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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., 185 Platt Clay Way, 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 acquired 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 is a wholly-owned subsidiary of Ply Gem. MWM Holding 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.” 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,” “Adjusted 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 August 27, 2004, we acquired all of the outstanding shares of capital stock of MWM Holding, in accordance with a stock purchase agreement entered into among Ply Gem, MWM Holding, Inc., and the selling stockholders listed therein, the “MW Sellers,” on July 23, 2004 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 was terminated upon the closing of the transactions contemplated by the stock purchase agreement. The purchase price is also subject to any adjustments based on MW’s working capital (as defined in the stock purchase agreement) and one and one-half percent (1.5%) of the cash purchase price was 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.”

Simultaneously with the MW Acquisition, we amended and restated our senior credit facilities, increasing by $15.0 million our revolving credit facility and adding an additional term loan facility in the amount of $111.0 million. At closing, we borrowed 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 are 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 issued an additional $135,000,000 of our 9% senior subordinated notes due 2012 in a private placement at an original issue price of 100.25%. The additional senior subordinated notes were issued pursuant to the same indenture as the notes and have the same terms as the notes, except for issue date, issue price and first interest payment date. The additional notes are not initially fungible with, and are expected initially to trade separately from, the notes. We refer to this as the “MW Note Offering.”

In connection with the MW Acquisition, we entered into a sale and leaseback transaction with respect to seven of our properties and one MW property. Under this sale and leaseback transaction, we sold these properties for approximately $36.0 million, and simultaneously entered 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 were used to fund a portion of the purchase price for the MW Acquisition, and were 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, an investor group led by Caxton-Iseman Capital, Inc. and its affiliates, together with certain members of MW’s management, made 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 made an equity contribution to Ply Gem Holdings, which in turn made 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 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 August 18, 2004.


Sources (dollars in millions)


Cash	$	10.7
Revolving credit facility(1)		6.0
Term loan facilities		111.0
Additional senior subordinated notes(2)		135.3
Proceeds from Sale and Leaseback Transaction		36.0
Sponsor and management equity(3)		34.3

Total sources	$	333.3


Uses (dollars in millions)


Purchase price(4)	$	317.5
Cancellation of MW management stock options(5)		2.5
Estimated transaction costs and expenses(6)		13.3

Total uses	$	333.3

(1)      Represents an incremental $6.0 million of which was drawn on our $70.0 million revolving credit facility at closing to fund the MW Acquisition and pay related costs and expenses. We have also drawn $9.0 million of our revolving credit facility, in connection with the Ply Gem Transactions and our seasonal working capital needs.

(2)      Includes $338,000 of note premium, which will be amortized over the life of the notes.

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

(4)      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 was used to repay the amount outstanding under MWM Holding’s existing credit facility and 1.5% of the purchase price was placed in escrow. See “The Transactions — The MW Transactions MW Acquisition.”

(5)      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.

(6)      Transaction costs include estimated commitment, placement, and other transaction fees and legal, accounting and other costs payable in connection with the MW Transactions. Transaction costs do not include approximately $6.4 million of transaction fees that may be paid to the Caxton-Iseman party under the General Advisory Agreement, because the Caxton-Iseman party has not yet determined if it will take this fee in connection with the MW Transactions. See “Certain relationships and related transactions — Caxton-Iseman Arrangements — General Advisory Agreement.”

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. In connection with the MW Transactions, we also amended and restated our senior credit facilities on August 27, 2004, to increase our revolving credit facility from $55.0 million to $70.0 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. In connection with the MW Transactions, we also amended and restated our senior credit facilities on August 27, 2004, to add an additional U.S. term loan facility of $111.0 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 185 Platt Clay Way, Kearney, Missouri 64060. Our telephone number is (800) 800-2244.

Our parent, Ply Gem Holdings, Inc., is a Delaware corporation, incorporated in 2004. Ply Gem Holdings is a holding company whose only substantial asset is our stock. Ply Gem Holdings has no operations. Our subsidiaries, Kroy Building Products, Inc., Napco, Inc., Napco Window Systems, Inc., MWM Holding, Inc., MW Manufacturers Holding Corp., MW Manufacturers, Inc., Lineal Technologies, Inc. and Patriot Manufacturing, Inc. are Delaware corporations, incorporated in 1994, 1989, 2000, 2002, 1995, 1999, 1999 and 1998, respectively. Our subsidiary Great Lakes Window, Inc., is an Ohio corporation, incorporated in 1986. Our subsidiary Thermal-Gard, Inc. is a Pennsylvania corporation, incorporated in 1999. Our subsidiary Variform, Inc. is a Missouri corporation, incorporated in 1964.

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 $340.5 million of senior debt, and we would have approximately an additional $35.8 million available to be borrowed under the revolving portion of our senior credit facilities. As of July 3, 2004, on a pro forma basis, we and the guarantors would have had approximately $135.0 million of debt ranking pari passu with the notes offered hereby, consisting of the



		additional senior subordinated notes offered in connection with the MW Note Offering. 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 prospectus, 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	)		(50,758	)

Earnings (loss) before provision (benefit) for income taxes		13,000			23,900			(1,400	)		18,200			19,265			21,541
Provision (benefit) for income taxes		6,200			8,100			(500	)		7,200			7,637			8,937

Earnings (loss) from continuing operations		6,800			15,800			(900	)		11,000			11,628			12,604
Earnings (loss) from discontinued operations(3)		(21,800	)		3,400			—			—			—			—

Net earnings (loss)	$	(15,000	)	$	19,200		$	(900	)	$	11,000		$	11,628		$	12,604

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	)		(26,170	)

Earnings (loss) before provision (benefit) for income taxes		(1,400	)		4,300			3,818			(5,200	)		14,840			9,627			14,494
Provision (benefit) for income taxes		(500	)		1,600			1,449			(1,850	)		5,639			3,784			5,629

Earnings (loss) from continuing operations		(900	)		2,700			2,369			(3,350	)		9,201			5,843			8,865
Earnings (loss) from discontinued operations(3)		—			—			—			—			—			—			—

Net earnings (loss)	$	(900	)	$	2,700		$	2,369		$	(3,350	)	$	9,201		$	5,843		$	8,865

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):

Post-Nortek

Recapital-

Pre-Nortek Recapitalization ization

Pre-Nortek

Fiscal Year Ended Recapital-

December 31, Jan. 1, 2003 Jan. 10, 2003 ization Jan. 1,

to Jan. 9, to Dec. 31, 2003 to Jan. 9,

(Dollars in 2001 2002 2003 2003 2003

thousands)

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

Interest expense, net
26,195 33,508 974 32,921 974

Provision (benefit) for income taxes
6,200 8,100 (500 ) 7,200 (500 )

Depreciation and amortization expense
21,044 14,071 327 14,702 327

Ply Gem EBITDA
$ 38,439 $ 74,879 $ (99 ) $ 65,823 $ 99

[Additional columns below]

[Continued from above table, first column(s) repeated]

Unaudited

Pro Forma

Post-Nortek Before Giving Ply Gem

Recapital- Effect to the Ply Gem Holdings Pro Forma Before Pro Forma Before

ization MW Transactions Jan. 1, Jan. 23, Giving Effect to the Giving Effect to the

Jan. 10, 2003 Six Months 2004 to 2004 to MW Transactions MW Transactions

to July 5, Ended July 5, Feb. 11, July 3, Full Year Ended Six Months Ended

(Dollars in 2003 2003 2004 2004 Dec. 31, 2003 July 3, 2004

thousands)

Net earnings (loss)
$ 2,700 $ 2,369 $ (3,350 ) $ 9,201 $ 11,628 $ 5,843

Interest expense, net
15,992 16,264 3,655 13,004 31,861 16,722

Provision (benefit) for income taxes
1,600 1,449 (1,850 ) 5,639 7,637 3,784

Depreciation and amortization expense
7,072 7,183 1,373 5,217 14,598 6,540

Ply Gem EBITDA
$ 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	$	8,865	$	12,604
Interest expense, net		26,170		50,758
Provision for income taxes		5,629		8,937
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 Adjusted 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.

(6) Net cash provided by (used in) operating activities, provided by (used in) investing activities and provided by (used in) financing activities for the pro forma six months ended July 3, 2004 and the full year ended December 31, 2003 were calculated based on the sum of such amounts for their respective combined periods.

(7) 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, 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.

(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).

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:
Adjusted 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) Adjusted 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 Adjusted EBITDA differently and, as a result, our measure of Adjusted MW EBITDA may not be directly comparable to Adjusted EBITDA of other companies. Adjusted 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 Adjusted 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. Adjusted MW EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use Adjusted MW EBITDA as a financial measure to assess the performance of our business, the use of Adjusted MW EBITDA is limited. Adjusted 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 Adjusted MW EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize Adjusted MW EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, Adjusted 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 Adjusted MW EBITDA. The following sets forth the reconciliation of Adjusted 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

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

(a) Adjusted 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, we would have had approximately $701.3 million of indebtedness outstanding and up to $35.8 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 $126.7 million (which includes $35.8 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

represents the full incremental stand-alone expense, and compares to a pre-Ply Gem Acquisition management fee of $7.2 million and an additional corporate allocation of approximately $3.4 million we paid in 2003. Our estimate may prove inaccurate or our separation from Nortek may not progress smoothly, either of which could adversely impact our results. Stand-alone expenses could increase as a result of our reduced buying leverage as a stand-alone entity (when compared to Nortek) in procuring insurance, audit, tax and actuarial services. In addition, following the Ply Gem Acquisition, we will in the future pay a Caxton-Iseman Capital party a 2% annual advisory fee based on our EBITDA, as defined in our General Advisory Agreement with the Caxton-Iseman Capital party. Based on pro forma results before giving effect to the MW Transactions, for 2003, the fee payable under this agreement would have been approximately $1.5 million had it been in place. With respect to 2004 only, this fee is contingent upon our achievement of certain financial performance metrics. See “Certain Relationships and Related Transactions — Caxton-Iseman Arrangements.”

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 completed 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 difficulties encountered in connection with the integration of businesses we acquire could hurt our business and results of operations. Further, the benefits that we anticipate from these acquisitions may not develop.

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. We have also entered into similar arrangements with certain key employees of MW including Mr. Haley. 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

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 earnings until the expected cost reductions are achieved. Such programs may include the consolidation and integration of facilities, functions, systems and procedures. Such actions may not be accomplished as quickly as anticipated and the expected cost reductions may not be achieved or sustained.

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

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 $340.5 million of senior debt and approximately $35.8 million ($70.0 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 the full six months ended July 3, 2004. In addition, it held approximately 6.1% of our consolidated assets as of July 3, 2004 on a pro forma basis. Any right of ours to receive the assets of any of our non-guarantor subsidiaries upon their bankruptcy, liquidation or reorganization (and the consequent right of the holders of the notes to participate in those assets) will be subject to the claims of that subsidiary’s creditors, including trade creditors. To the extent that we are recognized as a creditor of that subsidiary, we may have such claim, but we would still be subordinate to any security interests in the assets of that subsidiary and any indebtedness and other liabilities of that subsidiary senior to that held by us. As of July 3, 2004, these notes were have been effectively junior to approximately $36.2 million of liabilities (including trade payables) of our non-guarantor subsidiary, including term loans of $30.0 million under our senior credit facilities, which are guaranteed by Ply Gem and therefore constitute senior debt under the indenture.

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 August 27, 2004, we acquired all of the outstanding capital stock of MWM Holding 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 credit facility, was terminated upon the closing of the acquisition, pursuant to a stock purchase agreement among MWM Holding, Inc., the selling stockholders listed therein, the “MW Sellers,” and us. 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 was 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.

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, made 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 made an equity contribution to Ply Gem Holdings, which in turn made an equity contribution to Ply Gem. See “Certain relationships and related transactions—The MW Acquisition.”

In connection with the MW Acquisition, we entered into a sale and leaseback transaction with respect to seven of our properties and one MW property. Under this sale and leaseback transaction, we sold these properties for approximately $36.0 million, and simultaneously entered 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 are guaranteed by our parent Ply Gem Holdings, Inc. Net proceeds from the sale and leaseback transaction were used to fund a portion of the purchase price for the MW Acquisition, and were funded concurrently with the closing of the MW Acquisition. We refer to this transaction as the “Sale and Leaseback Transaction.”

We also entered into an amendment to our senior credit facilities, which increased by $15.0 million our revolving credit facility and added an additional term loan facility in the amount of $111.0 million. At closing, we borrowed 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 issued $135.0 million principal amount of additional 9% senior subordinated notes due 2012 in a private placement. The senior subordinated notes have the same terms as the notes, except for issue date, issue price and first interest payment date. The additional notes are not initially fungible with, and are expected initially to trade separately from, the notes.

The following table summarizes the estimated sources and uses of funds for the MW Transactions, assuming the closing occurred as of August 18, 2004.



(1)	Represents an incremental $6.0 million of which was drawn on our $70.0 million revolving credit facility at closing to fund the MW Acquisition and related costs and expenses. We have also drawn $9.0 million of our revolving credit facility in connection with the Ply Gem Transactions and our seasonal working capital needs.



(2)	Includes $338,000 of note premium, which will be amortized over the life of the notes.



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



(4)	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 was used to repay the amount outstanding under MWM Holdings existing credit facility and 1.5% of the purchase price was placed in escrow. See “The Transactions — The MW Acquisition.”



(5)	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.



(6)	Transaction costs include estimated commitment, placement, and other transaction fees and legal, accounting and other costs payable in connection with the MW Transactions. Transaction costs do not include approximately $6.4 million of transaction fees that may be paid to the Caxton-Iseman party under the General Advisory Agreement, because the Caxton-Iseman party has not yet determined if it will take this fee in connection with the MW Transactions. See “Certain relationships and related transactions — Caxton-Iseman Arrangements — General Advisory Agreement.”

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. In connection with the MW Transactions, we also amended and restated our senior credit facilities on August 27, 2004, to increase our revolving credit facility from $55.0 million to $70.0 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. In connection with the MW Transactions, we also amended and restated our senior credit facilities on August 27, 2004, to add an additional U.S. term loan facility of $111.0 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 $70.0 million revolving credit facility, $9.0 million of which was drawn at July 3, 2004 and of which an additional $6.0 million was 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)	Includes $338,000 of note premium, which will be amortized over the life of the notes.



(5)	Represents the equity contribution of $34.3 million 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 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. However, we do not anticipate significant adjustments to assets other than goodwill as MWM Holding’s balance sheet reflects value assigned to its assets when appraised on January 17, 2003, the date that MWM Holding was acquired by Investcorp.


