemptions of Equity Interests of the Issuer, Parent or Holdings shall be deemed not to be Investments.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement.

“Net Available Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents, net of


	(1) brokerage commissions and other fees and expenses (including fees, discounts and expenses of legal counsel, accountants, investment banks, consultants and placement agents) of such Asset Sale;

	(2) provisions for taxes payable as a result of such Asset Sale (after taking into account any available tax credits or deductions and any tax sharing arrangements);

	(3) amounts required to be paid to any Person (other than the Issuer or any Restricted Subsidiary) owning a beneficial interest in the assets subject to the Asset Sale or having a Lien thereon;

	(4) payments of unassumed liabilities (not constituting Indebtedness) relating to the assets sold at the time of, or within 30 days after the date of, such Asset Sale; and

	(5) appropriate amounts to be provided by the Issuer or any Restricted Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any adjustment in the sale price of such asset or assets or liabilities associated with such Asset Sale and retained by the Issuer or any Restricted Subsidiary, as the case may be, after such Asset Sale, including pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers’ Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds.

“Obligation” means any principal, interest, penalties, fees, indemnification, reimbursements, costs, expenses, damages and other liabilities payable under the documentation governing any Indebtedness.

“Officer” means any of the following of the Issuer: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary.

“Offering” means the offering of the Notes by the Issuer pursuant to this prospectus in connection with the funding of the Acquisition.

“Parent” means Ply Gem Holdings, Inc., a Delaware corporation, and its successors and assigns.

“Pari Passu Indebtedness” means any Indebtedness of the Issuer or any Guarantor that ranks pari passu in right of payment with the Notes or the Note Guarantees, as applicable.

“Permitted Business” means the businesses engaged in by the Issuer and its Subsidiaries on the Issue Date as described in this prospectus and businesses that are reasonably related thereto, reasonable extensions thereof or necessary or desirable to facilitate any such business, and any unrelated business to the extent that it is not material in size as compared with the Issuer’s business as a whole.

“Permitted Holders” means (1) Sponsor, Caxton Associates, LLC, Caxton-Iseman (Ply Gem) L.P., Frederick J. Iseman, Lee D. Meyer, John Wayne, Shawn Poe, Mark Watson, Bryan Sveinson, David S. McCready, Robert A. Ferris, Steven M. Lefkowitz and any other Person that is a controlled Affiliate of any of the foregoing and (2) any Related Party of any of the foregoing; provided that in no event shall any operating portfolio company or any holding company for any operating portfolio company (other than the Issuer) shall be a Permitted Holder.


	(1) (i) Investments by the Issuer or any Subsidiary Guarantor in (a) any Restricted Subsidiary that is a Subsidiary Guarantor or (b) any Person that will become immediately after such Investment a Restricted Subsidiary that is a Subsidiary Guarantor or that will merge or consolidate into the Issuer or any Restricted Subsidiary that is a Subsidiary Guarantor and (ii) Investments by any Restricted Subsidiary that is not a Subsidiary Guarantor in any other Restricted Subsidiary;

	(2) Investments in the Issuer by any Restricted Subsidiary;

	(3) loans and advances to directors, employees and officers of the Issuer and the Restricted Subsidiaries for bona fide business purposes and to purchase Equity Interests of the Issuer, Parent or Holdings not in excess of $5.0 million at any one time outstanding;

	(4) Hedging Obligations incurred pursuant to the covenant described under “— Certain Covenants — Limitations on Additional Indebtedness”;

	(5) cash and Cash Equivalents;

	(6) receivables owing to the Issuer or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Issuer or any such Restricted Subsidiary deems reasonable under the circumstances;

	(7) Investments in securities of trade creditors or customers received upon foreclosure or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

	(8) Investments made by the Issuer or any Restricted Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with the covenant described under “— Certain Covenants — Limitations on Asset Sales”;


	(9) lease, utility and other similar deposits in the ordinary course of business;

	(10) Investments made by the Issuer or a Restricted Subsidiary for consideration consisting only of Qualified Equity Interests;

	(11) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuer or any Restricted Subsidiary or in satisfaction of judgments;

	(12) guarantees of Indebtedness permitted to be incurred under the Indenture;

	(13) loans and advances to suppliers, licensees, franchisees or customers of the Issuer or any Restricted Subsidiary made in the ordinary course of business in an aggregate amount, together with the aggregate amount of Indebtedness under clause (14) of the definition of “Permitted Indebtedness,” not to exceed $5.0 million at any time outstanding;

	(14) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as operating expenses for accounting purposes and that are made in the ordinary course of business;

	(15) Investments in existence on the Issue Date;

	(16) prepaid expenses, negotiable instruments held for collection and workers’ compensation, performance and other similar deposits in the ordinary course of business;

	(17) Investments in an aggregate amount not to exceed, at any one time outstanding, the greater of (a) $20.0 million and (b) 7.0% of Consolidated Net Tangible Assets at such time (with each Investment being valued as of the date made and without regard to subsequent changes in value);

	(18) Investments in Subsidiaries that are not Guarantors or Foreign Subsidiaries in an aggregate amount not to exceed $10.0 million at any one time outstanding (with each Investment being valued as of the date made and without regard to subsequent changes in value); and

	(19) Investments in Foreign Subsidiaries in an aggregate amount not to exceed, at any one time outstanding, the greater of (a) $10.0 million and (b) 3.5% of Consolidated Net Tangible Assets at such time (with each Investment being valued as of the date made and without regard to subsequent changes in value).

The amount of Investments outstanding at any time pursuant to clause (17), (18) or (19) above shall be deemed to be reduced:


	(a) upon the disposition or repayment of or return on any Investment made pursuant to clause (17), (18) or (19) above, as the case may be, by an amount equal to the return of capital with respect to such Investment to the Issuer or any Restricted Subsidiary (to the extent not included in the computation of Consolidated Net Income); and

	(b) upon a Redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, by an amount equal to the lesser of (x) the Fair Market Value of the Issuer’s proportionate interest in such Subsidiary immediately following such Redesignation, and (y) the aggregate amount of Investments in such Subsidiary that increased (and did not previously decrease) the amount of Investments outstanding pursuant to clause (17), (18) or (19) above, as the case may be.


	(1) Equity Interests in the Issuer or any Guarantor; or

	(2) debt securities issued pursuant to a confirmed plan of reorganization that are subordinated in right of payment to (a) all Senior Debt and Guarantor Senior Debt and (b) any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt and Guarantor Senior Debt under the Indenture.


	(1) Liens for taxes, assessments or governmental charges or claims either (a) not delinquent or (b) contested in good faith by appropriate proceedings and as to which the Issuer or the Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP;

	(2) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof;

	(3) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money);

	(4) Liens upon specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

	(5) judgment Liens not giving rise to a Default so long as such Liens are adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which the proceedings may be initiated has not expired;

	(6) easements, rights-of-way, zoning restrictions and other similar charges, restrictions or encumbrances in respect of real property or immaterial imperfections of title which do not, in the aggregate, impair in any material respect the ordinary conduct of the business of the Issuer and the Restricted Subsidiaries taken as a whole;

	(7) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other assets relating to such letters of credit and products and proceeds thereof;

	(8) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements of the Issuer or any Restricted Subsidiary, including rights of offset and setoff;

	(9) bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more of accounts maintained by the Issuer or any Restricted Subsidiary, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

	(10) leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Issuer or any Restricted Subsidiary;

	(11) Liens arising from filing Uniform Commercial Code financing statements regarding leases;

	(12) Liens securing all of the Notes and Liens securing any Note Guarantee;

	(13) Liens securing Senior Debt or Guarantor Senior Debt;

	(14) Liens existing on the Issue Date securing Indebtedness outstanding on the Issue Date;

	(15) Liens in favor of the Issuer or a Guarantor;

	(16) Liens securing Indebtedness under the Credit Facilities;


	(17) Liens securing Purchase Money Indebtedness and Capitalized Lease Obligations; provided that such Liens shall not extend to any asset other than the specified asset being financed and additions and improvements thereon;

	(18) Liens securing Acquired Indebtedness permitted to be incurred under the Indenture; provided that the Liens do not extend to assets not subject to such Lien at the time of acquisition (other than improvements thereon) and are no more favorable to the lienholders than those securing such Acquired Indebtedness prior to the incurrence of such Acquired Indebtedness by the Issuer or a Restricted Subsidiary;

	(19) Liens on assets of a Person existing at the time such Person is acquired or merged with or into or consolidated with the Issuer or any such Restricted Subsidiary (and not created in anticipation or contemplation thereof);

	(20) Liens to secure Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (12), (14), (16), (17), (18) and (19); provided that in the case of Liens securing Refinancing Indebtedness of Indebtedness secured by Liens referred to in the foregoing clauses (14), (17), (18) and (19), such Liens do not extend to any additional assets (other than improvements thereon and replacements thereof);

	(21) Liens securing Indebtedness of any Restricted Subsidiary that is not a Subsidiary Guarantor permitted to be incurred under the Indenture; provided that such Lien extends only to the assets and Equity Interests of such Restricted Subsidiary;

	(22) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; and

	(23) Liens with respect to obligations that do not in the aggregate exceed $5.0 million at any one time outstanding.

“Permitted Sale and Leaseback Transaction” means a refinancing by the Issuer or one of its Subsidiaries following the date of the Indenture of all or a portion of the Indebtedness outstanding on the Issue Date in an aggregate principal amount of up to $29.8 million with respect to municipal loan or related agreements entered into in connection with the incurrence of industrial revenue bonds, with the proceeds of one or more Sale and Leaseback Transactions effected as operating leases involving the applicable properties securing such debt; provided that (i) the Issuer or such Subsidiary receives consideration at the time of such Permitted Sale and Leaseback Transaction at least equal to the Fair Market Value of the applicable property included in such Permitted Sale and Leaseback Transaction; (ii) at the time of and immediately after giving effect to such Permitted Sale and Leaseback Transaction and the application of the proceeds thereof, no Default shall have occurred and be continuing and (iii) the proceeds of at least 525% of the aggregate operating lease payments in respect of such Permitted Sale and Leaseback Transaction (such amount, the “Permitted Sale and Leaseback Transaction Amount”) are received in the form of cash or Cash Equivalents and used to repay Senior Debt or Guarantor Senior Debt.

“Permitted Sale and Leaseback Transaction Amount” shall have the meaning assigned to such term in the definition of “Permitted Sale and Leaseback Transaction.”

“Person” means any individual, corporation, partnership, limited liability company, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

“Plan of Liquidation” with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (1) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (2) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition of all or substantially all of the remaining assets of such Person to holders of Equity Interests of such Person.

“Preferred Stock” means, with respect to any Person, any and all preferred or preference stock or other equity interests (however designated) of such Person whether now outstanding or issued after the Issue Date.

“principal” means, with respect to the Notes, the principal of, and premium, if any, on the Notes.

“Pro Forma Cost Savings” means, with respect to any period, the reductions in costs that occurred during the Four-Quarter Period that are (1) directly attributable to an asset acquisition and calculated on a basis that is consistent with Article 11 of Regulation S-X under the Securities Act or (2) implemented, committed to be implemented or the commencement of implementation of which has begun in good faith by the business that was the subject of any such asset acquisition within six months of the date of the asset acquisition and that are supportable and quantifiable by the underlying records of such business, as if, in the case of each of clauses (1) and (2), all such reductions in costs had been effected as of the beginning of such period, decreased by any incremental expenses incurred or to be incurred during the Four-Quarter Period in order to achieve such reduction in costs.

“Purchase Money Indebtedness” means Indebtedness, including Capitalized Lease Obligations, of the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price of property, plant or equipment used in the business of the Issuer or any Restricted Subsidiary or the cost of installation, construction or improvement thereof, and the payment of any sales or other taxes associated therewith; provided, however, that (1) the amount of such Indebtedness shall not exceed such purchase price or cost and payment and (2) such Indebtedness shall be incurred within one year after such acquisition of such asset by the Issuer or such Restricted Subsidiary or such installation, construction or improvement.

“Qualified Equity Interests” means Equity Interests of the Issuer other than Disqualified Equity Interests; provided that such Equity Interests shall not be deemed Qualified Equity Interests to the extent sold or owed to a Subsidiary of the Issuer or financed, directly or indirectly, using funds (1) borrowed from the Issuer or any Subsidiary of the Issuer until and to the extent such borrowing is repaid or (2) contributed, extended, guaranteed or advanced by the Issuer or any Subsidiary of the Issuer (including, without limitation, in respect of any employee stock ownership or benefit plan).

“Qualified Equity Offering” means the issuance and sale of Qualified Equity Interests by the Issuer or Equity Interests by Parent or Holdings; provided, however, that in the case of an issuance or sale of Equity Interests of Parent or Holdings, cash proceeds therefrom equal to not less than 100% of the aggregate principal amount of any Notes to be redeemed are received by the Issuer as a capital contribution or consideration for the issuance and sale of Qualified Equity Interests immediately prior to such redemption.

“redeem” means to redeem, repurchase, purchase, defease, retire, discharge or otherwise acquire or retire for value; and “redemption” shall have a correlative meaning; provided that this definition shall not apply for purposes of “— Optional Redemption.”

“Redesignation” has the meaning given to such term in the covenant described under “— Certain Covenants — Limitations on Designation of Unrestricted Subsidiaries.”

“refinance” means to refinance, repay, prepay, replace, renew, refund, redeem, defease or retire.

“Refinancing Indebtedness” means Indebtedness of the Issuer or a Restricted Subsidiary issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to redeem or refinance in whole or in part, any Indebtedness of the Issuer or any Restricted Subsidiary (the “Refinanced Indebtedness”); provided that:


	(1) the principal amount (or accreted value, in the case of Indebtedness issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount (or accreted value, as the case may be) of the Refinanced Indebtedness plus the amount of accrued and unpaid interest on the Refinanced Indebtedness, any premium paid to the holders of the Refinanced Indebtedness and reasonable expenses incurred in connection with the incurrence of the Refinancing Indebtedness;

	(2) the Refinancing Indebtedness is the obligation of the same Person as that of the Refinanced Indebtedness;


	(3) if the Refinanced Indebtedness was subordinated in right of payment to the Notes or the Note Guarantees, as the case may be, then such Refinancing Indebtedness, by its terms, is subordinate in right of payment to the Notes or the Note Guarantees, as the case may be, at least to the same extent as the Refinanced Indebtedness, and if the Refinanced Indebtedness was pari passu with the Notes or the Note Guarantees, as the case may be, then the Refinancing Indebtedness ranks pari passu with, or is subordinated in right of payment to, the Notes or the Note Guarantees, as the case may be;

	(4) the Refinancing Indebtedness has a final stated maturity either (a) no earlier than the Refinanced Indebtedness being repaid or amended or (b) after the maturity date of the Notes; and

	(5) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Notes has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Refinanced Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Notes.

“Registration Rights Agreement” means (i) the Registration Rights Agreement dated as of the Issue Date among the Issuer, the Guarantors and UBS Securities LLC, Deutsche Bank Securities Inc., CIBC World Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated and (ii) any other registration rights agreement entered into in connection with an issuance of Additional Notes in a private offering after the Issue Date.

“Related Party” means, with respect to any Person, (1) any controlling stockholder, controlling member, general partner, Subsidiary, or spouse or immediate family member (in the case of an individual), of such Person, (2) any estate, trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners or owners of which consist solely of one or more Permitted Holders and/or such other Persons referred to in the immediately preceding clause (1), or (3) any executor, administrator, trustee, manager, director or other similar fiduciary of any Person referred to in the immediately preceding clause (2), acting solely in such capacity.

“Representative” means any agent or representative in respect of any Designated Senior Debt; provided that if, and for so long as, any Designated Senior Debt lacks such representative, then the Representative for such Designated Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Designated Senior Debt.


	(1) the declaration or payment of any dividend or any other distribution on Equity Interests of the Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Equity Interests of the Issuer or any Restricted Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving the Issuer but excluding (a) dividends or distributions payable solely in Qualified Equity Interests or through accretion or accumulation of such dividends on such Equity Interests and (b) in the case of Restricted Subsidiaries, dividends or distributions payable to the Issuer or to a Restricted Subsidiary and pro rata dividends or distributions payable to minority stockholders of any Restricted Subsidiary;

	(2) the redemption of any Equity Interests of the Issuer or any Restricted Subsidiary, or any equity holder of the Issuer, including, without limitation, any payment in connection with any merger or consolidation involving the Issuer but excluding any such Equity Interests held by the Issuer or any Restricted Subsidiary;

	(3) any Investment other than a Permitted Investment; or

	(4) any redemption prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness.

“Restricted Payments Basket” has the meaning given to such term in the first paragraph of the covenant described under “— Certain Covenants — Limitations on Restricted Payments.”

“Restricted Subsidiary” means any Subsidiary of the Issuer other than an Unrestricted Subsidiary.

“Restructuring Expenses” means losses, expenses and charges incurred in connection with restructuring within the Issuer and/or one or more Restricted Subsidiaries, including in connection with integration of acquired businesses or Persons, disposition of one or more Subsidiaries or businesses, exiting of one or more lines of businesses and relocation or consolidation of facilities, including severance, lease termination and other non-ordinary-course, non-operating costs and expenses in connection therewith.

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors.

“Sale and Leaseback Transactions” means with respect to any Person an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person of any asset of such Person which has been or is being sold or transferred by such Person to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such asset.

“Secretary’s Certificate” means a certificate signed by the Secretary of the Issuer.

“Senior Debt” means the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on and all Obligations of any Indebtedness of the Issuer, whether outstanding on the Issue Date or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall not be senior in right of payment to the Notes.

Without limiting the generality of the foregoing, “Senior Debt” shall include the principal of, premium, if any, interest (including any interest accruing subsequent to the filing of a petition of bankruptcy at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable law) on, and all other amounts owing in respect of:


	(1) all monetary obligations of every nature under, or with respect to, the Credit Facilities, including, without limitation, obligations to pay principal and interest, reimbursement obligations under letters of credit, fees, expenses and indemnities (and guarantees thereof); and

	(2) all Hedging Obligations in respect of the Credit Facilities;


	(1) any Indebtedness of the Issuer to Parent or any of its Subsidiaries;

	(2) obligations to trade creditors and other amounts incurred (but not under the Credit Facilities) in connection with obtaining goods, materials or services;

	(3) Indebtedness represented by Disqualified Equity Interests;

	(4) any liability for taxes owed or owing by the Issuer;

	(5) that portion of any Indebtedness incurred in violation of the “Limitations on Additional Indebtedness” covenant (but, as to any such obligation, no such violation shall be deemed to exist for purposes of this clause (6) if the holder(s) of such obligation or their representative shall have received an Officers’ Certificate of the Issuer to the effect that the incurrence of such Indebtedness does not (or, in the case of revolving credit indebtedness, that the incurrence of the entire committed amount thereof at


	the date on which the initial borrowing thereunder is made would not) violate such provisions of the Indenture);

	(6) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to the Issuer; and

	(7) any Indebtedness which is, by its express terms, subordinated in right of payment to any other Indebtedness of the Issuer.

“Significant Subsidiary” means (1) any Restricted Subsidiary that would be a “significant subsidiary” as defined in Regulation S-X promulgated pursuant to the Securities Act as such Regulation is in effect on the Issue Date and (2) any Restricted Subsidiary that, when aggregated with all other Restricted Subsidiaries that are not otherwise Significant Subsidiaries and as to which any event described in clause (7) or (8) under “— Events of Default” has occurred and is continuing, or which are being released from their Note Guarantees (in the case of clause (9) > of the provisions described under “Amendment, Supplement and Waiver”), would constitute a Significant Subsidiary under clause (1) of this definition.

“Stockholders’ Agreement” means the Stockholders’ Agreement, dated as of the Issue Date, by and among Ply Gem Investment Holdings, Inc., Caxton-Iseman (Ply Gem), L.P. and certain members of our management and other parties thereto.

“Subordinated Indebtedness” means Indebtedness of the Issuer or any Restricted Subsidiary that is expressly subordinated in right of payment to the Notes or the Note Guarantees, respectively.


	(1) any corporation, limited liability company, association or other business entity of which more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

	(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof).

Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Issuer.

“Transactions” means (i) the Acquisition; (ii) the Equity Contribution; (iii) the Bank Financing; and (iv) the Offering.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“Unrestricted Subsidiary” means (1) any Subsidiary that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Issuer in accordance with the covenant described under “— Certain Covenants — Limitations on Designation of Unrestricted Subsidiaries” and (2) any Subsidiary of an Unrestricted Subsidiary.

“U.S. Government Obligations” means direct non-callable obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged.

“Voting Stock” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether at all times or only so long as no senior class of stock or other relevant equity interest has voting power by reason of any contingency) to vote in the election of members of the Board of Directors of such Person.

“Weighted Average Life to Maturity” when applied to any Indebtedness at any date, means the number of years obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (2) the then outstanding principal amount of such Indebtedness.

“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary of which 100% of the Equity Interests (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) are owned directly by the Issuer or through one or more Wholly-Owned Restricted Subsidiaries.

The Notes will be represented by one or more global notes (the “Global Notes”) in definitive form. The Global Notes will be deposited with, or on behalf of, DTC and registered in the name of Cede & Co., as nominee of DTC (such nominee being referred to herein as the “Global Note Holder”). The Global Notes will be subject to certain restrictions on transfer and will bear the legend regarding these restrictions set forth under the heading “Notice to Investors.” DTC will maintain the Notes in denominations of $1,000 and integral multiples thereof through its book-entry facilities.

DTC is a limited-purpose trust company that was created to hold securities for its participating organizations, including Euroclear and Clearstream (collectively, the “Participants” or the “Depositary’s Participants”), and to facilitate the clearance and settlement of transactions in these securities between Participants through electronic book-entry changes in accounts of its Participants. The Depositary’s Participants include securities brokers and dealers (including the initial purchaser), banks and trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the “Indirect Participants” or the “Depositary’s Indirect Participants”) that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Depositary’s Participants or the Depositary’s Indirect Participants. Pursuant to procedures established by DTC, ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of the Depositary’s Participants) and the records of the Depositary’s Participants (with respect to the interests of the Depositary’s Indirect Participants).

The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer the Notes will be limited to such extent.

So long as the Global Note Holder is the registered owner of any Notes, the Global Note Holder will be considered the sole Holder of outstanding Notes represented by such Global Notes under the Indenture. Except as provided below, owners of Notes will not be entitled to have Notes registered in their names and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any directions, instructions, or approvals to the Trustee thereunder. None of the Issuer, the Guarantors or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes.

Payments in respect of the principal of, premium, if any, and interest on any Notes registered in the name of a Global Note Holder on the applicable record date will be payable by the Trustee to or at the direction of such Global Note Holder in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Issuer, any Guarantor and the Trustee may treat the persons in whose names any Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving such payments

Subject to certain conditions, any person having a beneficial interest in the Global Notes may, upon request to the Trustee and confirmation of such beneficial interest by the Depositary or its Participants or Indirect Participants, exchange such beneficial interest for Notes in definitive form. Upon any such issuance, the Trustee is required to register such Notes in the name of and cause the same to be delivered to, such person or persons (or the nominee of any thereof). Such Notes would be issued in fully registered form and would be subject to the legal requirements described in this prospectus under the caption “Notice to Investors.” In addition, if (1) the Depositary notifies the Issuer in writing that DTC is no longer willing or able to act as a depositary and the Issuer is unable to locate a qualified successor within 90 days or (2) the Issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of Notes in definitive form under the Indenture, then, upon surrender by the relevant Global Note Holder of its Global Note, Notes in such form will be issued to each person that such Global Note Holder and DTC identifies as being the beneficial owner of the related Notes.

Neither the Issuer, any Guarantor nor the Trustee will be liable for any delay by the Global Note Holder or DTC in identifying the beneficial owners of Notes and the Issuer, any Guarantor and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note Holder or DTC for all purposes.

The following discussion presents the opinion of Paul, Weiss, Rifkind, Wharton & Garrison LLP regarding material U.S. federal income tax consequences of the exchange of initial notes for exchange notes pursuant to the exchange offer, as well as the ownership and disposition of the exchange notes by U.S. holders and non-U.S. holders (each as defined below) who acquire exchange notes in the exchange offer. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), administrative pronouncements, judicial decisions, existing and proposed Treasury Regulations, and interpretations of the foregoing, all as of the date hereof. All of the foregoing authorities are subject to change (possibly with retroactive effect) and any such change may result in U.S. federal income tax consequences to a holder that are materially different from those described herein. We have not obtained and do not intend to obtain a ruling from the U.S. Internal Revenue Service (“IRS”) regarding the classification of the initial notes or the exchange notes for U.S. federal income tax purposes or for any other aspect of the tax consequences described below. We cannot assure you that the IRS will not disagree with any of the tax consequences described in this summary.

The following discussion does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to a particular holder in light of such holder’s particular circumstances, nor does it discuss U.S. federal tax laws applicable to special classes of taxpayers (such as insurance companies, dealers in securities or currencies, tax exempt organizations, banks or other financial institutions, persons that hold notes as part of a “straddle,” “hedge,” “integrated transaction,” or “conversion transaction,” persons that have a functional currency other than the U.S. dollar, persons that own notes through a partnership or other pass through entity, U.S. expatriates and, except to the extent indicated under “Non-U.S. holders” below, foreign corporations, non-resident alien individuals and other persons not subject to U.S. federal income tax on their worldwide income). In addition, the discussion does not consider the effect of any foreign, state, local, or other tax laws that may be applicable to a particular holder. This discussion assumes that holders will (except as otherwise indicated) hold the exchange notes as capital assets within the meaning of Section 1221 of the Code.

As used in this section, a “U.S. holder” means a beneficial owner of an exchange note who is, for U.S. federal income tax purposes: (i) a citizen or resident of the U.S., (ii) a corporation created or organized under the laws of the U.S. or any political subdivision thereof, (iii) an estate or trust the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust that (a) is subject to the primary supervision of a court within the U.S. and one or more U.S. persons has the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. As used in this section, the term “non-U.S. holder” means a beneficial owner of an exchange note who is not a U.S. holder. Holders that are partnerships or who would hold exchange notes through a partnership or similar pass-through entity should consult their tax advisors regarding the U.S. federal income tax consequences to them of holding such notes.

BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, PERSONS CONSIDERING THE ACQUISITION OF EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER SHOULD CONSULT THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION OF U.S. FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY TAX TREATY.

The exchange of initial notes for exchange notes pursuant to the exchange offer will not be treated as an exchange or otherwise as a taxable event to U.S. holders. Consequently, (1) a U.S. holder should not recognize a taxable gain or loss as a result of exchanging such holder’s initial notes for exchange notes; (2) the holding period of the exchange notes will include the holding period of the initial notes; and (3) the adjusted tax basis of exchange notes will be the same as the adjusted tax basis of the initial notes exchanged therefor

Stated interest on a note will generally be taxable to a U.S. holder as ordinary interest income at the time it accrues or is received, in accordance with such U.S. holder’s method of accounting for U.S. federal income tax purposes. In certain circumstances we may be obligated to pay amounts in excess of stated interest or principal on the notes. According to Treasury Regulations, the possibility that any such payments in excess of stated interest or principal will be made will not affect the amount of interest income a U.S. holder recognizes if there is only a remote chance as of the date the notes were issued that such payments will be made. We believe that the likelihood that we will be obligated to make any such payments is remote. Therefore, we do not intend to treat the potential payment of additional interest pursuant to the registration rights provisions or the potential payment of a premium pursuant to the optional redemption or change of control provisions as part of the yield to maturity of any notes. Our determination that these contingencies are remote is binding on a U.S. holder unless such holder discloses its contrary position in the manner required by applicable Treasury Regulations. Our determination is not, however, binding on the IRS and if the IRS were to challenge this determination, a U.S. holder might be required to accrue income on its notes in excess of stated interest and to treat as ordinary income rather than capital gain any income realized on the taxable disposition of a note before the resolution of the contingencies. In the event a contingency occurs, it would affect the amount and timing of the income recognized by a U.S. holder. If we pay additional interest on the notes pursuant to the registration rights provisions or a premium pursuant to the optional redemption or change of control provisions, U.S. holders will be required to recognize such amounts as income.

If a U.S. holder purchased an initial note prior to this exchange offer for an amount that is less than its principal amount, then, subject to a statutory de minimis rule, the difference generally will be treated as market discount. If a U.S. holder exchanges an initial note, with respect to which there is market discount, for an exchange note pursuant to the exchange offer, the market discount applicable to the initial note should carry over to the exchange note so received. In that case, any partial principal payment on, or any gain realized on the sale, exchange, retirement or other disposition of (including dispositions which are nonrecognition transactions under certain provisions of the Code), the exchange note will be included in gross income and characterized as ordinary income to the extent of the market discount that (1) has not previously been included in income and (2) is treated as having accrued on the exchange note prior to the payment or disposition. Market discount generally accrues on a straight-line basis over the remaining term of the exchange note. Upon an irrevocable election, however, market discount will accrue on a constant yield basis. A U.S. holder might be required to defer all or a portion of the interest expense on indebtedness incurred or continued to purchase or carry an exchange note. A U.S. holder may elect to include market discount in gross income currently as it accrues. If such an election is made, the preceding rules relating to the recognition of market discount and deferral of interest expense will not apply. An election made to include market discount in gross income as it accrues will apply to all debt instruments acquired by the U.S. holder on or after the first day of the taxable year to which the election applies and may be revoked only with the consent of the IRS.

If a U.S. holder purchased an initial note prior to this exchange offer for an amount that is in excess of all amounts payable on the initial note after the purchase date, other than payments of qualified stated interest, the excess will be treated as bond premium. If a U.S. holder exchanges an initial note, with respect to which there is a bond premium, for an exchange note pursuant to the exchange offer, the bond premium applicable to the initial note should carry over to the exchange note so received. In general, a U.S. holder may elect to amortize bond premium over the remaining term of the exchange note on a constant yield method. The amount of bond premium allocable to any accrual period is offset against the qualified stated interest allocable to the accrual period. If, following the offset determination described in the immediately preceding sentence, there is an excess allocable bond premium remaining, that excess may, in some circumstances, be deducted.

Upon the sale, redemption, exchange or other taxable disposition of a note, a U.S. holder generally will recognize gain or loss equal to the difference between the amount realized from such sale, redemption, exchange or other taxable disposition (other than amounts attributable to accrued interest, which amounts would be taxed as interest) and its adjusted basis in such note. Such gain or loss will be long term capital gain or loss if at the time of sale, redemption, exchange or other disposition, the note has been held for more than one year. Otherwise, such gain or loss will be short term capital gain or loss. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitation.

In general, information reporting requirements will apply to payments of interest on, and the proceeds of disposition of, an exchange note made to U.S. holders other than certain exempt recipients such as corporations. In general, backup withholding, at the then applicable rate, will be applicable to a U.S. holder that is not an exempt recipient if such U.S. holder: (1) fails to furnish its taxpayer identification number, or TIN, which, for an individual, is ordinarily his or her social security number, furnishes an incorrect TIN, (2) is notified by the IRS that it has failed to properly report payments of interest or dividends, or (3) fails to certify, under penalties of perjury, that it has furnished a correct TIN and that the IRS has not notified the U.S. holder that it is subject to backup withholding. Any amount withheld from payment to a holder under the backup withholding rules will be allowed as a credit against the holder’s federal income tax liability and may entitle the holder to a refund, provided the required information is furnished to the IRS. U.S. holders should consult their personal tax advisor regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable.

The exchange of initial notes for exchange notes pursuant to the exchange offer by a non-U.S. holder will not be treated as an exchange or otherwise as a taxable event.

Interest paid to a non-U.S. holder will not be subject to U.S. federal withholding tax of 30% (or, if applicable, a lower treaty rate), provided that: (1) such holder does not directly or indirectly, actually or constructively, own a 10% or greater capital or profit interest in us or 10% or more of the total combined voting power of all of our classes of stock, (2) such holder is not a controlled foreign corporation that is related to us through stock ownership, (3)such holder is not a bank that received such notes on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business, and either (a) the non-U.S. holder certifies in a statement provided to us or our paying agent, under penalties of perjury, that it is not a “United States person” within the meaning of the Code and provides its name and address (generally on IRS Form W-8 BEN), (b) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business and holds the notes on behalf of the non-U.S. holder certifies to us or our paying agent under penalties of perjury that it has received from the non-U.S. holder a statement, under penalties of perjury, that such holder is not a “United States person” and provides us or our paying agent with a copy of such statement or (c) the non-U.S. holder holds its notes through a “qualified intermediary” and certain conditions are satisfied.

Even if the above conditions are not met, a non-U.S. holder may be entitled to a reduction in, or exemption from, withholding tax on interest under a tax treaty between the U.S. and the non-U.S. holder’s

If a non-U.S. holder is engaged in a trade or business in the U.S. and if interest on an exchange note or gain realized on the disposition of an exchange note is effectively connected with the conduct of the trade or business, the non-U.S. holder usually will be subject to regular U.S. federal income tax on the interest or gain in the same manner as if it were a U.S. holder, unless an applicable treaty provides otherwise. In addition, if the non-U.S. holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% on its earnings and profits for the taxable year, subject to certain adjustments unless reduced or eliminated by an applicable tax treaty.

Subject to the discussion below concerning backup withholding, a non-U.S. holder of an exchange note generally will not be subject to U.S. federal income tax on gain realized on the sale, exchange or other taxable disposition of such note unless such holder is an individual who is present in the U.S. for 183 days or more in the taxable year of disposition, and certain other conditions are met, the holder is subject to the special rules applicable to certain former citizens or former residents of the U.S., or such gain is effectively connected to a U.S. trade or business, in which case such holder may have to pay a U.S. federal income tax of 30% (or, if applicable, a lower treaty rate) on such gain.

Backup withholding and information reporting generally will not apply to payments made by us or our paying agent on an exchange note to a non-U.S. holder if the non-U.S. holder has provided the required certification that it is not a U.S. person as described above. However, certain information reporting may still apply with respect to interest payments even if certification is provided.

Payments of the proceeds from a disposition by a non-U.S. holder of a note made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that information reporting (but generally not backup withholding) may apply to those payments if the broker is: (1) a U.S. person, (2) a controlled foreign corporation for U.S. federal income tax purposes, (3) a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period, (4) or a foreign partnership, if at any time during its tax year, one or more of its partners are U.S. persons, as defined in Treasury Regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership or if, at any time during its tax year, the foreign partnership is engaged in a U.S. trade or business. Backup withholding may apply to any payment that such broker is required to report if the broker has actual knowledge that the payee is a U.S. person.

Payments to or through the U.S. office of a broker will be subject to information reporting and possible backup withholding unless the holder certifies, under penalties of perjury, that it is not a U.S. holder or otherwise establishes an exemption, provided that the broker does not have actual knowledge that the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied.

The Treasury Regulations provide certain presumptions under which a non-U.S. holder will be subject to information reporting and backup withholding unless such holder certifies as to its non-U.S. status or otherwise establishes an exemption. Non-U.S. holders of exchange notes should consult their tax advisors regarding the application of information reporting and backup withholding in their particular situation, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available. Any amounts withheld from a payment to a non-U.S. holder under the backup withholding rules will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund if the required information is furnished to the IRS.

THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS NOT TAX ADVICE. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO YOU OF OWNING, HOLDING, AND DISPOSING OF AN EXCHANGE NOTE, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer in exchange for initial notes acquired by such broker-dealer as a result of market making or other trading activities may be deemed to be an “underwriter” within the meaning of the Securities Act and, therefore, must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales, offers to resell or other transfers of the exchange notes received by it in connection with the exchange offer. Accordingly, each such broker-dealer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for initial notes where such initial notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration of this exchange offer, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until , all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit of any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, New York, will opine that the exchange notes and guarantees are binding obligations of the registrants. Paul, Weiss, Rifkind, Wharton & Garrison LLP has represented Caxton-Iseman Capital and its related parties from time to time. Certain members of Paul, Weiss, Rifkind, Wharton & Garrison LLP have made an investment of $412,500 in Ply Gem Investment Holdings.

The combined financial statements of Ply Gem Industries, Inc. and subsidiaries and CWD Windows & Doors, a division of Broan-Nutone Canada, Inc., as of December 31, 2003 and 2002 and for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and for each of the two years in the period ended December 31, 2002 as well as the balance sheet of Ply Gem Holdings, Inc. as of January 23, 2004 (inception) and the consolidated balance sheet of MWM Holding, Inc. and subsidiaries as of December 27, 2003, and the related consolidated statements of operations, shareholders’ equity and cash flows for the period from January 18, 2003 through December 27, 2003, and the predecessor consolidated balance sheet of MW Manufacturers Holding Corp. as of December 28, 2002, and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from December 29, 2002 through January 17, 2003 and for the years ended December 28, 2002 and December 29, 2001 appearing in this prospectus and registration statement have been audited by Ernst & Young, LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

We have filed with the SEC a registration statement on Form S-4 to register the exchange notes. Upon the effectiveness of this Registration Statement on Form S-4, we will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will be required to file reports and other information with the SEC. This prospectus, which forms part of the registration statement, does not contain all of the information included in that registration statement. For further information about us and the exchange notes offered in this prospectus, you should refer to the registration statement and its exhibits. You may read and copy any document we file with the SEC at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of these reports, proxy statements and information may be obtained at prescribed rates from the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. In addition, the SEC maintains a web site that contains reports, proxy statements and other information regarding registrants, such as us, that file electronically with the SEC. The address of this web site is http://www.sec.gov.

Anyone who receives a copy of this prospectus may obtain a copy of the indenture without charge by writing to Ply Gem Industries Inc., 303 West Major Street, Kearney, Missouri 64060 Attn: Chief Financial Officer, (800) 800-2244.

We have audited the accompanying combined balance sheets of Ply Gem Industries, Inc. and subsidiaries and CWD Windows & Doors, a division of Broan-Nutone Canada Inc., all subsidiaries of Nortek, Inc., as of December 31, 2003 and 2002 and the related combined statements of operations, parent company (deficit) investment, and cash flows for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and for each of the two years in the period ended December 31, 2002. These financial statements are the responsibility of the management of Nortek, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined financial position of Ply Gem Industries, Inc. and subsidiaries and CWD Windows & Doors, a division of Broan-Nutone Canada Inc., all subsidiaries of Nortek, Inc., at December 31, 2003 and 2002 and the combined results of their operations and their cash flows for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and for each of the two years in the period ended December 31, 2002, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the combined financial statements, in 2003 the Company changed its method of accounting for stock-based compensation, pursuant to the adoption of Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure an Amendment of FASB statement No. 123. As discussed in Note 1 to the consolidated financial statements, in 2002 the Company changed its method of accounting for goodwill and other intangible assets, pursuant to the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

The accompanying notes are an integral part of these combined financial statements.

The accompanying combined financial statements include the financial position and results of operations for Ply Gem Industries, Inc. and Subsidiaries (“Ply Gem”) and CWD Windows & Doors (“CWD Windows”), a division of Broan-Nutone Canada Inc. (“BNC”) as of December 31, 2003 and 2002 and for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively. Ply Gem and CWD Windows (collectively, the “Combined Companies”) are diversified manufacturers of residential and commercial building products, which sell, primarily in the United States and Canada, a wide variety of products for the residential and commercial construction, the do-it-yourself and the professional remodeling and renovation markets. Ply Gem is a wholly owned subsidiary of WDS LLC, which is a wholly owned subsidiary of Nortek, Inc. (collectively with subsidiaries “Nortek”). Nortek is a wholly owned subsidiary of Nortek Holdings, Inc. (collectively with subsidiaries “Nortek Holdings”). As of December 31, 2003, CWD Windows was a division of BNC, which is a wholly owned subsidiary of Nortek. In 2004, BNC transferred ownership of CWD Canada to a wholly owned subsidiary of Ply Gem.