(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.


(7)	Represent the change in equity as a result of the MW Transactions. The total of common stock and additional paid-in capital includes the amount contributed to effect the MW Transactions. Additional paid-in capital pro forma adjustments consist of the elimination of the existing additional paid-in capital of MWM Holding of $115,925 offset by the MW Equity Contribution of $34,300.

NOTES TO UNAUDITED PRO FORMA COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS

(1)

In connection with the Ply Gem Transactions and the application of Push Down Accounting, we have reflected certain fair value adjustments to certain assets based upon amounts derived from Ply Gem Holdings’ preliminary purchase price allocation as of February 12, 2004. The table that follows presents the adjustments to cost of products sold due to the impact of Push Down Accounting for the Pre-Nortek Recapitalization period from January 1, 2003 to January 9, 2003 and the Post-Nortek Recapitalization period January 10, 2003 to December 31, 2003, 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 for the period from January 1, 2004 to February 11, 2004:


(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.



	Reflects elimination of other expense for MWM Holding’s results from January 18, 2003 to December 27, 2003, consisting of $4,000 of management fees and $819 of abandoned transaction costs. For the period from December 28, 2003 to July 30, 2004, other expense consisted of $250 of management fees to MWM Holding’s former owner.



	The Company does not expect to incur incremental costs to replace the services represented by MWM Holding’s previous management fee agreement, which terminated upon completion of the MW Acquisition. The services provided under MWM Holding’s previous management fee agreement were advisory services related to merger and acquisition opportunities and debt financing. Ply Gem will provide this advisory support for MWM Holding (as its parent), without MWM Holding having to incur duplicative costs. Furthermore, prior to the acquisition of MWM Holding by Ply Gem, MWM Holding operated as a stand alone company with all associated costs being included in its results 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) from continuing operations does not include the transaction fee that may be payable as a result of the MW Transactions under the General Advisory Agreement. The transaction fee would be approximately $6.4 million if the Caxton-Iseman party elects to take this fee on the MW Transactions. See “Certain Relationships and Related Party Transactions — Caxton-Iseman Arrangements — General Advisory Agreement.”

The selected historical financial information 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 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 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, 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 income 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 income. You are cautioned not to place undue reliance on EBITDA. The following sets forth the reconciliation of EBITDA to net earnings (loss):


(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.”

Upon completion of the MW Acquisition, MWM Holding is no longer owned by Investcorp, but has become our subsidiary and is included in our windows and doors segment. In connection with the MW Transactions, we expect to 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, received an equity contribution from Ply Gem Investment Holdings, and we entered into the Sale and Leaseback Transaction, amended our senior credit facilities and issued additional notes. 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. The periods presented for both 2003 and 2004 were impacted by the application of purchase accounting, primarily from the non-cash write off of excess purchase price allocated to inventory which impacted cost of products sold for the 2003 periods presented and the 2004 periods presented by $1.4 million and $2.0 million respectively.

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, which included $0.6 million for the closure of our Butler, Pennsylvania siding facility in May 2003, $1.9 million of cost incurred in the start-up of a new fencing fabrication process to support a significant new retail customer and $0.4 million of severance and relocation cost associated with management changes in our windows and doors segment. 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 earnings were reduced by depreciation expense and amortization of intangible assets, which were approximately $.2 million and $2.3 million for the 2004 period and 2003 period, respectively. The periods presented for both 2003 and 2004 were impacted by the application of purchase accounting, primarily from the non-cash write off of excess purchase price allocated to inventory which impacted the 2003 periods presented and the 2004 periods presented by $1.4 million and $2.0 million respectively.

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. The 2003 periods presented include the impact of the application of purchase accounting, primarily from the non-cash write off of excess purchase price allocated to inventory which impacted the 2003 periods by $2.0 million.

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 $0.8 million of costs associated with the closure of our Butler, Pennsylvania manufacturing facility in May 2003. The 2003 periods presented include the impact of the application of purchase accounting, which increased amortization expense by $0.8 million.

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. The 2003 periods presented include the impact of the application of purchase accounting as follows: 1) the non-cash write off of excess purchase price allocated to inventory, which impacted the 2003 periods cost of products sold by $2.0 million, and 2) the impact of the application of purchase accounting which increased amortization expense in SG&A by $0.8 million.

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 additional costs related to direct start-up costs and unabsorbed fixed overhead in connection with this acquisition.

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 provided by operating activities for the 2004 periods presented compared to the 2003 periods presented was primarily driven by improved earnings and improved working capital.

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,

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 $701.3 million of indebtedness and $35.8 million of availability under our revolving credit facility. Concurrently with the MW Acquisition, we issued $135.0 million principal amount of our 9% senior subordinated notes due 2012 and amended our senior secured credit facilities to increase the size of our revolving credit facility by $15.0 million to $70.0 million and to add a new $111.0 million term loan facility to our existing term loan facilities (thereby increasing the total size of our term loan facilities to $310.5 million). We borrowed 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 $111.0 million term loan facility has no scheduled amortization. Our existing term loan facilities have quarterly scheduled amortization payments of $500,000, which began in the quarter ended July 3, 2004 and continue for the next 23 calendar quarters thereafter, and payments of $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 sold seven of our properties and one MW property for approximately $36.0 million, and simultaneously entered 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 were 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 $310.5 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 $0.8 million per year. We also have a revolving credit facility which will provide for borrowings of up to $70.0 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

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 August 27, 2004, we acquired 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 Adjusted MW EBITDA of $32.2 million.

We believe the MW Acquisition 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:



4	*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, 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.


4	*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.

4	*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.

4	*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.


4	*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 made significant investments in the equity of Ply Gem Investment Holdings, our indirect parent. They acquired stock and received phantom stock awards representing approximately 5.8% of the common stock of Ply Gem Investment Holdings.

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


4	*Leading Sector Positions.* We believe MW is a leading supplier of vinyl windows to the new home construction market in the South Atlantic and Mid-Atlantic regions, respectively. The acquisition of MW, coupled with our existing windows product line, will give us a strong position in the vinyl windows market nationally as well in the combined company’s core regions of the Midwest, East South Central and New England and leading market positions in the South Atlantic, Mid-Atlantic and Western Canada core regions.

	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.

4	*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.

4	*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.

4	*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.


4	*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. In connection with the MW Acquisition, members of MW’s management team made significant investments in the equity of Ply Gem Investment Holdings, our indirect parent. Members of our management team (including MW) hold stock and phantom stock awards representing approximately 17.7% 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.


	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.

4	*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.

4	*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. Following completion of the MW Acquisition, vinyl products 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.

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. Following completion of the MW Acquisition, we 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.

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.

We 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 following completion of the MW Acquisition, 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 manufactured at a lower cost than competitive products, and are now applying those techniques in the research and development of composite siding products.

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. We 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 we have with Nortek under the Stock Purchase Agreement (see “The Transactions — The Acquisition”) and Alcan Aluminum Corporation (an indemnity we received when we purchased our York, Nebraska facility from Alcan Aluminum Corporation in 1998) will not result in material costs.

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.

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.

Following completion of the MW Acquisition, we 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.

Mr. Haley has been the President of MW since June 2001, and has served as President of MWM Holding since the MW Acquisition. 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.

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.

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 granted to these executives represents one share of Ply Gem Investment Holdings common stock, and each Phantom Additional Unit granted to these executives 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 MW Acquisition, Mr. Haley was granted 13,106 Phantom Additional Units under the Plan. Each Phantom Additional Unit that was granted to Mr. Haley represents one share of Ply Gem Investment Holdings common stock and 0.53803 share 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 August 30, 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., 185 Platt Clay Way, 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 2,874,445 shares of common stock held by that entity.



(5)	In connection with the Ply Gem Acquisition, Mr. Meyer received phantom stock units representing 157,272 shares of common stock, and 20,419 shares of senior preferred stock. In addition, in connection with the MW Acquisition, Mr. Meyer received 4,724 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.”

In connection with the MW Acquisition, certain members of MW management, including Mr. Haley, contributed cash to Ply Gem Investment Holdings, and in return received shares of common stock of Ply Gem Investment Holdings. In addition, Mr. Haley was awarded senior preferred phantom stock units of Ply Gem Investment Holdings. Members of MW management receiving 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 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

services, pay the Caxton-Iseman Party (1) an annual fee equal to 2% of our EBITDA, as defined in such agreement, (2) a transaction fee, payable upon the completion by us of any acquisitions, of 2% of the sale price, (3) a transaction fee, payable upon the completion by us of any divestitures, of 1% of the sale price, and (4) a transaction fee, payable upon the completion of the sale of our company, of 1% of the sale price. EBITDA in the General Advisory Agreement is based on our net income (loss) plus extraordinary losses and/or any net capital losses realized, provision for income taxes, interest expense (including amortization or write-off of debt discount and debt issuance costs and commissions, and other items), depreciation and amortization (including amortization of goodwill, organization costs, capitalized management fees, and other items), dividends paid or accrued on preferred stock, certain management fees paid to the Caxton-Iseman Party, charges related to certain phantom units, and a number of other items. Consequently, EBITDA as defined in the General Advisory Agreement is significantly different from the EBITDA measure we use elsewhere in this prospectus.

In connection with the MW Acquisition, the Caxton-Iseman party is 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 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 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, consisting of $190.0 million of term loan facilities (comprised of a $160.0 million U.S. term loan facility and a $30.0 million Canadian term loan facility) and a $65.0 million revolving credit facility.

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 used $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.

In connection with the MW Acquisition, we amended our senior secured credit facilities by entering into a second amended and restated credit agreement with the lenders party thereto, UBS Securities LLC and Deutsche Bank Securities Inc., as Joint Lead Arrangers and Bookrunners, J.P. Morgan Securities Inc., as Co-Arranger, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, UBS Loan Finance LLC, as Swingline Lender, Deutsche Bank AG Cayman Islands Branch, as Syndication Agent, and JP Morgan Chase Bank as Documentation Agent. Set forth below is a summary of the terms of our amended and restated senior credit facilities.

Our amended and restated senior secured credit facilities consist of two existing tranches of term loans in the aggregate amount of $199.5 million drawn in full on February 12, 2004 to finance the Ply Gem Acquisition, a new $111.0 million term loan tranche and a $70.0 million revolving loan facility, which included a $15.0 million increase to the existing revolving loan facility of $55.0 million. We used the entire $111.0 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, provide for senior secured financing of up to $380.5 million, consisting of $310.5 million of term loan facilities maturing in February 2011 that were drawn in full following the consummation of the MW Acquisition and a $70.0 million revolving loan facility, including a $35.0 million letter of credit subfacility and a $15.0 million swingline subfacility, maturing in February 2009. The existing term loan facilities consist of a $169.6 million tranche under which Ply Gem is the U.S. borrower and a $29.9 million tranche under which our Canadian subsidiary, CWD Windows and Doors, Inc., is the Canadian borrower. Our senior credit facilities will permit us to incur up to $100.0 million in additional term loans, not including the new $111.0 million term loan tranche, under our existing term loan tranches or through the addition of new 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.

All borrowings under our amended 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 new term loan tranche, together with up to approximately $6.0 million of the revolving loan facility and the other sources of funds described under “Use of proceeds,” were used to finance the MW Acquisition and pay related fees and expenses. Proceeds of revolving loans will be used after the closing date of the MW Acquisition to provide financing for working capital and general corporate purposes, potentially including acquisitions.

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) 1.50% initially for base rate revolving loans and (4) 2.50% initially 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 two tranches of existing term loans require scheduled quarterly payments of $500,000 which began in the quarter ended June 30, 2004 and continue for the next 23 calendar quarters thereafter, and payments of $47,000,000 on June 30, 2010, September 30, 2010, December 31, 2010, allocated pro rata between the two tranches of our existing term loans. Our new $111.0 million term loan tranche has no scheduled amortization. On the term loan maturity date we expect to make a payment of $158,000,000 with respect to our existing term loans tranches and our new term loan tranche.

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 the business that we conduct, engage in mergers, acquisitions and other business combinations, declare dividends, make payments or redeem or repurchase our or our parent’s equity interests, incur additional indebtedness or guarantees, issue preferred stock of our subsidiaries or disqualified preferred stock of our parent, make loans and investments, incur liens, transact with affiliates, engage in sale and leaseback transactions, lease property, amend or prepay subordinated debt, and modify or waive material agreements in any manner that is adverse in any material respect to the lenders.

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.

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 or interest rates that are currently fixed at various rates between 2.90% to 7.71%. The loan agreements typically allow us to prepay the outstanding principal amount at any time, and are secured by the fixed assets, real estate or facilities from the particular projects financed. As of July 3, 2004, we had approximately $15.5 million of principal and accrued interest outstanding under such loan agreements which will be due at various times from 2005 to 2025.

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 $340.5 million aggregate principal amount of Senior Debt and approximately $35.8 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

Issuer or a Wholly-Owned Restricted Subsidiary, or (3) if immediately after giving effect to such sale or issuance, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary. The sale of all the Equity Interests of any Restricted Subsidiary is permitted by this covenant but is subject to the covenant described under “— Limitations on Asset Sales.” Notwithstanding the foregoing, this covenant shall not prohibit the issuance or sale of Equity Interests of any Restricted Subsidiary in connection with (a) the formation or capitalization of a Restricted Subsidiary or (b) a single transaction or a series of substantially contemporaneous transactions whereby such Restricted Subsidiary becomes a Restricted Subsidiary of the Issuer by reason of acquisition of securities or assets from another Person; provided that following the consummation of any transaction or transactions contemplated by clause (a) or (b), the ownership of the Equity Interests of the relevant Restricted Subsidiary or Restricted Subsidiaries shall be as if this covenant had been complied with at all times.

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., 185 Platt Clay Way, 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:


(1)	The first quarter ended April 5, 2003 represents the combined pre- and post-Recapitalization periods of January 1, 2003 to January 9, 2003 and January 10, 2003 to April 5, 2003, respectively.

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.

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, 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.

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 assets acquired and liabilities assumed based upon their respective fair values as of the date of the acquisition. The allocation of total consideration from the acquisition to the fair value of assets acquired and liabilities assumed is 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 representing a liability for its future legal performance obligation to keep capital deployed and maintain certain employment commitments. 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.


(1)	The balance sheet at December 27, 2003 has been derived from the Company’s audited financial statements.

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 September 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.

Pursuant to the requirements of the Securities Act of 1933, the registrant duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Kearney, State of Missouri, on September 9, 2004.

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Lee D. Meyer or Shawn K. Poe or either of them his true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and all amendments (including post-effective amendments) to this registration statement together with all schedules and exhibits thereto and any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this registration statement or any such amendment or any subsequent registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and (iv) take any and all actions which may be necessary or appropriate in connection therewith, granting unto such agent, proxy and attorney-in-fact full power and authority to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact or any of their substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.



	PATRIOT MANUFACTURING, INC.



	By: /s/ MICHAEL HALEY


	_______________________________________ Name: Michael Haley


	Title: President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


**	Filed herewith.

EX-3.23 2 y95660a4exv3w23.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.23 CERTIFICATE OF INCORPORATION OF MWM HOLDING, INC. ARTICLE I NAME OF CORPORATION The name of this corporation is: MWM Holding, Inc. (the "Corporation"). ARTICLE II REGISTERED OFFICE The address of the registered office of the Corporation in the State of Delaware is 615 South DuPont Highway, City of Dover, 19901, County of Kent. The name of its registered agent at that address is National Corporate Research, Ltd. ARTICLE III PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV AUTHORIZED CAPITAL STOCK The Corporation shall be authorized to issue one class of stock to be designated Common Stock; the total number of shares which the Corporation shall have authority to issue is one thousand (1,000), and each such share shall have a par value of one cent ($0.01). ARTICLE V INCORPORATOR The name and mailing address of the incorporator of the Corporation is: Karen L. Doerner, Corporate Supervisor c/o Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 ARTICLE VI BOARD POWER REGARDING BYLAWS In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation. ARTICLE VII NUMBER OF DIRECTORS; ELECTION OF DIRECTORS The number of directors which will constitute the whole Board of Directors of the Corporation shall be specified in the bylaws of the Corporation. Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide. ARTICLE VIII LIMITATION OF DIRECTOR LIABILITY To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the Delaware Code, or (d) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law is amended after the date of the filing of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the personal liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended from time to time. No repeal or modification of this Article VIII by the stockholders of the Corporation shall adversely affect any right or protection of a director of the Corporation existing by virtue of this Article VIII at the time of such repeal or modification. ARTICLE IX AMENDMENT OR REPEAL The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation. 2 ARTICLE X ELECTION NOT TO BE GOVERNED BY SECTION 203 To the fullest extent permitted by the Delaware Code, the corporation shall not be governed by the provisions of Section 203 of the Delaware Code, or by any successor or similar statute. ARTICLE XI SPECIAL MEETINGS OF STOCKHOLDERS Special meetings of the stockholders of the corporation for any purpose or purposes may be called at any time by the Board of Directors or by a committee of the Board of Directors which has been duly designated by the Board of Directors to have the power to call such meetings, but such special meetings may not be called by any other person or persons; provided, however, that if and to the extent that any special meeting of the stockholders may be called by any other person or persons specified in any provisions of any certificate filed under Section 151(g) of the Delaware Code (or its successor statute as in effect from time to time hereunder), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified. * * * THE UNDERSIGNED, being the incorporator hereinbefore named, for the purpose of forming a Corporation to do business both within and without the State of Delaware, and in pursuance of the Delaware General Corporation Law, does make and file this Certificate. Dated: December 27, 2002 /s/ Karen L. Doerner --------------------------- Karen L. Doerner Sole Incorporator 3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MWM HOLDING, INC. ARTICLE I -- NAME The name of the corporation (hereinafter called the "Corporation") is MWM Holding, Inc. ARTICLE II -- REGISTERED OFFICE The address, including street, number, city, and county, of the registered office of the Corporation in the State of Delaware is 615 South Dupont Highway, Dover, Delaware 19901, County of Kent; and the name of the registered agent of the Corporation in the State of Delaware is National Corporate Research, Ltd. ARTICLE III -- PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE IV -- CAPITALIZATION 1. Definitions. As used in this Article IV, the following terms shall have the following meanings: "Affiliate", with respect to any Stockholder that is not a natural person, means (i) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Stockholder or (ii) any Person who is a director or officer (a) of such Stockholder, (b) of any subsidiary of such Stockholder or (c) of any Person described in clause (i) above. For purposes of this definition, "control" of a Person shall mean the power, directly or indirectly, (y) to vote fifty percent (50%) or more of the securities having ordinary voting power for the election of directors of such Person whether by ownership of securities, contract, proxy or otherwise, or (z) to direct or cause the direction of the management and policies of such Person whether by ownership of securities, contract, proxy or otherwise. "Board" means the Board of Directors of the Corporation. "Business Day" means any day other than a Saturday, Sunday, federal holiday or other day on which commercial banks in New York City are authorized or required to close under the laws of the State of New York. "Certificate of Incorporation" means this Amended and Restated Certificate of Incorporation of the Corporation. "Class A Stock" means the Class A Common Stock described in Section 2(c). "Class A Stockholder" means a record holder of one or more shares of Class A Stock. "Class B Stock" means the Class B Common Stock described in Section 2(c). "Class B Stockholder" means a record holder of one or more shares of Class B Stock. "Class B Warrants" means the Class B Warrants to be issued by the Corporation in connection with the $30,000,000 Senior Subordinated Notes issued by MW Manufacturers, Inc. "Class B Warrant Holders" means the holders of the Class B Warrants. "Class B Warrant Shares" means the shares of Class B Stock issuable upon exercise of the Class B Warrants. "Class D Stock" means the Class D Common Stock described in Section 2(c). "Class D Stockholder" means a record holder of one or more shares of Class D Stock. "Common Stock" has the meaning set forth in Section 2(c). "Common Stockholder" means a record holder of one or more shares of Common Stock. "Conversion Date" has the meaning set forth in Section 6. "Corporation" has the meaning set forth in Article I. "DGCL" has the meaning set forth in Section 2(b). "Difference Shares" has the meaning set forth in Section 5. 2 "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Initial Public Offering" means the effectiveness of a registration statement under the Securities Act on any of Forms S-l, S-2, S-3, S-4 or any similar or successor form covering any of the Stock, and the completion of a sale of such Stock thereunder, (i) following which the Corporation or any successor by way of merger, consolidation, reorganization or otherwise is, or becomes, a reporting company under Section 12(b) or 12(g) of the Exchange Act, and (ii) as a result of which the Stock (or shares of stock issued to holders of stock in any such merger, consolidation, reorganization or similar transaction) is traded on the New York Stock Exchange or the American Stock Exchange, or quoted on The Nasdaq Stock Market or is traded or quoted on any other national stock exchange or automated quotation system. "IPO Date" means the effective date of the Initial Public Offering. "Non-Redeemable Shares" means all shares of Class A Stock or Class B Stock that have been previously sold (whether under Section 4 or Section 5(c)) pursuant to a Tag-Along Transfer. "Notice Date" has the meaning set forth in Section 4(b)(iv). "Other Securityholders" has the meaning set forth in Section 4(a). "Permitted Liens" means liens, encumbrances or restrictions on the Stock of any Stockholder arising out of the agreement pursuant to which such Stock was acquired by such Stockholder or such other agreements as contemplated therein. "Permitted Transferee" with respect to a Transfer by a Class D Stockholder, means (i) with respect to any Class D Stockholder who is a natural person, a Transfer to (a) such Stockholder's spouse or issue, or (b) a trust the beneficiaries of which, and a partnership the limited and general partners of which, include only the Class D Stockholder, his spouse or issue; and (ii) with respect to any Class D Stockholder that is not a natural person, (A) a Transfer to an Affiliate of such Class D Stockholder; or (B) a Transfer to another Class D Stockholder or its Affiliates; provided such other Class D Stockholder referenced in this clause (ii)(B) did not acquire its shares of Class D Stock pursuant to a Tag-Along Transfer. "Person" means any natural person, partnership, limited liability company, corporation (including the Corporation), trust or unincorporated organization or a government or a political subdivision thereof. "Preferred Stock" has the meaning set forth in Section 2(a). 3 "Preferred Stock Designation" has the meaning set forth in Section 2(b). "Proposed Purchase Amount" has the meaning set forth in Section 4(a). "Proposed Transferee" has the meaning set forth in Section 4(a). "Proposed Transferor" has the meaning set forth in Section 4(a). "Redemption Date" has the meaning set forth in Section 5(c). "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Stock" has the meaning set forth in Section 2(c). "Stockholder" means a record holder of one or more shares of Class A Stock, Class B Stock, Class D Stock or Common Stock. "Tag-Along Acceptance Date" has the meaning set forth in Section 4(c). "Tag-Along Notice" has the meaning set forth in Section 4(c). "Tag-Along Pro Rata Amount" has the meaning set forth in Section 4(a). "Tag-Along Redemption Price" has the meaning set forth in Section 5(a). "Tag-Along Transfer" has the meaning set forth in Section 4(a). "Transfer", with respect to any share of Stock, means the sale, assignment, pledge, hypothecation, gift or any other disposition whatsoever of such share (other than pursuant to the Initial Public Offering or pursuant to the redemption or conversion of any such share of Stock, in either case in accordance with the terms of this Certificate of Incorporation), or the encumbrance or granting of any rights or interests whatsoever in or with respect to such share. "Transfer Notice" has the meaning set forth in Section 4(b). 4 2. Designation and Number. (a) The total number of shares of all classes of stock which the Corporation shall have authority to issue is 3,561,400, of which 500,000 shares shall be preferred stock and shall have a par value of $0.01 per share ("Preferred Stock") and 3,061,400 shares shall be common stock, as set forth in paragraph (c) below. (b) Preferred Stock. The Board is expressly authorized to provide for the issue of all or any shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board providing for the issue of such series (a "Preferred Stock Designation") and as may be permitted by the Delaware General Corporation Law (the "DGCL"). The Corporation may, by an amendment to the Certificate of Incorporation duly adopted, increase or decrease, at any time and from time to time (but not below the number of shares of Preferred Stock then outstanding), the number of authorized shares of Preferred Stock. Unless otherwise provided in a Preferred Stock Designation, shares of Preferred Stock redeemed, purchased or otherwise acquired by the Corporation pursuant to the terms hereof shall be retired and shall revert to authorized but unissued Preferred Stock. (c) Common Stock. There shall be four classes of common stock of the Corporation. The first class of common stock of the Corporation shall have a par value of $0.01 per share and shall be designated as "Class A Common Stock" and the number of shares constituting such class shall be 1,500,000. The second class of common stock of the Corporation shall have a par value of $0.01 per share and shall be designated as "Class B Common Stock" and the number of shares constituting such class shall be 28,200. The third class of common stock of the Corporation shall have a par value of $0.01 per share and shall be designated as "Class D Common Stock" and the number of shares constituting such class shall be 2,500. The fourth class of common stock of the Corporation shall have a par value of $0.01 per share and shall be designated as "Common Stock" and the number of shares constituting such class shall be 1,530,700. The Class A Stock, Class B Stock, Class D Stock and Common Stock sometimes are referred to collectively herein as the "Stock." The Corporation may, by an amendment to the Certificate of Incorporation duly adopted, increase or decrease, at any time and from time to time (but not below the number of shares of Class A Stock, Class B Stock, Class D Stock or Common Stock, as the case may be, then outstanding), the number of authorized shares of Class A Stock, Class B Stock, Class D Stock or Common Stock, as the case may be. Shares of Stock redeemed, purchased or otherwise acquired by the Corporation pursuant to the terms hereof shall be retired and shall revert to authorized but unissued Class A Stock, Class B Stock, Class D Stock or Common Stock, as the case may be. 5 3. Restrictions on Transfer. (a) Except for Transfers to a Permitted Transferee, no Class D Stockholder shall Transfer any share of Class D Stock owned by such Class D Stockholder except in accordance with the terms of this Certificate of Incorporation. Any Transfer or attempt to Transfer any share of Class D Stock in violation of the terms and conditions of this Certificate of Incorporation shall be null and void and of no force and effect, the transferee thereof shall not be deemed to be the registered holder thereof nor entitled to any rights with respect thereto, and the Corporation shall refuse to Transfer any such share of Class D Stock on its books to such alleged transferee. (b) No Stockholder shall Transfer any shares of Stock unless such Transfer complies with the conditions specified in this Section 3(b), which are intended to ensure compliance with the provisions of the Securities Act. Prior to any Transfer, the holder of the shares of Stock proposed to be Transferred shall give written notice to the Corporation of such holder's intention to effect such Transfer. Each such notice shall describe the manner and circumstances of the proposed Transfer in sufficient detail, and, except with respect to a Transfer to an Affiliate that is an "accredited investor" as defined under the Securities Act, if requested by the Corporation, shall be accompanied by either (i) a written opinion of legal counsel who is reasonably satisfactory to the Corporation, addressed to the Corporation and reasonably satisfactory in form and substance to the Corporation's counsel, to the effect that the proposed Transfer may be effected without registration under the Securities Act and qualification under applicable state securities laws, or (ii) a "no action" letter from the SEC to the effect that the Transfer of such securities without registration under the Securities Act will not result in a recommendation by the staff of the SEC that action be taken with respect thereof, or a combination of (i) and (ii) above, whereupon the holder of such shares of Stock shall be entitled to Transfer such shares in accordance with the terms of this Certificate and the written notice delivered by the holder to the Corporation. Each certificate evidencing the shares of Stock Transferred as above provided shall bear the appropriate restrictive legend set forth in Section 9, provided that, following the Initial Public Offering, such certificates shall bear the legend set forth in Section 9 or another legend only if, in the opinion of counsel to the Corporation, the imposition of such legend is required under the Securities Act or other applicable law. Any purported Transfer in violation of this Section 3(b) shall be null and void and of no force or effect, and the Corporation shall not record any such Transfer on its stock transfer books. The restrictions on Transfer contained in this Section 3(b) shall not apply to Transfers of shares of Stock (i) in the Initial Public Offering or (ii) following the Initial Public Offering, provided that such Transfer is made in compliance with the Securities Act and applicable state securities laws and in accordance with any restrictions on transfer contained in any restrictive legend set forth on the certificates representing such shares. 