On February 12, 2004, Nortek sold Ply Gem to Ply Gem Investment Holdings, Inc., an affiliate of Caxton-Iseman Capital, Inc., pursuant to the terms of the Stock Purchase Agreement among Ply Gem Investment Holdings, Inc. and Nortek, Inc. and WDS LLC dated as of December 19, 2003, as amended (the “Purchase Agreement”) in a transaction valued at approximately $560,000,000 (the “Acquisition”), including approximately $29.5 million of outstanding debt assumed by Ply Gem Investment Holdings, Inc. and approximately $4.3 million representing the aggregate value of certain management stock options of Nortek held by Ply Gem management that were cancelled or forfeited in connection with the Acquisition.

On January 9, 2003, Nortek Holdings was acquired by certain affiliates and designees of Kelso & Company L.P. and certain members of Nortek management in accordance with the Agreement and Plan of Recapitalization by and among Nortek, Inc., Nortek Holdings, Inc. and K Holdings, Inc. dated as of June 20, 2002, as amended, in a transaction valued at approximately $1.6 billion, including the assumption of certain indebtedness (the “Recapitalization”).

The Combined Companies, Nortek and Nortek Holdings have accounted for the Recapitalization as a purchase in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” (“SFAS No. 141”), which resulted in a new valuation for the assets and liabilities of Nortek Holdings and its subsidiaries based upon fair values as of the date of the Recapitalization. As allowed under SEC Staff Accounting Bulletin No. 54, “Push Down Basis of Accounting Required in Certain Limited Circumstances”, the Combined Companies have reflected certain applicable purchase accounting adjustments recorded by Nortek Holdings in the Combined Companies’ financial statements as of and for all periods subsequent to the date of the Recapitalization (“Push Down Accounting”) (see Note 2).

In 2002, Ply Gem sold its subsidiaries, Hoover Treated Wood Products, Inc. (“Hoover”) and Richwood Building Products, Inc. (“Richwood”) and in 2001, Ply Gem sold its subsidiaries, Peachtree Doors and Windows, Inc. (“Peachtree”) and SNE Enterprises, Inc. (“SNE”). The sale of these subsidiaries and their related operating results have been excluded from earnings (loss) from continuing operations and are classified as discontinued operations for all periods presented (see Note 3).

The combined financial statements include the accounts of the Combined Companies and all of their subsidiaries, all of which are wholly owned, after elimination of intercompany accounts and transactions.

The preparation of these combined financial statements in conformity with accounting principles generally accepted in the United States involves estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expense during the reporting periods. Certain of the Combined Companies’ accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Combined Companies periodically evaluate the judgments and estimates used for their critical accounting policies to ensure that such judgments and estimates are reasonable for their interim and year-end reporting requirements. These judgments are based on the Combined Companies’ historical experience, current trends and information available from other sources, as appropriate. If different conditions result from those assumptions used in the Combined Companies’ judgments, the results could be materially different from the Combined Companies’ estimates.

The Combined Companies recognize sales upon the shipment of their products net of applicable provisions for discounts and allowances. The customer takes title upon shipment and assumes the risks and rewards of ownership of the product. Allowances for cash discounts, volume rebates and other customer incentive programs, as well as gross customer returns, among others, are recorded as a reduction of sales at the time of sale based upon the estimated future outcome. Cash discounts, volume rebates and other customer incentive programs are based upon certain percentages agreed to with the Combined Companies’ various customers, which are typically earned by the customer over an annual period. The Combined Companies record periodic estimates for these amounts based upon the historical results to date, estimated future results through the end of the contract period and the contractual provisions of the customer agreements. For calendar year customer agreements, the Combined Companies are able to adjust their periodic estimates to actual amounts as of December 31 each year based upon the contractual provisions of the customer agreements. For those customers who have agreements that are not on a calendar year cycle, the Combined Companies record estimates at December 31 consistent with the methodology described above. Customer returns are recorded on an actual basis throughout the year and also include an estimate at the end of each reporting period for future customer returns related to sales recorded prior to the end of the period. The Combined Companies generally estimate customer returns based upon the time lag that historically occurs between the date of the sale and the date of the return while also factoring in any new business conditions that might impact the historical analysis such as new product introduction. The Combined Companies also provide for estimates of warranty, bad debts and shipping costs at the time of sale. Shipping and warranty costs are included in cost of products sold. Bad debt provisions are included in selling, general and administrative expense. The amounts recorded are generally based upon historically derived percentages while also factoring in any new business conditions that might impact the historical analysis such as new product introduction for warranty and bankruptcies of particular customers for bad debts.

Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less which are readily convertible into cash.

The Combined Companies have classified as restricted cash and cash equivalents in the accompanying combined balance sheets certain investments and marketable securities that are not fully available for use in their operations.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:



	•	Cash and Cash Equivalents — The carrying amount approximates fair value because of the short maturity of those instruments.



	•	Long-Term Debt — At December 31, 2003, the fair value of long-term indebtedness approximated the amounts included in the accompanying combined balance sheet (see Note 6).

Inventories in the accompanying combined balance sheet are valued at the lower of cost or market. At December 31, 2003, 2002 and 2001, approximately $10,097,000, $13,282,000 and $13,090,000 of total inventories, respectively, were valued on the last-in, first-out method (“LIFO”). Under the first-in, first-out method (“FIFO”) of accounting, such inventories would have been approximately $402,000 higher at December 31, 2003 and approximately $770,000 and $936,000 lower at December 31, 2002 and 2001, respectively. All other inventories were valued under the FIFO method. In connection with both LIFO and FIFO inventories, the Combined Companies record provisions, as appropriate, to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires the Combined Companies to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may cause the actual results to differ from the estimates at the time such inventory is disposed or sold.

Depreciation and amortization of property and equipment are provided on a straight-line basis over estimated useful lives, which are generally as follows:

Expenditures for maintenance and repairs are expensed when incurred. Expenditures for renewals and betterments are capitalized. When assets are sold, or otherwise disposed, the cost and related accumulated depreciation are eliminated and the resulting gain or loss is recognized.

Acquisitions are accounted for as purchases and, accordingly, have been included in the Combined Companies’ combined results of operations since the acquisition date. Purchase price allocations are subject to refinement until all pertinent information regarding the acquisition is obtained.

In the third quarter of 2001, the Combined Companies adopted SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets but does not apply to goodwill or intangible assets that are not being amortized and certain other long-lived assets and, as required by the standard, applied this accounting standard as of January 1, 2001. Adoption of this accounting standard did not result in any material

changes in net earnings (loss) from accounting standards previously applied. Adoption of this standard did result in the accounting for the gain (loss) on the sale of certain businesses and their related operating results as discontinued operations. The presentation of all periods presented has been reclassified to conform to SFAS No. 144 (see Note 3).

Subsequent to June 30, 2001, the Combined Companies account for acquired goodwill and intangible assets in accordance with SFAS No. 141. Prior to July 1, 2001, the Combined Companies accounted for acquired goodwill and intangible assets in accordance with APB No. 16, “Business Combinations” (“APB No. 16”). Purchase accounting required by SFAS No. 141 and APB No. 16 involves judgment with respect to the valuation of the acquired assets and liabilities in order to determine the final amount of goodwill. For significant acquisitions, the Combined Companies value items such as property, plant and equipment and acquired intangibles based upon appraisals and determine the value of assets and liabilities associated with pension, supplemental executive retirement and post retirement benefit plans based upon actuarial studies. The Combined Companies believe that the estimates that have been used to record prior acquisitions were reasonable and in accordance with SFAS No. 141 and APB No. 16.

On January 1, 2002, the Combined Companies adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). This statement applies to goodwill and intangible assets acquired after June 30, 2001, as well as goodwill and intangible assets previously acquired. Under this statement, goodwill and intangible assets determined to have an indefinite useful life are no longer amortized, instead these assets are evaluated for impairment on an annual basis and whenever events or business conditions warrant. All other intangible assets will continue to be amortized over their remaining estimated useful lives and are evaluated for impairment in accordance with the provisions of SFAS No. 144. The adoption of SFAS No. 142 did not result in any material changes to the Combined Companies’ accounting for intangible assets. The Combined Companies evaluated the carrying value of goodwill and determined that no impairment existed and therefore no impairment loss was required to be recorded in the Combined Companies’ combined financial statements as a result of adopting SFAS No. 142.

In accordance with SFAS No. 144, as of December 31, 2003, the Combined Companies have evaluated the realizability of non-goodwill long-lived assets, which primarily consist of property, plant and equipment and intangible assets (the “SFAS No. 144 Long-Lived Assets”) based on expectations of non-discounted future cash flows for each subsidiary or division having a material amount of SFAS No. 144 Long-Lived Assets. If the sum of the expected non-discounted future cash flows is less than the carrying amount of all assets including SFAS No. 144 Long-Lived Assets, the Combined Companies would recognize an impairment loss. The Combined Companies’ cash flow estimates are based upon historical cash flows, as well as future projected cash flows received from subsidiary or division management in connection with the annual Company wide planning process, and include a terminal valuation for the applicable subsidiary or division based upon a multiple of earnings before interest expense, net, depreciation and amortization expense and income taxes (“EBITDA”). The Combined Companies estimate the EBITDA multiple by reviewing comparable company information and other industry data. The Combined Companies believe that their procedures for estimating gross future cash flows, including the terminal valuation, are reasonable and consistent with market conditions at the time of the valuation. Based on their most recent analysis, the Combined Companies believe that no material impairment of SFAS No. 144 Long-Lived Assets exists at December 31, 2003. Prior to the adoption of SFAS No. 144 and SFAS No. 142, the Combined Companies accounted for the impairment of long-lived assets, including goodwill, in accordance with the then existing accounting standards, which did not result in any impairment losses in prior years.

Subsequent to the Recapitalization, intangible assets consist principally of patents, trademarks and customer relationships, which are being amortized on a straight-line basis over a weighted average remaining estimated useful life of approximately 13 years (see Note 2). Prior to the Recapitalization, intangible assets

consisted principally of patents and trademarks, which were amortized on a straight-line basis over a weighted average remaining estimated useful life of approximately 21 years. Amortization of intangible assets charged to operations amounted to approximately $3,837,000, $70,000, $3,118,000 and $3,091,000 for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively. The table that follows presents the major components of intangible assets as of December 31, 2003 and 2002:

As of December 31, 2003, the estimated annual intangible asset amortization expense for each of the succeeding five years aggregates approximately $19,740 as follows:

The Combined Companies have classified as goodwill the cost in excess of fair value of the net assets (including tax attributes) of companies acquired in purchase transactions (see Note 2). Prior to January 1, 2002, goodwill was amortized on a straight-line basis over 40 years through December 31, 2001. Goodwill amortization was approximately $7,557,000 for the year ended December 31, 2001, as determined under the then applicable accounting principles generally accepted in the United States.

The table that follows presents earnings from continuing operations and net loss for the year ended December 31, 2001, as adjusted to reflect the elimination of goodwill amortization expense and the related income tax impact:

The table that follows presents a summary of the activity in goodwill, prior to the impact of the Push Down Accounting (see Note 2 for a summary of the activity subsequent to the Recapitalization), for the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001:

Purchase accounting adjustments relate principally to adjustments to deferred income taxes that impact goodwill. Other relates primarily to foreign currency translation adjustments.

The Combined Companies account for pension, including supplemental executive retirement plans, and post retirement health benefit liabilities under SFAS No. 87 “Employers’ Accounting for Pensions” (“SFAS No. 87”) and SFAS No. 106, “Employers’ Accounting for Post Retirement Benefits Other Than Pensions” (“SFAS No. 106”). SFAS No. 87 and SFAS No. 106 require the estimating of such items as the long-term average return on plan assets, the discount rate, the rate of compensation increase and the assumed medical cost inflation rate. Such estimates require a significant amount of judgment. As a result, the Combined Companies obtain actuarial calculations of the amounts for pension and post retirement health benefit assets, liabilities, expense and other comprehensive income (loss) required to be recorded in the Combined Companies’ combined financial statements as of year-end in accordance with accounting principles generally accepted in the United States (see Notes 2 and 7).

The Combined Companies record insurance liabilities and related expenses for health, workers’ compensation, product and general liability losses and other insurance reserves and expenses in accordance

with either the contractual terms of their policies or, if self-insured, the total liabilities that are estimable and probable as of the reporting date. Insurance liabilities are recorded as current liabilities to the extent they are expected to be paid in the succeeding year with the remaining requirements classified as long-term liabilities. The accounting for self-insured plans requires that significant judgments and estimates be made both with respect to the future liabilities to be paid for known claims and incurred but not reported claims as of the reporting date. The Combined Companies rely heavily on historical trends and, in certain cases, actuarial calculations when determining the appropriate insurance reserves to record in the combined balance sheet for a substantial portion of their workers compensation and general and product liability losses. In certain cases where partial insurance coverage exists, the Combined Companies must estimate the portion of the liability that will be covered by existing insurance policies to arrive at the net expected liability to the Combined Companies.

Nortek is responsible for the preparation and filing of all income tax returns and the remittances of federal and state payments on behalf of the Combined Companies and their subsidiaries. Accordingly, for U.S. federal income tax purposes, the Combined Companies’ results of operations are included in the consolidated federal income tax returns of Nortek. The U.S. Combined Companies file unitary, combined and separate state income tax returns. CWD Windows is included in the Canadian income tax return of BNC and transfers to BNC their share of the Canadian income tax due and payable. Federal income taxes are recorded in the Combined Companies’ combined financial statements based upon the Combined Companies’ pro rata share of Nortek’s consolidated federal tax provision determined based upon a ratio of the Combined Companies’ book income on a taxable basis to Nortek’s consolidated book income on a taxable basis. State taxes and foreign taxes are recorded on a separate standalone basis for the Combined Companies.

The Combined Companies account for deferred income taxes using the liability method in accordance with SFAS No. 109 “Accounting for Income Taxes” (“SFAS No. 109”), which requires that the deferred tax consequences of temporary differences between the amounts recorded in the Combined Companies’ combined financial statements and the amounts included in the Combined Companies’ federal and state income tax returns be recognized in the balance sheet. As the Combined Companies generally do not file their income tax returns until well after the closing process for the December 31 financial statements is complete, the amounts recorded at December 31 reflect estimates of what the final amounts will be when the actual federal, state and foreign income tax returns are filed for that fiscal year. Estimates are required with respect to, among other things, the appropriate state income tax rates to use in the various states that the Combined Companies and their subsidiaries are required to file, the potential utilization of operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realizable in the future. SFAS No. 109 requires balance sheet classification of current and long-term deferred income tax assets and liabilities based upon the classification of the underlying asset or liability that gives rise to a temporary difference (see Note 5).

The Combined Companies provide accruals for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued have been estimated based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and outcomes (see Note 8).

Included in the combined statement of operations in selling, general and administrative expense are parent company corporate charges of approximately $7,100,000, $100,000, $10,200,000 and $5,400,000 for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively, related to accounting, legal, insurance, treasury and other management services provided by Nortek, which have been allocated based upon a combination of the specific identification method and as a percentage of the Combined Companies’ net sales to Nortek’s consolidated net sales. In the opinion of the Combined Companies’ management, this method of allocating such costs is reasonable. The Combined Companies’ management estimates that, on a pro forma basis, the Combined Companies would have incurred approximately $2.4 million (unaudited) of expenses per year to replace services provided and costs allocated by Nortek for the combined periods from January 10, 2003 to December 31, 2003 and January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, if the Combined Companies had operated as a standalone company. Included in interest expense is approximately $31,784,000, $942,000, $32,707,000 and $21,507,000 for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively, related to interest owed to a subsidiary which is wholly owned by Nortek.

Parent company investment in the accompanying combined balance sheet includes the combined equity, advance accounts with Nortek and its wholly owned subsidiaries and accumulated other comprehensive loss of Ply Gem and CWD Windows. Debt with Nortek and its wholly owned subsidiaries is included in notes, mortgage notes and obligations payable in the accompanying combined balance sheet (see Note 6). Net transfers to Nortek, Inc. in the accompanying consolidated statement of parent company investment represent recurring intercompany activity related to short-term intercompany advances by Nortek, intercompany charges and related payments for expenses and other charges originally paid by Nortek related to the Combined Companies’ operations and monthly transfers of free cash by the Combined Companies to Nortek under Nortek’s corporate cash management program. Dividends to Nortek, Inc. in the accompanying statement of parent company investment represent non-recurring transactions approved by the Company’s Board of Directors as they were funded by notes payable issued to a subsidiary of Nortek (see Note 6).

Comprehensive income (loss) includes net earnings (loss) and unrealized gains and losses from marketable securities available for sale and minimum pension liability adjustments, net of tax attributes. The components of the Combined Companies’ comprehensive income (loss) and the effect on net earnings (loss) for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001 are detailed in the accompanying combined statement of parent company (deficit) investment.

The balances of each classification, net of tax attributes, within accumulated other comprehensive income (loss) for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001 are as follows:

The financial statements of entities outside the United States are generally measured using the foreign entity’s local currency as the functional currency. The Combined Companies translate the assets and liabilities of their foreign entities at the exchange rates in effect at year-end. Net sales and expenses are translated using average exchange rates in effect during the year. Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive loss in the accompanying combined balance sheet. Transaction gains and losses are recorded in selling, general and administrative expense and have not been material during any of the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001.

The Combined Companies account for derivative instruments and hedging activities in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, amended in 1999 by SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of SFAS No. 133 — Amendment of SFAS No. 133”, amended in June 2000 by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities — an amendment to SFAS No. 133” and amended in April 2003 by SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (combined “SFAS No. 133”). SFAS No. 133 requires that every derivative instrument (including certain derivative instruments embedded in other contracts) issued, acquired, or substantially modified after December 31, 1997 be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the

income statement, and requires that a company formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

In the first quarter of 2001, the Combined Companies adopted SFAS No. 133 by recording a liability of approximately $800,000 in their unaudited combined balance sheet at March 31, 2001, representing the fair value of Ply Gem’s former interest rate collar agreement at March 31, 2001. The cumulative effect of adopting this accounting method as of January 1, 2001 was not material. Interest expense in the accompanying combined statement of operations for the years ended December 31, 2002 and 2001 includes a non-cash reduction of expense of approximately $1,200,000 and a non-cash charge of approximately $1,200,000, respectively, related to Ply Gem’s former interest rate collar agreement, which was terminated in August 2002 (see Note 6).

In the fourth quarter of 2003, the Combined Companies adopted the fair value method of accounting for stock-based compensation in accordance with SFAS No. 123 and recorded a pre-tax charge of approximately $96,000. The Combined Companies had previously accounted for stock-based compensation in accordance with APB Opinion No. 25 (“APB 25”) and followed the disclosure only provisions of SFAS No. 123. The Company adopted SFAS No. 123 using the prospective method of transition in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure (“SFAS No. 148”). The prospective method under SFAS No. 148 required the Company to adopt SFAS No. 123 effective January 1, 2003 for all options issued during 2003. Prior to January 1, 2003, the Combined Companies accounted for stock options granted to employees using the intrinsic value method pursuant to the provisions of APB 25, under which no compensation cost was recognized since the options were granted with exercise prices equal to the fair market value of the common stock at the date of grant. The Company estimates the fair value of each option grant as of the date of the grant using the Black-Scholes option-pricing model.

The table that follows summarizes the Combined Companies common and special common stock option transactions through the Recapitalization, which were options for shares in Nortek, Inc and Nortek Holdings (“Options”), for the years ended December 31, 2002 and 2001, respectively:

At December 31, 2002, 2001 and 2000, 71,995, 57,841 and 55,735, respectively, of Options to acquire shares of common and special common stock were exercisable.

Upon completion of the Recapitalization on January 9, 2003, all options became fully vested. 18,250 of Options with option prices ranging from $20.44 to $22.94 were exercised and tendered in connection with the Recapitalization. 60,000 of the Options with option prices ranging from $21.63 to $27.00 were rolled-over and

exchanged for stock options to purchase an equal number of shares of Class A Common Stock of Nortek Holdings at the same price per share. Such rolled-over options were to expire on January 9, 2013. On January 9, 2003, employees of the Combined Companies were issued approximately 41,000 Class A Common Stock options of Nortek Holdings at $46 per share, which vest ratably over a three-year period and approximately 83,000 of Class B Common Stock options of Nortek Holdings at $46 per share, which vest upon the attainment of certain performance measures, as defined.

The $96,000 of employee stock compensation expense for the period from January 10, 2003 to December, 2003 represents the amortization of the fair value of the approximately 41,000 Class A Common Stock options in accordance with the minimum value requirements of FASB 123, which exclude a volatility assumption for non-public companies. The fair value for these options was determined to be $6.86 per share based upon an interest rate of 3.23% and an expected dividend yield of 0%. No employee stock compensation expense has been recognized for the approximately 83,000 Class B Common Stock options as these options only vest upon the occurrence of a Liquidity Event (as defined) and upon reaching certain financial targets. It is the Company’s best estimate that no options will vest. Employee stock compensation expense relates only to options issued to employees of the Combined Companies and does not include amortization related to options issued to certain Nortek or Nortek Holdings employees who have provided management services to the Combined Companies.

No pro-forma information for the period from January 10, 2003 to December 31, 2003 is required under SFAS No. 148 as all options issued prior to January 1, 2003 were fully vested as of January 9, 2003 and the consolidated statement of operations for the period includes the actual stock-based employee compensation for options issued subsequent to January 1, 2003.

The table that follows presents the pro forma impact for the historical outstanding options issued prior to January 1, 2003 in accordance with the disclosure only requirements of SFAS No. 123. The period from January 1, 2003 to January 9, 2003 reflects the pro forma employee stock compensation expense, net of tax, associated with the accelerated vesting of all of the existing unvested options, which were issued prior to January 1, 2003, in connection with the Recapitalization. The pro forma amortization of stock compensation relates only to options issued to employees of the Combined Companies and does not include amortization related to options issued to certain Nortek or Nortek Holdings employees who have provided management services to the Combined Companies.

In connection with the Acquisition, all of the outstanding Class A Common Stock options were cancelled.

SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”) addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002 with early adoption permitted. The Combined Companies adopted SFAS No. 143 on January 1, 2003. Adoption of this accounting standard was not material to the results presented in the combined financial statements.

SFAS No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections” (“SFAS No. 145”), was issued in April 2002 and addresses the reporting of gains and losses resulting from the extinguishment of debt, accounting for sale-leaseback transactions and rescinds or amends other existing authoritative pronouncements. SFAS No. 145 requires that any gain or loss on extinguishment of debt that does not meet the criteria of APB 30 for classification as an extraordinary item shall not be classified as extraordinary and shall be included in earnings from continuing operations. The provisions of this statement related to the extinguishment of debt are effective for financial statements issued in fiscal years beginning after May 15, 2002 with early application encouraged. The Combined Companies adopted SFAS No. 145 on January 1, 2003 and adoption of this accounting standard was not material to the results presented in the combined financial statements.

Effective January 1, 2003, the Combined Companies adopted SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS No. 146”), which addresses the accounting and reporting for costs associated with exit or disposal activities, nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)” (“EITF 94-3”) and substantially nullifies EITF Issue No. 88-10, “Costs Associated with Lease Modification or Termination” (“EITF 88-10”). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit or disposal activities initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on the Combined Companies’ combined financial statements (see Note 10).

In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). Along with new disclosure requirements, FIN 45 requires guarantors to recognize, at the inception of certain guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee. This differs from the current practice to record a liability only when a loss is probable and reasonably estimable. The recognition and measurement provisions of FIN 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002. The Combined Companies adopted the disclosure provisions of FIN 45 as of December 31, 2002 and adopted the entire interpretation on January 1, 2003. Adoption of FIN 45 was not material to the Combined Companies’ combined financial statements (see Note 8).

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of ARB No. 51, “Consolidated Financial Statements”, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and for existing variable interest entities no later than the end of the first annual reporting period beginning after December 15, 2003. The Combined Companies do not expect the adoption of FIN 46 to have a material impact on their combined financial statements.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities” (“SFAS No. 149”), which clarifies the financial accounting and reporting proscribed by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”) for derivative instruments, including certain derivative instruments embedded in other contracts. Certain provisions of SFAS No. 149 related to implementation issues of SFAS No. 133 are already effective and other provisions related to forward purchases or sales are effective for both existing contracts and new contracts entered into after June 30, 2003. The Combined Companies have previously adopted SFAS No. 133, including the implementation issues addressed in SFAS No. 149, and the adoption of the new provisions of SFAS No. 149 on July 1, 2003 did not have an impact on the Combined Companies’ combined financial statements.

provisions for the first fiscal period beginning after December 15, 2003. The Combined Companies adopted SFAS No. 150 on July 1, 2003. Adoption of this accounting standard did not have an impact on the combined financial statements.

The purchase price paid and the debt assumed in connection with the Recapitalization of Nortek Holdings were approximately $586 million and $989 million, respectively, and reflect a total transaction value of approximately $1.6 billion. The purchase price paid and the debt assumed allocated to the Combined Companies in connection with the application of Push Down Accounting were approximately $370 million and $31 million, respectively, and reflect a total transaction value of approximately $401 million or approximately 25% of the total Nortek Holdings’ consolidated transaction value. The allocation of purchase price and total transaction value to the Combined Companies was based upon the relative fair value of the Combined Companies to the total fair value of Nortek Holdings as of the date of the Recapitalization utilizing a discounted cash flow methodology as there was no specific allocation of purchase price to any of Nortek Holdings’ operating units provided for in the Recapitalization agreements.

The following is a summary of the Push Down Accounting as of January 9, 2003, the date of the Recapitalization:

The Push Down Accounting resulted in a reduction of the net assets of the Combined Companies of $49,086,000, which resulted in a corresponding reduction to parent company (deficit) investment of

$49,086,000 in the accompanying combined statement of parent company (deficit) investment as of January 9, 2003.

In connection with the Recapitalization and the application of Push Down Accounting, the Combined Companies have reflected certain fair value adjustments, including the deferred tax consequences, to certain assets and liabilities based upon amounts derived from Nortek Holdings’ final purchase price allocations as of December 31, 2003. The following table shows a comparison of the initial allocation of purchase price reflected in the quarter ended April 5, 2003 and the final allocation of purchase price for the year ended December 31, 2003:

The following is a summary of the material adjustments made to the initial allocation of purchase price in the final allocation of purchase price:



	•	The change in the allocations to property, plant and equipment and intangible assets reflect adjustments recorded based upon the finalization of the Combined Companies’ asset appraisals for each of the Combined Companies’ significant locations in the fourth quarter of 2003.



	•	The change in the allocation to prepaid and deferred income taxes principally reflects the deferred tax consequences of the adjustments made to property, plant and equipment, and intangible assets discussed above.



	•	The increase in the reduction to goodwill principally reflects the impact of Nortek Holdings’ allocation of goodwill to its reporting segments based upon their relative fair values as of January 9, 2003, which resulted in a reduction to the Combined Companies’ goodwill of approximately $53,940,000. This reduction was partially offset by the net impact of the changes to property, plant and equipment, intangible assets, prepaid and deferred income taxes and other accounts, which increased goodwill by approximately $24,886,000. Goodwill associated with the Recapitalization will not be deductible for federal, state or foreign income tax purposes.

The reduction of goodwill of approximately $53,940,000 associated with Nortek’s allocation of goodwill by reporting segment is the principal component of the reduction to parent company (deficit) investment, which is included in the Recapitalization line in the accompanying combined statement of parent company (deficit) investment.

In the 4th quarter of 2003, Nortek Holdings’ realized the benefit of certain pre-Recapitalization deferred tax assets, which were not recorded as of the Recapitalization due to uncertainty of realization. The increase in the deferred tax assets resulted in a reduction to goodwill, which was allocated to Nortek Holdings’ reportable segments based upon their relative fair values as of January 9, 2003. Accordingly, the Combined Companies recorded a reduction to goodwill of $4,195,000 through an intercompany transfer in the parent company accounts, which is reflected as a separate item in the accompanying combined statement of parent company (deficit) investment.

During the period from January 10, 2003 to December 31, 2003, the Combined Companies reflected amortization of purchase price allocated to inventory of approximately $1,387,000 in cost of sales related to inventory acquired as part of the Recapitalization. No similar adjustment was required for such inventory in 2002 under the Company’s historical basis of accounting.

In connection with both the initial and final allocations of purchase price to property, plant and equipment acquired as part of the Recapitalization, the Combined Companies assigned new useful lives based upon the initial estimated and then the final appraised remaining useful lives from the date of the Recapitalization, respectively, in order to determine depreciation expense for all periods subsequent to the Recapitalization. For the period from January 10, 2003 to December 31, 2003, the Combined Companies reflected approximately $500,000 of lower depreciation expense in continuing operations in cost of sales as compared to the Combined Companies’ historical basis of accounting prior to the Recapitalization. The lower depreciation expense reflects the favorable impact of approximately $1,700,000 related to revisions to the remaining useful lives, which was partially offset by the unfavorable impact of approximately $1,200,000 related to the increase in property, plant and equipment related to the allocation of purchase price. Depreciation expense related to property, plant and equipment acquired as part of the Recapitalization was recorded based upon the initial allocation of purchase price and initial estimated useful lives for the period from January 10, 2003 to October 4, 2003 and based upon the final allocation of purchase price and appraised useful lives for the period from October 5, 2003 to December 31, 2003. Depreciation expense would have been approximately $1,800,000 higher for the period from January 10, 2003 to December 31, 2003 if the final allocation of purchase price and appraised remaining useful lives had been used to record depreciation expense for the period from January 10, 2003 to October 4, 2003, primarily due to the appraised remaining useful lives being shorter than the initial estimates, which was partially offset by the reduction in the final purchase price allocation.

In connection with both the initial and final allocations of purchase price to intangible assets acquired as part of the Recapitalization, the Combined Companies assigned new useful lives based upon the initial estimated and then the final appraised remaining useful lives from the date of the Recapitalization, respectively, in order to determine amortization expense for all periods subsequent to the Recapitalization. For the period from January 10, 2003 to December 31, 2003, the Combined Companies reflected in continuing operations approximately $800,000 of higher amortization of intangible assets as compared to the Combined Companies’ historical basis of accounting prior to the Recapitalization. The higher amortization reflects the combination of the unfavorable impact of approximately $1,500,000 related to revisions to the remaining useful lives and the favorable impact of approximately $700,000 related to the decrease in intangible assets as a result of the allocation of purchase price. Amortization expense related to intangible assets acquired as part of the Recapitalization was recorded based upon the initial allocation of purchase price and estimated useful lives for the period from January 10, 2003 to October 4, 2003 and based upon the final allocation of purchase price and appraised useful lives for the period from October 5, 2003 to December 31, 2003. Amortization expense would have been approximately $100,000 lower for the period from January 10, 2003 to December 31, 2003 if the final allocation of purchase price and appraised remaining useful lives had been used to record amortization expense for the period from January 10, 2003 to October 4, 2003, primarily due to the reduction

in the allocation of purchase price, which was partially offset by the appraised remaining useful lives being shorter than the initial estimates.

A summary of the rollforward of goodwill from January 9, 2003 to December 31, 2003 is presented in the table below:

A summary of acquired intangible assets as of January 9, 2003 after reflecting the impact of Push Down Accounting is as follows:

The following reflects the pro forma effect of the Recapitalization for the period from January 1, 2003 to January 9, 2003 and the year ended December 31, 2002:

The unaudited pro forma condensed consolidated summary of operations for the period from January 1, 2003 to January 9, 2003 reflect the actual results for the period as adjusted to give effect to the Recapitalization as if it had occurred on January 1, 2003. The unaudited pro forma condensed consolidated summary of operations for the year ended December 31, 2002 reflect the actual results for the year as adjusted to give effect to the Recapitalization as if it had occurred on January 1, 2002.

On November 22, 2002, Ply Gem sold the capital stock of its Richwood subsidiary for approximately $8,500,000 of net cash proceeds and recorded a pre-tax loss of approximately $3,000,000 in the fourth quarter of 2002. As required by SFAS No. 142, Ply Gem allocated $4,200,000 of goodwill to Richwood in connection with the determination of the loss on sale based upon the relative fair value of Richwood to the total fair value of Ply Gem. The related goodwill amortization prior to January 1, 2002 and goodwill have been included in the results of discontinued operations and assets of discontinued operations, respectively, for all periods presented below, as required.

On April 2, 2002, Ply Gem sold the capital stock of its Hoover subsidiary for approximately $20,000,000 of net cash proceeds and recorded a pre-tax gain of approximately $5,400,000 in the second quarter of 2002. Approximately $8,500,000 of the cash proceeds was used to pay down outstanding debt under Ply Gem’s then existing credit facility in the second quarter of 2002 (see Note 6).

On September 21, 2001, Ply Gem sold the capital stock of its subsidiaries, Peachtree and SNE for approximately $45,000,000 in cash, and recorded a pre-tax loss on the sale of approximately $34,000,000 in the third quarter of 2001, including the write-off of approximately $11,700,000 of unamortized intangible assets. A portion of the cash proceeds was used to pay down approximately $20,500,000 of outstanding debt under Ply Gem’s then existing credit facility (see Note 6).

The Combined Companies allocate interest to dispositions that qualify as a discontinued operation for debt instruments, which are entered into specifically and solely with the entity disposed of and from debt, which is paid down with proceeds received from the disposition. Interest allocated to discontinued operations was approximately $100,000 and $700,000 (net of taxes of approximately $500,000) for the years ended December 31, 2002 and 2001, respectively.

The table that follows presents a summary of the results of discontinued operations for the Combined Companies for the years ended December 31, 2002 and 2001:

Interest paid, excluding parent company charges, was $1,272,000, $16,000, $3,253,000 and $5,205,000 for the period from January 10, 2003 to December 31, 2003, the period January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively.

Certain non-cash financing and investing activities have been excluded from the accompanying combined statement of cash flows and include decreases of approximately $306,000 and $91,000 in the fair market value of marketable securities available for the years ended December 31, 2002 and 2001, respectively and dividends paid to Nortek, in the form of notes payable, of $280,000,000 during the year ended December 31, 2001.

The table that follows is a summary of domestic and foreign earnings (loss) from continuing operations before provision (benefit) for income taxes included in the accompanying combined statement of operations for the periods indicated:

The table that follows is a summary of the provision (benefit) for income taxes from continuing operations included in the accompanying combined statement of operations for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001:

As indicated in Note 1, the Combined Companies have recorded federal income taxes using the pro rata allocation method. If federal income taxes were computed assuming the Combined Companies filed a separate federal income tax return, the federal tax provision for the period from January 10, 2003 to December 31, 2003 would have been approximately $200,000 lower and net earnings would have been approximately $200,000 higher and would have been approximately the same for the period from January 1, 2003 to January 9, 2003.

Income tax payments (refunds), net, were approximately $703,000, $(6,000), $442,000 and $575,000 for the period from January 10, 2003 to December 31, 2003, the period January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively. In addition, CWD Windows transferred to BNC approximately $3,748,000, $1,091,000 and $891,000 during the period from January 10, 2003 to December 31, 2003 and the years ended December 31, 2002 and 2001, respectively, for their share of the amounts due under BNC’s Canadian income tax returns. No amounts were transferred during the period from January 1, 2003 to January 9, 2003.

The table that follows reconciles the provision for income taxes from continuing operations at the federal statutory income tax rate of 35% to the provision for income taxes from continuing operations for the periods indicated:

The tax effect of temporary differences, which gave rise to significant portions of deferred income tax assets and liabilities as of December 31, 2003 and 2002 are as follows:

The Combined Companies have established valuation allowances related to certain capital loss carry-forwards. At December 31, 2003, Ply Gem has approximately $8.4 million of capital loss carry-forwards, which can be utilized to offset capital gains, if any, in future periods, which expire between 2004 and 2006.

Notes, mortgage notes and obligations payable in the accompanying combined balance sheet at December 31, 2003 and 2002 consist of the following:

Ply Gem had a credit facility with a syndicate of banks, which provided Ply Gem with a term loan and a letter of credit facility, which was repaid in full on July 25, 2002 for the remaining amount of approximately $42,742,000. Nortek made the final payment of $42,742,000 on Ply Gem’s behalf utilizing proceeds from the Nortek debt facility described below. Ply Gem subsequently reimbursed Nortek the $42,742,000 through an intercompany cash transfer and the amount is included in net transfers to Nortek, Inc. in the accompanying combined statement of cash flows. Interest on borrowings were at varying rates based, at Ply Gem’s option, on (a) the London Interbank Offered Rate (LIBOR) plus a spread, or (b) the higher of (i) .50% above the federal funds rate or (ii) the bank’s prime rate. PLY GEM paid a facility fee quarterly, which fluctuated between .20% and .30% of the aggregate principal amount available under the facility. The weighted average interest rates on the credit facility for the period from January 1, 2002 through July 25, 2002 and the year ended December 31, 2001 were 2.4% and 4.8%, respectively. The credit facility included customary covenants, including covenants limiting Ply Gem’s ability to pledge assets or incur liens on assets and required Ply Gem to maintain certain financial covenants. Borrowings under this credit facility were collateralized by the common stock, inventory and accounts receivable of Ply Gem’s principal subsidiaries. Average outstanding borrowings under the credit facility for the period from January 1, 2002 through July 25, 2002 and the year ended December 31, 2001 were approximately $50,906,000 and $68,887,000, respectively. Prior to July 25, 2002, Ply Gem made mandatory principal payments of approximately $10,680,000 during 2002. In 2001, Ply Gem made mandatory principal payments of approximately $20,704,000.

During 1999, Ply Gem entered into a $45,000,000 interest rate collar agreement to lock in the interest rate on a portion of the credit facility between a floor of 5.76% and a cap of 7.00%. The interest rate collar agreement was terminated on August 27, 2002. To the extent that the one-month US Dollar Libor rate was below the collar floor, payment was due from Ply Gem for the difference. To the extent the one-month US Dollar Libor rate was above the collar cap, Ply Gem was entitled to receive the difference.

During 2002, Nortek entered into a $200,000,000 Senior Secured Credit Facility (the “Nortek Senior Secured Credit Facility”), which was syndicated among several banks. The Nortek Senior Secured Credit Facility is secured by substantially all of Nortek’s accounts receivable and inventory, as well as certain

intellectual property rights, including those of the Combined Companies as subsidiaries and divisions of Nortek.

Notes payable to a subsidiary, which is wholly owned by Nortek, relate to dividends payable to Nortek declared during prior years of approximately $360,797,000 and borrowings related to the acquisition of Kroy Building Products, Inc. during 1999 of approximately $33,938,000. These notes are payable on demand and carry interest rates of 8% for a $280,000,000 note and 9.0% per annum for the other notes totaling $114,735,000. Nortek has provided the Combined Companies with assurances that it will not demand repayment in the foreseeable future; therefore, the notes have been classified as long term.

Mortgage notes payable of approximately $22,503,000 outstanding at December 31, 2003 include various mortgage notes and other related indebtedness payable in installments through 2025. These notes bear interest at rates ranging from approximately 1.14% to 10.47% and are collateralized by property and equipment with an aggregate net book value of approximately $20,977,000 at December 31, 2003.

Other obligations of approximately $7,059,000 outstanding at December 31, 2003 principally include borrowings relating to capital leases and other borrowings bearing interest at rates ranging from approximately 1.25% to 8.5%, which mature at various dates through 2017 and are collateralized by property and equipment with an aggregate net book value of approximately $10,701,000 at December 31, 2003.

The table that follows is a summary of maturities of all of the Combined Companies’ debt obligations due after December 31, 2003:

Approximately $27,800,000 of letters of credit have been issued under the Nortek Senior Secured Credit Facility and other facilities as additional security for approximately $27,137,000 of industrial revenue bonds and capital leases outstanding (included in mortgage notes payable and other in the table of notes, mortgage notes and obligations payable above) at December 31, 2003 relating to several of the Combined Companies’ manufacturing facilities.

CWD Windows was allocated interest expense of approximately $89,000 and $401,000 for the years ended December 31, 2002 and 2001, respectively, for its proportionate share of the amounts borrowed under BNC’s then existing credit facilities, which were fully repaid in 2002.

The Combined Companies and their subsidiaries have various pension plans, supplemental retirement plans for certain officers and profit sharing plans requiring contributions to qualified trusts and union administered funds.

Pension and profit sharing expense charged to operations aggregated approximately $2,082,000, $62,000, $2,069,000 and $1,167,000 for the period from January 10, 2003 to December 31, 2003, the period January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively. The Combined

Companies’ policy is to fund currently the actuarially determined annual contribution of their various qualified defined benefit plans. The Combined Companies expect to contribute approximately $485,000 to their defined benefit pension plan during 2004.

The table that follows provides a reconciliation of benefit obligations, plan assets and funded status of the plans included in the Combined Companies’ combined balance sheet as of December 31, 2003 and 2002:

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $14,562,000, $14,562,000 and $9,248,000, respectively, as of December 31, 2003 and $14,320,000, $14,320,000 and $9,037,000, respectively, as of December 31, 2002.

As a result of the Recapitalization, purchase accounting adjustments were made for all defined benefit plans as of the January 10, 2003 transaction date. The purchase accounting adjustments reflect the immediate

recognition of all unrecognized actuarial losses and unrecognized prior service costs as well as the reversal of the accumulated other comprehensive loss before tax benefit.

Plan assets consist of cash and cash equivalents, common stock, U.S. Government securities, corporate debt and mutual funds, as well as other investments, and include certain commingled funds with some of Nortek’s defined benefit plans. The weighted average rate assumptions used in determining pension costs and the projected benefit obligation for the periods indicated are as follows:

The Combined Companies’ net periodic benefit expense (income) for their defined benefit plans for the periods indicated consists of the following components:

The Company’s pension plan weighted-average asset allocations at December 31, 2003 and 2002, by asset category are as follows:

Ply Gem’s domestic qualified defined benefit pension plan assets are invested to maximize returns without undue exposure to risk. The investment objectives are also to produce a total return exceeding the median of a universe of portfolios with similar average asset allocation and investment style objectives, and to earn a return, net of fees, greater or equal to the long-term rate of return used in the actuarial computations.

Risk is controlled by maintaining a portfolio of assets that is diversified across a variety of asset classes, investment styles and investment managers. The plans’ asset allocation policies are consistent with the

established investment objectives and risk tolerances. The asset allocation policies are developed by examining the historical relationships of risk and return among asset classes, and are designed to provide the highest probability of meeting or exceeding the return objectives at the lowest possible risk. For 2004, the target allocation is 57% for equity securities, 41% for fixed income securities and 2% for cash.

At December 31, 2003, the Combined Companies and their subsidiaries are obligated under lease agreements for the rental of certain real estate and machinery and equipment used in their operations. Future minimum rental obligations aggregate approximately $9,469,000 at December 31, 2003. The obligations are payable as follows:

Certain of these lease agreements provide for increased payments based on changes in the consumer price index and may include renewal options. Rental expense charged to operations in the accompanying combined statement of operations was approximately $6,630,000, $143,000, $6,017,000 and $5,365,000 for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001, respectively. Under certain of these lease agreements, the Combined Companies or their subsidiaries are also obligated to pay insurance and taxes.

Ply Gem has indemnified third parties in certain transactions involving dispositions of former subsidiaries. As of December 31, 2003 and 2002, Ply Gem has recorded liabilities in relation to these indemnifications of approximately $18,200,000 and $23,900,000, respectively consisting of the following:

The product claim liabilities of approximately $6,602,000 and $8,440,000 at December 31, 2003 and 2002, respectively, represent the estimated costs to resolve the outstanding matters related to a former subsidiary of Ply Gem, which is a defendant in a number of lawsuits alleging damage caused by alleged defects in certain pressure treated wood products. Ply Gem has indemnified the buyer of the former subsidiary for all known liabilities and future claims relating to such matters and retained the rights to all potential reimbursements related to insurance coverage. Many of the suits have been resolved by dismissal or settlement

with amounts being paid out of insurance proceeds or other third party recoveries. Ply Gem and the former subsidiary continue to vigorously defend the remaining suits. Certain defense and indemnity costs are being paid out of insurance proceeds and proceeds from a settlement with suppliers of material used in the production of the treated wood products. Ply Gem and the former subsidiary have engaged in coverage litigation with certain insurers and have settled coverage claims with several of the insurers. The Combined Companies believe that the remaining coverage disputes will be resolved on a satisfactory basis and additional coverage will be available. In reaching this belief, the Combined Companies analyzed insurance coverage and the status of the coverage litigation, considered the history of settlements with primary and excess insurers and consulted with counsel. The Combined Companies have recorded receivables at December 31, 2003 and 2002 of approximately $2,385,000 and $5,011,000, respectively, for the estimated recoveries, which are deemed probable of collection related to insurance litigation matters discussed above. During 2003, the Combined Companies settled certain of the insurance litigation matters and received approximately $4,113,000.

The long-term lease liabilities of approximately $6,226,000 and $8,427,000 at December 31, 2003 and 2002, respectively relate to the estimated amounts to be paid, net of any estimated recoveries where subleases are in place, primarily in connection with various facility leases where Ply Gem has retained the liability for the lease agreement in connection with the sale of certain former subsidiaries that utilized the facilities. Accrued costs include base rent, additional rent for consumer price index increases as defined in the leases, taxes, utilities, insurance, repairs and maintenance and, if applicable, the estimated settlement costs to terminate the leases prior to the end of their scheduled term. Consistent with generally accepted accounting provisions in the United States prior to December 31, 2002, the Combined Companies have recorded all long-term lease liabilities at the undiscounted gross amount expected to be paid to settle the liabilities in the future. Approximately $2,125,000 of these long-term lease liabilities were settled and paid during fiscal 2003.

The multiemployer pension liability of approximately $4,337,000 and $4,478,000 at December 31, 2003 and 2002, respectively, relates to liabilities assumed by Ply Gem in 1998 when its former subsidiary, Studley Products, Inc. (“Studley”) was sold. In connection with the sale, Studley ceased making contributions to the Production Service and Sales District Council Pension Fund (the “Pension Fund”) and Ply Gem assumed responsibility for all withdrawal liabilities to be assessed by the Pension Fund. Accordingly, Ply Gem is making quarterly payments of $89,747 to the Pension Fund through 2018 based upon the assessment of withdrawal liability received from the Pension Fund. The multiemployer pension liability represents the present value of the quarterly payment stream using a 6% discount rate as well as an estimate of additional amounts that may be assessed in the future by the Pension Fund under the contractual provisions of the Pension Fund.

Other indemnification liabilities of approximately $1,035,000 and $2,555,000 at December 31, 2003 and 2002, respectively, principally relate to the estimated amounts of various potential liabilities related to legal, environmental and other matters that may arise in connection with indemnification agreements provided in conjunction with the purchase and sale agreements for various subsidiaries, which Ply Gem has sold over the past several years.

Ply Gem has guaranteed certain obligations of various third parties that aggregate approximately $27,700,000 at December 31, 2003 related to Ply Gem’s guarantee of rental payments through June 30, 2016 under a facility leased by SNE Enterprises, Inc. (“SNE”), which was sold on September 21, 2001. The buyer of SNE has provided certain indemnifications and other rights to Ply Gem for any payments that it might be required to make pursuant to this guarantee. Should the buyer of SNE cease making payments then Ply Gem may be required to make payments on its guarantees. Ply Gem does not anticipate incurring any loss under these guarantees and accordingly has not recorded any liabilities at December 31, 2003 in the accompanying combined balance sheet in accordance with accounting principles generally accepted in the United States.

The Combined Companies sell a number of products and offer a number of warranties. The specific terms and conditions of these warranties vary depending on the product sold and country in which the product is sold. The Combined Companies estimate the costs that may be incurred under their warranties and record a liability for such costs at the time of sale. Factors that affect the Combined Companies’ warranty liabilities include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Combined Companies periodically assess the adequacy of the recorded warranty claims and adjust the amounts as necessary.

Changes in the Combined Companies’ combined short-term and long-term warranty liabilities during the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the year ended December 31, 2002 are as follows:

The Combined Companies are subject to other contingencies, including legal proceedings and claims arising out of their businesses that cover a wide range of matters, including, among others, environmental matters, contract and employment claims, product liability, warranty and modification, adjustment or replacement of component parts of units sold, which may include product recalls. Product liability, environmental and other legal proceedings also include matters with respect to businesses previously owned. The Combined Companies have used various substances in their products and manufacturing operations, which have been or may be deemed to be hazardous or dangerous, and the extent of their potential liability, if any, under environmental, product liability and workers’ compensation statutes, rules, regulations and case law is unclear. Further, due to the lack of adequate information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated.

As of December 31, 2003, the Combined Companies have accrued approximately $1,800,000 to cover the estimated costs of known litigation claims, including the estimated cost of legal services, that the Combined Companies are contesting including certain employment and shareholder litigation related to Ply Gem.

While it is impossible to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits, the Combined Companies believe that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the combined financial position or results of operations of the Combined Companies.

In connection with the Acquisition, Nortek has indemnified Ply Gem for certain liabilities as defined in the Purchase Agreement. In the event, Nortek were unable to satisfy amounts due under the indemnifications then Ply Gem would be liable. Ply Gem believes that Nortek has the financial capacity to honor the indemnifications and therefore does not anticipate incurring any losses related to liabilities indemnified under the Purchase Agreement.

Accrued expenses and taxes, net, consist of the following at December 31, 2003 and 2002:

Other long-term liabilities consist of the following at December 31, 2003 and 2002:

Effective January 1, 2003, the Combined Companies adopted SFAS No. 146 which addresses the accounting and reporting for costs associated with exit or disposal activities, nullifies EITF 94-3 and substantially nullifies EITF 88-10. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material effect on the Combined Companies’ combined financial statements.

The Combined Companies incurred approximately $600,000 during the period from January 10, 2003 to December 31, 2003 of severance and other costs associated with the closure of a certain manufacturing facility and expect to incur additional future restructuring costs of less than $100,000 related to restructuring plans, which began to be implemented in the first quarter of 2003. The facility to be closed is owned by a subsidiary of the Combined Companies and is expected to be sold in 2004. The facility, which has an estimated fair value of approximately $2.6 million, was transferred to Nortek in the 4th quarter of 2003.

The following table sets forth restructuring activity in the accompanying combined balance sheet and combined statement of operations for the period from January 10, 2003 to December 31, 2003. There was no

material restructuring activity for the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001. The provisions for these costs are included primarily in selling, general and administrative expense, net in the accompanying combined statement of operations.

Employee separation expenses are comprised of severance, vacation, outplacement and retention bonus payments.

Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information” (SFAS 131) requires companies to report certain information about operating segments in their financial statements and established standards for related disclosures about products and services, geographic areas and major customers. SFAS 131 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Operating segments meeting certain aggregation criteria may be combined into one reportable segment for disclosure purposes. Information is presented to conform to this organizational structure subsequent to the Acquisition.

The Combined Companies report information to the chief operating decision maker along product lines and have three operating segments but only two reportable segments: 1) vinyl siding, fencing, railing, and decking and 2) windows and doors.

The income (loss) from continuing operations before income taxes of each segment includes the revenue generated on transactions involving products within that segment less identifiable expenses. Unallocated income and expenses include items not directly attributed to or allocated to the financial statements reviewed by the Company’s chief operating decision maker for either of our reporting segments. Such items include interest, legal costs, corporate payroll, and unallocated finance and accounting expenses. Unallocated corporate assets include cash and certain receivables.

One customer accounted for approximately 28% of net sales for the combined periods from January 1, 2003 to January 9, 2003 and from January 10, 2003 to December 31, 2003 and 27% and 28% of the Combined Companies’ net sales for the years ended December 31, 2002 and 2001, respectively. The accounts receivable balance related to this customer was approximately $6,324,000 and $3,950,000 at December 31, 2003 and December 31, 2002, respectively.

For the year ended December 31, 2001, the Combined Companies recorded a non-taxable gain of approximately $3,200,000 from net death benefit insurance proceeds relating to life insurance maintained on former managers as a reduction of selling, general and administrative expense in the accompanying combined statement of operations.

For the year ended December 31, 2001, the Combined Companies charged approximately $600,000 of fees and expenses associated with Nortek’s material procurement strategy to selling, general and administrative expense in the accompanying combined statement of operations. Costs incurred in 2002 and 2003 were allocated through the management charge.

Financial instruments, which potentially subject the Combined Companies to concentrations of credit risk, consist principally of temporary cash investments and trade receivables. The Combined Companies place their temporary cash investments with high credit quality financial institutions and limit the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to trade receivables, with the exception of the significant customer, are limited due to the large number of customers comprising the Combined Companies’ customer base and their dispersion across many different geographical regions.

The tables that follow summarize unaudited quarterly financial data for the years ended December 31, 2003 and December 31, 2002:

In 2004, Ply Gem closed its Thermal-Gard, Inc. facilities in Punxsutawney, Pennsylvania. The impact of the closure is not expected to have a material impact on the financial statements of the Combined Companies in 2004.

In connection with the financing of the Acquisition, Ply Gem sold $225 million of 9% Senior Subordinated Notes due 2012 (the “Notes”) and entered into $255 million of new senior credit facilities. The Notes are secured by full and unconditional guarantees on a joint and several basis from certain of Ply Gem’s 100% owned subsidiaries. Accordingly, the following guarantor and non-guarantor combining financial information is presented as of December 31, 2003 and 2002 and for the period from January 10, 2003 to December 31, 2003, the period from January 1, 2003 to January 9, 2003 and the years ended December 31, 2002 and 2001:

We have audited the accompanying balance sheet of Ply Gem Holdings, Inc. as of January 23, 2004 (Inception). This balance sheet is the responsibility of the Company’s management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of Ply Gem Holdings, Inc. as of January 23, 2004 (Inception), in conformity with U.S. generally accepted accounting principles.

Ply Gem Holdings, Inc. (Holdings) is a wholly owned subsidiary of Ply Gem Investment Holdings, Inc. Holdings was incorporated on January 23, 2004 to act as a holding company and for the purpose of acquiring Ply Gem Industries, Inc. Holdings has no other operations.

The preparation of a balance sheet in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (FIN 46). FIN 46 clarifies the application of ARB No. 51, “Consolidated Financial Statements”, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and for existing variable interest entities no later than the end of the first annual reporting period beginning after December 15, 2003.

The adoption of FIN 46 is not expected to have a material impact on the Company’s results of operations or financial condition.

Holdings is authorized to issue up to 200 shares of capital stock, 100 shares each, of preferred and common stock. The board of directors is vested with the authority to designate the rights and limitations of the capital stock, including the dividend rate, the conversion rights, the redemption price, or liquidation preferences of the preferred shares at the time of their issuance. At January 23, 2004, no shares of preferred stock had been issued.

Shares of common stock are subordinated to shares of the preferred stock with respect to distributions upon liquidation.

On February 12, 2004, Holdings acquired all of the outstanding interests of Ply Gem Industries, Inc. in accordance with a stock purchase agreement entered into among Holdings, Nortek, and WDS LLC for an aggregate consideration of cash and assumed indebtedness of approximately $560 million. Transaction costs and expenses were approximately $30 million. In connection with the financing of the acquisition, Ply Gem Industries, Inc. sold $225 million of 9% Senior Subordinated Notes (Notes) due 2012 and entered into $255 million of new senior credit facilities consisting of a $65 million revolving credit facility and a $190 million term loan facility. The Notes are secured by guarantees from certain of Ply Gem Industries, Inc.’s subsidiaries and Holdings.

The accompanying unaudited condensed consolidated financial statements of Ply Gem Holdings, Inc. and the combined financial statements of Ply Gem Industries, Inc. and CWD Windows and Doors (“Ply Gem Industries, Inc.”) have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period from January 1, 2004 through February 11, 2004 and January 23, 2004 through July 3, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004.

The condensed combined balance sheet at December 31, 2003 has been derived from the audited combined financial statements of Ply Gem Industries, Inc. at that date but does not include all of the information and footnotes required by generally accepted accounting principles for completed financial statements.

The Company’s fiscal quarters are based on periods ending on the last Saturday of the last week in the quarter. Therefore the financial results of certain fiscal quarters will not be exactly comparable to the prior and subsequent fiscal quarters.

Ply Gem Holdings, Inc., a wholly owned subsidiary of Ply Gem Investment Holdings, Inc., was incorporated on January 23, 2004 for the purpose of acquiring Ply Gem Industries, Inc. from Nortek. The Acquisition was completed on February 12, 2004, as Nortek sold Ply Gem Industries, Inc., to Ply Gem Holdings, Inc., an affiliate of Caxton-Iseman Capital, Inc., pursuant to the terms of the Stock Purchase Agreement among Ply Gem Investment Holdings, Inc. and Nortek, Inc. and WDS LLC dated as of December 19, 2003, as amended (the “Purchase Agreement”). Prior to February 12, 2004, the date of the Acquisition, Ply Gem Holdings, Inc. had no operations and Ply Gem Industries, Inc. was wholly owned by a subsidiary of WDS LLC, which was a wholly owned subsidiary of Nortek, Inc. (collectively with subsidiaries “Nortek”).

The accompanying financial statements include the consolidated results of operations for the period from January 23, 2004 to July 3, 2004 and consolidated financial position for Ply Gem Holdings, Inc. and Subsidiaries (the “Company” or “Ply Gem”) as of July 3, 2004, and the combined results of operations of Ply Gem Industries, Inc. for the periods from January 1, 2004 to February 11, 2004, January 1, 2003 to January 9, 2003, and January 10, 2003 to July 5, 2003, and results of operations for the three month periods ending July 3, 2004 and July 5, 2003. The periods presented during calendar 2004 provide the combined operating results of Ply Gem Industries, Inc. from the beginning of the year, January 1, 2004, until the date of Acquisition, February 12, 2004 (see Note 2), as well as from the date of inception of Ply Gem Holdings, Inc., January 23, 2004, through the end of the second quarter, July 3, 2004.

The periods presented during calendar 2003 provide the combined operating results of Ply Gem Industries, Inc. from the beginning of the year, January 1, 2003 until January 9, 2003. On January 9, 2003, Nortek Holdings was acquired by certain affiliates and designees of Kelso & Company L.P. and certain members of Nortek management in accordance with the Agreement and Plan of Recapitalization by and among Nortek, Inc., Nortek Holdings, Inc. and K Holdings, Inc. dated as of June 20, 2002, (the “Recapitalization”). The period from January 10, 2003 until July 5, 2003 is presented in the accompanying consolidated and combined financial statements as “post-recapitalization”.

Nortek accounted for the Recapitalization as a purchase in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” (“SFAS No. 141”), which

resulted in a new valuation for the assets and liabilities of Nortek Holdings and its subsidiaries based upon fair values as of the date of the Recapitalization. As allowed under SEC Staff Accounting Bulletin No. 54, “Push Down Basis of Accounting Required in Certain Limited Circumstances”, Ply Gem Industries, Inc. reflected certain applicable purchase accounting adjustments recorded by Nortek Holdings in the combined Ply Gem Industries, Inc. financial statements as of December 31, 2003 and for the period from January 10, 2003 through the end of the second quarter, July 5, 2003.

Ply Gem is a diversified manufacturer of residential and commercial building products, which are sold, primarily in the United States and Canada, and include a wide variety of products for the residential and commercial construction, the do-it-yourself and the professional remodeling and renovation markets.

The consolidated and combined financial statements include the accounts of Ply Gem Holdings, Inc. and its subsidiaries, all of which are wholly owned, after the elimination of intercompany accounts and transactions.

The preparation of these consolidated and combined financial statements in conformity with accounting principles generally accepted in the United States involves estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of income and expense during the reporting periods. Certain of the Company’s accounting policies require the application of judgment in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company periodically evaluates the judgments and estimates used in their critical accounting policies to ensure that such judgments and estimates are reasonable for their interim and year-end reporting requirements. These judgments are based on the Company’s historical experience, current trends and information available from other sources, as appropriate. If different conditions result from those assumptions used in the Company’s judgments, the results could be materially different from the Company’s estimates.

The Company recognizes sales upon the shipment of their products net of applicable provisions for discounts and allowances. The customer takes title upon shipment and assumes the risks and rewards of ownership of the product. Allowances for cash discounts, volume rebates and other customer incentive programs, as well as gross customer returns, among others, are recorded as a reduction of sales at the time of sale based upon the estimated future outcome. Cash discounts, volume rebates and other customer incentive programs are based upon certain percentages agreed upon with the Company’s various customers, which are typically earned by the customer over an annual period. The Company records periodic estimates for these amounts based upon the historical results to date, estimated future results through the end of the contract period and the contractual provisions of the customer agreements. Customer returns are recorded on an actual basis throughout the year and also include an estimate at the end of each reporting period for future customer returns related to sales recorded prior to the end of the period. The Company generally estimates customer returns based upon the time lag that historically occurs between the date of the sale and the date of the return while also factoring in any new business conditions that might impact the historical analysis such as new product introduction. The Company also provides for estimates of warranty, bad debts and shipping costs at the time of sale. Shipping and warranty costs are included in cost of products sold. Bad debt provisions are included in selling, general and administrative expense. The amounts recorded are generally based upon historically derived percentages while also factoring in any new business conditions that might impact the

historical analysis such as new product introduction for warranty and bankruptcies of particular customers for bad debts.

Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less which are readily convertible into cash.

The Company has classified as restricted cash and cash equivalents in the accompanying consolidated and combined balance sheets certain investments and marketable securities that are not fully available for use in their operations. The amount of restricted cash is determined by the existing liabilities on our municipal bonds. At July 3, 2004 there was no restricted cash balance.

Inventories in the accompanying consolidated and combined balance sheets are valued at the lower of cost or market. At July 3, 2004 and December 31, 2003, approximately $11,069,000 and $10,097,000 of total inventories, respectively, were valued on the last-in, first-out method (“LIFO”). Under the first-in, first-out method (“FIFO”) of accounting, such inventories would have been approximately $982,000 lower at July 3, 2004, and $402,000 higher at December 31, 2003. All other inventories were valued under the FIFO method. In connection with both LIFO and FIFO inventories, the Company records provisions, as appropriate, to write-down obsolete and excess inventory to estimated net realizable value. The process for evaluating obsolete and excess inventory often requires the Company to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be able to be sold in the normal course of business. Accelerating the disposal process or incorrect estimates of future sales potential may cause the actual results to differ from the estimates at the time such inventory is disposed or sold.

Depreciation and amortization of property and equipment are provided on a straight-line basis over estimated useful lives, which are generally as follows:

The Company applies SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), to its intangible and other long-lived assets. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets but does not apply to goodwill or intangible assets that are not being amortized and certain other long-lived assets.

The Company accounts for acquired goodwill and intangible assets in accordance with SFAS No. 141. Purchase accounting required by SFAS No. 141 involves judgment with respect to the valuation of the acquired assets and liabilities in order to determine the final amount of goodwill (see Note 2). For significant acquisitions, the Company values items such as property, plant and equipment and acquired intangibles based

upon appraisals and determines the value of assets and liabilities associated with pension, supplemental executive retirement and post retirement benefit plans based upon actuarial studies.

The Company applies SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”) to goodwill and intangible assets. Under this statement, goodwill and intangible assets determined to have an indefinite useful life are no longer amortized, instead these assets are evaluated for impairment on an annual basis and whenever events or business conditions warrant. All other intangible assets are amortized over their estimated useful lives and are evaluated for impairment in accordance with the provisions of SFAS No. 144.

After the Acquisition, intangible assets consist principally of patents, trademarks and customer relationships, which are amortized on the straight-line basis over a weighted average remaining estimated useful life of approximately 13 years. As of July 3, 2004, the gross carrying amount of these patent, trademark and customer relationship assets was $12,000,000, $25,900,000 and $16,000,000, respectively. Accumulated amortization of these assets was approximately $223,000, $424,000, and $410,000, respectively. Amortization expense for the three month period ended July 3, 2004 was $625,000. Amortization expense for the period from January 23, 2004 through July 3, 2004 was $1,057,000. Estimated aggregate amortization for the remainder of 2004 and five succeeding fiscal years is $2,148,000, $4,295,000, $4,295,000, $4,295,000, $4,295,000, and $4,295,000.

Prior to the Acquisition, yet subsequent to the Recapitalization, intangible assets consisted principally of patents, trademarks and customer relationships, which were amortized on a straight-line basis over a weighted average remaining estimated useful life of approximately 13 years.

The Company records insurance liabilities and related expenses for health, workers’ compensation, product and general liability losses and other insurance reserves and expenses in accordance with either the contractual terms of their policies or, if self-insured, the total liabilities that are estimable and probable as of the reporting date. Insurance liabilities are recorded as current liabilities to the extent they are expected to be paid in the succeeding year with the remaining requirements classified as long-term liabilities. The accounting for self-insured plans requires that significant judgments and estimates be made both with respect to the future liabilities to be paid for known claims and incurred but not reported claims as of the reporting date. The Company relies heavily on historical trends and, in certain cases, actuarial calculations when determining the appropriate insurance reserves to record in the consolidated and combined balance sheet for a substantial portion of their workers compensation and general and product liability losses. In certain cases where partial insurance coverage exists, the Company must estimate the portion of the liability that will be covered by existing insurance policies to arrive at the net expected liability to the Company.

Prior to the Acquisition on February 12, 2004, Nortek was responsible for the preparation and filing of all income tax returns and the remittances of federal and state payments on behalf of the Company and its subsidiaries. Accordingly, for U.S. federal income tax purposes, the Company’s results of operations were included in the consolidated federal income tax returns of Nortek. The U.S. Subsidiaries file unitary, combined and separate state income tax returns. CWD Windows was included in the Canadian income tax return of BNC (a subsidiary of Nortek) and transferred to BNC their share of the Canadian income tax due and payable. After February 12, 2004, U.S. federal income tax returns will be prepared and filed by Ply Gem Investment Holdings, Inc. on behalf of the group. The Company and Ply Gem Investment Holdings, Inc. have executed a tax sharing agreement pursuant to which tax liabilities for each respective party are computed on a stand-alone basis. U.S. subsidiaries will continue to file unitary, combined and separate state income tax returns. CWD Windows will file a separate Canadian income tax return.

The Company accounts for deferred income taxes using the liability method in accordance with SFAS No. 109 “Accounting for Income Taxes” (“SFAS No. 109”), which requires that the deferred tax consequences of temporary differences between the amounts recorded in the Company’s consolidated and combined financial statements and the amounts included in the Company’s federal and state income tax returns be recognized in the balance sheet. The amounts recorded reflect estimates of what the final amounts will be when the actual federal, state and foreign income tax returns are filed for that fiscal year. Estimates are required with respect to, among other things, the appropriate state income tax rates to use in the various states that the Company and its subsidiaries are required to file, the potential utilization of operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realizable in the future. SFAS No. 109 requires balance sheet classification of current and long-term deferred income tax assets and liabilities based upon the classification of the underlying asset or liability that gives rise to a temporary difference.

The Company provides accruals for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated. Costs accrued have been estimated based upon an analysis of potential results, assuming a combination of litigation and settlement strategies and outcomes (see Note 6).

Included in the combined statement of operations in selling, general and administrative expense are parent company corporate charges of approximately $2,200,000 and $100,000 for the periods from January 10, 2003 to July 5, 2003, and from January 1, 2003 to January 9, 2003, and approximately $300,000 for the period from January 1, 2004 to February 11, 2004, respectively, related to accounting, legal, insurance, treasury and other management services provided by Nortek, which have been allocated based upon a combination of the specific identification method and as a percentage of the Company’s net sales to Nortek’s consolidated net sales. In the opinion of the Company’s management, this method of allocating such costs is reasonable. Included in interest expense is approximately $3,499,000, $15,421,000, and $942,000, for the periods from January 1, 2004 to February 11, 2004, January 10, 2003 to July 5, 2003, and from January 1, 2003 to January 9, 2003, respectively, related to interest owed to a subsidiary which is wholly owned by Nortek.

The Company has accrued a management fee to be paid to its equity sponsor, Caxton-Iseman Capital, Inc. of approximately $310,000 for the period from January 23, 2004 to April 3, 2004, and of approximately $385,000 for the period from April 4, 2004 to July 3, 2004.

The financial statements of entities outside the United States are generally measured using the foreign entity’s local currency as the functional currency. The Company translates the assets and liabilities of its foreign entity at the exchange rates in effect at year-end. Net sales and expenses are translated using average exchange rates in effect during the period. Gains and losses from foreign currency translation are credited or charged to accumulated other comprehensive loss in the accompanying consolidated and combined balance sheets.

On February 12, 2004, Ply Gem Investment Holdings, Inc.’s Board of Directors adopted the 2004 Stock Option Plan (the Plan) providing for grants of up to 148,050 shares of Ply Gem Investment Holdings, Inc.’s

common stock under nonqualified stock options. Employees of Ply Gem Investment Holdings, Inc. or any majority-owned subsidiary are eligible for awards, as specified in the Plan’s agreement. Ply Gem Investment Holdings, Inc.’s Board of Directors or Compensation Committee retains the right to select the grantees and set the term of each award, which may not be more than ten years. Ply Gem Investment Holdings, Inc.’s Board of Directors also has the power to determine the terms of the awards granted, including the number of shares subject to each award and other matters as specified in the Plan agreement. Generally, the exercise price of an option must be at least the estimated fair market value of a share as of the grant date. Awards generally vest over five years from the date of grant.

For the period January 1, 2003 through January 9, 2003 and for the period January 23, 2004 through July 3, 2004, the Company accounted for its stock-based employee compensation plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in the statement of operations, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

In connection with the Acquisition, all of the outstanding Class A Common Stock options issued by Nortek to Ply Gem Industries, Inc. employees were cancelled.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities — an interpretation of ARB No. 51” (“FIN 46”). FIN 46 clarifies the application of ARB No. 51, “Consolidated Financial Statements”, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The consolidation requirements of FIN 46 applied immediately to variable interest entities created after January 31, 2003 and for existing variable interest entities no later than the end of the first annual reporting period beginning after December 15, 2003. The adoption of FIN 46 did not have a material impact on the Company’s consolidated and combined financial statements.

The accounts receivable balance related to one customer was approximately $13,835,000 and $6,324,000 at July 3, 2004 and December 31, 2003, respectively.

On February 12, 2004, Ply Gem Holdings, Inc. purchased Ply Gem Industries, Inc. from Nortek, Inc. (the “Acquisition”). The Company accounted for the transaction as a purchase in accordance with the provisions of SFAS No. 141, which results in a new valuation for the assets and liabilities of Ply Gem Industries, Inc. and its subsidiaries based upon fair values as of the date of the purchase. The purchase price, excluding the value attributed to Ply Gem Industries, Inc. employees’ forfeited Nortek stock options, was allocated to the assets and liabilities based on their relative fair values. As of February 12, 2004, the Company preliminarily allocated the purchase price of the net assets acquired based on its estimates of the fair value of assets and liabilities as follows:

We have estimated the fair value of our assets and liabilities, as of the acquisition date, utilizing information available at the time our consolidated financial statements were prepared. These estimates are subject to refinement until all pertinent information has been obtained.

Unaudited pro forma results of operations for the periods January 1, 2003 to January 9, 2003, January 10, 2003 to July 5, 2003, and January 1, 2004 to February 11, 2004, and for the three month period ended July 5, 2003, as if the purchase had occurred at the beginning of the period is as follows:

Long-term debt in the accompanying consolidated and combined balance sheets at July 3, 2004 and December 31, 2003 consists of the following:

In connection with the Acquisition, the Company entered into new senior credit facilities with a syndicate of financial institutions and institutional lenders. The new senior credit facilities provide for senior secured financing of up to $255.0 million, consisting of $190.0 million of term loan facilities with a maturity of seven years that were drawn in full in connection with the consummation of the Acquisition and a $65.0 million revolving loan facility, including a letter of credit subfacility and a $10.0 million swingline subfacility, with a maturity of five years. The term loan facilities have two tranches, a $160.0 million tranche under which Ply Gem Industries, Inc. is the borrower, and a $30.0 million tranche under which our Canadian subsidiary, CWD Windows and Doors, Inc., is the borrower. However, it is the Company’s intention that Ply Gem Industries, Inc. will service this debt. The new senior credit facilities permit us to incur up to $50.0 million in additional term loans under the term loan facilities (including through additional tranches of term loans) which will have the benefit of the guarantees, and the collateral, described below. Such an increase in the term loan facilities will occur at our option if certain conditions are satisfied, including meeting our financial covenants, a senior leverage ratio on a pro forma basis and receipt of commitments from lenders for such additional amount.

Subsequent to the Acquisition, we amended and restated our new senior credit facilities on March 3, 2004, to increase our U.S. term loan facility from $160.0 million to $170.0 million and reduce our revolving credit facility from $65.0 million to $55.0 million.

The interest rates applicable to loans under our new senior credit facilities will be, at our option, equal to either a base rate plus an applicable interest margin, or an adjusted LIBOR rate plus an applicable interest margin, as defined in the senior credit facility agreement.

Our new senior credit facilities (following their amendment and restatement) require scheduled quarterly payments on the term loan facilities of $500,000 beginning in the quarter ended July 3, 2004 and for the next 23 calendar quarters thereafter, and payments of $47,000,000 on June 30, 2010, September 30, 2010, December 30, 2010 and on the maturity date, allocated pro rata between the two tranches.

The indebtedness of the U.S. borrower (Ply Gem Industries, Inc.) under our new senior credit facilities is guaranteed by Ply Gem Holdings, Inc., and all of our existing and future direct and indirect subsidiaries, subject to exceptions for foreign subsidiary guarantees of the U.S. borrower’s obligations to the extent such guarantees are prohibited by applicable law or would result in materially adverse tax consequences and other exceptions. The indebtedness of the Canadian borrower under our new senior credit facilities is guaranteed by Ply Gem Holdings, Inc., the U.S. borrower and all of the Canadian borrower’s future direct and indirect subsidiaries and is effectively guaranteed by all subsidiaries guaranteeing the U.S. borrower’s obligations under our new senior credit facilities. All indebtedness under our new senior credit facilities is secured, subject to certain exceptions, by a perfected first priority pledge of all of our equity interests and those of our direct and indirect subsidiaries, and, subject to certain exceptions, perfected first priority security interests in, and mortgages on, all tangible and intangible assets (including, without limitation, accounts receivable, inventory, equipment, general intangibles, inter-company notes, insurance policies, investment property, intellectual property, certain real property, cash and proceeds of the foregoing); provided that all tangible and intangible assets of the Canadian borrower and its subsidiaries are pledged to secure debt only of the Canadian borrower.

Our new senior credit facilities require that we comply on a quarterly basis with certain financial covenants, including a minimum interest coverage ratio test, a maximum leverage ratio test and a maximum capital expenditures level.

The table that follows is a summary of maturities of all of the Company’s long-term debt obligations due in each fiscal year after July 3, 2004: (Amounts in thousands)

Approximately $18,911,000 of letters of credit have been issued under our senior credit facility and other facilities as additional security for approximately $15,464,000 of industrial revenue bonds and capital leases outstanding (included in mortgage notes and bonds payable and other in the long-term debt table above) at July 3, 2004 relating to several of the Company’s manufacturing facilities.

The Company and it’s subsidiaries have various pension plans, supplemental retirement plans for certain officers and profit sharing plans requiring contributions to qualified trusts and union administered funds.

The Company’s policy is to fund currently the actuarially determined annual contribution of their various qualified defined benefit plans. The Company expects to contribute approximately $485,000 to the defined benefit pension plan during 2004.

The Company’s net periodic benefit expense for the defined benefit plans for the periods indicated consists of the following components:

In connection with the Acquisition, Nortek has indemnified the Company for certain liabilities as defined in the Purchase Agreement. In the event Nortek was unable to satisfy amounts due under these indemnifications then the Company would be liable. The Company believes that Nortek has the financial capacity to honor the indemnifications and therefore does not anticipate incurring any losses related to liabilities indemnified by Nortek under the Purchase Agreement. A receivable related to this indemnification has been recorded in other long-term assets in the amount of $15,372,000.

The Company has indemnified third parties in certain transactions involving dispositions of former subsidiaries. As of July 3, 2004 and December 31, 2003, the Company has recorded liabilities in relation to these indemnifications of approximately $14,186,000 and $18,200,000, respectively, consisting of the following:

The product claim liabilities of approximately $3,833,000 and $6,602,000 at July 3, 2004 and December 31, 2003 respectively, represented the estimated costs to resolve the outstanding matters related to a former subsidiary of the Company, which is a defendant in a number of lawsuits alleging damage caused by alleged defects in certain pressure treated wood products. The Company had indemnified the buyer of the former subsidiary for all known liabilities and future claims relating to such matters and retained the rights to all potential reimbursements related to insurance coverage. Many of the suits have been resolved by dismissal or settlement with amounts being paid out of insurance proceeds or other third party recoveries. The Company and the former subsidiary continue to vigorously defend the remaining suits. Certain defense and indemnity costs are being paid out of insurance proceeds and proceeds from a settlement with suppliers of material used in the production of the treated wood products. The Company and the former subsidiary have engaged in coverage litigation with certain insurers and have settled coverage claims with several of the insurers. The Company had recorded receivables at December 31, 2003 of approximately $2,385,000, for the estimated recoveries, which are deemed probable of collection related to insurance litigation matters discussed above. On February 12, 2004, in conjunction with the Acquisition, Nortek and the Company executed a Novation agreement, removing the Company as the primary obligor. Therefore the liability and a related receivable have been removed from the consolidated balance sheet as of July 3, 2004.

The long-term lease liabilities of approximately $5,606,000 and $6,226,000 at July 3, 2004 and December 31, 2003, respectively, relate to the estimated amounts to be paid, net of any estimated recoveries where subleases are in place, primarily in connection with various facility leases where the Company has retained the liability for the lease agreement in connection with the sale of certain former subsidiaries that utilized the facilities. Accrued costs include base rent, additional rent for consumer price index increases as defined in the leases, taxes, utilities, insurance, repairs and maintenance and, if applicable, the estimated settlement costs to terminate the leases prior to the end of their scheduled term. The Company has recorded all long-term lease liabilities at the undiscounted gross amount expected to be paid to settle the liabilities in the future. Approximately $2,125,000 of these long-term lease liabilities were settled and paid during fiscal 2003.

The multiemployer pension liability of approximately $4,262,000 and $4,337,000 at July 3, 2004 and December 31, 2003, respectively, relates to liabilities assumed by the Company in 1998 when its former subsidiary, Studley Products, Inc. (“Studley”) was sold. In connection with the sale, Studley ceased making contributions to the Production Service and Sales District Council Pension Fund (the “Pension Fund”) and the Company assumed responsibility for all withdrawal liabilities to be assessed by the Pension Fund. Accordingly, the Company is making quarterly payments of $89,747 to the Pension Fund through 2018 based upon the assessment of withdrawal liability received from the Pension Fund. The multiemployer pension liability represents the present value of the quarterly payment stream using a 6% discount rate as well as an estimate of additional amounts that may be assessed in the future by the Pension Fund under the contractual provisions of the Pension Fund.