4. Tag-Along Rights. (a) Transfer by Class D Stockholders. If, other than in connection with the Initial Public Offering, any Class D Stockholder or Class D Stockholders (for purposes of this Section 4, singularly or collectively, the "Proposed 6 Transferor"), at any time or from time to time in one transaction or in a series of transactions, desires to enter into an agreement (whether oral or written) to Transfer its shares of Class D Stock or any part thereof to any Person other than a Permitted Transferee (the "Proposed Transferee"), such proposed Transfer shall be deemed a "Tag-Along Transfer" and, each of the Class A Stockholders, Class B Stockholders and Class B Warrant Holders (collectively, the "Other Securityholders") shall have the right, as a condition to such Tag-Along Transfer, to have the Proposed Transferee purchase from each such Other Securityholder up to the number of shares (the "Tag-Along Pro Rata Amount") of Class A Stock or Class B Stock or Class B Warrant Shares derived by multiplying the total number of shares of Class A Stock or Class B Stock or Class B Warrant Shares (in each case exclusive of Non-Redeemable Shares) as the case may be, owned by such Other Securityholder by a fraction, the numerator of which is equal to the number of shares of Class D Stock that is proposed to be Transferred by the Proposed Transferor to the Proposed Transferee (the "Proposed Purchase Amount") and the denominator of which is the total number of shares of Class D Stock (other than shares of Class D Stock that have previously been Transferred pursuant to a Tag-Along Transfer) outstanding as of the Notice Date (as defined in Section 4(b)(iv)). If a Class B Warrant Holder elects to participate in the Tag-Along Transfer, it may do so either by (1) exercising a sufficient number of Class B Warrants prior to consummation of the Tag-Along Transfer and paving the aggregate exercise price for such exercise to the Corporation, in accordance with the procedures set forth in Section 4(c) below, or (2) selling directly to the Proposed Transferee the number of Class B Warrants it elects to include in the Tag-Along Transfer, in which latter case, upon consummation of the Tag-Along Transfer, (i) the Class B Warrant Holder shall receive the same consideration for each Class B Warrant Share included in the sale of the Class B Warrants as the Other Securityholders participating in the Tag-Along Transfer, less the aggregate exercise price for such Class B Warrants, (ii) such aggregate purchase price shall be remitted to the Corporation and (iii) the Corporation shall issue to the Proposed Transferee, upon delivery to the Corporation for cancellation of the warrant certificate representing the Class B Warrants it purchased, a number of shares of Class B Stock equal to the number of Class B Warrant Shares so purchased. All Tag-Along Transfers by Other Securityholders shall be on the same terms and conditions (with such changes as are necessary to apply such terms and conditions to a sale by such Other Securityholders) as the proposed Tag-Along Transfer by the Proposed Transferor, provided that no Other Securityholder may be required to make any representation or warranty in connection with the Tag-Along Transfer other than as to its ownership and authority to Transfer the shares of Stock to be Transferred by it, free and clear of any and all liens and encumbrances (other than under this Certificate of Incorporation) other than Permitted Liens and in compliance with all applicable laws and that no Other Securityholder may be required to join in any indemnification obligation that the Proposed Transferor has agreed to in connection with the Tag-Along Transfer other than with respect to any such representation or warranty relating to ownership and authority to Transfer the shares of Stock to be Transferred by such Other Securityholder and such indemnification obligation shall be limited to the amount of the net cash proceeds paid to the Other Securityholder in connection with the Tag-Along Transfer. 7 (b) Transfer Notice. The Proposed Transferor participating in a Tag-Along Transfer shall at least ten (10) Business Days prior to the closing date thereof provide the Corporation and the Other Securityholders with written notice (the "Transfer Notice") of the proposed Tag-Along Transfer containing the following: (i) the name and address of the Proposed Transferor and the Proposed Transferee; (ii) the Proposed Purchase Amount; (iii) the proposed amount to be paid for such shares of Class D Stock, the terms and conditions of payment offered by the Proposed Transferee, the closing date for the proposed Tag-Along Transfer and the estimated expenses payable pursuant to Section 4(d); (iv) the aggregate number of shares of Class A Stock or Class B Stock, as the case may be, and the aggregate number of shares underlying Class B Warrants held of record as of the date the Transfer Notice is sent (the "Notice Date") by the Other Securityholder to whom the notice is sent; (v) the aggregate number of shares of Class A Stock or Class B Stock, as the case may be, and the aggregate number of shares underlying Class B Warrants held of record as of the Notice Date by all Other Securityholders as a group; (vi) the Tag-Along Pro Rata Amount for the Other Securityholder to whom the Transfer Notice is sent (assuming, for this purpose, the Class B Warrant Holders elect to fully exercise the Class B Warrants in connection with the Tag-Along Transfer); and (vii) a statement confirming that the Proposed Transferee has agreed (i) to honor the tag-along rights of the Other Securityholders and (ii) pursuant to Section 5(c), to purchase the number of shares of Stock redeemed pursuant to Section 5(a). Upon written request by the Proposed Transferor, the Corporation shall provide to the Proposed Transferor the information referred to in (iv) and (v) above for inclusion in the Transfer Notice and such other information as may be required to enable the Proposed Transferor to comply with the terms of this Section 4(b). (c) Tag-Along Notice. Each Other Securityholder desiring to participate in the proposed Tag-Along Transfer shall provide a written notice (the "Tag-Along Notice") to the Proposed Transferor on or before the expiration of seven (7) Business Days after the Notice Date (the "Tag-Along Acceptance Date") stating the number of shares (including Class B Warrant Shares) held by such Other Securityholder (up to its Tag-Along Pro Rata Amount) to be included in the proposed Tag-Along Transfer on the terms and conditions specified in the Transfer Notice; if the number of 8 shares to be included in the proposed Tag-Along Transfer includes shares of Class B Warrant Shares, the Class B Warrant Holder shall include with the Tag-Along Notice a notice with respect to its Class B Warrants (which notice may be conditioned on the consummation of the Tag-Along Transfer), which notice shall indicate whether (1) the Class B Warrants are to be exercised for shares of Class B Stock immediately prior to the sale to the Proposed Transferee (which exercise may be conditioned on consummation of the Tag-Along Transfer) and, if so, shall further indicate whether payment of the aggregate exercise price of such Class B Warrants (i) is included with the exercise notice in the form of a certified check or other acceptable payment means or (ii) will be made through a cashless exercise of such Class B Warrants pursuant to the terms of the warrant certificate or (2) the Class B Warrants are to be sold directly to the Proposed Transferee pursuant to Section 4(a)(2) above. The Tag-Along Notice given by each Other Securityholder shall include and constitute such Other Securityholder's binding agreement to include a number of shares equal to its Tag-Along Pro Rata Amount (or such lesser amount as stated in the Tag-Along Notice) in the Tag-Along Transfer on the terms and conditions specified in the Transfer Notice and in this Certificate of Incorporation. If the Proposed Transferee does not purchase all of the shares of Stock of the Proposed Transferor and the Other Securityholders included in such proposed Tag-Along Transfer, then the proposed Tag-Along Transfer to such Proposed Transferee shall be prohibited, any attempt to consummate the proposed Tag-Along Transfer shall be null and void and of no force and effect and the Proposed Transferor shall not transfer any securities to such Proposed Transferee in connection with the contemplated Tag-Along Transfer without once again complying with the provisions of this Section 4. (d) Each Proposed Transferor and each Other Securityholder whose shares are sold in a Tag-Along Transfer shall be entitled to receive the proceeds of such Tag-Along Transfer less its pro rata share, based on the number of shares included in such Tag-Along Transfer, of the reasonable out-of-pocket expenses of the transaction including, without limitation, legal, accounting and investment banking fees and expenses (but expressly excluding any fees payable to the Proposed Transferor or its Affiliates that are not on an arms-length basis), such determination of expenses to be made in the good faith determination of the Board (and less, in the case of the exercise price of Class B Warrants not previously paid to the Corporation, the aggregate exercise price for such Class B Warrants). (e) The provisions of this Section 4 shall not apply to a subsequent Transfer of any share of Class D Stock that previously has been the subject of a completed Tag-Along Transfer that complied with the provisions of this Section 4. 5. Redemption. (a) The number of shares of Class A Stock or Class B Stock (including the Class B Warrant Shares), as applicable, equal to the difference ("Difference Shares") between (i) the number of shares included in any Tag-Along Transfer by a Class A Stockholder, Class B Stockholder or Class B Warrant Holder pursuant to Section 4 and (ii) the Tag-Along Pro Rata Amount for each such Class A Stockholder, Class B Stockholder or Class B Warrant Holder shall be redeemed by the 9 Corporation, to the extent it is lawfully permitted to do so and subject to the immediately succeeding sentence, out of funds legally available therefor pro rata, based on the number of Difference Shares held by such Other Securityholders, from each of the Class A Stockholders, Class B Stockholders or Class B Warrant Holders who elected to include in the Tag-Along Transfer a number of shares of Stock less than the number of shares that constitute their Tag-Along Pro Rata Amount or any such Other Securityholders that did not elect to participate in a Tag-Along Transfer at a redemption price (the "Tag-Along Redemption Price") for each share of Class A Stock or Class B Stock so redeemed equal to the per share price paid for the Class D Stock by the Proposed Transferee (provided that, if the consideration to be paid by the Proposed Transferee includes any non-cash consideration, the per share amount to be paid in such redemption shall be the fair value of the per share consideration to be paid by such Proposed Transferee as determined in good faith by the Board) less such Other Securityholder's pro rata share, based on the number of shares of Stock so redeemed from such Other Securityholder, of the expenses of the Tag-Along Transfer including, without limitation, legal, accounting and investment banking fees and expenses, as determined in good faith by the Board, and less, in the case shares of Class B Stock issued upon mandatory exercise of Class B Warrants pursuant to this Section 5(a), the aggregate exercise price of such Class B Warrants that were so exercised (unless, and to the extent, the Corporation and a Class B Warrant Holder agree to a cashless exercise of the Class B Warrants subject to mandatory exercise pursuant to this Section 5(a)). Notwithstanding the foregoing, the provisions of this Section 5 shall not apply to the holders of Class B Stock or Class B Warrants unless (i) the Tag-Along Transfer in which the Proposed Transferor proposes to Transfer a number of shares of Class D Stock exceeds 50% of the outstanding shares of Class D Stock and (ii) the Board recommends the sale as fair and that it represents a fair value to the holders of Class B Stock and Class B Warrants. To the extent the foregoing conditions are met, any Class B Warrant Holder that has not yet exercised its Class B Warrants shall be required to exercise such Class B Warrants to the extent necessary to effect the foregoing. The provisions of this Section 5(a) shall not apply to the Non-Redeemable Shares. Redemption under this subsection is conditioned upon the contemporaneous purchase by the Proposed Transferee of the shares issuable under Section 5(b) in connection with the applicable Tag-Along Transfer. (b) The shares of Class A Stock or Class B Stock redeemed by the Corporation pursuant to a Section 5(a) redemption shall, on the Redemption Date, be retired and upon such retirement shall automatically revert to authorized but unissued shares of Class A Stock or Class B Stock, and the Corporation shall, on the Redemption Date, but immediately after such redemption and retirement, issue, to the extent it is lawfully permitted to do so, to the Proposed Transferee a number of shares of Class A Stock and Class B Stock equal to the number of shares of such Stock so redeemed. Upon any issuance of shares of Class A Stock or Class B Stock equal to the number of shares of such Stock redeemed pursuant to a Section 5(a) mandatory redemption (and as a condition to such issuance), the Corporation shall receive from the Proposed Transferee as the purchase price for such shares an amount equal to the Tag-Along Redemption Price for each share of Class A Stock and Class B Stock so redeemed. 10 (c) The Corporation shall give to each holder of record of the shares of Class A Stock and Class B Stock (including Class B Warrant Holders) to be redeemed pursuant to the terms of this Section 5 prior written notice of such redemption not less than two (2) Business Days prior to the date such shares will be redeemed (the "Redemption Date") which in the case of a redemption pursuant to Section 5(a) shall be the closing date of the Tag-Along Transfer. Each such notice shall state: (A) the Redemption Date; (B) the total number of shares of Class A Stock and Class B Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (C) the Tag-Along Redemption Price; and (D) the fact that the certificates for the shares subject to redemption (and, in the case of Class B Warrants, the warrant certificates) are to be surrendered in exchange for payment of the Tag-Along Redemption Price (less, if applicable, the exercise price of the Class B Warrants), at the principal office of the Corporation or at such other place as the Corporation shall designate. (d) On the Redemption Date, and subject to receipt of the Tag-Along Redemption Price by the Stockholder thereof or deposit of the Tag-Along Redemption Price by the Corporation with an independent paying agent, the shares of Class A Stock and Class B Stock redeemed pursuant to the terms of this Section 5 shall be deemed to have been so redeemed, notwithstanding that the certificates representing such Class A Stock or Class B Stock (and, in the case of Class B Warrants, the warrant certificates) shall not have been surrendered at the principal office of the Corporation or such other place as the Corporation may have designated or that notice from the Corporation shall not have been given by the Corporation or, if given, shall not have been received by any holder of Class A Stock or Class B Stock (including the Class B Warrant Holders) whose shares of Stock are to be so redeemed. All certificates representing the redeemed shares of Class A Stock and Class B Stock, including all certificates not so delivered by such Class A Stockholders and Class B Stockholders (including, in the case of Class B Warrants, the warrant certificates), shall be, or shall be deemed to be, canceled by the Corporation as of the Redemption Date and shall thereafter no longer be of any force or effect. 6. Conversion. If an Initial Public Offering occurs, each then outstanding share of Class A Stock, Class B Stock and Class D Stock shall automatically convert into one share of Common Stock effective on the IPO Date (the "Conversion Date"), and Class B Warrants that have not been exercised prior to or concurrently with the consummation of the Initial Public Offering shall thereafter constitute warrants exercisable for the same number of shares of Common Stock. Prior to or on the Conversion Date, each holder of shares of Class A Stock, Class B Stock or Class D Stock shall surrender such holder's certificates evidencing such shares at the principal office of the Corporation or at such other place as the Corporation shall designate to such holder in writing at least ten (10) Business Days prior to the Conversion Date, and shall, within ten (10) Business Days after the Conversion Date, be entitled to receive from the Corporation certificates evidencing the number of shares of Common Stock into which such snares of Class A Stock, Class B Stock or Class D Stock are converted. On the Conversion Date, each holder of shares of 11 Class A Stock, Class B Stock or Class D Stock shall be deemed to be a holder of record of the Common Stock issuable upon such conversion, notwithstanding that the certificates representing such Class A Stock, Class B Stock or Class D Stock shall not have been surrendered at the principal office of the Corporation or such other place as the Corporation may have designated, that notice from the Corporation shall not have been given or, if given, shall not have been received by any holder of shares of Class A Stock, Class B Stock or Class D Stock, or that certificates evidencing such shares of Common Stock shall not then be actually delivered to such holder. All certificates representing the converted shares of Class A Stock, Class B Stock or Class D Stock, including all certificates not so delivered by such Class A Stockholders, Class B Stockholders or Class D Stockholders, shall be, or shall be deemed to be, canceled by the Corporation as of the Conversion Date and shall thereafter no longer be of any force or effect and the Corporation shall not thereafter issue any such shares of Class A Stock, Class B Stock or Class D Stock. 7. Voting Rights. (a) Holders of shares of Class D Stock and Common Stock shall be entitled to one vote for each share of such stock held on all matters as to which stockholders may be entitled to vote pursuant to the DGCL. (b) Holders of Class A Stock and Class B Stock shall not have any voting rights, except that the holders of the Class A Stock and Class B Stock shall have the right to vote to me extent required under the laws of the State of Delaware. Unless otherwise required by the terms of this Certificate of Incorporation, paragraph (2) of subsection (b) of Section 242 of the DGCL shall not entitle the holders of any shares of Stock to vote as a class on the increase of the number of authorized shares of such class of Stock or the decrease of the number of authorized but not outstanding shares of such class of Stock. Except as otherwise required by the DGCL, the holders of any class of Stock entitled to vote on any matter submitted to such holders for a vote shall vote together as a single group and not as separate classes. 8. Liquidation; Dividends. (a) Subject to the rights of the holders of any shares of then-outstanding Preferred Stock, any distribution made upon the liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, shall be allocated pro rata based upon the number of shares of Stock held by each Stockholder. None of the sale, transfer, conveyance or lease of all or substantially all of the property or business of the Corporation, the merger or consolidation of the Corporation into or with any other corporation or the merger or consolidation of any other corporation into or with the Corporation shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Section 8(a). (b) Subject to the rights of the holders of any shares of then outstanding Preferred Stock, holders of Class A Stock, Class B Stock, Class D Stock and Common Stock shall be entitled to share ratably as a single class in all dividends and 12 other distributions of cash or any other right or property as may be declared thereon by the Board from time to time out of assets or funds of the Corporation legally available therefor. 9. Legend. (a) All certificates representing shares of Class A Stock and Class B Stock shall, in addition to other legends that may be required by state or federal securities laws, bear legends substantially as follows: "THESE SECURITIES ARE SUBJECT TO MANDATORY REDEMPTION BY THE CORPORATION. SUCH REDEMPTION CAN BE ACCOMPLISHED WITHOUT THE CERTIFICATES REPRESENTING SUCH SECURITIES BEING SURRENDERED AND WHETHER OR NOT THE CORPORATION GIVES NOTICE OF SUCH REDEMPTION. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS." "AS SPECIFIED IN THE CERTIFICATE OF INCORPORATION OF THE CORPORATION, THE TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO RESTRICTION. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE." (b) All certificates representing shares of Class D Stock in the Corporation shall, in addition to other legends that may be required by state or federal securities laws, bear legends substantially as follows: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE." "AS SPECIFIED IN THE CERTIFICATE OF INCORPORATION OF THE CORPORATION, THE TRANSFERABILITY OF THESE SECURITIES IS SUBJECT TO RESTRICTION. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS." 13 (c) All certificates representing shares of Common Stock in the Corporation shall, in addition to other legends that may be required by state or federal securities laws, bear legends substantially as follows: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY BE REOFFERED AND SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE." "THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS." provided that, as specified in Section 3(b) hereof, following the Initial Public Offering, such certificates shall bear the legend(s) in the opinion of counsel to the Corporation required under the Securities Act or other applicable law. (d) All certificates representing shares of Stock shall bear such additional legends as may be required pursuant to applicable law. 10. Record Holders. The Corporation shall be entitled to recognize the exclusive right of a person registered in its records as the holder of shares of Class A Stock, Class B Stock, Class D Stock or Common Stock, and such record holders shall be deemed the holders of such shares for all purposes. ARTICLE V -- MANAGEMENT OF BUSINESS AND AFFAIRS For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation and of its directors and of its stockholders or any class thereof, as the case may be, it is further provided: 1. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board. The number of directors which shall constitute the whole Board shall be fixed by, or in the manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total number of directors" shall be deemed to have the same meaning, to wit, the total number of directors which the Corporation would have if there were no vacancies. No election of directors need be by written ballot. 2. After the original or other Bylaws of the Corporation have been adopted, amended, or repealed, as the case may be, in accordance with the provisions of Section 109 of the DGCL, and, after the Corporation has received any payment for any of 14 its stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the Board. ARTICLE VI -- DIRECTOR LIABILITY No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that (except as set forth below) this Article VI does not eliminate or limit any such liability imposed by law: (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be further eliminated or limited pursuant to this Article VI to the fullest extent permitted by the DGCL as so amended. Unless applicable law requires otherwise, any repeal of this Article VI by the stockholders of the Corporation, and any modification to this Article VI (other than one further eliminating or limiting director personal liability) shall be prospective only and shall not adversely affect any elimination of, or limitation on, the personal liability of a director of the Corporation existing at the time of such repeal or modification. ARTICLE VII -- INDEMNIFICATION 1. Indemnification. To the fullest extent from time to time permitted by Section 145 of the DGCL, the Corporation shall indemnify each Authorized Representative (as defined below) of the Corporation who was or is a party or who was or is threatened to be made a party to or otherwise is involved in any threatened, pending or completed action, suit or proceeding (including, without limitation, one by or in the right of the Corporation to procure a judgment in its favor), whether civil, criminal, administrative or investigative (hereinafter a "Proceeding"), by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise, including service with respect to employee benefit plans, from and against any and all expenses (including, without limitation, attorneys' fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by such Authorized Representative or on such Authorized Representative's behalf in connection with such Proceeding. The Corporation shall make such indemnification to the Authorized Representative within thirty (30) days after receipt by the Corporation of the written request of the Authorized Representative for such indemnification unless, within that time, the Corporation (by resolution of its directors or stockholders or the written opinion of its independent legal counsel) has determined that the Authorized Representative is not entitled to such indemnification. 15 2. Advancement of Expenses. Expenses (including attorneys' fees and expenses) incurred by an Authorized Representative or on such Authorized Representative's behalf in defending any such Proceeding shall be paid by the Corporation in advance of the final disposition of such Proceeding, within ten (10) days after receipt by the Corporation of the written request of the Authorized Representative for such advance. To the extent required by law, the Corporation may condition such advance upon the receipt of the written undertaking of such Authorized Representative or on such Authorized Representative's behalf to repay such amount if it shall ultimately be determined that the Authorized Representative is not entitled to be indemnified by the Corporation. Such undertaking shall not be required to be guarantied by any other person or collateralized, and shall be accepted by the Corporation without regard to the financial ability of the person providing such undertaking to make such repayment 3. Presumptions; Enforcement. For all purposes of this Article VII and to the fullest extent permitted by applicable law, there shall be a rebuttable presumption in favor of the Authorized Representative that all requested indemnifications and advancements of expenses are reasonable and that all conditions to indemnification or expense advancements, whether required under this Article VII or the DGCL, have been satisfied. The rights to indemnification and advancements of expenses provided by, or granted pursuant to, this Article VII shall be enforceable by any person entitled to such indemnification or advancement of expenses in any court of competent jurisdiction. Neither the failure of the Corporation (including the directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that such indemnification or advancement of expenses is proper in the circumstances nor an actual determination by the Corporation (including its directors, independent legal counsel and its stockholders) that such person in not entitled to indemnification or advancement of expenses shall constitute a defense to the action or create a presumption that such person is not so entitled. Such a person shall also be indemnified for any expenses incurred in connection with successfully establishing his or her right to such indemnification or advancement of expenses, in whole or in part, in any such proceeding. 4. Definitions, Etc. As used in this Article VIII, "Authorized Representative" means: (i) any person who is or was an officer or director of the Corporation; and (ii) any other person who may be designated by the Board from time to time as an "Authorized Representative" for purposes of this Article VII. The provisions of Section 145(h), (i) and (j) of the DGCL and shall apply to this Article VII. 5. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust, limited liability company or other enterprise against expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL or this Article VII. 6. Article Not Exclusive. The rights to indemnification and to the advancement of expenses conferred in this Article VII shall not be exclusive of any other 16 right which any Authorized Representative may have or hereafter acquire under any statute, this Certificate of Incorporation, any by-law, agreement (including any insurance policy), vote of stockholders or disinterested directors or otherwise, both as to action in such Authorized Representative's official capacity and as to action in another capacity while holding such office. Nothing in this Article VII shall affect the right of the Corporation to grant rights of indemnification, and the advancement of expenses, to any other person or in any other circumstance. 7. Reliance. Each Authorized Representative shall be deemed to have acted in reliance upon the rights to indemnification and advancement of expenses established in this Article VII. Unless applicable law requires otherwise, any repeal or modification of this Article VII (other than a modification expanding the right to indemnification and expense advancement in favor of Authorized Representatives) shall be prospective only and shall not adversely affect any right or benefit of an Authorized Representative to indemnification or expense advancement at the time of such repeal or modification. 8. Severability. If any portion of this Article VII shall be held to be illegal, invalid or otherwise unenforceable by any court having appropriate jurisdiction, then the Corporation nevertheless shall indemnify and advance expenses to each Authorized Representative to the fullest extent permitted by the applicable portions of this Article VII not so held to be illegal, invalid, unenforceable, and otherwise to the fullest extent permitted by law. 9. Related Service. Any director or officer of the Corporation serving in any capacity in (i) another corporation of which a majority of the shares entitled to vote in the election of its directors is held, directly or indirectly, by the Corporation or (ii) any employee benefit plan of the Corporation or any corporation referred to in clause (i) shall be deemed to be doing so at the request of the Corporation. 10. Applicable Law. To the extent permitted by law, any person entitled to indemnification or advancement of expenses as a matter of right pursuant to this Article VII may elect to have the right to indemnification or advancement of expenses interpreted on the basis of the applicable law in effect at the time of the occurrence of the event or events giving rise to the applicable Proceeding, or on the basis of the applicable law in effect at the time such indemnification or advancement of expenses is sought. Such election shall be made, by a notice in writing to the Corporation, at the time indemnification or advancement of expenses is sought; provided, however, that if no such notice is given, the right to indemnification or advancement of expenses shall be determined by the law in effect at the time such indemnification or advancement or expenses is sought. ARTICLE VIII -- AMENDMENTS From time to time any of the provisions of this Certificate of Incorporation may he amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted in the manner and at the 17 tune prescribed by said laws, and all rights at any time conferred upon the stockholders of the Corporation by this certificate of incorporation are granted subject to the provisions of this Article VIII. 18 IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been duly adopted in accordance with Sections 241 and 245 of the DGCL has been executed by its duly authorized officer this 16th day of January, 2003. By: /s/ Simon Moore ------------------------------- Name: Simon Moore Title: President and Director 19 SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MWM HOLDING, INC. MWM HOLDING, INC., a corporation organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS: A. The name of the corporation is MWM HOLDING, INC. (the "Corporation"). The date of filing of its Certificate of Incorporation ("Certificate of Incorporation") with the Secretary of State of Delaware was December 27, 2002. The date of filing of its Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware was January 16, 2003. B. This restated Certificate of Incorporation, having been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware (as amended from time to time, the "General Corporation Law") and by the written consent of the stockholders of the Corporation restates and further amends the provisions of the Amended and Restated Certificate of Incorporation. C. The text of the Certificate of Incorporation is hereby amended and restated (hereinafter, this "Second Amended and Restated Certificate of Incorporation") to read as follows: ARTICLE I. NAME The name of the corporation is "MWM Holding, Inc." (the "Corporation"). ARTICLE II. ADDRESS; REGISTERED OFFICE AND AGENT The address of the Corporation's registered office is 615 South DuPont Highway, Dover, Delaware 19901; and its registered agent at such address is National Corporate Research, Ltd. ARTICLE III. PURPOSES The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law. 2 ARTICLE IV. CAPITAL STOCK 4.1 Authorized Capital. The total number of shares of stock which the Corporation shall have authority to issue is Ten Thousand (10,000) shares of Common Stock par value One Cent ($.01) per share. 4.2 Exchange of Shares. Effective upon the filing of this Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, each share of (i) Class A Common Stock issued and outstanding immediately prior thereto shall, without any action on the part of the holder thereof, be reclassified as one one hundredth (0.01) of a share of Common Stock and (ii) Class D Common Stock issued and outstanding immediately prior thereto shall, without any action on the part of the holder thereof, be reclassified as one one hundredth (0.01) of a share of Common Stock. ARTICLE V. ELECTION OF DIRECTORS The number of the directors of the Corporation shall be fixed from time to time by or pursuant to the By-laws of the Corporation. Unless and except to the extent that the By-laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. ARTICLE VI. LIMITATION OF LIABILITY 6.1 To the fullest extent permitted under the General Corporation Law, as amended from time to time, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. 6.2 Any amendment, repeal or modification of the foregoing provision shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment, repeal or modification. ARTICLE VII. INDEMNIFICATION 7.1 Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or 3 may hereafter be amended, any person (a "Covered 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 (an "Other Entity"), including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section 7.3, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board of Directors. 7.2 Prepayment of Expenses. The Corporation shall pay the expenses (including attorneys' fees) incurred by a Covered Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article 7 or otherwise. 7.3 Claims. If a claim for indemnification or advancement of expenses under this Article 7 is not paid in full within thirty (30) days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law. 7.4 Nonexclusivity of Rights. The rights conferred on any Covered Person by this Article 7 shall not be exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the By-laws, agreement, vote of stockholders or disinterested directors or otherwise. 7.5 Other Sources. The Corporation's obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of an Other Entity shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such Other Entity. 7.6 Amendment or Repeal. Any repeal or modification of the foregoing provisions of this Article 7 shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such repeal or modification. 4 7.7 Other Indemnification and Prepayment of Expenses. This Article 7 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action. ARTICLE VIII. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board is expressly authorized to make, alter and repeal the By-laws, subject to the power of the stockholders of the Corporation to alter or repeal any By-law whether adopted by them or otherwise. ARTICLE IX. CERTIFICATE AMENDMENTS The Corporation reserves the right at any time, and from time to time, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by applicable law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the rights reserved in this article. [Signature Page Follows] 5 IN WITNESS WHEREOF, I, Lee D. Meyer, Vice President of MWM HOLDING, INC. have executed this Amended and Restated Certificate of Incorporation as of the 27 day of August, 2004, and DO HEREBY CERTIFY under the penalties of perjury that the facts stated in this Second Amended and Restated Certificate of Incorporation are true. /s/ Lee D. Meyer ------------------------------------ Lee D. Meyer Vice President EX-3.24 3 y95660a4exv3w24.txt BYLAWS EXHIBIT 3.24 MWM HOLDING, INC. (A DELAWARE CORPORATION) BYLAWS ARTICLE I Offices SECTION 1.01 Registered Office. The registered address of MWM Holding, Inc. (the "Corporation") in the State of Delaware is located in Kent County at 615 South Dupont Highway, Dover, Delaware 19901. The Corporation's registered agent at that address is National Corporate Research, Ltd. The Corporation's primary business address in the State of Delaware is 615 South DuPont Highway, Dover, Delaware 19901. The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors may, from time to time, appoint or as the business of the Corporation may require. ARTICLE II Meetings of Stockholders SECTION 2.01 Annual Meetings. An annual meeting of the stockholders is to be held once each fiscal year. Annual meetings of stockholders may be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as described in Section 2.02 of these Bylaws in accordance with Section 211(a)(2) of the Delaware General Corporation Law. Stockholders may act by written or electronic transmission of consent to elect directors; provided, however, that if such consent is less than unanimous, such action by written or electronic transmission of consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could have been elected at an annual meeting held at the effective time of such action are vacant and are filled by such action. SECTION 2.02 Special Meetings. Special meetings of stockholders, unless otherwise prescribed by statute, may be called by the President or by resolution of the Board of Directors and shall be called by the President or Secretary upon the written request of not less than 10% in interest of the stockholders entitled to vote thereat. Notice of each special meeting shall be given in accordance with Section 2.03 of these Bylaws. Unless otherwise permitted by law, business transacted at any special meeting of stockholders shall be limited to the purpose stated in the notice. If authorized by the Board of Directors hi its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication: (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided, that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder; (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings; and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation. SECTION 2.03 Notice of Meetings. Whenever stockholders are required or permitted to take any action at a meeting, a written notice or electronic transmission, in the manner provided in Section 232 of the Delaware General Corporation Law, of notice of the meeting, which shall state the place, if any, date and time of the meeting, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purposes for which the meeting is called, shall be mailed to or transmitted electronically to each stockholder of record entitled to vote thereat. Such notice shall be given not less than 10 days nor more than 60 days before the date of any such meeting. SECTION 2.04 Quorum. Unless otherwise required by law or the Certificate of Incorporation, the holders of a majority of the issued and outstanding stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. When a quorum is once present to organize a meeting, the quorum is not broken by the subsequent withdrawal of any stockholders. SECTION 2.05 Voting. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. Upon the request of not less than 10% in interest of the stockholders entitled to vote at a meeting, voting shall be by written ballot, unless 2 otherwise provided in the Certificate of Incorporation; if authorized by the stockholders, such requirement of a written ballot shall be satisfied, if authorized by the Board of Directors, by a ballot submitted by electronic transmission, provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxyholder. All elections of directors shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively. SECTION 2.06 Chairman of Meetings. The President of the Corporation shall preside at all meetings of the stockholders. SECTION 2.07 Secretary of Meeting. The Secretary of the Corporation shall act as Secretary at all meetings of the stockholders. In the absence or disability of the Secretary, the President shall appoint a person to act as Secretary at such meetings. SECTION 2.08 Consent of Stockholders in Lieu of Meeting. Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be made by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date the earliest dated consent is delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the first paragraph of this Section 2.08. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section 2.08 to the extent permitted by law. Any such consent shall be delivered in accordance with Section 228(d)(l) of the Delaware General Corporation Law. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing or electronic transmission and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date of such meeting had been the date that written consents 3 signed by a sufficient number of stockholders or members to take the action were delivered to the Corporation as provided by law. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. SECTION 2.09 Adjournment. At any meeting of stockholders of the Corporation, if less than a quorum be present, a majority of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present Any business may be transacted at the adjourned meeting that might have been transacted at the meeting originally noticed. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. ARTICLE III Board of Directors SECTION 3.01 Powers. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors. The Board of Directors shall exercise all of the powers and duties conferred by law except as provided by the Certificate of Incorporation or these Bylaws. SECTION 3.02 Number and Term. The number of directors shall initially be fixed at two (2) and may be adjusted from time to time by the Board of Directors. The Board of Directors shall be elected by the stockholders at their annual meeting, and each director shall be elected to serve for the term of one year and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. Directors need not be stockholders. SECTION 3.03 Resignations. Any director may resign at any time upon notice given in writing or by electronic transmission. The resignation shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. SECTION 3.04 Removal. Any director or the entire Board of Directors may be removed either with or without cause at any time by the affirmative vote of the holders of a majority of the shares then entitled to vote for the election of directors at any annual or special meeting of the stockholders called for that purpose or by written or electronic transmission of consent as permitted by law. 4 SECTION 3.05 Vacancies and Newly Created Directorships. Except as provided in Section 3.04 of these Bylaws, vacancies occurring in any directorship and newly created directorships may be filled by a majority vote of the remaining directors then in office. Any director so chosen shall hold office for the unexpired term of his or her predecessor and until his or her successor shall be elected and qualify or until his or her earlier death, resignation or removal. SECTION 3.06 Meetings. The newly elected directors shall hold their first meeting to organize the Corporation, elect officers and transact any other business that may properly come before the meeting. An annual organizational meeting of the Board of Directors shall be held immediately after each annual meeting of the stockholders, or at such time and place as may be noticed for the meeting. Regular meetings of the Board of Directors may be held without notice at such places and times as shall be determined from time to time by written or electronic transmission of consent of a resolution of the directors. Special meetings of the Board of Directors shall be called by the President or by the Secretary on the written or electronic transmission of such request of any director with at least two days notice to each director and shall be held at such place as may be determined by the directors or as shall be stated in the notice of the meeting. SECTION 3.07 Quorum, Voting and Adjournment. A majority of the total number of directors or any committee thereof shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of such adjourned meeting need not be given if the time and place of such adjourned meeting are announced at the meeting so adjourned. SECTION 3.08 Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter expressly required by law to be submitted to stockholders for approval or 5 (b) adopting, amending or repealing any bylaw of the Corporation. All committees of the Board of Directors shall keep minutes of their meetings and shall report their proceedings to the Board of Directors when requested or required by the Board of Directors. SECTION 3.09 Action Without a Meeting. Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or any committee thereof, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed in the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form or shall be in electronic form if the minutes are maintained in electronic form. SECTION 3.10 Compensation. The Board of Directors shall have the authority to fix the compensation of directors for their services. A director may also serve the Corporation in other capacities and receive compensation therefor. SECTION 3.11 Remote Meeting. Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting by means of conference telephone or other communications equipment in which all persons participating in the meeting can hear each other. Participation in a meeting by means of conference telephone or other communications equipment shall constitute the presence in person at such meeting. ARTICLE IV Officers SECTION 4.01 Number. The officers of the Corporation shall include a President and a Secretary, both of whom shall be elected by the Board of Directors and who shall hold office for a term of one year and until their successors are elected and qualify or until their earlier resignation or removal. In addition, the Board of Directors may elect one or more Vice Presidents, a Treasurer and one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual meeting of the Board of Directors. Any number of offices may be held by the same person. SECTION 4.02 Other Officers and Agents. The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise and perform such powers and duties as shall be determined from time to time by the Board of Directors. 6 SECTION 4.04 President. The President shall be the Chief Executive Officer of the Corporation. He or she shall exercise such duties as customarily pertain to the office of President and Chief Executive Officer, and shall have general and active management of the property, business and affairs of the Corporation, subject to the supervision and control of the Board of Directors. He or she shall perform such other duties as prescribed from time to time by the Board of Directors or these Bylaws. The President shall preside at all meetings of the stockholders and of the Board of Directors. Except as the Board of Directors shall otherwise authorize, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. SECTION 4.05 Vice Presidents. Each Vice President, if any are elected, of whom one or more may be designated an Executive Vice President, shall have such powers and shall perform such duties as shall be assigned to him or her by the President or the Board of Directors. SECTION 4.06 Treasurer. The Treasurer shall have the general care and custody of the funds and securities of the Corporation, and shall deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board of Directors. He or she shall receive, and give receipts for, moneys due and payable to the Corporation from any source whatsoever. He or she shall exercise general supervision over expenditures and disbursements made by officers, agents and employees of the Corporation and the preparation of such records and reports in connection therewith as may be necessary or desirable. He or she shall, in general, perform all other duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Board of Directors. SECTION 4.07 Secretary. The Secretary shall be the Chief Administrative Officer of the Corporation and shall: (a) cause minutes of all meetings of the stockholders and directors to be recorded and kept; (b) cause all notices required by these Bylaws or otherwise to be given properly, (c) see that the minute books, stock books, and other nonfinancial books, records and papers of the Corporation are kept properly, and (d) cause all reports, statements, returns, certificates and other documents to be prepared and filed when and as required. The Secretary shall have such further powers and perform such other duties as prescribed from time to time by the Board of Directors. SECTION 4.08 Assistant Treasurers and Assistant Secretaries. Each Assistant Treasurer and each Assistant Secretary, if any are elected, shall be vested with all the powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of Directors shall otherwise determine. In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board of Directors. 7 SECTION 4.09 Corporate Funds and Checks. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors. All checks or other orders for the payment of money shall be signed by the President or the Treasurer or such other person or agent as may from time to time be authorized and with such countersignature, if any, as may be required by the Board of Directors. SECTION 4.10 Contracts and Other Documents. The President or the Treasurer, or such other officer or officers as may from time to time be authorized by the Board of Directors or any other committee given specific authority by the Board of Directors during the intervals between the meetings of the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation. SECTION 4.11 Compensation. The compensation of the officers of the Corporation shall be fixed from tune to tune by the Board of Directors (subject to any employment agreements that may then be in effect between the Corporation and the relevant officer). None of such officers shall be prevented from receiving such compensation by reason of the fact that he or she is also a director of the Corporation. Nothing contained herein shall preclude any officer from serving the Corporation, or any subsidiary, in any other capacity and receiving such compensation by reason of the fact that he or she is also a director of the Corporation. SECTION 4.12 Ownership of Stock of Another Corporation. Unless otherwise directed by the Board of Directors, the President or the Treasurer, or such other officer or agent as shall be authorized by the Board of Directors, shall have the power and authority, on behalf of the Corporation, to attend and to vote at any meeting of stockholders of any corporation in which the Corporation holds stock and may exercise, on behalf of the Corporation, any and all of the rights and powers incident to the ownership of such stock at any such meeting, including the authority to execute and deliver proxies and consents on behalf of the Corporation. SECTION 4.13 Delegation of Duties. In the absence, disability or refusal of any officer to exercise and perform his or her duties, the Board of Directors may delegate to another officer such powers or duties. SECTION 4.14 Resignation and Removal. Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors. Any officer may resign at any time in the same manner prescribed under Section 3.03 of these Bylaws. SECTION 4.15 Vacancies. The Board of Directors shall have power to fill vacancies occurring in any office. 8 ARTICLE V Stock SECTION 5.01 Certificates of Stock. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the President or Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number and class of shares of stock in the Corporation owned by him or her. Any or all of the signatures on the certificate may be a facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars. SECTION 5.02 Transfer of Shares. Shares of stock of the Corporation shall be transferable upon its books by the holders thereof, in person or by their duly authorized attorneys or legal representatives, upon surrender to the Corporation by delivery thereof to the person in charge of the stock and transfer books and ledgers. Such certificates shall be cancelled and new certificates shall thereupon be issued. A record shall be made of each transfer. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented, both the transferor and transferee request the Corporation to do so. The Board of Directors shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of certificates for shares of stock of the Corporation. SECTION 5.03 Lost, Stolen, Destroyed or Mutilated Certificates. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed, and the Board of Directors may, in their discretion, require the owner of such lost, stolen or destroyed certificate, or his or her legal representative, to give the Corporation a bond, in such sum as the Board of Directors may direct, in order to indemnify the Corporation against any claims that may be made against it in connection therewith. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation that has become mutilated without the posting by the owner of any bond upon the surrender by such owner of such mutilated certificate. SECTION 5.04 List of Stockholders Entitled To Vote. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Delaware General Corporation Law Section 219 or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. SECTION 5.05 Dividends. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may at any regular or special meeting, declare dividends upon the stock of the Corporation either (a) out of its surplus, as defined in and computed in accordance with Delaware General Corporation Law Section 154 and Section 244 or (b) in case there shall be no such surplus, out of its net profits for the fiscal year in which 9 the dividend is declared and/or the preceding fiscal year. Before the declaration of any dividend, the Board of Directors may set apart, out of any funds of the Corporation available for dividends, such sum or sums as from time to time in their discretion may be deemed proper for working capital or as a reserve fund to meet contingencies or for such other purposes as shall be deemed conducive to the interests of the Corporation. SECTION 5.06 Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to consent to corporate action without a meeting, (including by telegram, cablegram or other electronic transmission as permitted by law), the Board of Directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall be not more than 10 days after the date upon which the resolution fixing the record date is adopted. If no record date has been fixed by the Board of Directors and no prior action by the Board of Directors is required by the Delaware General Corporation Law, the record date shall be the first date on which a consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Section 2.08 of these Bylaws. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation Law with respect to the proposed action by consent of the stockholders without a meeting, the record date for determining stockholders entitled to consent to corporate action without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. SECTION 5.07 Registered Stockholders. Prior to the surrender to the Corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the Corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof. ARTICLE VI Notice and Waiver of Notice SECTION 6.01 Notice. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law. SECTION 6.02 Waiver of Notice. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the 10 business nor the purpose of any meeting need by specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice. ARTICLE VII Indemnification SECTION 7.01 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to 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 is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, or trustee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an "indemnitee"), whether the basis of such proceeding is alleged action in an official capacity as a director, officer or trustee, or in any other capacity while serving as a director, officer or trustee, must be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 7.03 of these Bylaws with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors. SECTION 7.02 Right to Advancement of Expenses. In addition to the right to indemnification conferred in Section 7.01 of these Bylaws, an indemnitee shall also have the right to be paid by the Corporation the expenses (including attorney's fees) incurred in defending any such proceeding in advance of its final disposition (an "advancement of expenses"); provided, however, that, if the Delaware General Corporation Law as then in effect requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Section 7.02 or otherwise. SECTION 7.03 Right of Indemnitee to Bring Suit. If a claim under Section 7.01 or 7.02 of these Bylaws is not paid in full by the Corporation within 60 days 11 after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that identification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VII or otherwise shall be on the Corporation. SECTION 7.04 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation's Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise. SECTION 7.05 Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. SECTION 7.06 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this 12 Article VII with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. SECTION 7.07 Nature of Rights. The rights conferred upon indemnitees in this Article VII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee's heirs, executors and administrators. Any amendment, alteration or repeal of this Article VII that adversely affects any right of an indemnitee or it successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, alteration or repeal. ARTICLE VIII Miscellaneous SECTION 8.01 Amendments. In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to adopt, amend and repeal these Bylaws subject to the power of the holders of capital stock of the Corporation to adopt, amend or repeal the Bylaws. SECTION 8.02 Electronic Transmission. For purposes of these Bylaws, "electronic transmission" means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process. SECTION 8.03 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer. SECTION 8.04 Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year, or such other 12 consecutive months as the Board of Directors may designate. SECTION 8.05 Loans. The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiary(ies), including any officer or employee who is a director of the Corporation or its subsidiary(ies), whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of the capital stock of the Corporation. Nothing in this Section 8.05 shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute. 13 SECTION 8.06 Section Headings. Section headings in these Bylaws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein. SECTION 8.07 Inconsistent Provisions; Changes in Delaware Law. If any provision of these Bylaws is or becomes inconsistent with any provision of the Certificate of Incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these Bylaws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect. If any of the provisions of the General Corporation Law of the State of Delaware referred to above are modified or superseded, the references to those provisions is to be interpreted to refer to the provisions as so modified or superseded. Date of Adoption: December 27, 2002 14 EX-3.25 4 y95660a4exv3w25.