Other indemnification liabilities of approximately $485,000 and $1,035,000 at July 3, 2004 and December 31, 2003, respectively, principally relate to the estimated amounts of various potential liabilities related to legal, environmental and other matters that may arise in connection with indemnification agreements provided in conjunction with the purchase and sale agreements for various subsidiaries, which the Company has sold over the past several years.

The Company has guaranteed certain obligations of various third parties that aggregate approximately $27,700,000 at December 31, 2003 related to Ply Gem’s guarantee of rental payments through June 30, 2016 under a facility leased by SNE Enterprises, Inc. (“SNE”), which was sold on September 21, 2001. The buyer of SNE has provided certain indemnifications and other rights to the Company for any payments that it might be required to make pursuant to this guarantee. Should the buyer of SNE cease making payments then the Company may be required to make payments on its guarantees. The Company does not anticipate incurring any loss under these guarantees and accordingly has not recorded any liabilities at July 3, 2004 or December 31, 2003 in the accompanying consolidated and combined balance sheets.

The Company sells a number of products and offers a number of warranties. The specific terms and conditions of these warranties vary depending on the product sold and country in which the product is sold. The Company estimates the costs that may be incurred under their warranties and records a liability for such costs at the time of sale. Factors that affect the Company’s warranty liabilities include the number of units sold, historical and anticipated rates of warranty claims, cost per claim and new product introduction. The Company periodically assesses the adequacy of the recorded warranty claims and adjusts the amounts as necessary.

Changes in the Company’s short-term and long-term warranty liabilities are as follows:

The Company is subject to other contingencies, including legal proceedings and claims arising out of its businesses that cover a wide range of matters, including, among others, environmental matters, contract and employment claims, product liability, warranty and modification, adjustment or replacement of component parts of units sold, which may include product recalls. Product liability, environmental and other legal proceedings also include matters with respect to businesses previously owned. The Company has used various substances in their products and manufacturing operations, which have been or may be deemed to be hazardous or dangerous, and the extent of its potential liability, if any, under environmental, product liability and workers’ compensation statutes, rules, regulations and case law is unclear. Further, due to the lack of adequate information and the potential impact of present regulations and any future regulations, there are certain circumstances in which no range of potential exposure may be reasonably estimated.

As of July 3, 2004, the Company has accrued approximately $1,020,000 to cover the estimated costs of known litigation claims, including the estimated cost of legal services, that the Company is contesting including certain employment and former shareholder litigation related to the Company.

While it is impossible to ascertain the ultimate legal and financial liability with respect to contingent liabilities, including lawsuits, the Company believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated and combined financial position or results of operations. It is possible, however, that future results of operations for any particular future period could be materially affected by changes in the assumptions or strategies related to these contingencies or changes out of the Company’s control.

Accrued expenses and taxes, net, consist of the following at July 3, 2004 and December 31, 2003:

Other long-term liabilities consist of the following at July 3, 2004 and December 31, 2003:

Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information” (SFAS 131) requires companies to report certain information about operating segments in their financial statements and established standards for related disclosures about products and services, geographic areas and major customers. SFAS 131 defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by management in deciding how to allocate resources and in assessing performance. Operating segments meeting certain aggregation criteria may be combined into one reportable segment for disclosure purposes. Comparative information for prior years is presented to conform to our current organizational structure.

The Company has two reportable segments: 1) vinyl siding, fencing, railing, and decking and 2) windows and doors.

The income (loss) from continuing operations before income taxes of each segment includes the revenue generated on transactions involving products within that segment less identifiable expenses. Unallocated income and expenses include items which are not directly attributed to or allocated to either of our reporting segments. Such items include interest, legal costs, corporate payroll, and unallocated finance and accounting expenses. Unallocated corporate assets include cash and receivables.

On July 23, 2004, Ply Gem Industries, Inc. signed a definitive stock purchase agreement with MWM Holding, Inc. to acquire MW Manufacturers Inc. for an expected purchase price of approximately $320 million. The transaction is expected to be completed by the end of the Company’s fiscal third quarter of 2004. In order to finance the acquisition, Ply Gem Industries, Inc. will obtain financing from various sources, including incremental senior secured credit facilities, incremental equity and the sale and leaseback of certain assets.

In connection with the financing of the Acquisition, the Company sold $225 million of its 9% Senior Subordinated Notes due 2012 (the “Notes”) and entered into $255 million of new senior credit facilities. The Notes are secured by full and unconditional guarantees on a joint and several basis from certain of the Company’s 100% owned subsidiaries. Accordingly, the following guarantor and non-guarantor information is presented as of July 3, 2004 and for the period from January 1, 2004 to February 11, 2004, the period from January 23, 2004 to July 3, 2004, the period from January 1, 2003 to January 9, 2003, the period from January 10, 2003 to July 5, 2003, and for the three month periods ended July 3, 2004 and July 5, 2003.

We have audited the accompanying consolidated balance sheet of MWM Holding, Inc. and subsidiaries (the “Company”) as of December 27, 2003, and the related consolidated statements of operations, shareholders’ equity and cash flows for the period from January 18, 2003 through December 27, 2003. We have also audited the predecessor consolidated balance sheet of MW Manufacturers Holding Corp. and subsidiaries (the “Predecessor Company”) as of December 28, 2002, and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from December 29, 2002 through January 17, 2003 and for the years ended December 28, 2002 and December 29, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the successor and predecessor consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of MWM Holding, Inc. and subsidiaries at December 27, 2003, and the Predecessor Company at December 28, 2002, and the consolidated results of operations and cash flows of MWM Holding, Inc. for the periods from January 18, 2003 through December 27, 2003, and the Predecessor Company for the period from December 29, 2002 through January 17, 2003 and the years ended December 28, 2002 and December 29, 2001, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 of the financial statements, the Company adopted Statement of Financial Accounting Standards No. 142 in 2002.

MWM Holding, Inc. (the “Company”) was incorporated on December 27, 2002, under the state laws of Delaware. The Company was capitalized and began operations on January 17, 2003. The Company operates as a holding company for MW Manufacturers, Inc. (“MW”) and its wholly owned subsidiaries, Lineal Technologies, Inc. (“Lineal”) and Patriot Manufacturing, Inc. (“Patriot”). MW, Lineal and Patriot manufacture and distribute residential and light commercial building products for the construction and repair and remodeling markets in the eastern and southern United States.

MW is a wholly owned subsidiary of MW Manufacturers Holding Corp. (“Holding”), which was substantially wholly owned by Fenway Holdings, L.L.C. (“Fenway”) during the years ended December 29, 2001 and December 28, 2002 and through the period from December 29, 2002 through January 17, 2003.

On January 17, 2003, Fenway sold all of MW Manufacturers Holding Corp.’s common stock (the “Transaction”) to the Company, an entity substantially owned by affiliates of Investcorp S.A. (“Investcorp”) and other investors arranged by Investcorp (collectively the “Investcorp Group”). The Company purchased Holding for $188,000,000 minus certain liabilities at the closing date as set forth in Note 15.

The consolidated balance sheet, statements of operations, stockholder’s equity, and cash flows captioned as “Predecessor” include those of Holding from December 31, 2000 through the date of the Transaction (January 17, 2003). As a result of the Transaction, the consolidated balance sheet, statements of operations, stockholder’s equity, and cash flows captioned as “Successor” represent the financial statements of the Company from January 18, 2003 through December 27, 2003. The Transaction has been accounted for as a purchase. The purchase price, purchase accounting adjustments, and goodwill resulting from the Transaction resulted in a new basis of accounting (see Note 16). The comparability of operating results for the “Predecessor” period and the “Successor” period are affected by the purchase accounting adjustments.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated.

Financial instruments consist of cash and cash equivalents, accounts receivable, short-term and long-term debt and capital leases. The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company estimates the fair value of its financial instruments using a discounted cash flow analysis based on interest rates for similar types of instruments available in the market place. At December 27, 2003 and December 28, 2002, the carrying amounts of the Company’s financial instruments approximated their fair values.

Inventories are carried on the basis of the lower of cost (first-in, first-out) or market.

In October 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”). This Statement establishes a single accounting model for the impairment or disposal of long-lived assets. As required by SFAS No. 144, the Company adopted this new accounting standard on December 30, 2001. The adoption of SFAS No. 144 did not have a material impact on the Company’s financial statements.

Property, plant and equipment is stated at cost and is depreciated using the straight-line method over the estimated useful lives of the assets. The estimated useful lives for buildings and leasehold improvements are generally 10 years; useful lives for machinery, equipment, furniture and fixtures range from 7 to 10 years; useful lives of tooling are generally 5 years; useful lives of autos range from 3 to 5 years; useful lives for computer hardware and software range from 3 to 4 years. Expenditures for maintenance and repairs, which neither materially add to the value of the property nor appreciably prolong its life, are charged to expense as incurred. Gains or losses on dispositions of property and equipment are included in operating income.

Identifiable intangible assets with finite lives are amortized over their estimated remaining useful lives as follows:

The Company periodically reviews the carrying value and estimated useful life of its long-lived assets to determine whether current events and circumstances warrant adjustments. This valuation is performed using the expected future undiscounted cash flows associated with the long-lived intangible assets compared to the carrying value to determine if a write-down is required. To the extent such projection indicates that the undiscounted cash flow is not expected to be adequate to recover the carrying amounts, the assets are written down to estimated fair value.

Indefinite lived identifiable intangible assets consist of certain trade names that are not amortized but tested for impairment annually, or more frequently if events or changes in circumstances indicate impairment.

Goodwill represents the excess of the purchase price and related expenses over the net fair value of assets acquired and liabilities assumed in business combinations accounted for by the purchase method of accounting. On January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. As such, all goodwill is no longer amortized but reviewed at least annually for impairment.

As of December 28, 2002, the Company had approximately $53,357,000 of goodwill. As a result of the Transaction, the Company has reflected $64,919,000 of goodwill. See Note 15.

Through December 29, 2001, goodwill was amortized on a straight-line basis over forty years. The following is a summary of reported net loss, as adjusted to exclude goodwill amortization expense:

Deferred tax assets or liabilities are computed based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates and laws. Deferred income tax expense or benefit is based on the changes in the deferred tax asset or liability from period to period. A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be realized.

Revenue is recognized when title to the product and associated risk of loss has passed to the customer. All revenues are recorded net of applicable allowances for returns, rebates, and other applicable discounts and allowances. The Company warrants products against defects and has policies permitting the return of products under certain circumstances. Provisions are made for these costs at the time of sale. The reserve for product warranties is derived through an analysis of historical experience updated for changes in facts and circumstances as appropriate. The Company classifies amounts billed to customers for shipping and handling in net sales and costs incurred for shipping and handling in cost of sales in the statement of income.

The costs of advertising the Company’s products are expensed as incurred. Advertising costs charged to expense amounted to $671,862, $69,354, $814,000 and $811,000 for the period from January 18, 2003 through December 27, 2003, the period from December 29, 2002 through January 17, 2003 and for the years ended December 28, 2002 and December 29, 2001, respectively.

The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB”) and related interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the employee stock options equals the market price of the underlying stock on the date of the grant, no compensation expense is recognized. The Company did not recognize any stock-based compensation expense for any period presented.

During 2003, the Company adopted the MWM Holding, Inc. 2003 Management Stock Incentive Plan (the “2003 Plan”). The 2003 Plan allows for the granting of up to 103,737 options to certain employees of the Company to purchase Class A Common Stock based upon meeting certain performance targets. During the period from January 18, 2003 through December 27, 2003, the Company has not recognized any expense under the 2003 Plan.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions, which affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. The Standard specifies that instruments within its scope embody obligations of the issuer and that, therefore, the issuer must classify them as liabilities. The effective date of this standard is for interim periods beginning after June 15, 2003. Adoption of this standard had no material impact on the Company’s consolidated financial position, consolidated results of operations, or liquidity.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), Consolidation of Variable Interest Entities. FIN 46 addresses when a company should consolidate in its financial statements the assets, liabilities and activities of a variable interest entity (“VIE”). It defines VIEs as entities that either do not have any equity investors with a controlling financial interest, or have equity investors that do not provide sufficient financial resources for the entity to support its activities without additional subordinated financial support. FIN 46 also requires disclosures about VIEs that a company is not required to consolidate, but in which it has a significant variable interest. A modification to FIN 46 (“FIN 46®”) was released in December 2003. FIN 46® delayed the effective date for VIEs created before February 1, 2003, with the exception of special-purpose entities (“SPE”), until the first year or interim period ending after March 15, 2004. The Company has not identified any interests in special purpose entities applicable to the provisions of this statement and will apply the provisions of FIN 46® in the first quarter 2004 financial statements.

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company performs periodic credit evaluations of its customers’ financial condition, but generally does not require collateral. The Company provides an allowance for doubtful accounts based on management’s estimates of potential bad debt losses. Credit losses have generally been within management’s estimates.

Depreciation expense amounted to approximately $3,034,000, $362,000, $5,654,000 and $6,297,000 for the period from January 18, 2003 through December 27, 2003, from December 29, 2002 through January 17, 2003 and for the years ended December 28, 2002 and December 29, 2001, respectively.

On January 17, 2003, MW Manufacturers, Inc. entered into a credit agreement with a syndicate of banks (the “2003 Credit Agreement”). The agreement provides for a revolving credit facility with a borrowing capacity of $20 million. The revolving credit facility expires the earlier of January 17, 2008 or upon certain events defined in the agreement. In addition the agreement provided for term loans of $66 million (the “2003 Term Loans”). The 2003 Term Loans are repayable in increasing quarterly installments beginning June 2003. Borrowings under the 2003 Credit Agreement are secured by substantially all assets of MW Manufacturers, Inc. and are guaranteed by the Company.

On January 17, 2003, MW Manufacturers, Inc. issued $30 million principal amount of 14% Senior Subordinated Notes due January 17, 2010. The Senior Subordinated Notes were issued with 25,641 detachable warrants to acquire Class B Common Stock. The warrants are exercisable over an eight-year period at an exercise price of $0.01 per share. The Company estimated the fair value of the warrants to be $2,133,844, which was recorded as an increase to additional capital and a reduction of the debt balance by recording a debt discount. The subordinated notes contain an option whereby the Company can choose to “pay-in-kind” 2% of the interest payable. For the period January 18, 2003 through December 27, 2003, the Company elected this option and approximately $576,000 of interest otherwise payable is now reflected as additional principal owing under the subordinated notes.

Under the 2003 Credit Agreement all of the issued and outstanding shares of capital stock of the Company and substantially all of the assets of the Company are pledged to secure borrowings. The 2003 Credit Agreement provides, among other things, for the maintenance of certain financial ratios and places limits on dividends, capital expenditures and other transactions. The borrowings under the Credit Agreement are subject to mandatory prepayments if certain events, as defined in the Credit Agreement, occur. Such events include the existence of Available Cash (as defined) and Excess Cash Flow (as defined). During the year ended December 27, 2003, the Company elected to make unscheduled payments of approximately $5.9 million, which reduced the outstanding balance of Term Loans. The Company is currently generating positive operating cash flow and may be required, or may elect at the Company’s discretion, to make additional unscheduled payments, which would further reduce the outstanding principal amounts of Term Loans. The amount and timing of these unscheduled payments cannot be estimated. When and if these unscheduled payments are made, the future required payments are adjusted accordingly.

The 2003 Credit Agreement also provides for letters of credit of up to $10.0 million. At December 27, 2003, there was $1,300,000 outstanding under these letters of credit.

The Predecessor Company had a bank credit agreement (the “2002 Credit Agreement”) that included Term Loans A and B (“Term Loans”) and the Revolving Credit Facility (“Revolver”). The Revolver provided for advances of up to $8.5 million, with all outstanding amounts under the Revolver due in March 2004.

Under the Revolver and Term Loans, the Predecessor Company’s interest rate was a LIBOR-based rate plus 4.00% and 4.50%, respectively. The weighted average interest rates for Term Loan A, Term Loans B and the Revolving Credit Facility at December 28, 2002 was approximately 6.31%, 6.36% and 4.0%, respectively. The 2002 Credit Agreement also provided for letters of credit of up to $2.5 million. At December 28, 2002, there was $500,000 outstanding under these letters of credit. As discussed in Note 16, all outstanding amounts due under the 2002 Credit Agreement were paid on January 17, 2003.

The Company’s long-term obligation at December 27, 2003 is scheduled to mature as follows:

The Subordinated PIK Notes (“Notes”) were due to Fenway Partners Capital Fund, L.P. (the “Fund”), which invested in the Predecessor through the purchase of the Notes. These Notes accrued interest at 14%, which was due quarterly by the issuance of a new note with identical terms. All outstanding Notes and interest were scheduled to mature in March 2007. These Notes were subject to mandatory prepayments if certain events, as defined in the note agreements, occurred.

The Predecessor was contingently obligated on an additional $5,487,000 at December 29, 2002 and $4,781,000 at December 29, 2001 of PIK Notes issued by an affiliated company. Prior to the Transaction, the Predecessor assumed this liability and recorded a charge of $5,523,000 to recognize the assumption of an affiliate liability.

As discussed in Note 16, all outstanding amounts due under the Subordinated PIK Note agreements were paid on January 17, 2003.

Significant components of the income tax expense (benefit) are as follows (in thousands):

The reasons for the difference between income tax expense (benefit) and the amounts computed using the federal statutory rate is as follows (in thousands):

The Company paid approximately $16,000 in state income taxes for the period January 18, 2003 through December 27, 2003. The Company received approximately $101,000 of income tax refunds in 2002 relating to previously paid state income taxes.

The deferred income tax assets and liabilities primarily relate to net operating losses and differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes related to property, plant and equipment, receivables, inventory, goodwill, employee benefit obligations and certain other noncurrent liabilities. A portion of the deferred tax liabilities relate to the Company’s identifiable intangible assets, which amortize for book purposes and not for tax purposes.

As a result of operating losses and the uncertainty of the realization of the potential tax benefits thereof, the Predecessor had offset potential income tax benefits of $20,392,000 with a valuation allowance for the year ended December 28, 2002.

The Company has federal net operating loss carryforwards of approximately $52,900,000 as of December 27, 2003, which begin to expire in 2011. The Company also has state net operating loss carryforwards, which expire over various terms, depending upon state regulations. As a result of the Transaction, these carryforwards are potentially subject to limitations under applicable U.S. tax rules. The Company has not yet completed their analysis of the ultimate realizability of these carryforwards or the Company’s other deferred income tax assets. Once completed, this analysis could impact the value assigned to these assets in purchase accounting and would have a corresponding impact on goodwill.

The Company has noncontributory defined benefit pension plans covering approximately two-thirds of all its employees. The benefits for these plans are based primarily on years of credited service and average compensation as defined under the plan’s provisions. The Company’s funding policy is to contribute amounts to the plans sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus such additional amounts as the Company may determine to be appropriate from time to time.

The Company also sponsors defined contribution plans that cover all full-time employees of the Company. Contributions relating to the defined contribution plans are made based upon the plans’ provisions. Costs charged to operations with respect to this plan in 2003, 2002 and 2001 were approximately $202,000, $80,000 and $25,000, respectively.

The Company obtains actuarial valuations of the defined benefit pension plans annually in connection with its year-end financial statements. The Company utilizes a September 30 measurement date for purposes of calculating its year-end obligation. The following table sets forth the components of net periodic pension cost for the defined benefit plans in the statements of operations (in thousands):

The following table sets forth the funded status and amounts recognized in the consolidated balance sheets for the Company’s defined benefit plans (in thousands):

Certain of the Company’s pension plans have an accumulated benefit obligation (ABO) in excess of the fair value of plan assets. The ABO and fair value of plan assets for such plans are $15.3 million and $10.2 million, respectively, at December 27, 2003 and $12.8 million and $9.0 million, respectively, at December 28, 2002.

Assumptions used to determine benefit obligations at December 27, 2003 and December 28, 2002.

Assumptions used to determine net periodic benefit cost for years ended December 27, 2003 and December 28, 2002.

The Company’s plan assets are included in a master trust at December 27, 2003 and December 28, 2002, by asset categories as follows:

As a result of the Transaction, the Investment Trustee transferred the investments of the plan into low-risk fixed income securities until the Successor Investment Committee determined the appropriate investment allocation for the trust. As of December 27, 2003, it is the Investments Committee’s intention to transition the fund allocation to approximately 60% Equity Securities and 40% Fixed Income Securities.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

The Company has an unfunded nonqualified Supplemental Executive Retirement Plan (the “Plan”) for certain employees. The portion of the projected benefit obligation relating to this unfunded plan totaled approximately $226,000 and $182,000 at December 27, 2003 and December 28, 2002, respectively. Pension expense for the Plan was approximately $10,500, $1,000, $5,500 and $300 for the period from January 18, 2003 through December 27, 2003, the period from December 29, 2002 through January 17, 2003, for the years ended December 28, 2002 and December 29, 2001, respectively.

The Company leases certain of its production facilities under various operating lease agreements and certain computer equipment and machinery under capital lease agreements. At December 27, 2003 and December 28, 2002, the aggregate net book value of all equipment under capital leases was approximately $0 and $164,000, respectively. Amortization of these assets is included in depreciation expense.

Rental expense for operating leases, including cancelable and month-to-month agreements, was approximately $3,176,000, $289,000, $3,019,000 and $4,878,000 for the period from January 18, 2003 through December 27, 2003, the period from December 29, 2002 through January 17, 2003, for the years ended December 28, 2002 and December 29, 2001, respectively. Future minimum commitments under noncancelable operating leases and capital leases, with an initial or remaining term in excess of one year, as of December 27, 2003 are as follows (in thousands):

In addition to other transactions with Fenway, Investcorp and their affiliates discussed herein, the Company made a cash payment of $5.2 million to Investcorp International, Inc. (“III”), an affiliate of

Investcorp, for advisory services rendered in connection with the financing for the transaction, and the Company paid $6 million to III as an advance payment for management advisory services. Of the $11.2 million in payments, approximately $4.9 million was expensed in 2003. The Company recorded expenses of approximately $643,000 and $831,000 related to transactions with Fenway in fiscal 2002 and 2001, respectively.

In fiscal 2001 and fiscal 2002, the Company entered into incentive plans with certain of the Company’s management and two outside contractors. The management incentive plans entitle the recipient to the right to receive a cash payment from the Company based upon a formula using the net proceeds arising from a liquidity event, as defined. The awards vest over a three-year period. The outside contractor incentive plans also entitle the recipient to the right to receive a cash payment from the Company based upon a formula using the net proceeds arising from a liquidity event, as defined, with the awards computed based upon formulas, as defined. Neither the management nor the contractor incentive plans resulted in expense recorded in the financial statements prior to December 28, 2002, as recognition was deferred until such time as a liquidity event occurs. As discussed in Note 16, a liquidity event occurred on January 17, 2003 in connection with the Transaction and accordingly the Predecessor recorded the amount paid under the plans as an expense in the period December 29, 2002 through January 17, 2003. The Company paid approximately $19.8 million as its obligation under the plans.

On January 16, 2003, the Company filed an amended and restated certificate of incorporation authorizing the Company to issue 3,561,400 shares of stock, of which 500,000 shares shall be preferred stock, par value of $0.01 per share. The Company is authorized to issue four classes of common stock: Class A Common Stock, par value $0.01 per share, 1,500,000 authorized shares, 997,500 issued and outstanding as of December 27, 2003; Class B Common Stock, par value $0.01 per share, 28,200 authorized shares, zero issued and outstanding as of December 27, 2003; Class D Common Stock, par value $0.01 per share, 2,500 authorized shares, 2,500 issued and outstanding as of December 27, 2003 and Common Stock, par value $0.01 per share, 1,530,700 authorized shares, zero issued and outstanding as of December 27, 2003. All shares of common stock have similar liquidation preferences, however, only Class D Common Stock and Common Stock stockholders have voting rights.

In connection with the Transaction, the Company issued 1,000,000 shares of common stock (997,500 Class A shares and 2,500 Class D shares) on January 17, 2003 for total proceeds of $113,800,700, including $580,000 of shareholder notes receivable. The shareholder notes receivable are issued under the MWM Holding, Inc. 2003 Loan Plan (the “Loan Plan”). The Loan Plan allows the Company to make loans to certain key employees for the purchase of common stock. The loans made under the Loan Plan are due on January 17, 2010, bear interest at variable rates, are secured by the underlying shares purchased and are full-recourse to the participants.

The Preferred Stock of the Predecessor was a 15% nonvoting security and was subject to redemption by the Predecessor at its option. Dividends were cumulative at the rate of $150 per share per annum. Additionally, any unpaid dividends accrued dividends in future periods at the applicable rate of 15%. The Predecessor had the option of paying the dividends in either cash or additional preferred shares. In the event of any liquidation, the holders of the Preferred Stock had the right to receive $1,000 per share plus all accrued and unpaid dividends on such shares. At December 28, 2002 and December 29, 2001, cumulative unpaid

dividends on the Preferred Stock amounted to approximately $5,570,514 and $4,523,228, respectively. As discussed in Note 16, the Preferred Stock was redeemed effective January 17, 2003.

The Company may be responsible for environmental safety and remediation obligations under various laws and regulations. Expenditures may be required in connection with the investigation and remediation of certain subsurface contamination at the Rocky Mount, Virginia facility under the Virginia Voluntary Remediation Program. The Company believes it is indemnified for these obligations by U.S. Industries, Inc., pursuant to U.S. Industries’ 1995 sale of MW stock to Fenway Partners. U.S. Industries has assumed all responsibility for this investigation and remediation to date. Nevertheless, the Company has accrued $496,000 and $547,000, as of December 27, 2003 and December 28, 2002, respectively, net of expected recoveries, for potential environmental remediation and associated costs. Management believes it is possible that additional costs may be incurred beyond the amounts accrued as a result of additional information that may arise regarding this or other environmental, safety or remediation matters. These amounts, if any, cannot be estimated, however, management believes that any such additional amounts would not be material to the Company’s financial condition, cash flow or results of its operations.

The Company is a party to legal proceedings, which arose in the normal course of business, including those relating to commercial transactions and product liability matters. It is management’s opinion, based on the advice of counsel, that the ultimate outcome of such litigation will not have a material adverse effect on the Company’s financial position or operations.

During fiscal 2001, Valley Recreation Products, Inc. (Valley), which is wholly owned by Valley Holdings, a subsidiary of Fenway, experienced significant financial difficulties, and Valley filed for Chapter 7 liquidation during fiscal 2002. Because the Company is a co-obligor with respect to certain liabilities of Valley, the Company assumed primary responsibility for certain Valley liabilities, including Valley’s obligations to a defined benefit pension plan. During 2001, the Company recorded a charge in the amount of $2,244,000 related to the Valley liabilities. During 2002, the Company revised its estimates of the obligations assumed and recorded an additional provision of $222,000. As discussed in Note 7, immediately prior to the Transaction, the Predecessor assumed primary responsibility for PIK Notes owed by Valley Holdings to Fenway and recorded a charge of $5,523,000 to recognize the assumption of an affiliate liability.

On January 17, 2003, Fenway sold all of MW Manufacturers Holding Corp.’s common stock (the “Transaction”) to MWM Holding, Inc. (MWM Holding), an entity substantially owned by the Investcorp Group. MWM Holding purchased the common stock of MW Manufacturers Holding Corp. for $188,000,000 minus the following items as of the closing date: preferred stock; PIK notes; amounts owing under the Unit Plan; line of credit; capital lease obligations; payable to Option holders and all fees associated with repayment of debt, and other closing costs, as defined.

The Company has built a loyal customer base by distinguishing itself with a broad, high-quality product offering, efficient distribution, superior customer service, and attentive after-market support. The company has significantly improved its operating results and financial performance by strengthening its management team, optimizing process management to increase profitability, and renewing top-line growth. These factors, along with the stability and experience of the MW workforce and the other identified intangible assets included in these statements, contributed to the purchase price being in excess of the fair market value of the identifiable assets acquired in the transaction.

In accordance with SFAS No. 141, Business Combinations, (“SFAS No. 141) the above transaction has been accounted for using the purchase method of accounting. The total purchase price has been allocated to the tangible assets acquired and liabilities assumed and with the advice of independent valuation experts, to the identifiable intangible assets. The Company has made a preliminary allocation of total consideration from the acquisition to the fair value of assets acquired and liabilities assumed as follows:

Identifiable intangible assets consist of the following as of December 27, 2003:

The estimated aggregate amortization is summarized for the fiscal years ending December:

Amortization expense of identifiable intangible assets for the period from January 18, 2003 through December 28, 2003 was approximately $5,843,000.

Management believes that the Company’s trade names have an indefinite live and accordingly, the value assigned to trade names is not subject to amortization.

During fiscal year 2003, the Company received $650,000 in government assistance (“assistance”) from three different government entities as an incentive to move one of its plants to Franklin County, Virginia. In connection with receiving the assistance, the Company entered into a Performance Agreement (“Agreement”) with each government entity. Each Agreement requires the Company to establish and operate a facility on the site in Franklin County, Virginia and to make an investment of at least $4.7 million in improvements, machinery, and equipment (“capital investment”) and create 130 jobs (“job commitment”) at the facility within a 30-month time period from the time the assistance are received by the Company. If the Company does not meet 90 percent of its capital investment and job commitment, the Company is obligated to repay the government entities the part of the assistance that is proportional to the shortfall.

The Company recorded the receipt of the funds by establishing a Deferred Revenue account. The portion of the assistance received related to the capital investment will be recognized over the useful life of the related assets. The portion of the assistance received related to the job commitment will be recognized as the costs associated with hiring employees at the facility are expended. As of the end of the year, the Company has not recognized any revenue related to the government assistance.

On February 17, 2004, MW Manufacturers, Inc. entered into a new credit agreement with a syndicate of banks. The agreement provides for a revolving credit facility with a borrowing capacity of $20 million. The revolving credit facility expires the earlier of February 17, 2009 or upon certain events defined in the agreement. In addition, the agreement provides for $90 million of Term Loans. The Term Loans are repayable in increasing quarterly installments beginning June 30, 2004 through December 31, 2009. Borrowings under the Credit Agreement are secured by substantially all assets of MW Manufacturers, Inc. and are guaranteed by MW Manufacturers Holding Corp. and MWM Holding. In connection with this financing, the 2003 Credit Agreement and the subordinated notes were repaid in full.

On July 26, 2004, Investcorp announced an agreement under which Ply Gem Industries, Inc., a portfolio company of Caxton-Iseman Capital, Inc. (“Caxton-Iseman”), will acquire 100% of the outstanding stock of MWM Holdings, Inc. The agreement is subject to customary closing conditions.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included in the interim financial statements. Operating results for the six-months ended July 3, 2004 are not necessarily indicative of the results that may be expected for the year ending January 1, 2005.

MWM Holding, Inc. (the “Company”) was incorporated on December 27, 2002, under the state laws of Delaware. The Company was capitalized and began operations on January 17, 2003. The Company operates as a holding company for MW Manufacturers Inc. (“MW”) and its wholly owned subsidiaries, Lineal Technologies, Inc. (“Lineal”) and Patriot Manufacturing, Inc. (“Patriot”). MW, Lineal and Patriot manufacture and distribute residential and light commercial building products for the construction and repair and remodeling markets in the eastern and southern United States.

The consolidated balance sheet, statements of operations, stockholder’s equity, and cash flows captioned as “Predecessor” include those of Holding from December 29, 2002 through the date of the Transaction (January 17, 2003). As a result of the Transaction, the consolidated balance sheet, statements of operations, and cash flows captioned as “Successor” represent the financial statements of the Company from January 18, 2003 through July 3, 2004. The Transaction has been accounted for as a purchase. The purchase price, purchase accounting adjustments, and goodwill resulting from the Transaction resulted in a new basis of accounting. The comparability of operating results for the “Predecessor” period and the “Successor” period are affected by the purchase accounting adjustments. All significant intercompany accounts and transactions have been eliminated.

Identifiable intangible assets consist of the following as of July 3, 2004 (in thousands):

On February 17, 2004, MW Manufacturers, Inc. entered into a new credit agreement with a syndicate of banks. The agreement provides for a revolving credit facility with a borrowing capacity of $20 million. The revolving credit facility expires the earlier of February 17, 2009 or upon certain events defined in the agreement. In addition, the agreement provides for $90 million of Term Loans. The Term Loans are repayable in increasing quarterly installments beginning June 30, 2004 through December 31, 2009. Borrowings under the Credit Agreement are secured by substantially all assets of MW Manufacturers, Inc. and are guaranteed by MW Manufacturers Holding Corp. and MWM Holding. Under the 2004 Credit Agreement, the interest rate on the term loans is a LIBOR-based rate plus 3.75%. The credit agreement allows the interest rate to be set in one, two, three or six month periods. At July 3, 2004 the average interest rate on outstanding borrowings was 4.93%. In connection with this financing, the 2003 Credit Agreement and the subordinated notes were repaid in full.

The Company is currently generating positive operating cash flow and may be required, or may elect at the Company’s discretion, to make additional unscheduled payments, which would further reduce the outstanding principal amounts of Term Loans. The amount and timing of these unscheduled payments cannot be estimated. When and if these unscheduled payments are made, the future required payments are adjusted accordingly.

The following table sets forth the components of net periodic pension cost for the defined benefit plans in the statements of operations (in thousands):

No person has been authorized to give any information or to make any representation other than those contained in this prospectus, and, if given or made, any information or representations must not be relied upon as having been authorized. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any securities other than the securities to which it relates or an offer to sell or the solicitation of an offer to buy these securities in any circumstances in which this offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made under this prospectus shall, under any circumstances, create any implication that there has been no change in the affairs of Ply Gem since the date of this prospectus or that the information contained in this prospectus is correct as of any time subsequent to its date.

Until , 2004, broker-dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the broker-dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Section 145 of the Delaware General Corporation Law (the “DGCL”) grants a Delaware corporation the power to indemnify any director, officer, employee or agent against reasonable expenses (including attorneys’ fees) incurred by him in connection with any proceeding brought by or on behalf of the corporation and against judgments, fines, settlements and reasonable expenses (including attorneys’ fees) incurred by him in connection with any other proceeding, if (a) he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and (b) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Except as ordered by a court, however, no indemnification is to be made in connection with any proceeding brought by or in the right of the corporation where the person involved is adjudged to be liable to the corporation.

Article 7 of our amended and restated certificate of incorporation provides that we shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the corporation or, while a director or officer of the corporation, is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person. Notwithstanding the preceding sentence, we shall be required to indemnify a person in connection with a proceeding (or part thereof) initiated by such person only if the commencement of such proceeding (or part thereof) was authorized by our board of directors.

Section 102 of the DGCL permits the limitation of directors’ personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director except for (i) any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) breaches under section 174 of the DGCL, which relates to unlawful payments of dividends or unlawful stock repurchase or redemptions, and (iv) any transaction from which the director derived an improper personal benefit.

Article 7 of our amended and restated certificate of incorporation limits the personal liability of our directors to the fullest extent permitted by the DGCL.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

We maintain directors’ and officers’ liability insurance for our officers and directors.


	(a)	The following exhibits are being filed with this Registration Statement on Form S-4:

We have audited the combined financial statements of Ply Gem Industries, Inc. and subsidiaries and CWD Windows & Doors, a division of Broan-Nutone Canada Inc. as of December 31, 2003 and 2002, and for the period January 10, 2003 to December 31, 2003, January 1, 2003 to January 9, 2003, and for each of the two years in the period ended December 31, 2002, and have issued our report thereon dated March 26, 2004, except for Note 11, as to which the date is August 6, 2004 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedule listed in Item 21b of this Registration Statement. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

(a) The undersigned registrants hereby undertake to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement.

(b) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 (and where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(d) The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

(e) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.


	(i)	to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:


	B.	to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.


	C.	to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;


	(ii)	that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and


	(iii)	to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

Pursuant to the requirements of the Securities Act of 1933, the registrant duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Kearney, State of Missouri, on August 9, 2004.


	By:	/s/ LEE D. MEYER



	Name: Lee D. Meyer
	Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated.


	By:	/s/ LEE D. MEYER



	Name: Lee D. Meyer
	Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacities and on the dates indicated.