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.25 CERTIFICATE OF INCORPORATION of BROWN MOULDING HOLDING CORP. 1. The name of this corporation is Brown Moulding Holding Corp. 2. The registered office of this corporation in the State of Delaware is located at 1013 Centre Road, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company. 3. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 4. The total number of shares of stock that this corporation shall have authority to issue is 3,000 shares of Common Stock, $.01 par value per share. Each share of Common Stock shall be entitled to one vote. 5. The name and mailing address of the incorporator is: Sean W. Mullaney, One International Place, Boston, Massachusetts 02110. 6. Except as provided to the contrary in the provisions establishing a class or series of stock, the amount of the authorized stock of this corporation of any class or classes may be increased or decreased by the affirmative vote of the holders of a majority of the stock of this corporation entitled to vote. 7. The election of directors need not be by ballot unless the by-laws shall so require. 8. In furtherance and not in limitation of the power conferred upon the board of directors by law, the board of directors shall have power to make, adopt, alter, amend and repeal from time to time by-laws of this corporation, subject to the right of the stockholders entitled to vote with respect thereto to alter and repeal by-laws made by the board of directors. 9. A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the General Corporation Law of the State of Delaware as in effect at the time such liability is determined. No amendment or repeal of this paragraph 9 shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 10. This corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request shall advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this paragraph 10 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this paragraph 10 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. 11. The books of this corporation may (subject to any statutory requirements) be kept outside the State of Delaware as may be designated by the board of directors or in the by-laws of this corporation. 12. If at any time this corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, for so long as such class is so registered, any action by the stockholders of such class must be taken at an annual or special meeting of stockholders and may not be taken by written consent. THE UNDERSIGNED, the sole incorporator named above, hereby certifies that the facts stated above are true as of this 1st day of September, 1995. /s/ Sean W. Mullane ---------------------------------- Sean W. Mullane -2- CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BROWN MOULDING HOLDING CORP. BROWN MOULDING HOLDING CORP. (the "Corporation"), a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS: FIRST: That by written consent, dated September 26, 1996, of the Board of Directors of the Corporation, resolutions were duly adopted setting for the proposed amendment to the Certificate of Incorporation of the Corporation, declaring such amendment to be advisable and directing that the amendment be presented to the stockholders of the Corporation for their consideration. The resolution setting forth the proposed amendment is as follows: RESOLVED: That the Board of Directors of this Corporation deems it advisable that the Certificate of Incorporation of the Corporation be amended so that Section 4 thereof reads in its entirety as set forth in Exhibit A hereto and directs that such amendment be submitted to the sole stockholder of the Corporation for its approval; that upon approval by the sole stockholder of the Corporation, the officers of this Corporation are severally authorized and directed to execute and to cause the amended Certificate of Incorporation to be duly filed with the Secretary of State of the State of Delaware and to take any and all such further action as such officer or officers deem necessary or appropriate to effectuate said amendment. SECOND: That, thereafter, pursuant to the aforementioned resolution adopted by the Board of Directors, the sole stockholder of this Corporation duly adopted the proposed amendment of the Certificate of Incorporation of the Corporation set forth above in accordance with Section 242 of the General Corporation Law of the State of Delaware. THIRD: That said amendment was duly adopted in accordance with the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned BROWN MOULDING HOLDING CORP., has caused this Certificate of Amendment of Certificate of Incorporation to be executed and attested on its behalf by Andrea Geisser, its Vice President and Richard Dresdale, its Secretary, on and as of this 26th day of September, 1996. BROWN MOULDING HOLDING CORP. By: /s/ Andrea Geisser -------------------------------- Andrea Geisser Vice President ATTEST: /s/ Richard Dresdale - -------------------------- Richard Dresdale Secretary 2 Exhibit A 4. The total number of shares of capital stock that this Corporation shall have authority to issue is 1,100,000 shares, consisting of (a) 100,000 shares of Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock"), and (b) 1,000,000 shares of Common Stock, par value $0.01 per share ("Common Stock"). The following is a statement of the designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the shares of each such class of capital stock. A. PREFERRED STOCK The designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed on the Preferred Stock are as follows: 1. Dividends/Distributions. 1.1 Preferred Stock. 1.1.1. Dividends shall accrue on each share of Preferred Stock on a daily basis and at the Dividend Rate (as defined herein) from time to time in effect, beginning on the date of issuance of such share. The holders of shares of Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends payable on September 30 in each year (each such date being a "Dividend Payment Date") in an amount equal to all accrued and unpaid dividends on the Preferred Stock; provided, however, that if and to the extent that the holder of a share of Preferred Stock does not receive on any given Dividend Payment Date payment of the accrued and unpaid dividend on such share of Preferred Stock or any previously cumulated dividend for the period ending on such Dividend Payment Date and beginning on the immediately preceding Dividend Payment Date, such dividend shall be cumulative and shall itself accrue, whether or not declared, from and after such date dividends on a daily basis and an annual rate equal to the Dividend Rate from time to time in effect (calculated, for this purpose, as a percentage of such cumulated dividend equal to such Dividend Rate divided by $100.00 and expressed as a percentage). 1.1.2. As used herein, the term "Dividend Rate" shall mean $10.00 per annum; provided, however, that in no event shall the Dividend Rate exceed the maximum rate permitted by applicable law if any such maximum rate shall exist. 1.1.3. Dividends may be paid on the Preferred Stock, from time to time at the option of the Board of Directors, (a) in cash, (b) in shares of Preferred Stock, with each such share being ascribed a value of $100.00 or (c) in any combination of the forms described in the immediately preceding clauses (a) and (b). 1.1.4. No dividend shall be paid or declared, and no distribution shall be made, on the Common Stock (other than a stock dividend payable solely in shares of Common Stock) at any time when any shares of Preferred Stock are outstanding. 1.1.5. Upon any conversion of any share of Preferred Stock pursuant to the provisions hereof, all unpaid dividends (whether or not declared) on such share to and until the date of such conversion shall be forfeited and thereafter never become due and payable. 2. Redemptions Preferred Stock. 2.1 Preferred Stock Redemption Price. The Preferred Stock shall be redeemable as hereinafter set forth upon payment in cash in respect of each share redeemed of the sum of $100.00 plus an amount equal to dividends accrued but unpaid to the date of redemption (the "Preferred Stock Redemption Price"). Subject to the provisions hereof, the Board of Directors shall have authority to prescribe the manner in which the Preferred Stock shall be redeemed from time to time. 2.2 Optional Redemption. At any time and from time to time the Corporation may at its option by resolution of its Board of Directors redeem, at the Preferred Stock Redemption Price, all or any part of the shares of the Preferred Stock then outstanding; provided, however, that in the case of any redemption of only a part of the outstanding shares of Preferred Stock, there shall be so redeemed from each record holder thereof in whole shares of Preferred Stock, as nearly as possible to the nearest whole share, the proportion of all shares of Preferred Stock to be redeemed which the number of shares of Preferred Stock held of record as of the record date for such redemption by such holder bears to the total number of shares of Preferred Stock of record outstanding as of such date. Not fewer than 15 nor more than 60 days' prior written notice shall be given by certified mail, postage prepaid, to each holder of record of the shares of Preferred Stock to be redeemed, at such holder's post office address as shown in the records of the Corporation, and said notice shall specify the amount to be paid per share upon such redemption, the place and the date, which date shall not be a legal holiday, on which the shares called for redemption will be redeemed. 2.3 Payment of Redemption Price. The redemption price of shares of Preferred Stock shall be paid in cash. 3. Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in the following manner and subject to the following preferences. 3.1 Preferred Stock. The holders of Preferred Stock shall first be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of the Common Stock or any other class or series of capital stock of the Corporation, by reason of their ownership of such stock, an amount per share equal to the 2 sum of (i) $100.00 plus (ii) all accrued and unpaid dividends on such share (such sum being hereinafter referred to as the "Preferential Amount"). If the assets and funds of the Corporation shall be insufficient to permit the payment in full to such holders of Preferred Stock of the full Preferential Amount, then the entire assets of the Corporation legally available for distribution to the stockholders shall be distributed ratably among the holders of Preferred Stock in accordance with the aggregate Preferential Amount of the shares of Preferred Stock held by each of them. 3.2 Consolidations, Merger, Etc. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Common Stock of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof, and the sale or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of these provisions of the Preferred Stock. 4. Voting Rights of Preferred Stock. Except as otherwise hereinafter provided in this Certificate of Incorporation or as required by applicable law which cannot be superseded by the provisions of this Certificate of Incorporation, the holders of the outstanding shares of Preferred Stock shall possess no voting power whatsoever, either general or specific. 4.1 Amendments to Terms of Preferred Stock. So long as any shares of Preferred Stock shall be outstanding, the holders of the Preferred Stock shall be entitled to vote together as a single class on any amendments to the terms of the Preferred Stock, and such terms shall not be amended without the affirmative vote of the holders of a majority of the outstanding shares of Preferred Stock. 5. Conversion. The holders of the Preferred Stock shall have conversion rights as follows: 5.1 Right of Conversion. Each share of Preferred Stock shall be convertible at the option of the holder thereof at any time at the office of the Corporation or any transfer agent for the Preferred Stock into the number of shares of the Common Stock of the Corporation obtained by dividing $100.00 by the conversion price in effect at the time of conversion, determined as hereinafter provided (the "Conversion Price"). The initial Conversion Price shall be $100.00 per share. All calculations under this numbered paragraph 5.1 shall be made to the nearest one hundredth of a cent. 5.2 Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Price at any time upon the written consent of holders of a majority of the outstanding shares of Preferred Stock. Following any conversion of any shares of Preferred Stock pursuant to this paragraph the holders thereof shall no longer be entitled to receive the Preferential Amount or any portion thereof in respect of the share of Preferred Stock so converted. 3 5.3 Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock and to receive certificates therefor, he shall surrender the Preferred Stock certificates, duly endorsed, at the head office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at such office that he elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to the preceding paragraph 5.2, the outstanding shares of Preferred Stock subject to automatic conversion shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; and provided, further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation and any transfer agent from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or execution of such agreement in the case of a lost, stolen or destroyed certificate, issue and deliver at such office to such holder of Preferred Stock, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, or in the case of automatic conversion, immediately upon or obtaining the required written consent, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock as of such time. 5.4 Adjustments of Conversion Price for Subdivisions, Stock Dividends, Combinations or Consolidation of Common Stock. In the event the outstanding shares of Common Stock shall be increased by way of stock issued as a dividend for no consideration or subdivided (by stock split or otherwise) into a greater number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such increase or subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. 5.5 Subsequent Events. In the event of any recapitalization, consolidation or merger of the Corporation or its successor, the shares of Preferred Stock shall be convertible into such shares or other interests as the Preferred Stock would have been entitled if the Preferred Stock had been converted into Common Stock immediately prior to such event. 4 6. Covenants. 6.1 No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of all or a substantial portion of its assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 4 of its Certificate of Incorporation by the Corporation, but will at all times in good faith assist in carrying out all the provisions of this Section 4 and in taking all such action as may be necessary or appropriate in order to protect the rights and privileges of the holders of Preferred Stock against impairment. 6.2 Reservation of Shares. So long as any share of Preferred Stock shall remain outstanding, the Corporation shall at all times reserve and keep available, free from preemptive rights, out of its authorized capital stock, for the purpose of issuance upon conversion of the Preferred Stock, the full number of shares of Common Stock then issuable upon conversion of all outstanding shares of Preferred Stock. If the Corporation's Common Stock shall be listed on any national stock exchange, the Corporation at its expense shall include in its listing application all of the shares of Common Stock reserved for issuance upon conversion of the Preferred Stock (subject to issuance or notice of issuance to the exchange) and will similarly procure the listing of any further Common Stock reserved for issuance upon conversion of the Preferred Stock at any subsequent time as a result of adjustments in the outstanding Common Stock or otherwise. 6.3 Validity of Shares. The Corporation agrees that it will from time to time take all such action as may be required to assure that all shares of Common Stock which may be issued upon conversion of any share of Preferred Stock will, upon issuance, be legally and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof; and, without limiting the generality of the foregoing, the Corporation agrees that it will from time to time take all such action as may be required to assure that the par value per share, if any, of the Common Stock is at all times equal to or less than the lowest quotient obtained by dividing the then current par value of Preferred Stock by the number of shares of Common Stock into which each share of Preferred Stock can, from time to time, be converted. 6.4 Notice of Certain Events. If at any time: (a) the Corporation shall declare any dividend or distribution payable to the holders of its Common Stock; (b) the Corporation shall offer for subscription pro rata to the holders of Common Stock any additional shares of stock of any class or any other rights; (c) there shall be any recapitalization of the Corporation, or consolidation or merger of the Corporation with, or sale of all or substantially all of its assets to, another corporation, business organization or other person; or 5 (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then, in any one or more of such cases, the Corporation shall give the registered holders of the Preferred Stock written notice, by registered or certified mail, of the date on which a record shall be taken for such dividend, distribution or subscription rights or for determining stockholders entitled to vote upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be. Such written notice shall be given at least 20 days prior to the applicable record date. Such notice shall also specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 7. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly. B. COMMON STOCK The designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the Common Stock shall be as follows: 1. Dividends. Subject to the rights of holders of any class or series of capital stock entitled to a preference, the holders of shares of the Common Stock will be entitled to receive when, as, and if declared by the Board of Directors, out of funds legally available therefor, dividends in such amounts and payable on such dates as shall be determined by the Board of Directors. 