**	Filed herewith.

EX-2.2 2 y95660a3exv2w2.txt STOCK PURCHASE AGREEMENT Exhibit 2.2 EXECUTION STOCK PURCHASE AGREEMENT BY AND AMONG MWM HOLDING, INC. THE STOCKHOLDERS LISTED ON THE SCHEDULE 1 ATTACHED HERETO AND PLYGEM INDUSTRIES, INC. DATED AS OF JULY 23, 2004 ii STOCK PURCHASE AGREEMENT TABLE OF CONTENTS

iii SCHEDULES SCHEDULE 1 STOCKHOLDERS SCHEDULE 2.3 SAMPLE NET WORKING CAPITAL CALCULATION SCHEDULE 3.1 FOREIGN QUALIFICATIONS SCHEDULE 3.3 CONFLICTS SCHEDULE 3.4(e) AGREEMENTS REGARDING CAPITAL STOCK SCHEDULE 3.4(g) ACTIVITY OF THE COMPANY SCHEDULE 3.5 SUBSIDIARIES SCHEDULE 3.6 FINANCIAL STATEMENTS SCHEDULE 3.7 ABSENCE OF CERTAIN CHANGES SCHEDULE 3.8 LIABILITIES SCHEDULE 3.9 TAXES SCHEDULE 3.11 OWNED REAL PROPERTY SCHEDULE 3.12(a) SCHEDULED LEASES SCHEDULE 3.12(b) DEFAULTS UNDER SCHEDULED LEASES SCHEDULE 3.12(c) LEASES TERMINABLE ON THIRTY-DAYS NOTICE OR LESS SCHEDULE 3.13(a) REGISTERED INTELLECTUAL PROPERTY SCHEDULE 3.13(b) LICENSES SCHEDULE 3.13(C) ENCUMBRANCES ON INTELLECTUAL PROPERTY SCHEDULE 3.14 LABOR RELATIONS SCHEDULE 3.15 ERISA MATTERS SCHEDULE 3.15(a) ERISA AFFILIATES SCHEDULE 3.15(b) TITLE IV PLANS SCHEDULE 3.16 COMPANY CONTRACTS SCHEDULE 3.17 LITIGATION SCHEDULE 3.18 ENVIRONMENTAL MATTERS SCHEDULE 3.19 INSURANCE SCHEDULE 3.20 FINDERS SCHEDULE 3.21 TRANSACTIONS WITH AFFILIATES SCHEDULE 3.24 RECEIVABLES SCHEDULE 3.26 CONDITION OF ASSETS AND PROPERTIES SCHEDULE 6.1 CONDUCT OF BUSINESS SCHEDULE 6.9 AFFILIATE AGREEMENTS TERMINATED AT CLOSING SCHEDULE 10.10 KNOWLEDGE EXHIBITS EXHIBIT A: CAPITALIZATION EXHIBIT B: PER SHARE AMOUNT iv STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 23, 2004, is entered into by and among MWM Holding, Inc., a Delaware corporation (the "Company"), and those Persons listed on Schedule 1 hereto (collectively, the "Stockholders"), on the one hand, and Ply Gem Industries, Inc., a Delaware corporation (the "Purchaser"), on the other hand. RECITALS A. The outstanding equity securities of the Company as of the date hereof consist of shares of (i) Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"), held by the holders (the "Class A Stockholders") and (ii) Class D Common Stock, par value $0.01 per share (the "Class D Common Stock"), held by the holders (the "Class D Stockholders," who together with the Class A Stockholders shall consist the Stockholders) listed on Exhibit A. B. The Stockholders are, in the aggregate, the owners of 100% of the outstanding capital stock of the Company as of the date hereof. The Class B Warrantholders are, in the aggregate, the owners of 100% of the outstanding Class B Warrants and the Option Holders are, in the aggregate, the owners of 100% of the outstanding Options. C. The Stockholders desire to sell to the Purchaser and the Purchaser desires to purchase from the Stockholders all of the outstanding shares of Class A Common Stock and Class D Common Stock. The Class B Warrantholders desire to cancel their Class B Warrants and the Option Holders desire to cancel their Options in exchange for cash or other consideration and have this day entered into an agreement respecting the same. D. As a result of the foregoing and upon consummation of the other transactions contemplated herein, the Purchaser will acquire ownership of 100% of the outstanding shares of equity securities of the Company and all securities convertible into or exchangeable for, and all rights to acquire, equity securities of the Company. AGREEMENT NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. As used in this Agreement, the following words and terms shall have the meanings specified or referred to below: "Affiliate" of any specified Person shall mean any other Person directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such specified Person. "Aggregate Equity Amount" shall mean an amount equal to (a) the sum of (i) $320,000,000, (ii) the aggregate Stockholder Loan Amount, (iii) the aggregate Warrant Exercise Price for all Class B Warrants cancelled hereunder and (iv) the aggregate Option Exercise Price for all Options cancelled hereunder, minus (b)(i) Net Debt and (ii) the Seller Transaction Expenses to the extent not paid prior to the Closing Date that are due and payable on the Closing Date. "Business Day" shall mean any day except Saturday, Sunday or any day on which banks are generally not open for business in the city of New York, New York. "Cash" shall mean the result, whether positive or negative, produced by (x) the sum of (i) all cash, all cash equivalents and marketable securities as reflected in the bank accounts of the MW Companies or other financial institution statements and (ii) all deposits in transit (subject to the clearing and actual credit to the account of the applicable MW Company of such deposits), each as of the Closing Date and net of Taxes or other costs associated with liquidating to cash any of the items referred to in this definition less (y) the amount of any checks or other instruments that have been written or issued by any of the MW Companies each determined as of the close of business on the day immediately prior to the Closing Date. "Code" shall mean the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Control," "Controlling" or "Controlled by" shall mean, when used with respect to any specified Person, the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. "Damages" shall mean all liabilities, demands, claims, actions or causes of action, regulatory, legislative or judicial proceedings or investigations, assessments, levies, losses, fines, penalties, damages, costs and expenses, including, without limitation, reasonable attorneys', accountants', and experts' fees and expenses, sustained or incurred in connection with the defense of any claim or the enforcement of any rights under Article X. "Encumbrances" shall mean all mortgages, deeds of trust, liens, pledges, security interests, charges, claims and encumbrances of any nature whatsoever; provided, however, that the term "Encumbrances" shall not include statutory liens for Taxes to the extent that the payment thereof is not in arrears or otherwise due. "Fayetteville Damages" shall mean Damages attributable to the Fayetteville Environmental Condition. "Fayetteville Environmental Condition" means environmental contamination, if any, located at the property at the Fayetteville Facility identified by Environ, the Purchaser's environmental consultant, pursuant to environmental sampling on July 22, 2004. -2- "Fayetteville Facility" shall mean the property at 408 Pine Street, Fayetteville, North Carolina. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fully Diluted Number" shall mean the sum of (a) the aggregate number of shares of Class A Common Stock and Class D Common Stock outstanding as of immediately prior to the Closing, (b) the aggregate number of share of Class B Common Stock issuable upon exercise of all unexercised Class B Warrants outstanding as of immediately prior to the Closing and (c) the aggregate number of shares of Class A Common Stock issuable upon exercise of all unexercised Options outstanding as of immediately prior to the Closing. "Funded Indebtedness" shall mean all obligations under, including the total required to prepay all amounts payable under and to fully retire (i) the Senior Credit Facility; (ii) indebtedness for borrowed money; (iii) indebtedness evidenced by notes, debentures or similar instruments; (iv) capitalized lease obligations; (v) the deferred purchase price of assets, services or securities (other than ordinary trade accounts payable); (vi) conditional sale or other title retention agreements; (vii) reimbursement obligations, whether contingent or matured, with respect to letters of credit, bankers' acceptances, surety bonds, other financial guarantees and interest rate protection agreements (without duplication of other indebtedness supported or guaranteed thereby) other than the letters of credit set forth on Schedule 3.8; (viii) obligations of other Persons of the nature described in clause (i) through (vii) that are guaranteed by such Person; (ix) interest, premium, penalties, fees, expenses and other amounts owing in respect of the items described in the foregoing clauses (i) through (viii); and (ix) any remaining payment obligation under the Acquisition Advisory Services Agreement dated as of January 17, 2003 between the Company and Fenway Partners, Inc. to the extent not extinguished prior to the Closing. Funded Indebtedness will be determined based upon payoff letters received from the respective creditors or, if the concept of payoff letters are not applicable to such Funded Indebtedness, the amount in fact outstanding as of the close of business on the day immediately prior to the Closing Date. "GAAP" shall mean United States generally accepted accounting principles. "Governmental Entity" shall mean any federal, state or local or foreign government, any political subdivision thereof or any court, administrative or regulatory agency, department, instrumentality, body or commission or other governmental authority or agency, domestic or foreign. "Hammonton Facility" shall mean the property at 999A Grand Street South, Hammonton, New Jersey 08037. "Hammonton ISRA Damages" shall mean Damages attributable to remediation of environmental contamination, if any, required to be performed at the Hammonton Facility as a result of the process of obtaining clearance from the New Jersey Department of Environmental Protection pursuant to ISRA for the acquisition of the Company by Purchaser as contemplated hereby. -3- "Independent Expert" shall mean Deloitte & Touche LLP or such other independent accounting firm of national reputation as the Purchaser and the Stockholders Representative may agree. "Intellectual Property" means, as they exist anywhere in the world, all (i) copyrights and mask works, including all renewals and extensions thereof, and all applications and registrations therefor, (ii) domain names, Internet addresses and other computer identifiers, web sites, web pages and similar rights and items, (iii) patents, patent applications and inventions, designs and improvements described and claimed therein, patentable inventions and other patent rights (including any divisions, continuations, continuations-in-part, reissues, reexaminations or interferences thereof, whether or not patents are issued on any such applications and whether or no any such applications are modified, withdrawn or resubmitted), (iv) computer software programs, including all source code, object code, specifications, designs and documentation related to such programs; (v) Trade Secrets; and (vi) trademarks, service marks, trade dress, trade names, brand names, designs, logos or corporate names, whether registered or unregistered, and all registrations and applications for registration thereof, and all goodwill related thereto. "Investcorp Agreement" means the Agreement for Management Advisory Strategic Planning and Consulting Services between Investcorp International Inc. and MW Manufacturers Inc. dated January 17, 2003. "Laws" shall mean any federal, state, local or foreign law, code, regulation rule or decree. "MW Companies" shall mean the Company and each Subsidiary of the Company. "Net Debt" shall mean Funded Indebtedness less Cash. "Option Exercise Price" shall mean, with respect to any Option, the per share exercise price to be paid upon the exercise of such Option in accordance with the terms thereof. "Ordinary Course" shall mean the ordinary course of business consistent with past practice. "Per Share Amount" shall mean the Aggregate Equity Amount divided by the Fully Diluted Number (carried up to 6 decimal places as designated by the Company). For the avoidance of doubt, a sample calculation of the Per Share Amount is set forth on Exhibit B. "Person" shall mean any individual, corporation, partnership, joint venture, limited liability company, trust, unincorporated organization, Governmental Entity or other legally recognized entity. "Rollover Options" means those Options which are being cancelled at the Closing (a) as set forth on Schedule 2.5 or, (b) subsequent to the date hereof but prior to the Closing Date, as agreed to in writing by each of the Purchaser and such Option Holder and notified to the Stockholders Representative no later than 3 Business Days prior to the Closing. "Securities Act" means the Securities Act of 1933, as amended. -4- "Sellers" shall mean the Stockholders, the Class B Warrantholders and the Option Holders, collectively. "Seller Transaction Expenses" shall mean (i) the legal, accounting, financial advisory and other third party finder, advisory or consulting fees and expenses incurred by any of the MW Companies, whether directly or for the benefit of any of the Sellers in connection with the transactions contemplated hereby, including, without limitation, amounts payable to Gibson, Dunn & Crutcher LLP, UBS Securities LLC and Deutsche Bank Securities Inc., (ii) amounts payable under the commitments with certain debt and equity providing sources in relation to a recapitalization of MW Manufacturers Inc. and (iii) amounts paid by the Company to procure officers' and directors' liability insurance and fiduciary liability insurance in accordance with Section 6.5(b); provided, however, Seller Transaction Expenses shall expressly exclude any fees and expenses incurred by the MW Companies or the Purchaser in connection with any financings required to consummate the transactions contemplated herein. "Senior Credit Facility" shall mean the borrowings of the Company and/or its Subsidiaries under the Credit Agreement, dated as of February 17, 2004, by and among MW Manufacturers Inc., the several Lenders from time to time parties thereto, The Royal Bank of Scotland plc, as lead arranger, bookrunner, administrative agent and collateral agent, Madison Capital Funding LLC, as syndication agent, and General Electric Capital Corporation, as documentation agent. "Stock Option Adjustment Amount" shall mean, with respect to each Rollover Option, the amount represented by the product of (a) the number of shares of Class A Stock issuable upon exercise of such Rollover Option and (b) the difference between the Per Share Amount and the Option Exercise Price of such Rollover Option. "Stockholders Representative" shall mean Investcorp International, Inc. "Target" shall mean $6,422,000. Schedule 2.3 sets forth a sample calculation of the Target and the parties agree that the final Net Working Capital will be calculated in a manner consistent with such schedule. "Tax Return" shall mean any and all reports, returns, declarations, claims for refund, elections, disclosures, estimates or other information, returns or statements required to be supplied to a Governmental Entity in connection with Taxes, including any schedule or attachment thereto and any amendment thereof. "Taxes" shall mean (i) any and all federal, state, provincial, local, foreign and other taxes, levies, fees, imposts, duties, and similar governmental charges (including any interest, fines, assessments, penalties or additions to tax imposed in connection therewith or with respect thereto) including, without limitation (x) taxes imposed on, or measured by, income, franchise, profits or gross receipts, and (y) ad valorem, value added, capital gains, sales, goods and services, use, real or personal property, capital stock, license, branch, payroll, estimated withholding, employment, social security (or similar), unemployment, compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains -5- taxes, and customs duties, and (ii) any transferee liability in respect of any items described in clause (i) above. "Trade Secrets" means all trade secrets, know-how, inventions, processes, procedures, databases, confidential business information and other proprietary information and rights, whether or not patentable or subject to copyright, mask work or trade secret protection. "Treasury Regulations" shall mean the Income Tax Regulations, promulgated under the Code. "Warrant Exercise Price" shall mean, with respect to each Class B Warrant, the per share purchase price to be paid upon exercise of such Class B Warrant in accordance with the terms thereof. Section 1.2. Table of Definitions. The following terms have the meanings set forth in the Sections set forth below:

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ARTICLE II PURCHASE AND REDEMPTION OF SHARES, WARRANTS AND OPTIONS Section 2.1. Agreement for the Purchase and Sale of Shares/Cancellation of Options and Class B Warrants. (a) On the basis of the representations, warranties, covenants and agreements and subject to the satisfaction or waiver of the conditions set forth in Articles VII and VIII herein, at the Closing the Stockholders will sell, transfer and deliver to the Purchaser, and the Purchaser will purchase and acquire from the Stockholders all of the shares of Class A Common Stock and Class D Common Stock outstanding as of the Closing Date (collectively, the "Shares"). (b) The Company and the Option Holders (other than with respect to any Rollover Options) shall cause all of the Options (other than any Rollover Options) to be cancelled at the Closing. The Purchaser shall cause the Company to pay to each applicable Option Holder of Options that are or become vested as of the Closing, the amounts provided in Section 2.5(d). Prior to the Closing, the Company and the applicable Option Holders shall take all actions necessary to give effect to the transactions contemplated by this Section 2.1(b). (c) The Company and the Class B Warrantholders shall cause all of the Class B Warrants to be cancelled at the Closing. The Purchaser shall cause the Company to -8- pay to the Class B Warrantholders the amounts provided in Section 2.5(d). Prior to the Closing, the Company and the Class B Warrantholders shall take all actions necessary to give effect to the transactions contemplated by this Section 2.1(c). Section 2.2. Aggregate Purchase Price. (a) The aggregate cash amount to be paid by the Purchaser at the Closing shall be Three Hundred Twenty Million Dollars ($320,000,000) minus the sum of (A) the amount of Net Debt, (B) the aggregate amount of all Seller Transaction Expenses to the extent not paid prior to the Closing Date that are due and payable on the Closing Date and (C) the aggregate Stock Option Adjustment Amounts (the "Preliminary Purchase Price"); provided, however, one and one-half percent (1.5%) of the sum of (x) the Preliminary Purchase Price plus (y) the aggregate Stock Option Adjustment Amounts (together, the "Escrow Amount") shall be delivered to an escrow agent (which escrow agent shall be a bank or trust company with a branch located in the City of New York) appointed prior to the Closing by the Stockholders Representative, subject to approval by the Purchaser, which approval shall not be unreasonably withheld or delayed, pursuant to an Escrow Agreement (the "Escrow Agreement") to be entered into by the Purchaser, the Stockholders Representative and the Escrow Agent. Such Escrow Amount shall be held and disbursed by the escrow agent in accordance with the terms and conditions in this Article II and in the Escrow Agreement. Prior to the Closing, the Stockholder Representative shall prepare a schedule (based upon the respective amounts payable to each Seller net of any amount payable by such Seller hereunder, but assuming that individually and in the aggregate each holder of Rollover Options held a like number of Options that were not Rollover Options in lieu of the Rollover Options so held) setting forth the respective percentages of the aggregate Escrow Amount applicable to each Seller, which schedule shall be utilized to determine any distributions to Sellers from the Escrow Amount or any other adjustments to the Purchase Price and corresponding payments to or by the Sellers (the "Pro Rata Amount"). (b) As used herein, the "Net Working Capital Adjustment Amount" shall be the difference between the final Net Working Capital amount as set forth in the Final Statement minus the Target. In accordance with Sections 2.7 and 2.8, the Preliminary Purchase Price shall be (1) increased by the Net Working Capital Adjustment Amount, if the Net Working Capital Adjustment Amount is a positive integral, or (2) decreased by the Net Working Capital Adjustment Amount, if the Net Working Capital Adjustment Amount is a negative integral. The Preliminary Purchase Price as so adjusted shall constitute the "Purchase Price." Section 2.3. Net Working Capital As used herein, "Net Working Capital" shall be determined in the same manner as the parties calculated the Target as of the close of business on the day immediately prior to the Closing Date. Schedule 2.3 sets forth the calculation of Net Working Capital used by the parties to negotiate the Target and all calculations of Net Working Capital pursuant to this Agreement shall be made in the same manner as Schedule 2.3. Current assets shall only be included in the calculation of Net Working Capital to the extent the MW Companies continue to retain the benefit thereof immediately after closing (it being understood and agreed that prepaid items directly related to the officers' and directors' insurance will not be governed by this sentence). Any current assets and current liabilities attributable to the -9- incurrence of expenses directly related to the transactions contemplated by this Agreement and any tax effect thereof (including, without limitation, cancellation of the Options and payment of Funded Indebtedness) shall not be considered in calculating Net Working Capital. Section 2.4. Payment of the Purchase Price. (a) Subject to the terms and conditions hereof, on the Closing Date, the Purchaser shall pay, to such account or accounts as specified by the Company, in writing, on behalf of such intended recipient at least two Business Days prior to the Closing Date: (i) to each Class A Stockholder an amount (rounded to the nearest whole cent) equal to (A) 0.985 multiplied by (B) the Per Share Amount multiplied by (C) the number of shares of Class A Common Stock owned by such Class A Common Stockholder as of the Closing less (D) all amounts outstanding and payable under any notes receivables of any MW Companies (including the outstanding principal balance and any accrued but unpaid interest) owed by such Class A Stockholder as of the Closing Date, if any (the "Stockholder Loan Amount"); (ii)to each Class D Stockholder an amount (rounded to the nearest whole cent) equal to (A) 0.985 multiplied by (B) the Per Share Amount multiplied by (C) the number of shares of Class D Common Stock owned by such Class D Common Stockholder as of the Closing; (b) All payments required pursuant to Section 2.4(a), Section 2.5 and Section 2.7 shall be made by wire transfer of immediately available funds against delivery of, if applicable: (i) stock certificates representing the shares of Class A Common Stock and Class D Common Stock being sold, in each case in proper form as reasonably requested by the Purchaser and (ii) documentation reasonably satisfactory to the Purchaser that all of the outstanding Class B Warrants and all of the outstanding Options shall be cancelled prior to or at the Closing. (c) With respect to each payment made pursuant to Section 2.4(a), Section 2.5 and Section 2.7, the Purchaser shall be entitled to, or to cause the appropriate MW Company to, deduct, withhold and remit to the appropriate Governmental Entities (or cause to be deducted, withheld and remitted) any and all Taxes required by Law with respect to such payment. Any such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the party who otherwise would have received such amounts but for such withholding of Taxes. Section 2.5. Payments of Other Amounts Payable at Closing. On the Closing Date, the Purchaser shall pay or cause to be paid to such account or accounts as the Stockholders Representative specifies to the Purchaser in writing at least two Business Days prior to the Closing Date: (a) the aggregate amount of all Funded Indebtedness as of the Closing Date; -10- (b) the aggregate amount of all Seller Transaction Expenses, to the extent not paid prior to the Closing Date that are due and payable on the Closing Date; (c) to each Class B Warrantholder an amount (rounded to the nearest whole cent) equal to (i) 0.985 multiplied by (ii)(A) the Per Share Amount minus (B) the Warrant Exercise Price of such Class B Warrant multiplied by (iii) the number of shares of Class B Common Stock issuable upon conversion of each such Class B Warrant owned by such Class B Warrantholder as of the Closing; and (d) to each Option Holder with respect to each outstanding Option that is or becomes as of the Closing vested (other than with respect to any Rollover Options) an amount (rounded to the nearest whole cent) equal to (i)(A) 0.985 multiplied by (B)(1) the Per Share Amount minus (2) the Option Exercise Price of such Option, multiplied by (C) the number of shares of Class A Common Stock issuable upon the exercise of each such outstanding Option (other than any Rollover Options) owned by such Option Holder as of the Closing minus (ii)(A) 0.015 multiplied by (B)(1) the Per Share Amount minus (2) the Option Exercise Price of the Rollover Option multiplied by (C) the number of shares of Class A Common Stock issuable upon the exercise of such Rollover Option owned by such Option Holder, if any. Section 2.6. Closing Date. Subject to the terms and conditions hereof, the consummation of the transactions provided for in this Article II (the "Closing") shall take place at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the Americas, New York, New York 10019 at 10:00 A.M. on the later of (a) the second Business Day after the date on which each of the conditions set forth in Articles VII and VIII have been satisfied or waived by the party or parties entitled to the benefit of such conditions (it being understood that, in the case of a waiver of any conditions for the benefit of the Company and the Stockholders, such waiver may be made by the Company on behalf of itself and each of the Stockholders) and (b) such other date, time or place as the Purchaser and the Company (on behalf of itself and the Stockholders) mutually agree; provided, however, notwithstanding anything herein to the contrary, the Company shall have the right, in its sole discretion, to postpone the Closing until after the expiration of the Company Review Period. Subject to the foregoing, each of the parties will use its commercially reasonably efforts to consummate the transactions contemplated by this Agreement as soon as practicable. The date on which the Closing actually occurs is hereinafter referred to as the "Closing Date." Section 2.7. Post-Closing Purchase Price Adjustment. (a) No later than 45 days following the Closing Date, the Purchaser shall prepare or cause to be prepared and shall deliver to the Stockholders Representative a draft final statement setting forth in reasonable detail the Purchaser's calculation of the final Purchase Price which shall include a calculation of final Net Working Capital amount, Net Debt, Seller Transaction Expenses and the Net Working Capital Adjustment Amount (the "Draft Final Statement"). Seller Transaction Expenses shall be reconciled to the actual amount thereof. The Draft Final Statement will be accompanied by a report of the Company's independent accountants stating that the calculation of the final Net Working Capital amount was prepared in the same manner as Schedule 2.3. -11- (b) The Stockholders Representative shall have 45 days following the Purchaser's delivery or deemed delivery of the Draft Final Statement to the Stockholders Representative (the "Review Period") to review and respond to the Draft Final Statement, during which period the Purchaser shall grant the Stockholders Representative and its advisors (including independent accountants and legal counsel) reasonable access to all books and records and other materials used to prepare the Draft Final Statement and any work papers prepared by the Purchaser or (subject to execution of customary exculpation letters) its independent accountants with respect to the Draft Final Statement (collectively, the "Net Working Capital Materials"). (c) In the event the Stockholders object to all or any part of the Draft Final Statement, the Stockholders Representative shall so notify the Purchaser in writing (such notice, a "Notice of Objections") prior to the expiration of the Review Period setting forth a description of such objections in reasonable detail and the amount of the adjustment which the Stockholders believe should be made to each item of their objection. If the Stockholders Representative fails to deliver a Notice of Objections within the Review Period, the Draft Final Statement shall be deemed to have been accepted by the Stockholders and shall become the Final Statement. (d) As soon as practicable but in no event later than 20 Business Days following the delivery by the Stockholders Representative of the Notice of Objections (the "Discussion Period"), the Purchaser and the Stockholders Representative shall meet and endeavor to resolve the matters set forth in the Notice of Objections. Any matters set forth in the Notice of Objection that are resolved by the Purchaser and the Stockholders Representative shall collectively be referred to herein as the "Resolved Objections." The Draft Final Statement shall be revised to reflect any Resolved Objections. To the extent the parties are able to resolve all matters set forth in the Notice of Objections, the Draft Final Statement as so adjusted by the Resolved Objections shall become the "Final Statement." (e) In the event the Purchaser and the Stockholders Representative are unable to resolve all matters set forth in the Notice of Objections within such Discussion Period, the following procedures shall apply: (i) After the end of the Discussion Period, upon written request of either the Purchaser or the Stockholders Representative, the parties shall jointly appoint the Independent Expert to assist in the resolution of the outstanding objections; (ii)Upon appointment of the Independent Expert, each party shall provide to the Independent Expert and to the other party, within five Business Days of such appointment, a copy of the Draft Final Statement and the Notice of Objections and any other written submission or materials such party may wish to make, or provide, in support of its position, including the Net Working Capital Materials; (iii) Each party may submit a reply brief in response to the written submissions referred to in clause (ii) above, such reply brief to be delivered to the Independent Expert and to the other party within five Business Days after the receipt of the other party's written submissions; -12- (iv)The Independent Expert shall review the matters set forth in the Notice of Objections that are not Resolved Objections (the "Differences") and the written submissions, if any, of the parties and shall determine, based on the requirements set forth in this Article II (and related definitions), and only with respect to the Differences submitted, whether and to what extent the Draft Final Statement requires adjustment; provided, however, that in no event shall any determination made by the Independent Expert of any Differences result in an adjustment greater than the amount of the adjustment requested with respect to such Difference in the Notice of Objections. It is the understanding and agreement of the parties that time is of the essence in the resolution of the Differences, and each party shall use its reasonable best efforts to cause the Independent Expert to make its determination as expeditiously as possible. (v) The Independent Expert shall have the discretion to determine whether to convene a meeting or meetings of the parties to assist in the resolution of the Differences. (vi)The fees and expenses of the Independent Expert shall be borne by the Purchaser and the Stockholders Representative (on behalf of the Sellers) in inverse proportion as each of them may prevail on the Differences resolved by the Independent Expert, which proportionate allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in dispute. (vii) The Independent Expert's resolution of the Differences shall be conclusive and binding upon the parties. The Draft Final Statement, as adjusted to reflect any such determination of by the Independent Expert, shall become the Final Statement. Section 2.8. Final Purchase Price. (a) In the event that the Purchase Price as set forth in the Final Statement exceeds the Preliminary Purchase Price (i) the Purchaser shall pay each of the Stockholders, the Option Holders and the Class B Warrantholders their respective Pro Rata Amount of such excess and (ii) the respective Pro Rata Amount of the Escrow Amount shall be released and disbursed by the escrow agent in accordance with the terms of the Escrow Agreement to each of the Stockholders, the Option Holders and the Class B Warrantholders. (b) In the event that the Preliminary Purchase Price is greater than the Purchase price as set forth in the Final Statement, the escrow agent shall disburse from the Escrow Amount, in accordance with the terms of the Escrow Agreement: (i) to the Purchaser an amount equal to the amount of such excess and (ii) to each of the Stockholders, the Option Holders and the Class B Warrantholders their respective Pro Rata Amount of the balance remaining of the Escrow Amount, if any. If the amount payable to Purchaser in accordance with this Section 2.8(b) exceeds the Escrow Amount, the Sellers shall pay their respective Pro Rata Amount of the difference to the Purchaser, it being understood that the Escrow Amount is not a limitation on the amount payable to the Purchasers under this Section 2.8(b). (c) If the Escrow Amount exceeds the amount to which the Purchaser may be entitled based on the Draft Final Statement, then the escrow agent shall be authorized under -13- the Escrow Agreement to release and discharge such excess amount as soon as practicable after the date of the Draft Final Statement and prior to the final determination of the Net Working Capital Adjustment Amount. (d) The amounts payable pursuant to this Section 2.8 shall be paid to the applicable recipient, whether disbursed by the escrow agent or paid by the Sellers or the Purchaser, within ten Business Days following the date on which the Draft Final Statement becomes the Final Statement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to the Purchaser as follows: Section 3.1. Corporate Organization. (a) Each of the MW Companies (a) is a corporation duly organized and in good standing under the laws of the State of Delaware, (b) is duly qualified to transact business as a foreign corporation and is in good standing in each other jurisdiction in which the ownership, leasing or operation of its properties or assets or the conduct of its business requires such qualification or licensing, and (c) has the requisite corporate power to own, lease or operate its properties and assets and to carry on its business as now conducted, except, in the case of clause (b), for any such failures that have not had and are not reasonably likely to have, individually or in the aggregate, a Material Adverse Effect. Schedule 3.1 lists all jurisdictions in which each MW Company is duly qualified to conduct business. As used herein, "Material Adverse Effect" means any circumstance, change in or effect that is materially adverse to the business, assets or the results of operations or financial condition of the MW Companies, taken as a whole; provided, however, that none of the following, either alone or in combination, shall be considered in determining whether there has been a Material Adverse Effect: (i) circumstances, changes or effects resulting from any general national, international or regional economic, political or financial conditions, including any such circumstances, changes or effects resulting from acts of war (whether or not declared) or terrorism or other force majeure events, (ii) circumstances, changes or effects generally affecting the vinyl, vinyl-wood, clad-wood and composite window and patio door industry in which the MW Companies operate (including legal and regulatory changes) and (iii) circumstances, changes or effects resulting from any action taken at the specific request of the Purchaser. The Company has delivered to the Purchaser complete and correct copies of the certificate of incorporation and bylaws of each of the MW Companies, each as in effect on the date hereof. (b) The Company has delivered to the Purchaser complete and correct copies of the certificate of incorporation and bylaws of each of the MW Companies, each as in effect on the date hereof. The certificate of incorporation and bylaws of each of the MW Companies are in full force and effect and none of the MW Companies are in violation of any -14- of the provisions of their respective certificates of incorporation or bylaws. The minute books (or comparable records) of each of the MW Companies have been delivered to the Purchaser and accurately reflect in all material respects all transactions and actions referred to in such minutes and consents in lieu of meetings. The Company has previously delivered to the Purchaser all stock books (or comparable records) of each MW Company in the possession of the MW Companies. The stock book (or comparable record) of the Company that has been delivered to the Purchaser is true and complete. Section 3.2. Corporate Authority. The Company has the requisite corporate power to execute and deliver this Agreement and to fulfill its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action. This Agreement has been duly executed and delivered by the Company and, assuming due execution by the counterparties, constitutes the valid and binding obligation of the Company enforceable in accordance with its terms, except that such enforceability (a) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally, and (b) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). Section 3.3. No Conflicts; Required Filings and Consents. Except as set forth in Schedule 3.3, neither the execution and delivery by the Company or any Seller of this Agreement nor the consummation by the Company or any Seller of the transactions contemplated hereby, nor compliance by the Company or any Seller with or fulfillment of its respective obligations hereunder will: (a) conflict with or violate any provision of the Company's certificate of incorporation or bylaws; (b) contravene, conflict with or result in a violation of, or constitute a failure to comply with in any material respects any Law material to the Company or any Seller; (c) result in the acceleration of, or entitle any party to accelerate (whether after the giving of notice or lapse of time or both), any debt obligation of any of the MW Companies in excess of $250,000 in the aggregate; (d) constitute a material default under or materially violate, or result, with giving of notice or lapse of time or both in any default under or violation of, or result in the creation or imposition of, any Encumbrance upon any of the assets or properties any of the MW Companies or any of the Shares pursuant to any provision of, any material mortgage, lease, agreement, indenture, license or instrument to which any of the MW Companies is a party or by which any of them or any of their respective properties or assets is bound; (e) constitute an event permitting modification, amendment or termination of a material mortgage, lease, agreement, indenture, license, instrument, order, arbitration award, judgment or decree to which any of the MW Companies is a party or by which any of them or any of their assets or properties is bound; or -15- (f) except as may be required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended ("HSR Act"), require the approval, consent, authorization or act of, or the making by any of the MW Companies, of any material declaration, filing or registration with any Governmental Entity or other Person. Section 3.4. Capital Stock. (a) The authorized capital stock of the Company consists of (i) 1,500,000 shares of Class A Common Stock, (ii) 28,200 shares of Class B Common Stock, par value $0.01 per share (the "Class B Common Stock"), (iii) 2,500 shares of Class D Common Stock, (iv) 1,530,700 shares of Common Stock, par value $0.01 per share (the "Undesignated Common Stock") and (v) 500,000 shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"). (b) As of the date hereof, (i) 997,500 shares of Class A Common Stock are outstanding, (ii) 2,500 shares of Class D Common Stock are outstanding, (iii) no shares of Preferred Stock are outstanding and (iv) no shares of Undesignated Common Stock or Class B Common Stock are outstanding. As of the date hereof, all of the outstanding shares of Class A Common Stock are held by the Class A Stockholders in the respective amounts listed on Exhibit A hereto. As of the date hereof, all of the outstanding shares of Class D Common Stock are held by the Class D Stockholders in the respective amounts listed on Exhibit A hereto. (c) As of the date hereof, warrants (the "Class B Warrants") to purchase 25,641 shares of Class B Common Stock are outstanding pursuant to a Warrant Agreement, dated as of January 17, 2003 (the "Warrant Agreement"), by and among the Company and the initial purchasers named therein (the "Class B Warrantholders"). As of the date hereof, all of the Class B Warrants are held by the Class B Warrantholders in the respective amounts listed on Exhibit A hereto. The exercise price of each Class B Warrant is listed on Exhibit A hereto. (d) As of the date hereof, options (the "Options") to purchase 113,486.8807 shares of Class A Stock are outstanding pursuant to stock option agreements (the "Option Agreements") entered into pursuant to the Company's 2003 Management Stock Incentive Plan (the "Company Option Plan"). As of the date hereof, all of the Options are held by the holders (the "Option Holders") in the respective amounts listed on Exhibit A hereto. The exercise price of each Option is listed on Exhibit A hereto. (e) Except for this Agreement, the Class B Warrants, the Options and as disclosed in Schedule 3.4(e), there are no agreements, warrants, puts, calls, rights, options or other commitments of any character to which the Company is a party relating to the issuance, sale, purchase, redemption, conversion, exchange, registration, voting or transfer of any shares of capital stock of the Company or that provides for any stock appreciation or similar right. Except as set forth in Section 3.4, the Company does not have any capital stock, equity securities or securities containing any equity features authorized, issued or outstanding. (f) All outstanding shares of Class A Common Stock and Class D Common Stock are duly authorized and validly issued and fully paid and nonassessable, free of any -16- preemptive or subscription rights, and upon delivery to the Purchaser pursuant to Article II hereof, will be free of any preemptive or subscription rights and free and clear of all Encumbrances, other than those created by the Purchaser. There are no unsatisfied preemptive rights relating to the capital stock of the Company. (g) Except as set forth on Schedule 3.4(g), since its founding, the Company has not engaged in any business other than the ownership of all of the capital stock of MW Manufacturers Holding Corp. (h) No Person other than the record holders of the Shares are or will be entitled to receive any payment from the Purchaser or the Company on account of any beneficial or similar interest any such Person may have had in any Shares at any time prior to the Closing. Section 3.5. Subsidiaries. Schedule 3.5 lists each Subsidiary of the Company. As used in this Agreement, "Subsidiary" means any corporation, partnership, joint venture or other legal entity of which the Company owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which generally are entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, joint venture or other legal entity. Except as set forth in Section 3.4(c) and (d) above, there are no agreements, warrants, puts, calls, rights, options, subscriptions, preemptive rights or other commitments of any character to which any of the MW Companies is a party or by which any of the MW Companies is bound which obligates any of the MW Companies to issue, deliver or sell any outstanding or additional shares of capital stock of any Subsidiary or any securities or instruments convertible into or exchangeable for any such outstanding or additional shares of capital stock. Each outstanding share of capital stock of each Subsidiary is duly authorized, validly issued, fully paid and nonassessable and free of preemptive rights, and each such share is owned by the Company or another Subsidiary, free and clear of Encumbrances, except those arising under the Funded Indebtedness outstanding as of the date hereof. Except for the Subsidiaries, no MW Company owns any equity interest in any Person. Section 3.6. Financial Statements. The Company has delivered to the Purchaser (a) the audited consolidated balance sheet of MW Manufacturers Inc. and its Subsidiaries as of December 29, 2001, December 28, 2002 and December 27, 2003, and the related audited consolidated statements of operations, stockholders' equity and cash flows of MW Manufacturers Inc. and its Subsidiaries for the periods from January 18, 2003 through December 27, 2003 and from December 29, 2002 through January 17, 2003, and for the years ended December 28, 2002 and December 29, 2001, together with all related notes and schedules thereto (the "Audited Financial Statements") and (b) the unaudited consolidated balance sheet of the Company and its Subsidiaries as of April 3, 2004 and the related unaudited consolidated statements of operations, stockholders' equity and cash flows of the Company and its Subsidiaries for the three-month period ended April 3, 2004, together with all related notes and schedules thereto (the "Interim Financial Statements"). The Audited Financial Statements and the Interim Financial Statements are referred to collectively as the "Financial Statements"). The Financial Statements have been prepared from, and are in accordance with, the books and records of the Company and its Subsidiaries. Except as set forth in Schedule 3.6, the Financial Statements were prepared in accordance with GAAP applied on a consistent basis and fairly present, in all material respects, -17- the consolidated financial position of the Company and its Subsidiaries as of the applicable dates thereof and for the applicable periods then ended (subject, in the case of the Interim Financial Statements, to reclassifications, normal year-end adjustments and the absence of notes to such statements). Section 3.7. Absence of Certain Changes. Except as described in Schedule 3.7 and except for the transactions permitted or contemplated by this Agreement, since December 27, 2003: (a) there has not been a Material Adverse Effect or any event or circumstance that, individually or in the aggregate, is reasonably likely to have a Material Adverse Effect; (b) the business of the MW Companies has been conducted, in all material respects, in the Ordinary Course; and (c) none of the MW Companies has taken any of the following actions: (i) amended its certificate of incorporation or bylaws; (ii)declared, set aside, made or paid any dividends or other distributions (whether in cash, stock, property or otherwise) with respect to any of its capital stock, except for dividends, distributions or other payments by any Subsidiary of the Company to any other Subsidiary of the Company or to the Company; (iii) reclassified, combined, split, subdivided or redeemed, purchased or otherwise acquired for any consideration any outstanding shares of its capital stock or securities carrying the right to acquire or which are convertible into or exchangeable or exercisable for, with or without additional consideration, such capital stock, except the redemption or repurchase of shares of Class A Common Stock from employees in connection with the termination of such employee's employment; (iv)acquired stock or other securities or all or any portion of the business of any Person; (v) acquired the assets of any Person or disposed of any asset, except acquisitions or dispositions of inventory and equipment in the Ordinary Course or otherwise not in excess of $250,000 in the aggregate; (v) incurred any indebtedness for borrowed money, other than borrowings under the Senior Credit Facility and other indebtedness not in excess of $250,000 in the aggregate; (vi)merged or consolidated with any corporation or other entity or acquired any capital stock or business of any Person, or consummated any business combination transaction, in each case, whether in a single transaction or series of related transactions; -18- (vii) created, assumed or suffered to be incurred any Encumbrance of any kind on any of its properties or assets, other than liens created pursuant to the Senior Credit Facility, Permitted Encumbrances and other Encumbrances having a value, in the aggregate, not in excess of $250,000; (viii) changed its accounting methods, principles or practices, except as may be required by GAAP and as disclosed in the Interim Financial Statements; (ix) paid or committed to pay any bonus, or additional salary or compensation to any of the employees, directors, officers or consultants of the Company and the Subsidiaries, other than the payment or commitment to pay bonuses or additional salary or compensation in the Ordinary Course; (x) sold, assigned or transferred (A) any patents, trademarks, tradenames, copyrights or trade secrets or (B) any other intangible assets with an aggregate value in excess of $250,000 in the aggregate; (xi)suffered any extraordinary losses, casualties, damage or destruction, or waived or cancelled any rights of value in excess of $250,000 in the aggregate; (xii) granted or announced any increase in the salaries, bonuses or other benefits payable by the Company or any of its Subsidiaries to any of their employees, other than as required by Law or pursuant to any plans, programs or agreements existing on the date hereof, including normal merit increases to non-executive officers of the Company or any of its Subsidiaries, in each case, consistent with the past practices of the Company or such Subsidiary; (xiii) granted any severance or termination pay to any of the employees, directors, officers or consultants of the Company and its Subsidiaries or increased any benefits payable under any existing severance or termination pay policies or employment agreements with any of the employees, directors, officers or consultants of the Company and its Subsidiaries; (xiv) entered into, amended, supplemented or modified any agreement material to the MW Companies taken as a whole, except in the Ordinary Course; or (xv)committed, authorized or agreed to do any of the foregoing. Section 3.8. No Undisclosed Liabilities. Except as set forth in the Financial Statements and in Schedule 3.8, none of the MW Companies is subject to any claims, obligations or liabilities of any nature (whether accrued, absolute, known, choate, contingent or otherwise) and whether or not of the type required to be reflected on a balance sheet prepared in accordance with GAAP, other than (a) obligations pursuant to or in connection with this Agreement or the transactions contemplated hereby, (b) liabilities and obligations incurred in the Ordinary Course since April 3, 2004 and (c) other liabilities and obligations not in excess of $250,000 in the aggregate. -19- Section 3.9. Taxes. Except as set forth in Schedule 3.9: (a) each of the MW Companies has timely filed or caused to be timely filed all material Tax Returns (taking into account applicable extension periods) required to be filed as of the date hereof, has paid, or will pay, all Taxes required to be paid (whether or not shown on any Tax Return) and has made adequate provision for any Taxes that are not yet due and payable for all taxable periods, or portions thereof, ending on or before the date hereof; (b) the Sellers and the MW Companies have given or otherwise made available to the Purchaser true, correct and complete copies of all material Tax Returns, examination reports and statements of deficiencies for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired; (c) there are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment of, Taxes due from the MW Companies for any taxable period and no request for any such waiver or extension is currently pending; (d) no audit or other proceeding by any Governmental Entity is pending or, to the knowledge of the Sellers or the MW Companies, threatened with respect to any Taxes due from or with respect to the MW Companies, no Governmental Entity has given notice of any intention to assert any deficiency or claim for additional Taxes against any of the MW Companies, and no claim in writing has been made by any Governmental Entity in a jurisdiction where none of the MW Companies files a Tax Return that any of the MW Companies is or may be subject to taxation by that jurisdiction, and all deficiencies for Taxes asserted or assessed against any of the MW Companies have been fully and timely paid, settled or properly reflected in the Financial Statements; (e) there are no Encumbrances for Taxes upon the assets or properties of any of the MW Companies; (f) none of the MW Companies have taken any reporting position on a Tax Return, which reporting position (i) if not sustained would be reasonably likely, absent disclosure, to give rise to a penalty for substantial understatement of federal income Tax under Section 6662 of the Code (or any similar provision of state, local, or foreign Tax law), and (ii) has not adequately been disclosed on such Tax Return in accordance with Section 6662(d)(2)(B) of the Code (or any similar provision of state, local, or foreign Tax law); (g) none of the MW Companies is a party to any agreement relating to the sharing, allocation or indemnification of Taxes, or any similar agreement, contract or arrangement, (collectively, "Tax Sharing Agreements") or has any liability for Taxes of any Person (other than members of the affiliated group, within the meaning of Section 1504(a) of the Code, filing consolidated federal income tax returns of which the Company is the common parent) under Treasury Regulation Section 1.1502-6, Treasury Regulation Section 1.1502-78 or similar provision of state, local Or foreign law, as a transferee or successor, by contract, or otherwise; (h) each of the MW Companies has withheld (or will withhold) from their respective employees, independent contractors, creditors, stockholders and third parties and -20- timely paid to the appropriate Governmental Entity proper and accurate amounts in all material respects for all periods ending on or before the Closing Date in compliance with all Tax withholding and remitting provisions of applicable laws and have each complied in all material respects with all Tax information reporting provisions of all applicable laws; (i) none of the MW Companies has constituted a "distributing corporation" or a "controlled corporation" (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free treatment under Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution that could otherwise constitute part of a "plan" or "series of related transactions" (within the meaning of Section 355(e) of the Code) in conjunction with this acquisition; (j) none of the MW Companies has agreed, or is required to make, any adjustment under Section 481(a) of the Code, and to the knowledge of the Sellers and the MW Companies, no Governmental Entity has proposed any such adjustment or change in accounting method; (k) any adjustment of Taxes of any of the MW Companies made by the Internal Revenue Service (the "IRS"), which adjustment is required to be reported to the appropriate state, local, or foreign Governmental Entity, has been so reported; (l) none of the MW Companies has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of state, local or foreign law, and none of the MW Companies has is subject to any private letter ruling of the IRS or comparable ruling of any other Governmental Entity; (m) there is no contract, agreement, plan, or arrangement covering any person that, individually or collectively, will give rise to the payment of any amount in connection with the transactions contemplated by this Agreement that would not be deductible by the Purchaser or any of the MW Companies by reason of Section 280G of the Code. (n) The Company is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Section 3.10. Governmental Permits. Each of the MW Companies has all governmental licenses, franchises, permits, privileges, immunities, approvals and other authorizations which are reasonably necessary and material for the ownership, leasing, operation and use of its assets and properties and which are reasonably necessary and material to their carrying on and conducting their respective businesses as currently conducted (herein collectively called "Governmental Permits"). Each such Governmental Permit is valid and in full force and effect in all material respects and, to the knowledge of the Company, no suspension or cancellation of any of them is threatened. Section 3.11. Owned Real Property. All real property owned by any of the MW Companies is identified in Schedule 3.11 and is hereinafter referred to as the "Owned Real Property". The MW Company shown on such Schedule 3.11 as owning such Owned Real Property holds good, valid and marketable fee title to the Owned Real Property shown as so -21- owned, free of all Encumbrances except (i) for easements, covenants, restrictions and other matters that do not impair in any material respect the use and enjoyment of the property, (ii) for liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings for which adequate reserves have been created in accordance with GAAP, (iii) for liens of carriers, warehousemen, mechanics, materialmen and other similar liens incurred in the Ordinary Course for amounts which are not delinquent and which are not individually or in the aggregate, material (the matters set forth in the foregoing clauses (i), (ii) and (iii) are referred to herein as "Permitted Encumbrances"), and (iv) liens created pursuant to the Senior Credit Facility and (v) as set forth in Schedule 3.11. Section 3.12. Real Property Leases. (a) Schedule 3.12(a) contains an accurate and complete list of all real property leased by any of the MW Companies (the "Scheduled Leases"). Except as set forth on Schedule 3.12(a), the Company has heretofore delivered to the Purchaser true, correct and complete copies of all Scheduled Leases (including all modifications, amendments and supplements). The applicable MW Company holds good and valid leasehold title to each of the properties which are the subject of the Scheduled Leases (the "Leased Real Property"), in each case free of all Encumbrances, except for liens created pursuant to the Senior Credit Facility and Permitted Encumbrances. (b) Except as disclosed in Schedule 3.12(b), each Scheduled Lease is valid, binding and in full force and effect and there are no existing defaults under any Scheduled Lease, and no event has occurred which, to the knowledge of the Company, with notice or lapse of time, or both, would constitute an event of default under any Scheduled Lease, except in each case for matters that would not have a Material Adverse Effect. (c) Schedule 3.12(c) sets forth all Scheduled Leases that are terminable by the landlord thereunder on thirty-days notice or less. In the event that the landlords under the leases set forth on Schedule 3.12(c) were to terminate those leases, such terminations would not individually or, in the aggregate, have a Material Adverse Effect. Section 3.13. Intellectual Property. (a) Schedule 3.13(a) lists all patents, patent applications, registered trademarks, trademark applications, registered service marks, service mark applications, trade names and registered copyrights that are owned by any of the MW Companies and included in the Intellectual Property (collectively, "Registered Intellectual Property"). (b) Schedule 3.13(b) lists all licenses or other agreements relating to Intellectual Property to which any of the MW Companies is a party, other than any "shrink wrap" and "click wrap" software license agreements and any other software license agreements that do not involve prospective material license fees or royalty payments by any of the MW Companies. (c) One of the MW Companies owns, or otherwise has the right pursuant to a valid agreement, to use the Intellectual Property necessary or material to the business of the MW Companies as presently conducted (the "Company Intellectual Property"). Except for the -22- liens in connection with the Senior Credit Facility, all of the Registered Intellectual Property is free and clear of all Encumbrances. To the knowledge of the Company, all of the rights of the MW Companies in and to the Registered Intellectual Property are valid and enforceable. Each of the MW Companies has taken all actions reasonably necessary to maintain and protect each item of Company Intellectual Property owned or purported to be owned by it, and to protect the secrecy, confidentiality and value of its Trade Secrets that are material to the business of the MW Companies as presently conducted and taken as a whole. (d) To the knowledge of the Company, none of the Intellectual Property, products or services owned, used, developed, provided, sold, licensed, imported or otherwise exploited by the MW Companies infringes upon or otherwise violates in any material respect any Intellectual Property rights of others. None of the MW Companies has received written notice that is still pending to the effect that any of the MW Companies has infringed any patent, trademark, service mark, trade name, copyright, brand name, logo, symbol or other intellectual property right of any third party and there is no action pending or, to the knowledge of the Company, threatened against any of the MW Companies, and to the knowledge of the Company, there is no fact, event, condition or circumstance that reasonably would be expected to give rise to the commencement of a claim, that any of the MW Companies has infringed or misappropriated any such intellectual property right of any Person in any material respects. (e) To the knowledge of the Company, no Person is infringing any Company Intellectual Property or opposing or attempting to cancel any rights of the MW Companies in or to the Company Intellectual Property. (f) No past or present employee or consultant of any MW Company owns or has any right in or to any portion of any Company Intellectual Property. Section 3.14. Labor Relations. No MW Company is a party to any collective bargaining agreement, contract or legally binding commitment to any trade union or employee organization or group in respect of or affecting employees. Except as set forth on Schedule 3.14, (a) no MW Company is currently engaged in any negotiation with any trade union or employee organization; (b) in the last six years, no MW Company has engaged in any unfair labor practice within the meaning of the National Labor Relations Act, and, there is no pending or, to the knowledge of the Company, threatened complaint regarding any alleged unfair labor practices as so defined; (c) there is no strike, labor dispute, work slow down or stoppage pending or, to the knowledge of the Company, threatened against any MW Company; (d) in the last six years, no MW Company has experienced any material work stoppage; (e) to the knowledge of the Company, no MW Company is the subject of any union organization effort; and (f) except as to matters that are not individually or in the aggregate likely to have a Material Adverse Effect, the MW Companies are and have been in material compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including, without limitation, any such Laws respecting employment discrimination, occupational safety and health, and unfair labor practices. -23- Section 3.15. Employee Benefit Plans. (a) As used in this Agreement, the term "Employee Plan" means any pension, retirement, profit-sharing, deferred compensation, stock purchase, stock option, bonus or incentive plan, any medical, vision, dental or other health plan, any life insurance plan, vacation, employment, consulting, severance, disability or other employee benefit plan, program, policy agreement or arrangement, whether written or unwritten, including, without limitation, any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which any of the MW Companies maintains or contributes to or for which any of the MW Companies has any actual, contingent, primary or secondary liability. Each Employee Plan is listed on Schedule 3.15. Except as set forth in Schedule 3.15(a), no MW Company, or any entity which is considered to be under common control with any of such MW Companies pursuant to Section 1001 of ERISA or Section 414 of the Code (an "ERISA Affiliate") sponsors, maintains, contributes to or had any obligation with respect to, or in the past six years preceding the date hereof has sponsored, maintained, contributed to or had any obligation with respect to, any Employee Plan which is a single employer defined benefit plan as defined in Section 3(35) of ERISA subject to Title IV of ERISA (a "Title IV Plan"), or contributed to, participated in or had any obligation with respect to, any multiemployer plan within the meaning of Section 3(37) of ERISA or any plan subject to Section 4063 or 4064 of ERISA. (b) Except as set forth in Schedule 3.15(b), for each Employee Plan that is a Title IV Plan, (a) as of the last day of the most recent plan year ended prior to the date hereof, there is no "amount of unfunded benefit liabilities," as defined in Section 4001(a)(18) of ERISA, and there has been no material change in the financial condition of any such Title IV Plan since the last day of its most recent fiscal year, (b) there has been no "reportable event" as that term is defined in Section 4043 of ERISA and the regulations thereunder that would require the giving of notice or any event requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA, (c) all premiums due the Pension Benefit Guaranty Corporation ("PBGC") have been paid, (d) none of the MW Companies has filed a notice of intent to terminate any Title IV Plan and has not adopted any amendment to treat such Title IV Plan as terminated, (e) the PBGC has not instituted, or threatened to institute, proceedings to treat any Title IV Plan as terminated and (f) no event has occurred or circumstance exists that may constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan. No "accumulated funding deficiency" as defined in Section 302 of ERISA or Section 412 of the Code, whether or not waived, exists with respect to any Employee Plan subject to Section 302 of ERISA or Section 412 of the Code and the Company is not, and does not expect to be, subject to (i) any requirement to post security pursuant to Section 412(f) of the Code or (ii) any lien pursuant to Section 412(n) of the Code. (c) Each Employee Plan that is intended to be qualified under Section 401(a) of the Code and any trust relating to any such Employee Plan that is intended to be exempt from income tax under Section 501(a) of the Code is so qualified and exempt, as applicable, and each such Employee Plan has received one or more favorable determination letters or opinion letters from the U.S. Internal Revenue Service to such effect. Each Employee Plan intended to be qualified under Section 401 of the Code has been administered in all material respects according to its terms and applicable Law, and, to the knowledge of the -24- Company, nothing has occurred which would be reasonably likely to adversely affect its qualified status or the qualified status of any related trust. (d) The Employee Plans are in compliance in all material respects with all Laws (including, without limitation, ERISA and the Code) applicable to Employee Plans. All material reports and material disclosures relating to the Employee Plans required to be filed with or furnished to any Governmental Entity have been filed or furnished in a timely manner and in accordance with applicable Laws. With respect to any Employee Plan, no prohibited transaction (within the meaning of Section 406 of ERISA and/or Section 4975 of the Code) exists which could subject any of the MW Companies or any "disqualified person" to any excise tax or penalty pursuant to Section 502(1) of ERISA or under Section 4975 of the Code. Each of the MW Companies has made full and timely payment of all amounts which are required to be paid as contributions to each Employee Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA). Each of the MW Companies has complied in all material respects with the continuation coverage requirements of Part 6 of Title I of ERISA, as amended ("COBRA") and with the requirements of the Health Insurance Portability and Accountability Act. There is no contract, agreement, plan or arrangement with any person which provides for any payment to any employee by any of the MW Companies, either in connection with this transaction or otherwise, which payment would increase, be accelerated and/or would not be deductible under Code Sections 162(m) or 404. (e) With respect to any Employee Plan, other than routine claims for benefits, no liens, lawsuits or complaints to or by any person or Governmental Entity have been filed or made against such Employee Plan or any MW Companies or, to the knowledge of the Company, against any other person or party and, to the knowledge of the Company, no such liens, lawsuits or complaints are contemplated or threatened and no individual who has performed services for any MW Company has been improperly excluded from participation in any Employee Plan. All liabilities or expenses of the MW Companies in respect of any Employee Plan (including workers compensation) or which have not been paid, have been properly accrued on the Company's Financial Statements in compliance with GAAP. None of the MW Companies nor any organization to which any MW Company is a successor or parent corporation, within the meaning of Section 4069(b) of ERISA, has engaged in any transaction described in Sections 4069 or 4212(c) of ERISA. (f) None of the MW Companies has an obligation to provide or make available post-employment welfare benefits or welfare benefit coverage for any employee or former employee, except as may be required under COBRA, and at the expense of the employee or former employee. (g) The Company has no contract or commitment to create any additional employee benefit or compensation plans, policies or arrangements or, except as may be required by applicable law, to modify any Employee Plan, and the Company may amend or modify any Employee Plan at any time. (h) The Company has not as of the date hereof incurred, and shall not as of the Closing incur, any liability or obligation under the Worker Adjustment and Retraining Notification Act, and the regulations promulgated thereunder (the "WARN Act"), or any -25- similar state or local law which remains unsatisfied. The Company has no material direct or indirect liability, whether absolute or contingent, with respect to any misclassification of any person as an independent contractor rather than as an employee, or with respect to any employee leased from another employer. Section 3.16. Certain Contracts. Except as set forth in Schedule 3.16, none of the MW Companies is a party to, or bound by, nor are any of their respective properties subject to, or bound by, any contract or agreement relating to the following (the "Company Contracts"): (a) payments by or to any of the MW Companies of more than $250,000 in any 12-month period from or after January 1, 2003 (other than the Funded Indebtedness); (b) the employment of any officer or employee (other than any contract which is terminable without liability upon notice of 90 days or less), or any contract of employment with a former officer or employee, in each case pursuant to which payments in excess of $250,000 are required to be made by any of the MW Companies in any 12-month period after the date hereof; (c) any outstanding indebtedness for borrowed money by any of the MW Companies, other than borrowings under the Senior Credit Facility and other indebtedness not in excess of $250,000 in the aggregate; (d) the sharing of profits, losses, costs or liabilities with any other Person in a joint venture agreement, partnership agreement, or limited liability company agreement or other agreement (however named) that is material to the Company or the Subsidiaries considered as a whole; (e) non-competition or exclusivity obligations which would prohibit the Company or any Subsidiary from freely engaging in business anywhere in the world; (f) any obligation to pay any "earnout" payment or deferred or contingent purchase price or any similar payment respecting the purchase of any business or assets; (g) except for guarantees of obligations between or among the MW Companies and except pursuant to the Funded Indebtedness, any material guarantee or other material contingent liability in respect of any indebtedness or obligation of any Person; and (h) any other contract or agreement that is material to the MW Companies taken as a whole. True, correct and complete copies of all Company Contracts have been made available to the Purchaser. The Company and the Subsidiaries have been in compliance in all material respects with all applicable terms and requirements of each Company Contract and to the Company's knowledge, each other Person that is a party to any of the Company Contracts has been in compliance with all applicable terms and requirements of such Company Contract, other than any non-compliance by the Company and its Subsidiaries or such other party to such Company Contract that would not have a Material Adverse Effect. Neither the Company nor any Subsidiary has given to or received from any other Person any written notice regarding any -26- actual, alleged, possible or potential violation or breach of, or default under, or any threat to terminate, any Company Contract. Section 3.17. Litigation. Except as set forth in Schedule 3.17, there are no suits, claims, actions, proceedings or investigations pending or, to the knowledge of the Company, threatened against any of the MW Companies or any of their respective properties or assets which, if determined adversely, (i) require the payment individually in excess of $150,000, (ii) result in the entry of any equitable relief or (iii) would reasonably be expected to prevent or materially delay the consummation of the transactions contemplated hereby. Except as set forth in Schedule 3.17, no MW Company is subject to any writ, injunction or decree of any Governmental Entity that would have a Material Adverse Effect. Section 3.18. Environmental Matters. Except as set forth in Schedule 3.18, (a) none of the MW Companies is subject to any order, decree or injunction issued by any Governmental Entity relating to any Environmental Law; (b) none of the MW Companies has been notified in writing that it may be liable under or in violation of or out of compliance with any Environmental Law; (c) the MW Companies are, and have been for the past three years, in compliance in all material respects with applicable Environmental Laws; (d) to the knowledge of the Company, there are no events or facts that would cause any of the MW Companies to be liable under or in violation of or not in compliance with any Environmental Law in any material respect; and (e) to the knowledge of the Company, no real property currently or formerly owned or operated by any of the MW Companies is contaminated with any pollutant, contaminant, hazardous waste or hazardous substance to an extent or in a manner or condition now requiring remediation under any Environmental Law. As used herein, "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, the Federal Water Pollution Control Act, 33 U.S.C. Section 1201, the Clean Water Act, 33 U.S.C. Section 1321, the Clean Air Act, 42 U.S.C. Section 7401 and thE Toxic Substances Control Act, 15 U.S.C. Section 2601, in each case, as amended from time to time, or any other applicable federal, state, local or foreign law, ordinance, regulation or rule dealing with pollution, the protection of natural resources and/or the environment or occupational exposures to hazardous materials, or the handling, storage, treatment, transport, disposal or recycling of hazardous materials. Section 3.19. Insurance. Schedule 3.19 lists all currently effective material insurance policies or binders of insurance which relate to the business of the MW Companies (excluding insurance funded Employee Plans). Such policies and binders are valid and binding in accordance with their terms, are in full force and effect, and insure against risks and liabilities to an extent and in a manner customary in all material respects in the industries in which the MW Companies operate. The Company has made available to the Purchaser a brief description (specifying the insurer and the policy number or covering note number with respect to binders, describing each pending claim thereunder of more than $25,000, setting forth the aggregate amounts paid out under each such policy through the date hereof) or provided copies of all policies or binders of fire, liability, worker's compensation, vehicular, products liability and other insurance held by or on behalf of any of the MW Companies. None of the MW Companies is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such policy or binder or has failed to give any notice or present any claim under any such policy or binder in due and timely fashion that would result in the cancellation of such -27- policy or binder. No MW Company has received (x) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (y) any notice of cancellation or non-renewal of any such policy or binder. To the Company's knowledge, no event has occurred or circumstance exists that may form the basis for termination of any such policy or binder. Except as set forth on Schedule 3.19, no MW Company has received any notice from any of their insurance carriers that any insurance premiums will or may be materially increased in the future or that any insurance coverage set forth on Schedule 3.19 will or may not be renewed on substantially the same terms as now in effect. Section 3.20. Finders. Except as set forth on Schedule 3.20, no MW Company will be obligated to pay any fee or commission to any broker, finder or similar intermediary for or on account of the transactions contemplated by this Agreement. Section 3.21. Transactions with Affiliates. Except as set forth on Schedule 3.21 (collectively, the "Affiliate Transactions"), no officer or director of any MW Company, no Person with whom any such officer or director has any direct or indirect relation by blood, marriage or adoption, no entity in which any such officer, director or Person owns any beneficial interest (other than a publicly held corporation whose stock is traded on a national securities exchange or in the over-the-counter market and less than five percent of the stock of which is beneficially owned by all such officers, directors and Persons in the aggregate), no Affiliate of any of the foregoing and no current or former Affiliate of any MW Company and no Seller has any interest in: (a) any contract, arrangement or understanding with, or relating to, any MW Company or the properties or assets of any MW Company or (b) any loan, arrangement, understanding, agreement or contract for or relating to any MW Company or the properties or assets of any MW Company. Section 3.22. Compliance with Laws. The MW Companies are in compliance with all applicable Laws of foreign, federal, state and local governments and all agencies thereof, except where the failure to comply has not had and is not reasonably likely to have, individually or in the aggregate, Material Adverse Effect. Section 3.23. Inventory. The inventories of the MW Companies are in good and merchantable condition in all material respects, are saleable in all material respects in the Ordinary Course for the purposes for which intended and are in amounts consistent with prior practice at this time of year in all material respects, except for shorts, obsolete or otherwise unusable inventory for which adequate reserves have been reflected in the Interim Financial Statements in accordance with GAAP consistently applied. Section 3.24. Receivables. Except as set forth on Schedule 3.24, all accounts and notes receivable reflected on the Interim Financial Statements, and all accounts and notes receivable arising subsequent to the date of the Interim Financial Statements, have arisen in all material respects from bona fide transactions entered into by the Company and/or one or more of its Subsidiaries involving the sale of inventory or the rendering of a service in the Ordinary Course. The Company has provided the Purchaser with a true and complete list of all accounts receivable, as of April 3, 2004, which list sets forth the aging of such accounts receivable. -28- Section 3.25. Warranty Claims. Within the last three years, there have been no (a) citations or decisions by any Governmental Entity specifically stating that any product manufactured, marketed or distributed at any time by any MW Company (collectively, "Transferred Company Products") is defective or unsafe or fails to meet any safety standards promulgated by such Governmental Entity or (b) recalls ordered by any Governmental Entity with respect to any Transferred Company Product. Except as would not reasonably be expected to have a Material Adverse Effect or except pursuant to the standard merchandise return policies of the MW Companies, which provide for the replacement or return for credit of defective or damaged products or other returns for credit at the request of the customer other than for the replacement or return for credit of defective or damaged products, there are no pending or, to the Company's knowledge, threatened warranty claims, against any MW Company which would, in the aggregate, reasonably be expected to exceed the reserve for such claims reflected in the Interim Financial Statements, as such reserve has been adjusted in the Ordinary Course since the date of the Interim Financial Statements. Section 3.26. Condition of Assets and Properties. Except as set forth on Schedule 3.26 or defects that would not, in the aggregate, have a Material Adverse Effect, all of the assets and properties of the MW Companies are in good operating condition and repair, subject to ordinary wear and tear. ARTICLE IV INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each Stockholder severally (as to himself, herself or itself and not as to any other Stockholder) hereby represents and warrants to the Purchaser as follows: Section 4.1. Authority and Related Matters. (a) The Stockholder has full legal right, power, capacity and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and, for the Stockholders other than natural persons, such Stockholder is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has taken all corporate action necessary to authorize the execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by such Stockholder and constitutes a valid and legally binding obligation of such Stockholder enforceable against such Stockholder in accordance with it terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally, and (ii) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). (b) The Stockholder is the record owner of the aggregate number and class of shares of capital stock of the Company listed beside its name on Exhibit A and such shares are the only shares of capital stock of the Company owned by such Stockholder. Except for -29- this Agreement and the transactions contemplated hereby, there are no agreements, arrangements, warrants, options, puts, calls or other rights, of any character to which such Stockholder is a party or by which any shares of capital stock of the Company owned by Stockholder are bound relating to the issuance, sale, purchase, redemption, conversion, exchange, registration, voting or transfer of any such shares, other than those which, pursuant to their terms, will terminate immediately on the Closing Date. At Closing, the Stockholder will transfer good and valid title to the Shares to be sold by such Stockholder to the Purchaser free of any preemptive or subscription rights and free and clear of all Encumbrances other than those created by the Purchaser. (c) The execution and delivery by the Stockholder of this Agreement and the consummation by the Stockholder of the transactions contemplated hereby not: (i) violate, conflict with, result with the giving of notice or lapse of time or both in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, amendment, termination or cancellation or a loss of rights under, or result in the creation or imposition of any Encumbrance upon, any of the assets or properties of such Stockholder or any of the MW Companies, any articles of organization, bylaws, trust agreement, partnership agreement or certificate of partnership or other constitutive documents of such Stockholder, or, except as would not prevent or materially delay the consummation of the transactions contemplated hereby, any note, instrument, agreement, mortgage, lease, license, franchise, Governmental Permit or judgment, order, award or decree to which such Stockholder is a party or by which the Stockholder is bound, or any Law affecting such Stockholder; or (ii)except for compliance with the HSR Act, require the approval, consent, authorization or act of, or the making by such Stockholder of any declaration, filing or registration with, any Governmental Entity or other Person. Section 4.2. No Finder. Except as set forth on Schedule 3.20, the Stockholder has not made any arrangement which would obligate the Purchaser or the Company to pay any fee or commission (or reimburse expenses) to any broker, finder or similar intermediary for or on account of the transactions contemplated by this Agreement. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby represents and warrants to the Company and the Sellers as follows: Section 5.1. Organization. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all necessary corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. The Purchaser has delivered to the Company true and correct copies of its certificate of incorporation and bylaws as in effect on the date hereof and as proposed to be in effect immediately prior to the Closing Date. -30- Section 5.2. Authority Relative to this Agreement. The Purchaser has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by all necessary corporate action and no other corporate proceedings on the part of the Purchaser are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. Each of this Agreement has been duly and validly executed and delivered by the Purchaser and, assuming the due authorization, execution and delivery hereof by the Company and the Stockholders, constitutes a valid and binding agreement of the Purchaser, enforceable against it in accordance with its terms, except that such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally, and (b) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). Section 5.3. Noncontravention. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) conflict with or result in any violation of any provision of the certificate of incorporation or bylaws (or equivalent governing instruments) of the Purchaser or any of its Subsidiaries, (b) require any consent, approval or notice under, or conflict with or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any contracts of the Purchaser or any of its Subsidiaries or (c) subject to the approvals, filings and consents referred to in Section 5.4, violate any legal requirements applicable to the Purchaser or any of its Subsidiaries, except, in the case of clauses (b) and (c), with respect to matters that would not impair the ability of the Purchaser to perform its obligations under this Agreement in any material respect or otherwise delay in any material respect or prevent the consummation of any of the transactions contemplated by this Agreement. Section 5.4. Governmental Consents. No consent, approval or authorization of, or declaration or filing with, any Governmental Entity on the part of the Purchaser or any of its Subsidiaries that has not been obtained or made is required in connection with the execution or delivery by the Purchaser of this Agreement or the consummation by the Purchaser of the transactions contemplated hereby, other than (a) compliance with the notification and waiting period requirements of the HSR Act, (b) such filings as may be required by any applicable state securities or "blue sky" laws or state takeover laws, and (c) consents, approvals, authorizations, declarations or filings that, if not obtained or made, would not impair the ability of the Purchaser to perform its obligations under this Agreement in any material respect or otherwise delay in any material respect or prevent the consummation of any of the transactions contemplated hereby. Section 5.5. No Finder. Neither the Purchaser nor any party acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement. Section 5.6. Investment Intent. The Purchaser is purchasing the shares of capital stock of the Company pursuant to Article II solely for its own account and with no intention of distributing or reselling such shares or any part thereof, or interest therein, in any transaction that -31- would be in violation of the Securities Act of 1933, as amended, or any other securities laws of the United States of America or any state thereof. Section 5.7. Status as Accredited Investor. The Purchaser is an "accredited investor" (as that term is defined in Rule 501 of Regulation D under the Securities Act). The Purchaser has such knowledge and experience in business and financial matters so that the Purchaser is capable of evaluating the merits and risks of an investment in the shares being acquired hereunder. The Purchaser understands the full nature and risk of an investment in such shares. The Purchaser further acknowledges that it has had access to the books and records of the Company, is generally familiar with the business being conducted by the Company and has had an opportunity to ask questions concerning the Company and the Company's securities. Section 5.8. Financial Capability/Solvency. (a) The Purchaser has received binding commitments from UBS Loan Finance LLC and UBS Securities LLC (together, the "Debt Financing Commitments") and Caxton-Iseman Capital, Inc. (together with the Debt Financing Commitments, the "Financing Commitments"). The Purchaser has previously delivered to the Company true and complete copies of the executed Financing Commitments. (b) To the knowledge of the Purchaser based on information heretofore provided by the Company to the Purchaser and assuming the accuracy of the Company's representations and warranties under this Agreement, immediately following the Closing, the Company shall be Solvent. For purposes of this Agreement, "Solvent" when used with respect to the Company shall mean that, immediately following the Closing, (i) the amount of the Present Fair Salable Value of its assets will, as of such date, exceed all of its liabilities, contingent or otherwise, as of such date, (ii) the Company will not have, as of such date, an unreasonably small amount of capital for the business in which it is engaged or will be engaged and (iii) the Company will be able to pay its Debts as they become absolute and mature, taking into account the timing of and amounts of cash to be received by it and the timing or and amounts of cash to be payable on or in respect of its indebtedness. The term "Solvency" shall have its correlative meaning. For purposes of the definition of Solvent, (A) "Debt" shall mean liability on a Claim; (B) "Claim" shall mean (I) any right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (II) the right to an equitable remedy for breach on performance if such breach gives rise to a right to payment, whether or not such equitable remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; and (C) "Present Fair Salable Value" shall mean the amount that may be realized if the aggregate assets of the Company (including goodwill) are sold in its entirety with reasonable promptness in an arm's length transaction under present conditions for the sale of comparable business enterprises. -32- ARTICLE VI ADDITIONAL COVENANTS Section 6.1. Conduct of Business of the MW Companies. For the period commencing on the date hereof and ending on the Closing Date, except as expressly contemplated by this Agreement, or set forth in Schedule 6.1, or otherwise consented to in advance in writing by the Purchaser (which consent shall not be unreasonably withheld), the Company hereby agrees that: (a) none of the MW Companies will: (i) amend its certificate of incorporation or bylaws; (ii) declare, set aside, make or pay any dividends or other distributions (whether in cash, stock, property or otherwise) with respect to any of its capital stock, except for dividends, distributions or other payments by any Subsidiary to any other Subsidiary or to the Company; (iii) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire for any consideration any outstanding shares of its capital stock or securities carrying the right to acquire or which are convertible into or exchangeable or exercisable for, with or without additional consideration, such capital stock, except the redemption or repurchase of shares of Class A Common Stock from employees in connection with the termination of such employee's employment (if such redemption or repurchase occurs after the date hereof, the Company and the Stockholders will prior to the Closing Date amend Exhibit A to reflect such redemption or repurchase); (iv) acquire stock or other securities or assets of any Person, or dispose of any assets, except acquisitions or dispositions of inventory or equipment in the Ordinary Course or otherwise not in excess of $250,000 in the aggregate; (v) incur any indebtedness for borrowed money, other than borrowings under the Senior Credit Facility and other indebtedness not in excess of $250,000 in the aggregate; (vi) merge or consolidate with any corporation or other entity or acquire any capital stock or business of any Person, or consummate any business combination transaction, in each case, whether in a single transaction or series of related transactions; (vii) create, assume or suffer to be incurred any Encumbrance of any kind on any of its properties or assets, other than liens created pursuant to the Senior Credit Facility, Permitted Encumbrances and other Encumbrances having a value, in the aggregate, not in excess of $250,000; (viii) change its accounting methods, principles or practices, except as may be required by GAAP and as disclosed in the Interim Financial Statements; -33- (ix) suffer any extraordinary losses, casualties, damage or destruction, or waive or cancel any rights of value in excess of $250,000 in the aggregate (x) grant or announce any increase in the salaries, bonuses or other benefits payable by the Company or any of its Subsidiaries to any of their employees, other than as required by Law or pursuant to any plans, programs or agreements existing on the date hereof, including normal merit increases to non-executive officers of the Company or any of its Subsidiaries, in each case, consistent with the past practices of the Company or such Subsidiary; (xi) grant any severance or termination pay to any of the employees, directors, officers or consultants of the Company and its Subsidiaries or increase any benefits payable under any existing severance or termination pay policies or employment agreements with any of the employees, directors, officers or consultants of the Company and its Subsidiaries; (xii) make any payment or distribution to any Seller or any Affiliate of any Seller (other than in the Ordinary Course in his or her capacity as a director, officer or employee of the MW Companies); (xiii) sell, assign or transfer any patents, trademarks, trade names, copyrights, trade secrets or other intangible assets other than in the Ordinary Course; (xiv) enter into, amend, supplement or modify any agreement material to the MW Companies taken as a whole, except in the Ordinary Course; or (xv) commit, authorize or agree to do any of the foregoing; and (b) each of the MW Companies will: (i) conduct its business in all material respects in the Ordinary Course; and (ii) use its commercially reasonable efforts, consistent with the past practices of the Company, to preserve in all material respects the current business organization, existing business relationships and goodwill of the MW Companies; and (c) without limiting the generality of the foregoing, the MW Companies shall continue to make capital expenditures in the Ordinary Course. Section 6.2. Confidentiality. Any information provided to the Purchaser or its directors, officers, employees, agents, accountants, advisors, bankers and other representatives (collectively, the "Representatives") pursuant to this Agreement shall be held by the Purchaser and its Representatives in accordance with, and shall be subject to the terms of, the Confidentiality Agreement dated May 14, 2004 by and between the Purchaser and the Company. Section 6.3. Certain Efforts. Each of the parties hereto shall use his, her or its reasonable efforts to perform such party's obligations hereunder and to take, or cause to be taken, -34- or do, or cause to be done, all things necessary, proper or advisable under applicable Law to obtain all regulatory approvals and to cause the transactions contemplated hereby to be completed in accordance with the terms hereof and shall cooperate fully with each other party and their respective Representatives in connection with any steps required to be taken as a part of their respective obligations under this Agreement, including without limitation: (a) Promptly upon execution and delivery of this Agreement, each of the Purchaser and the Company shall prepare and file as promptly as possible, or cause to be prepared and filed, with the appropriate Governmental Entity, a notification with respect to the transactions contemplated by this Agreement pursuant to the HSR Act, supply all information requested by such Governmental Entity in connection with the HSR Act notification and cooperate with each other in responding to any such request. Each of the parties shall cooperate with each other in promptly filing any other necessary applications, reports or other documents with any Governmental Entity having jurisdiction with respect to this Agreement and the transactions contemplated hereby, and in seeking necessary consultation with and prompt favorable action by such Governmental Entity. (b) Each party shall give prompt written notice to the others of (i) the occurrence, or failure to occur, of any event which occurrence or failure would be likely to cause any representation or warranty of such party contained in this Agreement or any other agreement or document contemplated hereby to be materially untrue or inaccurate at any time from the date hereof until the Closing or that will or may result in the failure to satisfy any of the conditions specified in Articles VII and VIII and (ii) any failure of any party hereto to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder. No such notification shall limit or otherwise affect the terms of this Agreement or the Schedules delivered by the parties pursuant to this Agreement on the date hereof. Section 6.4. No Public Announcement. Prior to the Closing Date, neither the Purchaser, the Company nor any Seller shall, without the approval of the Purchaser and the Company (which shall not be unreasonably withheld), make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such party shall be so obligated by Law, in which case the Purchaser and the Company shall be advised, and the Purchaser and the Company shall use their reasonable efforts to give the other party advance opportunity to review and comment on such release or announcement. Section 6.5. Directors' and Officers' Indemnification. (a) The Purchaser agrees that (i) the certificate of incorporation or the bylaws of the Company and its Subsidiaries immediately after the Closing shall contain provisions with respect to indemnification and exculpation from liability that are at least as favorable to the beneficiaries of such provisions as those provisions that are set forth in the certificate of incorporation and bylaws of the Company and its Subsidiaries, respectively, on the date of this Agreement, which provisions shall not be amended, repealed or otherwise modified for a period of six years following the Closing in any manner that would adversely affect the rights thereunder of Persons who at or prior to the Closing were Representatives of -35- the Company or any of its Subsidiaries, unless such modification is required by Law and (ii) all rights to indemnification as provided in any indemnification agreements with any current or former Representative of the Company or any of its Subsidiaries as in effect as of the date hereof with respect to matters occurring at or prior to the Closing shall survive the Closing in accordance with the terms thereof and shall not be amended, modified or repealed without the prior written consent of the applicable Representative. (b) Prior to the Closing, the Company may at its option purchase and pre-pay for six years from the Closing Date, officers' and directors' liability insurance and fiduciary liability insurance covering the Persons described in paragraph (a) of this Section 6.5 (whether or not they are entitled to indemnification thereunder) who are currently covered by their existing officers' and directors' or fiduciary liability insurance policies. (c) This Section 6.5, which shall survive the Closing and shall continue for the periods specified herein, is intended to benefit any Person or entity referenced in this Section 6.5 or indemnified hereunder, each of whom may enforce the provisions of this Section 6.5 (whether or not parties to this Agreement). Section 6.6. Investigation of the Company by the Purchaser. From the date hereof until the earlier of the Closing or termination of this Agreement pursuant to Article IX hereof, upon reasonable advance notice, the Company shall afford to the Representatives of the Purchaser (including, without limitation, independent public accountants and attorneys) reasonable access to the offices, properties, senior management, and business and financial records of the MW Companies, and shall furnish to the Purchaser or its Representatives such additional information concerning the MW Companies and their respective properties, assets, businesses and operations as shall be reasonably requested by the Purchaser; provided, however, any such access or furnishing of information shall be conducted at the Purchaser's expense, during normal business hours, under the supervision of the Company's personnel and in such a manner as not unreasonably to interfere with the normal operations of the Company and its Subsidiaries. Nothing in this Section 6.6 or elsewhere in this Agreement shall be interpreted so as to grant the Purchaser the right to perform invasive or subsurface investigations of the properties or locations of any of the MW Companies. Section 6.7. Tax Matters. During the period from the date of this Agreement to the Closing Date, the MW Companies shall (and the Stockholders shall cause the MW Companies to): (a) prepare, in the Ordinary Course (except as otherwise required by law), and timely file all Tax Returns required to be filed by it (or them) on or before the Closing Date ("Post Signing Returns"); (b) consult with the Purchaser with respect to all material Post-Signing Returns and deliver drafts of such Post-Signing Returns to the Purchaser no later than ten (10) business days prior to the date (including extensions) on which such Post-Signing Returns are required to be filed; -36- (c) fully and timely pay all Taxes shown due and payable in respect of such Post Signing Returns that are so filed; (d) properly accrue (and reflect such accrual in its books and records and financial statements), to the extent required in accordance with GAAP, in the Ordinary Course, for all Taxes payable by it (or them) for which no Post Signing Return is due prior to the Closing Date; (e) promptly notify the Purchaser of any material federal, state, local or foreign income or franchise and any other suit, claim, contest, investigation, administrative or judicial proceeding or audit pending against or with respect to any of the MW Companies in respect of any Tax matter, including (without limitation) Tax liabilities and refund claims (collectively, "Contests"), and not settle or compromise any such Contest without Purchaser's consent, which consent shall not be unreasonably withheld or delayed; (f) not make or revoke any material election with regard to Taxes or file any material amended Tax Returns, in each case, other than consistent with past practice; (g) not make any significant change in any Tax or accounting methods or systems of internal accounting controls (including procedures with respect to the payment of accounts payable and collection of accounts receivable), except, consistent with past practice, as may be appropriate to conform to changes in Tax laws or regulatory accounting requirements or GAAP; (h) terminate all Tax Sharing Agreements to which any of the MW Companies is a party such that there is no further liability thereunder except as provided as a current liability on the Interim Financial Statements; and (i) take all actions that are reasonably necessary to ensure that the Company shall not experience a loss of deduction pursuant to Section 280G of the Code and/or any employee incur an excise tax pursuant to Section 4999 of the Code, as a result of making any payments to any current or former employee of the Company or any of its subsidiaries in connection with the transactions contemplated by this Agreement or otherwise. Section 6.8. No Solicitation of Acquisition Proposals. As an inducement to the Purchaser to enter into this Agreement, and in consideration of the time and expense which it has devoted and will devote to the transactions contemplated hereby during the period beginning on the date of this Agreement and ending on the earlier of (a) the Closing Date and (b) the termination of this Agreement in accordance with Article IX, except for the transactions contemplated hereby, the Sellers shall not, and shall cause the MW Companies and each of the Affiliates and authorized representatives of each of the MW Companies and the Sellers not to, directly or indirectly, (i) initiate, solicit or encourage, or respond to, any inquiry or proposal by any Person with respect to (a) a merger, consolidation, share exchange, business combination, joint venture, liquidation, dissolution or similar transaction involving any MW Company, (b) a sale, lease, exchange or other disposition of all or any portion of the business, properties or assets of any MW Company (other than in the Ordinary Course) or the outstanding shares of capital stock of, or other ownership interests in, any MW Company or (c) a sale of any securities of, or -37- otherwise making an investment in, any MW Company (each, an "Acquisition Proposal"), or (ii) enter into any discussions, negotiations or agreements concerning an Acquisition Proposal with, or provide any information concerning any MW Company or afford any access to properties, books and records of any MW Company to, or otherwise assist or facilitate any effort relating to an Acquisition Proposal by, any Person. The Sellers shall, and shall cause the MW Companies and each of the Affiliates and authorized representatives of the MW Companies and the Sellers to, immediately cease any existing discussions or negotiations with any Person concerning any Acquisition Proposal. Section 6.9. Payment in Full of Certain Company and Subsidiary Indebtedness. The Company shall, on or prior to the Closing, pay or cause to be paid in full or otherwise terminated in a manner satisfactory to the Purchaser all Funded Indebtedness owed to the Company or any Subsidiary by a Seller or any Affiliate of such Seller. Except as set forth on Schedule 6.9, on or before the Closing, the Stockholder Representative shall cause all agreements disclosed or required to be disclosed pursuant to Section 3.21 to be terminated and the Company and its Subsidiaries will be fully and unconditionally released from all obligations thereunder. At and as of the Closing, assuming compliance by Purchaser with its obligations under Section 2.5(a), any Funded Indebtedness owed by the Company or any Subsidiary to any Seller or to any Affiliate of any of the Sellers shall be canceled. Section 6.10. Financing Assistance. (a) The Company shall cooperate with the Purchaser and its Affiliates in connection with the Purchaser's efforts to obtain the necessary financing to consummate the transactions hereunder, including without limitation, causing the Company and the Subsidiaries and their respective officers, employees, advisers and authorized representatives to (i) assist with the preparation of such offering memoranda and documentation as may be required under the Purchaser's financing commitments, and (ii) meet with potential lenders and financing sources at the reasonable request of the Purchaser. (b) Upon the reasonable request of the Purchaser, to the extent the Purchaser or any of its Affiliates conducts or intends to conduct an offering of securities (and if the registration statement, prospectus or offering memorandum for such offering includes or incorporates by reference the financial statements relating to the Company and the Subsidiaries), the Company shall use its commercially reasonable efforts to cause its independent auditors to deliver a letter containing statements and information of the type ordinarily included in accountant's "comfort letters" with respect to the financial statements and financial information relating to the Company or its Subsidiaries contained or incorporated by reference in any such document relating to any such offering, within the time period reasonably requested by the Purchaser or any of its Affiliates. (c) The Company shall use its commercially reasonable efforts to (i) cause the MW Companies to prepare and deliver to the Purchaser all financial statements and financial information (and to provide assistance to the Purchaser and its Affiliates with the preparation of pro forma financial information) as may be required by the Purchaser or any of its Affiliates in connection with their Securities Act or Exchange Act filings with the Securities and Exchange Commission (the "SEC"), including without limitation the -38- Purchaser's Registration Statement on Form S-4 in connection with the issuance of registered 9% Senior Subordinated Notes due 2012 in exchange for unregistered 9% Senior Subordinated Notes due 2012, (ii) cause the financial statements referred to in clause (i) to be audited by the Company's independent auditor in accordance with SEC rules and (ii) cause the independent auditors of the Company to execute and deliver any required documentation in connection with the Purchaser's SEC filings referred to above, including without limitation the consent to the use of the auditor's name as required by SEC rules. The Sellers shall cooperate with the Company and the Purchasers to effect the foregoing. Section 6.11. Fulfillment of Financing Commitments. (a) The Purchaser shall use its commercially reasonable efforts to cause the Financing Commitments to be fulfilled in accordance with their terms. (b) In the event the condition to the Closing set forth in Section 7.9 fails to be satisfied because of a failure of the condition set forth in clause (iv) of the Conditions in the Debt Financing Commitments (or a similar provision in alternative sources of financing) solely due to a change having occurred, or additional information having been disclosed to or discovered by UBS Loan Finance LLC or UBS Securities LLC which has had or could reasonably be expected to have a material adverse effect on the business, results of operations, condition (financial or otherwise), assets or liabilities of Ply Gem Holdings, Inc. and its Subsidiaries taken as a whole, the Purchaser hereby unconditionally agrees to pay the sum of $15,000,000 to the Company within 3 Business Days after the termination of this Agreement in accordance with Article IX by wire transfer in immediately available funds to an account designated by the Company; provided, however, in the event the Purchaser fails to pay such amount to the Company within such 3-Business Day period, the Purchaser shall pay interest on such amount at a rate per annum of 10% from such due date until paid. Section 6.12. ISRA Compliance. The Sellers shall use their commercially reasonable efforts to seek and obtain the necessary approvals required under the New Jersey Industrial Site Recovery Act, N.J.S.A. Sect. 13:1K-6 et seq. ("ISRA") for the consummation of the transactions contemplated by this Agreement. Section 6.13. FIRPTA Certificate. Prior to the Closing Date, the Company shall deliver to the Purchaser a statement from the Company meeting the requirements of Treasury Regulation Section 1.1445-2(c)(3) that thE Company is not a United States real property interest. ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE PURCHASER The obligation of the Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver in writing by the Purchaser, on or prior to the Closing Date, of each of the following conditions: -39- Section 7.1. No Misrepresentation or Breach of Covenants and Warranties. (a) The Company shall have performed in all material respects all agreements required to be performed by it at or prior to Closing. (b) The representations and warranties of the Company and the Stockholders contained in this Agreement shall be true and correct (without regard to the qualifications of "material" or "Material Adverse Effect") as of the date hereof and as of the Closing Date as though made on and as of the Closing Date (except for representations and warranties that speak as of a specific date prior to the Closing Date which need only be true and correct as of such earlier date), except respecting such matters which would not, individually and in the aggregate, be reasonably likely to have a Material Adverse Effect. (c) Each Stockholder shall have performed in all material respects all agreements required to be performed by such Stockholder at or prior to Closing. Section 7.2. No Material Adverse Effect. Since the date of this Agreement, there shall not have occurred any Material Adverse Effect or any event or circumstance that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. Section 7.3. Resignations of Directors. The Company shall have furnished the Purchaser with signed resignations, effective as of the Closing of each director of each MW Company, other than those directors of the MW Companies identified at least two (2) Business Days prior to the Closing as Persons whose resignations are not required by the Purchaser. Section 7.4. Litigation. As of the Closing Date, there shall be no Law, injunction, restraining order or decree of any nature of any court or other Governmental Entity of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions or other material obligations of the parties hereto as contemplated hereby. As of the Closing Date, no action, suit or proceeding shall be pending wherein an unfavorable judgment, decree or order would (a) lead to damages or other relief in connection with the transactions contemplated hereby or (b) have the effect of preventing, materially delaying, making illegal, imposing material limitations or conditions on or otherwise materially interfering with the performance of this Agreement or the consummation of any of the transactions contemplated hereby, or (c) declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded Section 7.5. Governmental Approvals. The filing and waiting period requirements of the HSR Act shall have been complied with to the extent applicable. The approval required under ISRA and all other required authorizations, consents and approvals of (or filings with) any Governmental Entity shall have been obtained or made, except for those authorizations, consents and approvals (other than under ISRA) which if not obtained would not have a Material Adverse Effect. Section 7.6. Stock, Warrant and Option Certificates. In accordance with Section 2.4(b) of this Agreement, the Sellers and the Company shall have delivered to the Purchaser (a) stock certificates representing all of the issued and outstanding shares of Class A Common Stock and Class D Common Stock and accompanying stock powers duly executed by the applicable -40- Stockholder, evidencing the transfer of such shares to the Purchaser, (b) documentation reasonably satisfactory to the Purchaser that all of the outstanding Class B Warrants and all of the outstanding Options (other than any Rollover Options) shall be cancelled immediately following the Closing and (c) evidence reasonably satisfactory to the Purchaser that all Stockholder Loan Amounts have been repaid. Section 7.7. Satisfactory Documentation. All instruments and legal and corporate proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Purchaser. Section 7.8. Release. Each of the MW Companies shall have been released as a borrower or guarantor, as applicable, under all the Funded Indebtedness and all Liens on the capital stock or assets of the MW Companies securing amounts owed in respect of the Funded Indebtedness or any other outstanding indebtedness shall have been released or terminated. Section 7.9. Financing. The Purchaser and/or the Company shall have received the amount of funds set forth in the Financing Commitments as a result of funding thereunder or as a result of funding from one or more alternative sources of financing on terms no less favorable to the Purchaser than under the Financing Commitments; provided, however, that a failure to receive the amount of funds set forth in the Debt Financing Commitments due to (a) a breach by Caxton-Iseman Capital, Inc. of its obligations under its Financing Commitments, (b) the failure to pay the required fees and expenses or (c) the failure to provide accurate, complete and not misleading information (other than with respect to information provided by the Sellers or the Company to the Purchaser regarding the MW Companies) shall not relieve the Purchaser of its obligations to consummate the transactions contemplated by this Agreement. Section 7.10. Termination of Investcorp Agreement. The Investcorp Agreement shall have been terminated and MW Manufacturers, Inc. shall have been released of all of its obligations thereunder. ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS The obligations of the Company and the Stockholders to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver in writing by the Company, on or prior to the Closing Date, of each of the following conditions: Section 8.1. No Misrepresentation or Breach of Covenants and Warranties. (a) The Purchaser shall have performed in all material respects all agreements required to be performed by it at or prior to Closing; and -41- (b) Each of the representations and warranties of the Purchaser contained in Article V of this Agreement shall be true and correct in all material respects on the date hereof and on the Closing Date as though made on and as of the Closing Date. Section 8.2. Litigation. As of the Closing Date, there shall be no Law, injunction, restraining order or decree of any nature of any court or other Governmental Entity of competent jurisdiction that is in effect that restrains or prohibits the consummation of the transactions or other material obligations of the parties hereto as contemplated hereby. Section 8.3. Governmental Approvals. The filing and waiting period requirements of the HSR Act shall have been complied with to the extent applicable. All other required authorizations, consents and approvals of (or filings with) any Governmental Entity shall have been obtained or made, except for those authorizations, consents and approvals which if not obtained would not result in a Material Adverse Effect. Section 8.4. Satisfactory Documentation. All instruments and legal and corporate proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Company. ARTICLE IX TERMINATION Section 9.1. Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) by written consent of the Purchaser and the Company (on behalf of itself and the Stockholders); (b) by the Purchaser or the Company (on behalf of itself and the Stockholders) if: (i) any court or other Governmental Entity of competent jurisdiction shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the such transaction and such order, decree, ruling or other action shall have become final and nonappealable; or (ii)the Closing shall not have occurred on or prior to September 30, 2004 (the "Termination Date"); (c) by the Purchaser in the event of a material breach by the Company or the Stockholders of this Agreement which would cause the conditions to the Purchaser's obligations hereunder not to be satisfied and which has not been cured within 30 days after the giving of written notice to the Company or which is incapable of being cured prior to the Termination Date; -42- (d) by the Company (on behalf of itself and the Stockholders) in the event of a material breach by the Purchaser of this Agreement would cause the conditions to the Sellers' obligations hereunder not to be satisfied and which has not been cured within 30 days after the giving of written notice to the Purchaser or which is incapable of being cured prior to the Termination Date; and (e) by the Company (on behalf of itself and the Stockholders) or the Purchaser in the event the Agreed Fayetteville Costs and Agreed NJ Costs in the aggregate exceed $5,000,000; provided, however, no party may terminate this Agreement pursuant to Sections 9.1(b), (c), (d) if the failure of the condition (or failure of the condition to be reasonably capable of being satisfied within the applicable time period) giving rise to the right to terminate results from or is caused by the breach of any obligation hereunder by such party. Section 9.2. Effect of Termination. If this Agreement is terminated and the transactions contemplated hereby are abandoned pursuant to Section 9.1, this Agreement shall become null and void and of no further force or effect and all obligations of the parties under this Agreement shall be terminated without liability or penalty on the part of any party or its officers, directors or shareholders to any other party, except for the provisions contained in Section 6.2 relating to confidentiality, Section 6.4 relating to public announcements, Section 6.12(b) relating to the payment by the Purchaser of a termination fee (if the termination of this Agreement is caused by the condition described in such Section 6.12(b)), Section 10.10 relating to jury trials, Section 10.11 relating to expenses, Section 10.12 relating to notices, Section 10.14 relating to third party beneficiaries, Section 10.15 relating to governing law and submission to jurisdiction and this Section 9.2. No such termination shall relieve any party from liability for damages resulting from any breach by such party of this Agreement or otherwise limit any remedy available to a party or parties on account of any such breach. ARTICLE X MISCELLANEOUS Section 10.1. Environmental Matters. (a) In the event that Environ, the Purchaser's environmental consultant (the "Purchaser Fayetteville Consultant"), determines that the costs of investigating and remediating one or more Fayetteville Environmental Conditions (the "Likely Fayetteville Costs") are reasonably likely to exceed $150,000 (the "Fayetteville Threshold"), the Purchaser shall submit to the Company a written opinion of the Purchaser Fayetteville Consultant setting forth such Likely Fayetteville Costs (the "Purchaser Fayetteville Report") no later than 10 Business Days after the date hereof. Any fees and expenses of the Purchaser Fayetteville Consultant shall be for the account of and shall be paid for by the Purchaser. (b) In the event that the Company receives a timely submission of the Purchaser Fayetteville Report, the Company shall have, for a period of 10 Business Days -43- thereafter (the "Company Review Period"), the right to review and respond to the estimate of Likely Fayetteville Costs contained in the Purchaser Fayetteville Report. During the Company Review Period, the Purchaser shall grant to the Company and its advisors (including its environmental consultants and legal counsel) reasonable access to all materials reviewed and used by the Purchaser or the Purchaser Fayetteville Consultant in preparing the Purchaser Fayetteville Report. Prior to the end of the Company Review Period, the Company shall deliver to the Purchaser either (i) its written agreement to the Likely Fayetteville Costs set forth in the Purchaser Fayetteville Report or (ii) a separate written estimate of the Likely Fayetteville Costs determined by the Company's environmental consultants (the "Company Fayetteville Consultant") (such submission by the Company, the "Company Fayetteville Report"). Any fees and expenses of the Company Fayetteville Consultant shall be for the account of and shall be paid for by the Sellers. In the event the Company fails to deliver the Company Fayetteville Report prior to the expiration of the Company Review Period, the Likely Fayetteville Costs set forth in the Purchaser Fayetteville Report shall be deemed to be the "Agreed Fayetteville Costs" for the purposes hereunder. (c) In the event that the difference between the Likely Fayetteville Costs in the Purchaser Fayetteville Report and the Likely Fayetteville Costs in the Company Fayetteville Report is greater than 25% of the larger of the two estimates (unless the difference is less than $500,000 in which case the last sentence of this clause (c) shall apply), the Purchaser Fayetteville Consultant and the Company Fayetteville Consultant shall jointly select an environmental consultant of national repute or otherwise reasonably acceptable to Purchaser (the "Fayetteville Independent Consultant") to make an independent determination of the Likely Fayetteville Costs. The fees and expenses of the Fayetteville Independent Consultant shall be shared equally between the Purchaser and the Sellers. The parties shall grant to the Fayetteville Independent Consultant reasonable access to all materials reviewed and used by each of their consultants in preparing such estimates of the Likely Fayetteville Costs. It is the understanding and agreement of the parties that time is of the essence and each party shall use its reasonable best efforts to cause the Fayetteville Independent Consultant to make its determination as expeditiously as possible but in any event not later than 60 days from the date hereof. The average of the estimated Likely Fayetteville Costs as determined by the Purchaser Fayetteville Consultant, the Company Fayetteville Consultant and the Fayetteville Independent Consultant shall constitute the Agreed Fayetteville Costs for purposes hereunder. In the event that the difference in the Likely Fayetteville Costs as set forth in the Purchaser Fayetteville Report and the Company Fayetteville Report is less than 25% of the larger of the two estimates, the average of the two estimates shall be deemed to be the Agreed Fayetteville Costs for purposes hereunder. (d) In the event that the Agreed Fayetteville Costs are less than the Fayetteville Threshold, the provisions of this Section 10.1(a), (b), (c) and e(iii) shall immediately terminate and shall have no further force or effect. (e) From and after the Closing Date, the Sellers shall indemnify the Purchaser, the MW Companies and their respective Affiliates (each an "Indemnified Party" and collectively, the "Indemnified Parties") against and hold harmless from (i) the first $250,000 of Hammonton ISRA Damages; (ii) seventy-five percent of Hammonton ISRA Damages in excess of those referred to in clause (i) above; and (iii) seventy-five percent of any -44- Fayetteville Damages in excess of the Fayetteville Threshold; provided, however, (x) the aggregate liability of the Sellers pursuant to clause (ii) and (iii) above for any Damages suffered by the Indemnified Parties shall in no event exceed $5,500,000, and (y) the Indemnified Parties shall carry out any investigation and remediation activities with respect to the foregoing matters in the most cost-effective manner that complies with any applicable Environmental Laws and does not interfere with operations at the Fayetteville Facility or Hammonton Facility as they were conducted on the Closing Date. (f) The Indemnified Parties, the Stockholder's Representative and the Company will cooperate with one another as reasonably appropriate with respect to spending plans, budgets, periodic historical spending results and other pertinent information regarding the status of any remediation or other activities conducted in connection with the matters covered by this Section 10.1. Purchaser agrees the Company following the Closing shall be responsible for that portion of the Hammonton ISRA Damages and the Fayetteville Damages not covered by the contribution levels required by Section 10.1(e)(ii) and (iii). (g) All obligations of the Sellers pursuant to Sections 10.1 and 10.2 hereof shall be (i) several and not joint, (ii) in proportion with each of their Pro Rata Amounts and (iii) notwithstanding anything to the contrary in this Article X or otherwise, in no event shall a Class B Warrantholder's liability in respect of any Damages owed pursuant to Sections 10.1 or 10.2 exceed (together with all related liabilities and amounts paid in respect of Section 10.19 herein or any other section of this Agreement and whether in their capacity as Class B Warrantholders or Stockholders) the lesser of (A) such Class B Warrantholder's Pro Rata Amount, in respect of its Shares and Class B Warrants, of any such Damages and (B) the proceeds actually received by such Class B Warrantholder in respect of its Shares and Class B Warrants pursuant to this Agreement (except that such Class B Warrantholder shall be liable up to the amount set forth in clause (A) for any Damages attributable to any breach of representation by that Class B Warrantholder or in any Warrant cancellation agreement entered into by such Class B Warrantholder). (h) (i) As soon as practicable after the Company has determined that there are reasonably likely to be Hammonton ISRA Damages in excess of $250,000, the Company will promptly notify the Purchaser and the Company will, within 10 Business Days thereafter, submit to the Purchaser a written report of an independent environmental consultant chosen by the Company ("Company NJ Consultant") setting forth such consultant's estimate of the likely amount (the "Likely NJ Costs") of Hammonton ISRA Damages (the "Company NJ Report"). Any fees and expenses of the Company NJ Consultant shall be paid for by the Sellers. (ii) In the event that the Purchaser receives a timely submission of the Company NJ Report, the Purchaser shall have, for a period of 10 Business Days thereafter (the "Purchaser Review Period"), the right to review and respond to the estimate of Likely NJ Costs contained in the Company NJ Report. During the Purchaser Review Period, the Company shall grant to the Purchaser and its advisors (including its environmental consultants and legal counsel) reasonable access to all materials reviewed and used by the Company or the Company NJ Consultant in preparing the Company NJ Report. Prior to the end of the Purchaser Review -45- Period, the Purchaser shall deliver to the Company either (i) its written agreement to the Likely NJ Costs set forth in the Company NJ Report or (ii) a separate written estimate of the Likely NJ Costs determined by the Purchaser's environmental consultants (the "Purchaser NJ Consultant") (such submission by the Purchaser, the "Purchaser NJ Report"). Any fees and expenses of the Purchaser NJ Consultant shall be for the account of and shall be paid for by the Purchaser. In the event the Purchaser fails to deliver the Purchaser NJ Report prior to the expiration of the Purchaser Review Period, the Likely NJ Costs set forth in the Company NJ Report shall be deemed to be the "Agreed NJ Costs" for the purposes hereunder. (iii) In the event that the difference between the Likely NJ Costs in the Company NJ Report and the Likely NJ Costs in the Purchaser NJ Report is greater than 25% of the larger of the two estimates (unless the difference is less than $500,000 in which case the last sentence of this clause (h)(iii) shall apply), the Company NJ Consultant and the Purchaser NJ Consultant shall jointly select an environmental consultant of national repute or otherwise reasonably acceptable to Company (the "NJ Independent Consultant") to make an independent determination of the Likely NJ Costs. The fees and expenses of the NJ Independent Consultant shall be shared equally between the Company and the Sellers. The parties shall grant to the NJ Independent Consultant reasonable access to all materials reviewed and used by each of their consultants in preparing such estimates of the Likely NJ Costs. It is the understanding and agreement of the parties that time is of the essence and each party shall use its reasonable best efforts to cause the NJ Independent Consultant to make its determination as expeditiously as possible. The average of the estimated Likely NJ Costs as determined by the Company NJ Consultant, the Purchaser NJ Consultant and the NJ Independent Consultant shall constitute the Agreed NJ Costs for purposes hereunder. In the event that the difference in the Likely NJ Costs as set forth in the Company NJ Report and the Purchaser NJ Report is less than 25% of the larger of the two estimates, the average of the two estimates shall be deemed to be the Agreed NJ Costs for purposes hereunder. Section 10.2. General Indemnification . (a) The Sellers shall indemnify, defend, save and keep harmless the Indemnified Parties against and from all Damages sustained or incurred by any of them resulting from or arising out of or by virtue of: (i) an inaccuracy in or a breach by any Seller of the representations and warranties of such Seller set forth in Section 4.1 (Authority and Related Matters); and (ii) an inaccuracy in or breach by the Company of the representations and warranties set forth in Sections 3.2 (Corporate Authority), 3.4 (Capital Stock) or 3.5 (Subsidiary). (b) The Sellers shall not be liable under this Section 10.2 unless a claim has been asserted by written notice, setting forth the basis for such claim, delivered to the Stockholders Representative with respect to a claim for indemnification pursuant to Section 10.2 hereof, prior to ninety (90) days following the expiration of the applicable statute of limitations (excluding extensions thereunder, whether automatic or permissive). -46- Section 10.3. Amendment and Modification. This Agreement may be amended only by a written agreement signed by the Purchaser, the Stockholders and the Company at any time prior to the Closing Date with respect to any of the terms contained herein. Section 10.4. Survival of Representations and Warranties. The respective representations and warranties of the Purchaser, the Stockholders and the Company contained in Articles III, IV and V of this Agreement shall terminate at, and not survive, the Closing other than the representations and warranties set forth in Sections 3.2 (Corporate Authority), 3.4 (Capital Stock), 3.5 (Subsidiary) and 4.1(a) and (b) (Authority and Related Matters) which shall survive such date and consummation as set forth above in Section 10.2. Section 10.5. Partial Invalidity. Wherever possible, each provision hereof shall be interpreted in such manner as to be effective and valid under applicable Law, but in the case that any provision contained herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or provisions had never been contained herein unless the deletion of such provision or provisions would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable. Section 10.6. Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered an original instrument, but all of which shall be considered one and the same agreement, and shall become binding when one or more counterparts have been signed by each of the parties and delivered to each of the Company and the Purchaser. Section 10.7. Assignment; Successors and Assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties except that the Purchaser may, without the obligation to obtain the prior written consent of any other party, assign this Agreement or all or any part of its rights or obligations hereunder to one (1) or more direct or indirect wholly-owned Subsidiaries of the Purchaser and may assign its rights under this Agreement to its lenders for collateral security purposes (in all or any of which cases the Purchaser shall remain responsible for the performance of all of its obligations under this Agreement). In addition, without the obligation to obtain the prior written consent of any other party, following the Closing the Purchaser may assign its rights and delegate its duties under this Agreement to any successor (by operation of law or otherwise), or any purchaser of a majority of its or the Company's equity interest or substantially all of its assets. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors or permitted assigns, heirs, legatees, distributees, executors, administrators and guardians. Section 10.8. Titles and Headings. Titles and headings to sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. Unless otherwise specified herein, all references to Articles, Sections, Exhibits and Schedules shall refer to the Articles, Sections, Exhibits and Schedules, respectively, of this Agreement. -47- Section 10.9. Schedules and Exhibits. The schedules and exhibits referred to in this Agreement shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. Except as expressly set forth herein, disclosure of any fact or item in any schedule hereto shall, to the extent reasonably apparent by cross-reference from the face of such schedule and relevant to any other schedule or schedules, be deemed to be disclosed in such other schedule or schedules, notwithstanding the lack of a specific cross-reference. Section 10.10. Knowledge. In each provision of this Agreement in which a representation or warranty is qualified to the "knowledge" of a Person or to the "best of the knowledge" of a person, unless otherwise stated in such provision, each such phrase means that the Person does not have actual knowledge after due investigation thereof of any state of facts which is different from the facts described in the warranty or representation. With respect to the Company, such knowledge shall refer solely to the "knowledge" of one or more of the Persons identified in Schedule 10.10. Section 10.11. Waivers. Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the party or parties entitled to the benefit thereof, in each case in writing. The failure of any party hereto to enforce at any time any provision of this Agreement shall not be construed to be a waiver of such provision, nor in any way to affect the validity of this Agreement or any part hereof or the right of any party thereafter to enforce each and every such provision. No waiver of any breach of this Agreement shall be held to constitute a waiver of any other or subsequent breach. Section 10.12. Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore each such party hereby irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement or the transactions contemplated hereby. Each party certifies and acknowledges that (i) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each party understands and has considered the implications of this waiver, (iii) each party makes this waiver voluntarily, and (iv) each party has been induced to enter into this agreement by, among other things, the mutual waivers and certifications in this Section 10.12. Section 10.13. Expenses. The Company will pay all Seller Transaction Expenses prior to or following the Closing. The Stockholder Representative shall cause any other expenses incurred by the Company directly relating to the transactions contemplated by this Agreement to be reimbursed by the Sellers. The Purchaser shall bear all such costs and expenses incurred by the Purchaser in connection with the transactions contemplated by this Agreement. The fees and expenses related to any filing made pursuant to the HSR Act shall be paid one half by Sellers and one half by the Purchaser. Section 10.14. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) upon receipt if given by delivery in Person or if by facsimile, upon written confirmation of receipt by facsimile, (b) on the next -48- Business Day when sent by overnight courier service, or (c) on the earlier of confirmed receipt or the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid, to the parties at the following addresses (or such other address for a party as shall be specified by like notice): If to the Purchaser, to: Ply Gem Industries, Inc. 303 West Major Street Kearney, Missouri 64060 Tel: (800) 800-2244 Fax: (816) 903-6942 Attention: Shawn Poe with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 Tel.: (212) 373-3000 Fax: (212) 757-3990 Attention: Carl L. Reisner, Esq. If to the Company, to: MWM Holding, Inc. Rocky Mount Window Plant No. 1 433 North Main Street Rocky Mount, VA 24151 Facsimile: (540) 484-6640 Attention: Lynn Morstad with a copy to: Investcorp International, Inc. 280 Park Avenue 36th Floor West New York, New York 10017 Facsimile: (212) 983-7073 Attention: Simon Moore and Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166-0193 Facsimile: (212) 351-4035 Attention: E. Michael Greaney, Esq. -49- If to the Stockholders, to: the addresses set forth on Exhibit A hereto; with a copy to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166-0193 Facsimile: (212) 351-4035 Attention: E. Michael Greaney, Esq. Section 10.15. Entire Agreement. This Agreement and the Confidentiality Agreement (including the exhibits and other documents referred to herein and therein) embody the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof and supersede all prior agreements and understandings, both written and oral, among the parties, or between any of them, with respect to the subject matter hereof and thereof. Section 10.16. No Third Party Beneficiaries. Except as expressly provided in Section 6.5, this Agreement is not intended to, and does not, create any rights or benefits of any party other than the parties hereto. Section 10.17. Governing Law; Jurisdiction; Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts or choice of laws. Any case, proceeding or action concerning any dispute arising out of or relating to this Agreement must be brought in a court situated in the State of New York, and each party hereto consents and submits to the jurisdiction of any state or federal court sitting in the State of New York for any such case, proceeding or action. Each party hereto waives any objection to the laying of venue in such courts and any claim that any such action has been brought in an inconvenient forum. To the extent permitted by law, any judgment in respect of a dispute arising out of or relating to this Agreement may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of such judgment being conclusive evidence of the fact and amount of such judgment. Section 10.18. No Implied Representations. (a) Notwithstanding any other provision of this Agreement, the Purchaser acknowledges and agrees that neither the Company, the Sellers nor any other Person has made any representation or warranty, express or implied except as expressly set forth in this Agreement. (b) In connection with the Purchaser's investigation of the MW Companies in connection herewith, the Purchaser has received certain projections and other forecasts regarding the MW Companies. The Purchaser acknowledges that there are uncertainties inherent in attempting to make such projections and other forecasts, that the Purchaser is familiar with such uncertainties and that the Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts so furnished to it (including the reasonableness of the assumptions underlying such -50- projections and other forecasts). Accordingly and without limiting the foregoing, neither the Company nor any Sellers make any representation or warranty with respect to such projections and other forecasts (including the reasonableness of the assumptions underlying such projections and other forecasts). Section 10.19. Stockholders Representative. (a) Each Stockholder, by the execution of this Agreement (and each other Seller upon execution of such other instrument of similar import entered into by such other Seller), agrees that the Stockholders Representative shall be authorized to act on behalf of such Sellers for all purposes of this Agreement with the full and exclusive power and authority to represent and bind such Seller with respect to all matters arising under and pursuant to this Agreement and the transactions contemplated hereby (including the taking by the Stockholders Representative of any and all actions and the making of any decisions required or permitted to be taken) on such Seller's behalf (a) to consummate the transactions contemplated herein, (b) to pay such Seller's expenses incurred in connection with the negotiation and performance of this Agreement (whether incurred on or after the date hereof), (c) to disburse any funds received hereunder to such Seller and each other Seller, (d) to endorse and deliver any certificates or instruments representing the Shares, the Options and the Class B Warrants and execute such further instruments of assignment as the Purchaser shall reasonably request, (e) to execute and deliver on behalf of such Seller any amendment or waiver hereto, (f) to take all other actions to be taken by or on behalf of such Seller in connection herewith, (g) to withhold funds to pay Seller related expenses and obligations, and (h) to do each and every act and exercise any and all rights which such Seller or the Sellers collectively are permitted or required to do or exercise under this Agreement). (b) As part of the power and authority granted under this Section 10.19 and not in limitation, each Seller specifically consents to the Stockholders Representative's exercise of the power (i) to bring, defend and/or resolve any claim made pursuant to Article X, (ii) to agree to, negotiate, enter into settlements and compromises of, to bring suit or seek arbitration and to comply with orders of courts and awards of arbitrators with respect to such claims, and (iii) to take all actions necessary in the judgment of the Stockholders Representative for the accomplishment of the foregoing. (c) Neither the Stockholders Representative nor any agent employed by it shall incur any liability to any Seller by virtue of the failure or refusal of the Stockholders Representative for any reason to consummate the transactions contemplated hereby or relating to the performance of its other duties hereunder, except for actions or omissions constituting fraud or bad faith. (d) In all matters in which action by the Stockholders Representative is required or permitted, the Purchaser shall be entitled to rely on any and all action taken by the Stockholders Representative under this Agreement without any liability to, or obligation to inquire of, any of the Sellers. (e) Notwithstanding anything herein to the contrary, (i) in no event shall the Stockholders Representative (A) take any action in respect of any of the foregoing that does -51- not, in all respects, treat each Seller in a manner which is pro rata (based on its ownership of the Company in the aggregate, including all Shares, Options and Warrants, held by such Seller immediately prior to the Closing calculated on a fully diluted basis) or (B) amend this Agreement in any manner whatsoever to expand, increase or alter any Seller's liability and (ii) in no event shall a Seller's liability with respect to any of the foregoing exceed (together with all related liabilities and amounts paid in respect of Sections 10.1 and 10.2 herein or any other section of this Agreement) such Seller's pro rata portion, based on the ownership of the Company in the aggregate, including all Shares, Options and Warrants, held by such Seller immediately prior to the Closing calculated on a fully-diluted basis, of any liability for such amounts. (signatures on next page) -52- IN WITNESS WHEREOF, each of the parties has caused this Stock Purchase Agreement to be duly executed as of the day and year first above written. MWM HOLDING, INC. By: /s/ Simon Moore --------------------------------- Name: Simon Moore Title: President PLY GEM INDUSTRIES, INC. By: /s/ Lee D. Meyer --------------------------------- Name: Lee D. Meyer Title: President & CEO (signatures continue on next page) CLASS A STOCKHOLDERS /s/ Michael Haley ------------------------------------ Michael Haley /s/ Lynn Morstad ------------------------------------ Lynn Morstad /s/ E. Hobson Meeler ------------------------------------ E. Hobson Meeler /s/ Robert Wayne Slate ------------------------------------ Robert Wayne Slate /s/ Eric M. Martin ------------------------------------ Eric M. Martin /s/ Harry W. Austin Jr. ------------------------------------ Harry W. Austin Jr. /s/ William H. Milburn ------------------------------------ William H. Milburn (signatures continue on next page) MW IIP LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director VINYL EQUITY LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director WINDOWS HOLDINGS LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director WINDOWS EQUITY LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director MW INTERNATIONAL LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director (signatures continue on next page) MW INVESTMENTS LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director MW EQUITY LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director PARDEE LIMITED /s/ Peter Yates ------------------------------------ Name: Martonmere Services Ltd. Title: Director PLYMOUTH LIMITED /s/ Peter Yates ------------------------------------ Name: Martonmere Services Ltd. Title: Director CALVERTON LIMITED /s/ Peter Yates ------------------------------------ Name: Martonmere Services Ltd. Title: Director (signatures continue on next page) ALEXANDRIA LIMITED /s/ ------------------------------------ Name: Martonmere Services Ltd. Title: Director EQUITY MW LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director INVESTCORP MW LIMITED PARTNERSHIP /s/ Ebrahim Ebrahim ------------------------------------ Name: Title: (signatures continue on next page) MADISON CAPITAL FUNDING LLC /s/ K. Thomas Klimmeck ------------------------------------ Name: K. Thomas Klimmeck Title: Managing Director (signatures continue on next page) THE GeMROI COMPANY /s/ Elaine P. Hockaday ------------------------------------ Name: Elaine P. Hockaday Title: Vice President (signatures continue on next page) CLASS D STOCKHOLDERS BALLET LIMITED /s/ Mufeet Rajab ------------------------------------ Name: Mufeet Rajab Title: Authorized Representative DENARY LIMITED /s/ Anthony Robinson ------------------------------------ Name: Anthony Robinson Title: Authorized Representative GLEAM LIMITED /s/ Ebrahim H. Ebrahim ------------------------------------ Name: Ebrahim H. Ebrahim Title: Authorized Representative HIGHLANDS LIMITED /s/ Salman Javed ------------------------------------ Name: Salman Javed Title: Authorized Representative NOBLE LIMITED /s/ Hedin W. Jeyeratine ------------------------------------ Name: Hedin W. Jeyeratine Title: Authorized Representative (signatures continue on next page) OUTRIGGER LIMITED /s/ Meredith Brody ------------------------------------ Name: Meredith Brody Title: Authorized Representative QUILL LIMITED /s/ Kevin O'Shea ------------------------------------ Name: Kevin O'Shea Title: Authorized Representative RADIAL LIMITED /s/ Poralyn Fiel ------------------------------------ Name: Poralyn Fiel Title: Authorized Representative SHORTUNE LIMITED /s/ Jon Feeney ------------------------------------ Name: Jon Feeney Title: Authorized Representative ZINNIA LIMITED /s/ Kevin Murphy ------------------------------------ Name: Kevin Murphy Title: Authorized Representative (signatures continue on next page) INVESTCORP INVESTMENT EQUITY LIMITED /s/ Sidney J. Coleman ------------------------------------ Name: The Director Ltd. Title: Director EX-5.1 3 y95660a3exv5w1.txt OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP Exhibit 5.1 August 9, 2004 Ply Gem Industries, Inc. 303 West Major Street Kearney, Missouri 64060 Registration Statement on Form S-4 (Registration No. 333-114041) Ladies and Gentlemen: In connection with the Registration Statement on Form S-4, as amended (the "Registration Statement") of Ply Gem Industries, Inc., a Delaware corporation (the "Company"), and Ply Gem Holdings, Inc., a Delaware corporation ("Holdings"), Great Lakes Window, Inc., an Ohio corporation ("Great Lakes"), Kroy Building Products, Inc., a Delaware corporation ("Kroy"), Napco, Inc., a Delaware corporation ("Napco"), Napco Window Systems, Inc., a Delaware corporation ("NWS"), Thermal-Gard, Inc., a 2 Pennsylvania corporation ("Thermal Gard"), and Variform, Inc., a Missouri corporation ("Variform") (collectively, the "Guarantors"), filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules and regulations thereunder (the "Rules"), you have asked us to furnish our opinion as to the legality of the securities being registered under the Registration Statement. The Registration Statement relates to the registration under the Act of the Company's $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Exchange Notes") and the guarantees of the Exchange Notes by the Guarantors (the "Guarantees"). The Exchange Notes are to be offered in exchange for the Company's outstanding $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Initial Notes") issued and sold by the Company on February 12, 2004 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Company in accordance with the terms of the Indenture (the "Indenture"), dated as of February 12, 2004, among the Company, the Guarantors and U.S. Bank National Association, as trustee. In connection with the furnishing of this opinion, we have examined originals or copies certified or otherwise identified to our satisfaction, of the following documents (collectively, the "Documents"): 1. the Registration Statement; 2. the Indenture, including as exhibits thereto the form of Exchange Note and the related Guarantees, included as Exhibit 4.1 to the Registration Statement; and 3 3. the Registration Rights Agreement, dated as of February 12, 2004 (the "Registration Rights Agreement), among the Company, the Guarantors and the initial purchasers named therein, included as Exhibit 4.3 to the Registration Statement. In addition, we have examined (i) such corporate records of the Company and each Guarantor organized in the State of Delaware that we have considered appropriate, including a copy of the certificate of incorporation, as amended, and by-laws, as amended, of the Company and each Guarantor organized in the State of Delaware, certified as in effect on the date of this letter, and copies of resolutions of the board of directors of the Company and such Guarantors relating to the issuance of the Exchange Notes and the Guarantees, certified by officers of the Company and such Guarantors and (ii) those other certificates, agreements and documents that we deemed relevant and necessary as a basis for our opinion. We have also relied upon the factual matters contained in the representations and warranties of the Company and the Guarantors made in the Documents and upon certificates of public officials and the officers of the Company and the Guarantors. In our examination of the documents referred to above, we have assumed, without independent investigation, the genuineness of all signatures, the legal capacity of all individuals who have executed any of the documents reviewed by us, the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as certified, photostatic, reproduced or conformed copies of valid existing agreements or other documents, the authenticity of all the latter documents and that the statements regarding matters of fact in the certificates, records, agreements, instruments and documents that we have examined are accurate and complete. We have 4 also assumed, without independent investigation, (i) that the Exchange Notes and Guarantees will be issued as described in the Registration Statement and (ii) that the Exchange Notes and Guarantees will be in substantially the form attached to the Indenture and that any information omitted from such form will be properly added. With regards to certain matters of state law, we have relied, with the Company's permission, upon the opinions of Lathrop & Gage L.C., Marshall & Melhorn LLC, and Saul Ewing LP, filed as Exhibits 5.2, 5.3 and 5.4, respectively, to the Registration Statement. Based upon the above, and subject to the stated assumptions, exceptions and qualifications, we are of the opinion that: 1. When duly issued, authenticated and delivered against the surrender and cancellation of the Initial Notes as set forth in the Registration Statement and in accordance with the terms of the Indenture and Registration Rights Agreement, the Exchange Notes will be legal, valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except that the enforceability of the Exchange Notes may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally and subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). 2. When duly executed, issued, and delivered against the surrender and cancellation of the Initial Notes as set forth in the Registration Statement and in accordance with the terms of the Indenture and Registration Rights Agreement, the Guarantees will be legal, valid and binding obligations of each of the Guarantors enforceable against each of the Guarantors in accordance with their terms, except that enforceability of the 5 Guarantees may be subject to bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally and subject to general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). The opinions expressed above are limited to the laws of the State of New York and the General Corporation Law of the State of Delaware. Our opinion is rendered only with respect to the laws, and the rules, regulations and orders under those laws that are in effect on the effective date of the Registration Statement. We hereby consent to use of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Matters" contained in the Prospectus included in the Registration Statement. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required by the Act or the Rules. Very truly yours, /s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP EX-5.2 4 y95660a3exv5w2.txt OPINION OF LATHROP & GAGE L.C. EXHIBIT 5.2 August 9, 2004 Ply Gem Industries, Inc. 303 West Major Street Kearney, Missouri 64060 Re: Ply Gem Industries, Inc. Exchange Offer for $225,000,000 9% Senior Subordinated Notes due 2012 Ladies and Gentlemen: In connection with the Registration Statement on Form S-4, as amended (the "Registration Statement"), of Ply Gem Industries, Inc., a Delaware corporation (the "Company"), and Ply Gem Holdings, Inc., a Delaware corporation ("Holdings"), Great Lakes Window, Inc., an Ohio corporation ("Great Lakes"), Kroy Building Products, Inc., a Delaware corporation ("Kroy"), Napco, Inc., a Delaware corporation ("Napco"), Napco Window Systems, Inc., a Delaware corporation ("NWS"), Thermal-Gard, Inc., a Pennsylvania corporation ("Thermal Gard"), and Variform, Inc., a Missouri corporation ("Variform") (collectively, the "Guarantors"), filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and the rules and regulations thereunder (the "Rules"), you have asked us, as special counsel in the State of Missouri to Variform, to furnish the opinions set forth below. The Registration Statement relates to the registration under the Act of the Company's $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Exchange Notes") and the guarantees of the Exchange Notes by the Guarantors (the "Guarantees") The Exchange Notes are to be offered in exchange for the Company's outstanding $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Initial Notes") issued and sold by the Company on February 12, 2004 in an offering exempt from registration under the Act. The Exchange Notes will be issued by the Company in accordance with the terms of the Indenture (the "Indenture"), dated as of February 12, 2004, among the Company, the Guarantors and U.S. Bank National Association, as trustee. As special counsel to Variform, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the Indenture, the form of Exchange Notes and such corporate records and other documents as we have considered relevant and necessary for the purposes of this opinion. Ply Gem Industries, Inc. August 9, 2004 Page 2 As to matters of fact, we have relied upon representations of officers of Variform, including but not limited to those set forth in the Certificate of the Secretary of even date herewith, and upon certain certificates of public officials. As to matters of law, we express no opinion as to any matter relating to the laws of any jurisdiction other than the laws of the State of Missouri. We have assumed due authorization, execution and delivery of the Indenture and the other agreements and documents referred to in this opinion by all parties thereto other than the Company and its affiliates and the enforceability of the Indenture and such other agreements and documents against such parties. We have also assumed, without independent investigation, (i) that the Exchange Notes and Guarantees will be issued as described in the Registration Statement and (ii) that the Exchange Notes and Guarantees will be in substantially the form attached to the Indenture and that any information omitted from such form will be properly added. We have also assumed the correctness of all statements of fact contained in all agreements, certificates and other documents examined by us; the correctness of all statements of fact made in response to our inquiries by officers and other representatives of Variform and by public officials; the legal capacity of all natural persons; the genuineness of all signatures on all agreements and other documents examined by us; the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as copies. We have also assumed that Variform has or will receive any consideration required under Missouri law for its issuance of the Guarantees. With regard to due authorization, execution and delivery of the Indenture and other agreements and documents referred to in this opinion by the Company and its affiliates other than Variform, we have relied, with the Company's permission, upon the opinions of Paul, Weiss, Rifkind, Wharton & Garrison LLP, Marshall & Melhorn LLC, and Saul Ewing LLP. Based upon, and subject to, the foregoing, we are of the opinion that: (i) Variform is validly existing as a corporation and in good standing under the laws of the State of Missouri. (ii) Variform has duly authorized the Guarantees and duly authorized the performance of its obligations thereunder. (iii) Variform has the requisite corporate power and authority to execute, deliver and perform its obligations under the Guarantees. (iv) The issuance, execution and delivery of the Guarantees by Variform and the performance of its obligations thereunder will not result in a violation of the certificate of incorporation, as amended, or by-laws, as amended, of Variform, as certified by Variform, as in effect on the date of the opinion (collectively, the "Charter Documents") or any Missouri statute, rule or regulation binding on Variform. Ply Gem Industries, Inc. August 9, 2004 Page 3 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Matters" contained in the Prospectus included in the Registration Statement. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required by the Act or the Rules. The opinions set forth in this letter are effective as of the date hereof. We express no opinions other than as herein expressly set forth, and no expansion of our opinions may be made by implication or otherwise. This opinion letter may be relied upon only in connection with the registration and initial issuance, purchase and sale of the Exchange Notes. Very truly yours, /s/ LATHROP & GAGE L.C. --------------------------- LATHROP & GAGE L.C. EX-5.3 5 y95660a3exv5w3.txt OPINION OF MARSHALL & MELHORN LLC Exhibit 5.3 August 9, 2004 Ply Gem Industries, Inc. 303 West Major Street Kearny, Missouri 64060 RE: PLY GEM INDUSTRIES, INC. - $225,000,000 9% SENIOR SUBORDINATED NOTES DUE 2012 Ladies and Gentlemen: We have acted as special counsel in the State of Ohio (the "State") to Great Lakes Window, Inc., an Ohio corporation (the "Company"), to render the opinions set forth herein (collectively, the "Opinion") in connection with the Registration Statement on Form S-4, as amended (the "Registration Statement") of Ply Gem Industries, Inc., a Delaware corporation (the "Parent"), and Ply Gem Holdings, Inc., a Delaware corporation, Kroy Building Products, Inc., a Delaware corporation, Napco, Inc., a Delaware corporation, Napco Window Systems, Inc., a Delaware corporation, Thermal-Gard, Inc., a Pennsylvania corporation, Variform, Inc., a Missouri corporation, and the Company (collectively, the "Guarantors"), filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, and the rules and regulations thereunder. The Registration Statement relates to the registration under the Act of the Parent's $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Exchange Notes") and the guarantees of the Exchange Notes by the Guarantors (collectively, the "Guarantees" and each a "Guaranty"). You have asked us to furnish our opinion as to the organization and qualification of the Company and as to enforceability against the Company of the Guaranty executed by the Company of the Exchange Notes. In addition to the Registration Agreement, in rendering our Opinion we have reviewed and relied upon: (x) the certificate of the Secretary of the Company dated and delivered to us as of even date herewith (the "Officer Certificate"); and (y) such other certificates, documents, and records as we have deemed relevant to our opinions and the factual assumptions underlying the legal conclusions set forth herein. I. ASSUMPTIONS The Opinion rendered in this letter is based upon the following assumptions, together with such additional assumptions and qualifications as may be more specifically set forth in other sections of this letter Ply Gem Industries, Inc. August 9, 2004 Page 2 (collectively, "Assumptions"). 1. All signatures on all original documents are genuine and authentic. All documents that were submitted to us as originals are authentic, true, accurate and complete. All documents that were submitted to us as certified or photographic copies conform to the original documents, which are themselves authentic, true, accurate and complete. 2. The statements regarding matters of fact in the certificates (inclusive of the Officer Certificate), records, agreements, instruments and documents that we have examined in connection with our preparation and rendering of this Opinion are accurate and complete. II. OPINION Subject to the foregoing Assumptions and the Limitations set forth below, it is our opinion that: 1. The Company (a) is an Ohio corporation, duly organized and validly existing and in good standing under the laws of the State, and (b) is qualified to do business and is in good standing in the State. 2. The Company has all requisite corporate or other power and authority to execute, deliver and perform all of its obligations under the Guarantee and the execution and delivery of the Guarantee by the Company and the performance of its obligations thereunder have been duly and validly authorized by all requisite action of the governing authority of the Company. 3. The issuance, execution and delivery of the Guarantee by the Company and the performance of its obligations thereunder will not result in a violation of Company's Organizational Documents or any law of the State of Ohio. III. LIMITATIONS The foregoing Opinion is subject to the following exceptions and limitations (collectively, "Limitations"): 1. Any limitations imposed by and the effect of all applicable bankruptcy, reorganization, insolvency, moratorium or similar laws at any time generally in effect with respect to the enforcement of creditors' rights. 2. The Opinion set forth herein is given as of the date hereof only, and does not contemplate, and no opinion is given or intended, with respect, to future events or subsequent changes in law or fact. We are licensed to practice in the State. This Opinion is based solely on the laws of the State and, to the extent applicable, the United States of America. No opinion is intended to be given with respect to the laws of any other jurisdiction. The Opinion expressed herein is rendered in connection with the issuance by Parent of the Exchange Notes and for the sole purpose of serving as an Exhibit to the Registration Statement on Form S-4 and is to be read and relied upon only in connection therewith. Very truly yours, /s/ MARSHALL & MELHORN, LLC MARSHALL & MELHORN, LLC EX-5.4 6 y95660a3exv5w4.txt OPINION OF SAUL EWING LLP Exhibit 5.4 [SAUL EWING LLP LETTERHEAD] August 9, 2004 Ply Gem Industries, Inc. 303 West Major Street Kearney, MO 64060 Re: $225,000,000 9% Senior Subordinated Notes Ladies and Gentlemen: We have acted as special counsel in the Commonwealth of Pennsylvania ( the "State") to Thermal-Gard, Inc., a Pennsylvania corporation ("Thermal-Gard") in connection with the following documents (collectively, the "Documents"): 1. the Registration Rights Agreement dated as of February 12, 2004 by and between the Issuers (as defined therein) and Initial Purchasers (the "Registration Rights Agreement"); 2. the Registration Statement on Form S-4 (Registration No. 333-114041) of, inter alia, Ply Gem Industries, Inc., a Delaware corporation 3. the Indenture dated as of February 12, 2004 by and between the Issuers and U.S. Bank National Association, as trustee, including the Guarantee (as defined below) contained therein (the "Indenture"); and 4. the form of the $225,000,000 aggregate principal amount of 9% Senior Subordinated Notes due 2012 (the "Exchange Notes"). We have also examined the following: (a) Articles of Incorporation of Thermal-Gard; (b) Bylaws of Thermal-Gard; (c) Certified Resolution of the Board of Directors of Thermal-Gard dated February 12, 2004; and [SAUL EWING LLP LETTERHEAD] Ply Gem Industries, Inc. August 9, 2004 Page 2 (d) such other documents and matters as we have deemed necessary and appropriate to render the opinions set forth in this letter, subject to the assumptions, qualifications, limitations, exceptions and restrictions noted below. Based solely upon the foregoing, and subject to the assumptions, qualifications, limitations, exceptions and restrictions hereinafter set forth, we are of the opinion that: (i) Thermal-Gard is duly organized and validly existing and subsisting under the laws of the Commonwealth of Pennsylvania. (ii) Thermal-Gard has all requisite power and authority to execute, deliver and perform its obligations under the Documents. The Documents to which Thermal-Gard is a party have been duly authorized, executed and delivered by Thermal-Gard. (iii) Thermal-Gard has duly authorized the guarantee of the Exchange Notes contained in the Indenture (collectively, the "Guarantee"). (iv) The issuance of the Guarantee by Thermal-Gard and the execution, delivery and compliance by Thermal-Gard of the Documents and the performance of its obligations thereunder will not result in a violation of the Thermal-Gard's Articles of Incorporation (as amended), By-Laws (as amended), or the laws of the Commonwealth of Pennsylvania in effect (in each case) as of the date of this opinion. QUALIFICATIONS AND LIMITATIONS The opinions set forth in this letter are subject to the following assumptions, qualifications, limitations, exceptions and restrictions: (1) We have made the following assumptions: a. Each document submitted to us for review is accurate and complete; each such document submitted to us as an original is authentic; each such document submitted to us as a copy conforms to the original document. b. All signatures of the parties on any of the Documents are genuine. (2) The opinions set forth in this letter: a. are limited to the law of the Commonwealth of Pennsylvania and the Federal law of the United States of America, each to the extent applicable. We express no opinion as to the laws of any other jurisdiction or the effect thereof; Ply Gem Industries, Inc. August 9, 2004 Page 3 b. are limited to those matters which are expressly set forth in this letter, and no opinion may be inferred or implied beyond the matters expressly set forth in this letter; and c. must be read in conjunction with the assumptions, qualifications, limitations, exceptions and restrictions set forth in this letter. We consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Matters" contained in the Prospectus included in the Registration Statement. In giving this consent, we do not admit that we come within the category of persons whose consent is required by the Securities Act of 1933, as amended, or the rules and regulations thereunder. Very truly yours, /s/ Saul Ewing LLP EX-8.1 7 y95660a3exv8w1.txt OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP. (212) 373-3000 Exhibit 8.1 (212) 757-3990 August 6, 2004 Ply Gem Industries, Inc. 303 West Major Street Kearney, Missouri 64060 Registration Statement on Form S-4 Ladies and Gentlemen: We have acted as United States federal income tax counsel for Ply Gem Industries, Inc. a Delaware Corporation (the "Company") in connection with the offer to exchange $225,000,000 aggregate principal amount at maturity of new 9% Senior Discount Notes due 2012 (the "Exchange Notes"), for the same aggregate principal amount of substantially identical 9% Senior Discount Notes due 2012 (the "Initial Notes") that were issued and sold by the Company on February 12, 2004 in an offering that was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"). We are rendering this opinion in connection with the Registration Statement on Form S-4 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission pursuant to the Securities Act, and the rules and regulations thereunder (the "Rules"). Capitalized terms used and not otherwise defined herein have the meanings given them in the Registration Statement. In rendering our opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such agreements and other documents as we Ply Gem Industries, Inc. 2 have deemed relevant and necessary and we have made such investigations of law as we have deemed appropriate as a basis for the opinion expressed below. In our examination, we have assumed, without independent verification, (i) the authenticity of original documents, (ii) the accuracy of copies and the genuineness of signatures, (iii) that the execution and delivery by the Company of each document to which it is a party and the performance by such party of its obligations thereunder have been authorized by all necessary measures and do not violate or result in a breach of or default under such party's certificate or instrument of formation and by-laws or the laws of such party's jurisdiction of organization, (iv) that each such agreement represents the entire agreement between the parties with respect to the subject matter thereof, (v) the parties to each agreement have complied, and will comply, with all of their respective covenants, agreements and undertakings contained therein and (vi) the transactions provided for by each agreement were and will be carried out in accordance with their terms. The opinion set forth below is limited to the Internal Revenue Code of 1986, as amended, administrative rulings, judicial decisions, treasury regulations and other applicable authorities. The statutory provisions, regulations and interpretations upon which our opinion is based are subject to change, and such changes could apply retroactively. Any such change could affect the continuing validity of the opinion set forth below. The opinion set forth herein has no binding effect on the United States Internal Revenue Service or the courts of the United States. No assurance can be given that, if the matter were contested, a court would agree with the opinion set forth herein. Based upon and subject to the foregoing, and subject to the qualifications set forth herein, we hereby confirm that the discussion set forth in the Registration Statement under the heading "Federal income tax considerations" is our opinion. Such discussion does not, however, purport to discuss all United States federal income tax consequences and is limited to those United States federal income tax consequences specifically discussed therein and subject to the qualifications set forth therein. In giving the foregoing opinion, we express no opinion other than as to the federal income tax laws of the United States of America. Furthermore, in rendering our opinion, we have made no independent investigation of the facts referred to herein and have relied for the purpose of rendering this opinion exclusively on those facts that have been provided to us by you and your agents, which we assume have been, and will continue to be, true. We are furnishing this letter in our capacity as United States federal income tax counsel to the Company. This letter is not to be used, circulated, quoted or otherwise referred to for any other purpose, except as set forth below. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. The issuance of such a consent does not concede that we are an "expert" for purposes of the Securities Act. Very truly yours, Ply Gem Industries, Inc. 3 /s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP EX-23.1 8 y95660a3exv23w1.txt CONSENT OF ERNST & YOUNG LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts" and to the use of our report dated March 26, 2004, except for Note 11, as to which the date is August 6, 2004, in Amendment No. 3 to the Registration Statement (Form S-4 No. 333-114041) related Prospectus of Ply Gem Industries, Inc. for the registration of $225,000,000 of 9% Senior Subordinated Notes due 2012. /s/ Ernst & Young LLP Boston, Massachusetts August 6, 2004 EX-23.2 9 y95660a3exv23w2.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts" and to the use of our report on the balance sheet of Ply Gem Holdings, Inc. dated March 26, 2004, included in Amendment No. 3 to the Registration Statement on Form S-4 and related Prospectus of Ply Gem Industries, Inc. for the registration of $225,000,000 of 9% Senior Subordinated Notes due 2012. /s/ Ernst & Young LLP Kansas City, Missouri August 6, 2004 EX-23.3 10 y95660a3exv23w3.txt CONSENT OF ERNST & YOUNG LLP Exhibit 23.3 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the reference to our firm under the caption "Experts" and to the use of our report dated July 30, 2004, with respect to the financial statements and schedules of MWM Holding, Inc. included in the Amendment No. 3 to the Registration Statement on S-4 and related Prospectus of Ply Gem Industries, Inc. for the registration of $225,000,000 of 9% Senior Subordinated Notes due 2012. /s/ Ernst & Young LLP Greensboro, NC August 6, 2004 GRAPHIC 12 y95660a3y9566001.gif GRAPHIC begin 644 y95660a3y9566001.gif M1TE&.#EA*P+D`??_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#, M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,` MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9 M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_ MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;, MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9 MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P` M,\P`9LP`FO;)U3UMZ][MV2/OE*Q_"Q_^=R_QD\:/*U\>5BWSVXZ?2Y]N-"-L MZA"=8]_.W>6*Z]T?KO\.3[Z\Q(SFD8-/SYY[\O84W\//O![C_+;U[RM$K]_R MBO^Y^280``0"T!,K!*Y0$%3UJ<6:%0`,V%)PYT5(E8*J`?@=;@S==-Y_^9V% M87^0;73-B!;F=DV`]JVH8D-[6>B2?`_)V-2++<7HXD+?#63C0S1F9Q&..9(( M&8<$_7CB-0A2N&!!K#RU(Y,EZ;CB0,8Y%AU!QEDGD'.2.;5EE%DB.-66+^GX M%IA<"2@04UZN:%V<6!XHY8[HQ3DG@CUI22:<6_K)I($Q\6=D8A"^^*.AB4*Y M`@!@_;>B@@[VF5N$$'[)I(((EF0CIYSV]%UNE"I((7H]2OH6ITH2162.!U+_ M>JFF`SGY9DFL>NKI@J+*.J5CN&J*7H2=7@.IL50N6:R%K;*$YJ&'>83BDP29 M:5"F=>ZXIJ42(KO76\R*^6:RKW&JK8I1GLBM9,T&E:Y=KWT98)])JIBH2*R% MBRR7Z\XJZET][KION/CVI&^[*[T*;5__=ENK0S4S9&&//+^F9+]&JX8D@ON#5K M+3;24:ND<,YR9232EX1^R91>*F+ZME.2@JCA1R`F_]HH;B69?"S<`?,-8'1Y MCXB;WJ8VSO%1:Z^T6H^;4CYU8V^M1BC'?/*)]W>)/[QIW'?S#6GG!FI^X.G' MQCM3Y&S#!7M[SR(T8E&S\Y9[[+R31>=!N]\<)''!]VY\5[\'7=34RQ5__/,T M83[22+;^#+U-UV=?5O)8:I^7]^!?Q;WRX<-8_L+#2YXVC.O=?M3D5<;-9<]= M4P3_68TID!Y MR7-BDF#@N)6NOD7G61>34G0REL6P.##<8`N. 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M+/2JO=#3/2.#)>+KH`KL',HC+X^KN/OYG[]2H^DB+AO0N]"8S=(+KH^HC$TRC)"T`<;+@35,)#[**V M*,$K;*]D>J6M@[J(0Z<&D\2(\R4Q-*`E:K%ETCI%7!=9"[.4BJ8$ZC3-BT36 M^T0O+$0\_(A$)(E87*0;'+Q&7,2%H*KOJKCD,C??@1M(FIF1DQ_PD2H!^IPS M&R20H<7O@[Z+F;YZ.ZOAT\!".CDVS,(\S*!:A#P]G#;#VK4.E*`=FCYBA)N* M\3UZ"^ MT;R[AI(HGVR[ MS8.)9/*G&%LFHN$KME.AN%O%I"DS8-3`C(2H-(2Z+APB2@S#^9FPB!O$%&0_ MQ\-(?D22A=S(D''%KMQ)G8RRS;`[9@PXH9A%QS+$K\S'N200Q@/`5V1'CHR\ M5U..[EO)ON1+'=-';(M*M`1+PCS,G)1+X9@K;53+Q -----END PRIVACY-ENHANCED MESSAGE-----


Delaware	3089	11-1727150
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(IRS Employer Identification No.)



Uses (dollars in millions)

Purchase price of equity(5)	$	526.6
Net assumed indebtedness(3)		29.1
Cancellation of management stock options(6)		4.3
Transaction costs and expenses(7)		30.0

Total uses	$	590.0


			Actual as of			Pro Forma as
			July 3,			of July 3,
			2004			2004

(Dollars in thousands)			(Unaudited)			(Unaudited)
Debt:
	Senior revolving credit facility		$	9,000	(1)	$	15,000	(2)
	Senior term loan facilities			199,500			340,500
	Municipal loan agreements(3)			15,464			15,464
	Senior subordinated notes			225,000			330,000

		Total debt		448,964			700,964

Stockholders’ equity:
Common stock				—			—
Additional paid-in capital				141,000			175,300	(4)
Retained earnings				9,201			9,201
Accumulated other comprehensive loss				(116	)		(116	)

		Total stockholders’ equity		150,085			184,385

		Total capitalization	$	599,049		$	885,349


											Pro Forma
											Combined and
		Ply Gem			MWM			Pro Forma			Consolidated
		Holdings			Holding			Adjustments			July 3, 2004


		(Dollars in thousands)
Current assets:
Unrestricted cash and cash equivalents		$	10,821		$	1,456		$	(12,277	)(1)	$	—
Accounts receivable, less allowances			69,901			22,614			—			92,515
Inventory			45,547			13,466			—			59,013
Prepaid expenses and other current assets			4,866			2,894			—			7,760
Deferred income taxes			10,889			4,851			—			15,740

	Total current assets		142,024			45,281			(12,277	)		175,028
Property and equipment, net			113,903			45,499			(42,603	)(2)		116,799
Other assets:
Goodwill			391,707			64,919			132,363	(3)		588,989
Intangible assets, less accumulated amortization			52,843			106,014			—			158,857
Other			39,387			3,607			7,223	(4)		50,217

	Total other assets		483,937			174,540			139,586			798,063

	Total assets	$	739,864		$	265,320		$	84,706		$	1,089,890

Current liabilities:
Current maturities of long-term debt		$	2,760		$	5,400		$	(5,400	)(5)	$	2,760
Accounts payable			29,105			15,115			—			44,220
Accrued expenses and taxes			42,580			19,613			—			62,193

	Total current liabilities		74,445			40,128			(5,400	)		109,173
Deferred income taxes			40,639			26,024			—			66,663
Other long-term liabilities			28,491			2,974			—			31,465
Long-term debt, less current maturities			446,204			77,100			174,900	(6)		698,204

	Total liabilities		589,779			146,226			169,500			905,505
Stockholders’ equity:
Preferred stock			—			—			—			—
Common stock			—			10			(10	)(7)		—
Additional paid-in-capital			141,000			115,925			(81,625	)(7)		175,300
Retained earnings			9,201			4,357			(4,357	)(7)		9,201
Accumulated other comprehensive loss and other			(116	)		(1,198	)		1,198	(7)		(116	)

	Total stockholders’ equity		150,085			119,094			(84,794	)		184,385

	Total liabilities and stockholders’ equity	$	739,864		$	265,320		$	84,706		$	1,089,890


Write down of real property to be sold in the Sale and Leaseback Transaction	$	(7,353	)
Net book value of assets to be sold in the Sale and Leaseback Transaction		(35,250	)

Total adjustments to property and equipment, net	$	(42,603	)


	Page

Industry Data		i
Trademarks and Patents		i
Acquisition Entities		ii
Prospectus Summary		1
Risk Factors		23
Forward-Looking Statements		32
The Transactions		33
Use of Proceeds		37
Capitalization		38
Unaudited Pro Forma Financial Information		39
Selected Historical Financial Information		51
Management’s Discussion and Analysis of Financial Condition and Results of Operations		54
Industry Overview and Trends		71
Business		73
Management		83
Security Ownership of Certain Beneficial Owners and Management		91
Certain Relationships and Related Transactions		92
Description of Other Indebtedness		95
The Exchange Offer		100
Description of the Notes		108
U.S. Federal Income Tax Considerations		154
Plan of Distribution		159
Legal Matters		160
Experts		160
Where You Can Find More Information		160
Index to Financial Statements		F-1
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	•	the Ply Gem Acquisition;



	•	the Ply Gem Equity Contribution;



	•	the Ply Gem Bank Financing; and


	•	the offering of the initial notes.


(3)	Discontinued operations consist of our former subsidiaries, Peachtree Doors and Windows, Inc. and SNE Enterprises, Inc. (sold in September 2001), Hoover Treated Wood Products, Inc. (sold in April 2002) and Richwood Building Products, Inc. (sold in November 2002).

(4)	Ply Gem EBITDA means net earnings (loss) plus interest expense (net of investment income), provision (benefit) for income taxes and depreciation and amortization expense. Other companies may define EBITDA differently and, as a result, our measure of Ply Gem EBITDA may not be directly comparable to EBITDA of other companies. Ply Gem EBITDA is presented herein because we believe it to be relevant and useful information to our investors because it is used by our management to analyze and evaluate the operating performance of our business, to compare our operating performance with that of our competitors and to benchmark the value of our business. Management also uses Ply Gem EBITDA for planning purposes, including the preparation of annual operating budgets, to determine appropriate levels of operating and capital investments and as one of the target elements in our compensation incentive programs. Ply Gem EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use Ply Gem EBITDA as a financial measure to assess the performance of our business, the use of Ply Gem EBITDA is limited. Ply Gem EBITDA does not include: (a) interest expense, which, because we have borrowed money in order to finance our operations, is a necessary element of our costs and ability to generate revenue; (b) depreciation expense, which, because we use capital assets, is a necessary element of our costs and ability to generate revenue; and (c) taxes, the payment of which is a necessary element of our operations. Because Ply Gem EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize Ply Gem EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, Ply Gem EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as net earnings. You are cautioned not to place undue reliance on Ply Gem EBITDA. The following sets forth the reconciliation of Ply Gem EBITDA to net earnings (loss):


(a)	Net earnings (loss) for historical periods have not been adjusted to eliminate Nortek’s historical allocations to Ply Gem for Nortek’s management fees and Nortek’s historical allocation to Ply Gem of corporate expenses, which have been replaced with our stand-alone costs estimated to be $2.4 million annually. Historical management fees were $5.4 million, $10.2 million and $7.2 million for the fiscal years ended December 31, 2001, 2002 and 2003, respectively. Historical allocations of corporate expenses were $(0.3) million, $3.5 million and $3.4 million for the fiscal years ended December 31, 2001, 2002 and 2003 respectively, and $2.3 million and $0.3 million for the six months ended July 5, 2003 and July 3, 2004, respectively.


(b)	Ply Gem EBITDA (as defined above) has not been adjusted to exclude or include items which are or are not considered by management to be indicative of our underlying results and to give full period effect to cost savings we have achieved through facilities rationalizations and contract negotiations. Those adjustments would included the following:



(i)	the additional savings of $1.9 million, $1.4 million and $1.4 million that we would have realized from the amortization of non-cash charges of excess purchase price allocated to inventory in connection with the Nortek Recapitalization and the Ply Gem Transactions for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(ii)	the additional savings of $0.3 million, $7.2 million and $2.2 million that we would have realized from the elimination of Nortek’s historical allocations to Ply Gem for Nortek’s management fee for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(iii)	the additional savings of $0.1 million, $3.4 million and $2.9 million that we would have realized from the elimination of Nortek’s historical allocations to Ply Gem’s corporate expenses for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(iv)	the additional costs of $0.2 million, $2.3 million and $1.2 million that we will incur due to our separation from Nortek and stemming from services previously provided by Nortek, such as legal and accounting services, to us for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(v)	net losses of $0.01 million, $0.5 million and $0.2 million that we realized from the sale of the assets of our subsidiary, Thermal-Gard, Inc., in April of 2004 for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(vi)	the additional savings that we estimate we would have realized of $1.9 million and $1.9 million from lower PVC resin costs that were renegotiated effective July 2003 for the entire fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(vii)	the direct costs of $0.5 million, $1.9 million and $1.9 million that we incurred in establishing our new fencing business, including the net cost of the buy-out of competitors’ material, and excess manufacturing and freight costs associated with the start-up of a new fabrication process at our Fairbluff, NC facility for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(viii)	the severance and direct costs of $0.1 million and $1.8 million, including removal and transfer of equipment, associated with the closure of our Butler, PA vinyl siding facility and additional savings that we estimate we would have realized from the closure of that facility in May of 2003 that it has been closed for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(ix)	the severance and relocation costs of $0.5 million, $0.6 million and $0.4 million associated with the changes in senior management at a windows product subsidiary and our fencing subsidiary for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



(x)	additional earnings that we estimate of $0.9 million that we estimate we would have realized had our price increases on our metal products been implemented at the same time as the metal cost increases for the full six months ended July 3, 2004.



(xi)	certain balance sheet adjustments of $0.9 million, $2.1 million and $0.6 million made in the second half of 2003 and the first of 2004 of our fencing products subsidiary, following management changes at that subsidiary, for the full six months ended July 3, 2004, the full fiscal year ended December 31, 2003 and the full six months ended July 5, 2003 respectively.



	(i)	the series of adjustments which are listed under footnote(b) of the reconciliation of Ply Gem EBITDA to net earnings (loss) set forth in footnote 4 above.



	(ii)	the series of adjustments which are listed under footnote (a) of the reconciliation of MW EBITDA to net earnings (loss) set forth in footnote 2 to “—Summary Historical Financial Information of MWM Holding.”



	(iii)	cost savings that we have identified and expect to achieve subsequent to the completion of the MW transactions and include: $2.2 million of annual savings for the use by MW of PVC resin purchased and compounded by Ply Gem; $1.7 million related to labor productivity improvements at MW’s Hammonton, NJ facility; 40.7 million from insurance savings related to the inclusion of MW under Ply Gem’s insurance program; $0.7 million related to the shift from purchasing profiles to internally manufactured profiles;


		40.6 million form reductions in glass and vinyl scrap from implementation of PMC optimization software; $0.3 million related to optimization of freight software at MW’s Rocky Mount, VA; and $0.6 million in other identified savings.


(8)	Working capital was calculated as current assets (excluding cash and cash equivalents and deferred income taxes) less current liabilities (excluding the current portion of long-term debt and capital lease obligations).



(1)	MWM Holding was incorporated on December 27, 2002 and began operations on January 17, 2003, when it acquired all of the common stock of MW Manufacturers Holding Corp. The acquisition was accounted for as a purchase and resulted in a new valuation of assets and liabilities of MW Manufacturers Holding Corp. and its subsidiaries.



(2)	MW EBITDA means net earnings (loss) plus interest expense (net of investment income), provision (benefit) for income taxes, depreciation and amortization expense and other expense. Other companies may define EBITDA differently and, as a result, our measure of MW EBITDA may not be directly comparable to EBITDA of other companies. MW EBITDA is presented herein because we believe it to be relevant and useful information to our investors, because it is used by our management to analyze and evaluate the operating performance of our business, to compare our operating performance with that of our competitors and to benchmark the value of our business. Management also uses MW EBITDA for planning purposes, including the preparation of annual operating budgets, to determine appropriate levels of operating and capital investments and as one of the target elements in our compensation incentive programs. MW EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use MW EBITDA as a financial measure to assess the performance of our business, the use of MW EBITDA is limited. MW EBITDA does not include: (a) interest expense, which, because we have borrowed money in order to finance our operations, is a necessary element of our costs and ability to generate revenue; (b) depreciation, which, because we use capital assets, is a necessary element of our costs and ability to generate revenue; and (c) taxes, the payment of which is a necessary element of our operations. Because MW EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize MW EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, MW EBITDA is not a measure of financial performance under GAAP and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as net income. You are cautioned to not place undue reliance on MW EBITDA. The following sets forth the reconciliation of MW EBITDA to net earnings (loss):



	(i)	the additional savings that MW estimates it would have realized from manufacturing process improvements, including internal extrusion of window lineals and process automation, had they been in place for the entire fiscal year ended December 27, 2003.



	(ii)	the elimination of stand alone costs of $0.09 million and $0.1 million, consisting of insurance expenses of $0.03 million and board and miscellaneous expenses of $0.06 million for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003 respectively.



	(iii)	the elimination of consulting expenses of $0.3 million for the entire fiscal year ended December 27, 2003 and recruiting and relocation expenses of $0.2 million and $0.5 million for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003 respectively.



	(iv)	the additional savings that MW expects it will realize from closing MW’s pension plan to new employees and freezing the pension plan with respect to certain existing employees for the full six months ended July 3, 2004 and the entire fiscal year ended December 27, 2003.



(3)	Net cash provided by (used in) operating activities, provided by (used in) investing activities and provided by (used in) financing activities for MW’s total full year ended December 27, 2003, and six months ended June 28, 2003 and July 3, 2004 were calculated based on the sum of such amounts for their respective combined periods.



(4)	Working capital was calculated as current assets (excluding cash and cash equivalents and deferred income taxes) less current liabilities (excluding the current portion of long-term debt and capital lease obligations).



(5)	Total debt, including current maturities includes credit agreements, capital lease obligations and subordinated notes payable and excludes accrued pension costs and deferred income taxes.


	Our substantial level of indebtedness may limit our cash flow available to invest in the ongoing needs of our business, which could prevent us from fulfilling our obligations on the notes.


	We face competition from other vinyl exterior building products manufacturers and alternative building materials. If we are unable to compete successfully, we could lose customers and our sales could decline.


	Downturns in the home repair and remodeling and new home construction sectors or the economy could lower the demand for, and pricing of, our products, which in turn could cause our net sales and net income to decrease.


	*Changes in the costs and availability of raw materials, especially PVC resin and aluminum, can decrease our profit margin by increasing our costs.*


	Because we depend on a core group of significant customers, our sales, cash flows from operations and results of operations may decline if our key customers reduce the amount of products they purchase from us.


	Our business is seasonal and can be affected by inclement weather conditions which could affect the timing of the demand for our products and cause reduced profit margins when such conditions exist.


	If we are unable to meet future capital requirements our product offering may become dated, our productivity may decrease and the quality of our products decline, which, in turn, could reduce our sales and profitability.


	Increases in the cost of labor, union organizing activity and work stoppages at our facilities or the facilities of our suppliers could delay or impede our production, reduce sales of our products and increase our costs.


	*The separation of our business from Nortek may not proceed as smoothly as anticipated, and could result in unexpected costs to us.*


	We may be subject to claims arising from our former operations as a Nortek subsidiary, including claims arising from disposal of operations. Nortek may not have the ability to fulfill its indemnification obligations to us in connection with the Ply Gem Acquisition, in which case, we would be liable for these claims.


	*Our acquisitions may expose us to unanticipated negative consequences, such as not being able to successfully integrate any companies we acquire.*


	*No assurance can be given that the MW Acquisition will be consummated.*


	*We could face potential product liability claims relating to products we manufacture.*


	*We are dependent on certain key personnel, the loss of whom could materially affect our financial performance and prospects.*


	*Interruptions in deliveries of raw materials or finished goods could adversely affect our production and increase our costs, thereby decreasing our profitability.*


	*Environmental requirements may impose significant costs and liabilities on us.*


	*Manufacturing or assembly realignments may result in a decrease in our near-term earnings, until the expected cost reductions are achieved, due to the costs of implementation.*


	*We rely on a variety of intellectual property rights. Any threat to, or impairment of, these rights could cause us to incur costs to defend these rights.*