2. Distribution of Assets. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of the Common Stock will be entitled to receive on a ratable basis all of the remaining assets of the Corporation available for distribution to its stockholders after payment to the holders of shares of any class or series of capital stock having preferential rights to receive distributions of such assets. 3. Voting Rights. The holders of shares of the Common Stock shall have the general right to vote for all purposes, including the election of directors, as provided by law. Each holder of shares of the Common Stock shall be entitled to one vote for each share thereof registered in his name on the books of the Corporation. 6 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BROWN MOULDING HOLDING CORP. BROWN MOULDING HOLDING CORP. (the "Corporation"), a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS: FIRST: That by written consent, dated March 6, 1997 of the Board of Directors of the Corporation, resolutions were duly adopted setting forth the proposed amendment to the Certificate of Incorporation of the Corporation, declaring such amendment to be advisable and directing that the amendment be presented to the stockholders of the Corporation for their consideration. The resolution setting forth the proposed amendment is as follows: RESOLVED: That the Board of Directors of this Corporation deems it advisable that the Certificate of Incorporation of the Corporation be amended so that Section 4 thereof reads in its entirety as set forth in Exhibit A hereto and directs that such amendment be submitted to the sole stockholder of the Corporation for its approval; that upon approval by the sole stockholder of the Corporation, the officers of this Corporation are severally authorized and directed to execute and to cause the amended Certificate of Incorporation to be duly filed with the Secretary of State of the State of Delaware and to take any and all such further action as such officer or officers deem necessary or appropriate to effectuate said amendment. SECOND: That, thereafter, pursuant to the aforementioned resolution adopted by the Board of Directors, the sole stockholder of this Corporation duly adopted the proposed amendment of the Certificate of Incorporation of the Corporation set forth above in accordance with Section 242 of the General Corporation Law of the State of Delaware. THIRD: That said amendment was duly adopted in accordance with the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned BROWN MOULDING HOLDING CORP., has caused this Certificate of Amendment of Certificate of Incorporation to be executed and attested on its behalf by Andrea Geisser, its Vice President and Richard Dresdale, its Secretary, on and as of this 6th day of March, 1997. BROWN MOULDING HOLDING CORP. By: /s/ Andrea Geisser -------------------------- Andrea Geisser Vice President ATTEST: /s/ Richard Dresdale - ------------------------------- Richard Dresdale Secretary - 2 - EXHIBIT A 4. The total number of shares of capital stock that this Corporation shall have authority to issue is 110,000 shares, consisting of (a) 10,000 shares of Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock"), and (b) 100,000 shares of Common Stock, par value $0.01 per share ("Common Stock"). The following is a statement of the designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the shares of each such class of capital stock. A. PREFERRED STOCK The designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed on the Preferred Stock are as follows: 1. Dividends Distributions. 1.1. Preferred Stock. 1.1.1. Dividends shall accrue on each share of Preferred Stock on a daily basis and at the Dividend Rate (as defined herein) from time to time in effect, beginning on the date of issuance of such share. The holders of shares of Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends payable on September 30 in each year (each such date being a "Dividend Payment Date") in an amount equal to all accrued and unpaid dividends on the Preferred Stock; provided, however, that if and to the extent that the holder of a share of Preferred Stock does not receive on any given Dividend Payment Date payment of the accrued and unpaid dividend on such share of Preferred Stock or any previously cumulated dividend for the period ending on such Dividend Payment Date and beginning on the immediately preceding Dividend Payment Date, such dividend shall be cumulative and shall itself accrue, whether or not declared, from and after such date dividends on a daily basis and an annual rate equal to the Dividend Rate from time to time in effect (calculated, for this purpose, as a percentage of such cumulated dividend equal to such Dividend Rate divided by $1,000.00 and expressed as a percentage). 1.1.2. As used herein, the term "Dividend Rate" shall mean $100.00 per annum; provided, however, that in no event shall the Dividend Rate exceed the maximum rate permitted by applicable law if any such maximum rate shall exist. 1.1.3. Dividends may be paid on the Preferred Stock, from time to time at the option of the Board of Directors, (a) in cash, (b) in shares of Preferred Stock, with each such share being ascribed a value of $1,000.00 or (c) in any combination of the forms described in the immediately preceding clauses (a) and (b). 1.1.4. No dividend shall be paid or declared, and no distribution shall be made, on the Common Stock (other than a stock dividend payable solely in shares of Common Stock) at any time when any shares of Preferred Stock are outstanding. 1.1.5. Upon any conversion of any share of Preferred Stock pursuant to the provisions hereof, all unpaid dividends (whether or not declared) on such share to and until the date of such conversion shall be forfeited and thereafter never become due and payable. 2. Redemptions Preferred Stock. 2.1. Preferred Stock Redemption Price. The Preferred Stock shall be redeemable as hereinafter set forth upon payment in cash in respect of each share redeemed of the sum of $1,000.00 plus an amount equal to dividends accrued but unpaid to the date of redemption (the "Preferred Stock Redemption Price"). Subject to the provisions hereof, the Board of Directors shall have authority to prescribe the manner in which the Preferred Stock shall be redeemed from time to time. 2.2. Optional Redemption. At any time and from time to time the Corporation may at its option by resolution of its Board of Directors redeem, at the Preferred Stock Redemption Price, ail or any part of the shares of the Preferred Stock then outstanding; provided, however, that in the case of any redemption of only a part of the outstanding shares of Preferred Stock, there shall be so redeemed from each record holder thereof in whole shares of Preferred Stock, as nearly as possible to the nearest whole share, the proportion of all shares of Preferred Stock to be redeemed which the number of shares of Preferred Stock held of record as of the record date for such redemption by such holder bears to the total number of shares of Preferred Stock of record outstanding as of such date. Not fewer than 15 nor more than 60 days' prior written notice shall be given by certified mail, postage prepaid, to each holder of record of the shares of Preferred Stock to be redeemed, at such holder's post office address as shown in the records of the Corporation, and said notice shall specify the amount to be paid per share upon such redemption, the place and the date, which date shall not be a legal holiday, on which the shares called for redemption will be redeemed. 2.3. Payment of Redemption Price. The redemption price of shares of Preferred Stock shall be paid in cash. 3. Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in the following manner and subject to the following preferences. 3.1. Preferred Stock. The holders of Preferred Stock shall first be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of the Common Stock or any other class or series of capital stock of the Corporation, by reason of their ownership of such stock, an amount per share equal to the sum of (i) $1,000.00 plus (ii) all accrued and unpaid dividends on such share (such sum - 2 - being hereinafter referred to as the "Preferential Amount"). If the assets and funds of the Corporation shall be insufficient to permit the payment in full to such holders of Preferred Stock of the full Preferential Amount, then the entire assets of the Corporation legally available for distribution to the stockholders shall be distributed ratably among the holders of Preferred Stock in accordance with the aggregate Preferential Amount of the shares of Preferred Stock held by each of them. 3.2. Consolidations, Merger, Etc. The consolidation or merger of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Common Stock of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof, and the sale or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of these provisions of the Preferred Stock. 4. Voting Rights of Preferred Stock. Except as otherwise hereinafter provided in this Certificate of Incorporation or as required by applicable law which cannot be superseded by the provisions of this Certificate of Incorporation, the holders of the outstanding shares of Preferred Stock shall possess no voting power whatsoever, either general or specific. 4.1. Amendments to Terms of Preferred Stock. So long as any shares of Preferred Stock shall be outstanding, the holders of the Preferred Suck shall be entitled to vote together as a single class on any amendment to the terms of the Preferred Stock, and such terms shall not be amended without the affirmative vote of the holders of a majority of the outstanding shares of Preferred Stock. 5. Conversion. The holders of the Preferred Stock shall have conversion rights as follows: 5.1. Right of Conversion. Each share of Preferred Stock shall be convertible at the option of the holder thereof at any time at the office of the Corporation or any transfer agent for the Preferred Stock into the number of shares of the Common Stock of the Corporation obtained by dividing $1,000.00 by the conversion price in effect at the time of conversion, determined as hereinafter provided (the "Conversion Price"). The initial Conversion Price shall be $1,000.00 per share. All calculations under this numbered paragraph 5.1 shall be made to the nearest one hundredth of a cent. 5.2. Automatic Conversion. Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Price at any time upon the written consent of holders of a majority of the outstanding shares of Preferred Stock. Following any conversion of any shares of Preferred Stock pursuant to this paragraph the holders thereof shall no longer be entitled to receive the Preferential Amount or any portion thereof in respect of the share of Preferred Stock so converted. 5.3. Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock and to receive certificates - 3 - therefor, he shall surrender the Preferred Stock certificates, duly endorsed, at the head office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at such office that he elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to the preceding paragraph 5.2, the outstanding shares of Preferred Stock subject to automatic conversion shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; and provided, further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Corporation to indemnify the Corporation and any transfer agent from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or execution of such agreement in the case of a lost, stolen or destroyed certificate, issue and deliver at such office to such holder of Preferred Stock, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, or in the case of automatic conversion, immediately upon or obtaining the required written consent, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock as of such time. 5.4. Adjustments of Conversion Price for Subdivisions, Stock Dividends, Combinations or Consolidation of Common Stock. In the event the outstanding shares of Common Stock shall be increased by way of stock issued as a dividend for no consideration or subdivided (by stock split or otherwise) into a greater number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such increase or subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price then in effect shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. 5.5. Subsequent Events. In the event of any recapitalization, consolidation or merger of the Corporation or its successor, the shares of Preferred Stock shall be convertible into such shares or other interests as the Preferred Stock would have been entitled if the Preferred Stock had been converted into Common Stock immediately prior to such event. 6. Covenants. 6.1. No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of all - 4 - or a portion of its assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 4 of its Certificate of Incorporation by the Corporation, but will at all times in good faith assist in carrying out all the provisions of this Section 4 and in taking all such action as may be necessary or appropriate in order to protect the rights and privileges of the holders of Preferred Stock against impairment. 6.2. Reservation of Shares. So long as any share of Preferred Stock shall remain outstanding, the Corporation shall at all tunes reserve and keep available, free from preemptive rights, out of its authorized capital stock, for the purpose of issuance upon conversion of the Preferred Stock, the full number of shares of Common Stock then issuable upon conversion of all outstanding shares of Preferred Stock. If the Corporation's Common Stock shall be listed on any national stock exchange, the Corporation at its expense shall include in its listing application all of the shares of Common Stock reserved for issuance upon conversion of the Preferred Stock (subject to issuance or notice of issuance to the exchange) and will similarly procure the listing of any further Common Stock reserved for issuance upon conversion of the Preferred Stock at any subsequent time as a result of adjustments in the outstanding Common Stock or otherwise. 6.3. Validity of Shares. The Corporation agrees that it will from time to time take all such action as may be required to assure that all shares of Common Stock which may be issued upon conversion of any share of Preferred Stock will, upon issuance, be legally and validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof; and, without limiting the generality of the foregoing, the Corporation agrees that it will from time to time take all such action as may be required to assure that the par value per share, if any, of the Common Stock is at all times equal to or less than the lowest quotient obtained by dividing the then current par value of Preferred Stock by the number of shares of Common Stock into which each share of Preferred Stock can, from time to time, be converted. 6.4. Notice of Certain Events. If at any time: (a) the Corporation shall declare any dividend or distribution payable to the holders of its Common Stock; (b) the Corporation shall offer for subscription pro rata to the holders of Common Stock any additional shares of stock of any class or any other rights; (c) there shall be any recapitalization of the Corporation, or consolidation or merger of the Corporation with, or sale of all or substantially all of its assets to, another corporation, business organization or other person; or (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation; - 5 - then, in any one or more of such cases, the Corporation shall give the registered holders of the Preferred Stock written notice, by registered or certified mail, of the date on which a record shall be taken for such dividend, distribution or subscription rights or for determining stockholders entitled to vote upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be. Such written notice shall be given at least 20 days prior to the applicable record date. Such notice shall also specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 7. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly. B. COMMON STOCK The designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the Common Stock shall be as follows: 1. Dividends. Subject to the rights of holders of any class or series of capital stock entitled to a preference, the holders of shares of the Common Stock will be entitled to receive when, as, and if declared by the Board of Directors, out of funds legally available therefor, dividends in such amounts and payable on such dates as shall be determined by the Board of Directors. 2. Distribution of Assets. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of the Common Stock will be entitled to receive on a ratable basis all of the remaining assets of the Corporation available for distribution to its stockholders after payment to the holders of shares of any class or series of capital stock having preferential rights to receive distributions of such assets. 3. Voting Rights. The holders of shares of the Common Stock shall have the general right to vote for all purposes, including the election of directors, as provided by law. Each holder of shares of the Common Stock shall be entitled to one vote for each share thereof registered in his name on the books of the Corporation. - 6 - CERTIFICATE OF MERGER of Brown Moulding Holding Corp. a Delaware Corporation and MW Manufacturers Holding Corp. a Delaware Corporation In accordance with the provisions of Section 251 of the Delaware Corporation Law, Brown Moulding Holding Corp., a Delaware corporation, and MW Manufacturers Holding Corp., a Delaware corporation, adopt the following Certificate of Merger for purposes of merging MW Manufacturers Holding Corp., a Delaware corporation, into Brown Moulding Holding Corp., a Delaware corporation: 1. An Agreement and Plan of Merger dated December 11, 1997 has been approved, adopted, certified, executed and acknowledged by Brown Moulding Holding Corp., a Delaware corporation, and MW Manufacturers Holding Corp., a Delaware corporation, in accordance with the provisions of Section 251 of the Delaware Corporation Law. 2. The name of the surviving corporation is Brown Moulding Holding Corp. and it is to be governed by the laws of the State of Delaware. 3. The certificate of incorporation of Brown Moulding Holding Corp., as in effect immediately prior to the merger, shall be the certificate of incorporation of the surviving corporation after the merger. 4. The executed Agreement and Plan of Merger is on file at the principal place of business of Brown Moulding Holding Corp., which is at 130 Franklin Street, Rocky Mount, Virginia 24151. 5. A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation, Brown Moulding Holding Corp., on request and without cost, to any stockholder of the constituent corporation. 116 2 IN WITNESS WHEREOF, Brown Moulding Holding Corp., the surviving corporation to the aforementioned merger, has duly caused this Certificate of Merger to be executed by its duly authorized officers as of this __ day of December, 1997. BROWN MOULDING HOLDING CORP. a Delaware Corporation /s/ Mark Genender ------------------------------ Name: Mark Genender Title: Vice President and /s/ Gregory Meredith ------------------------------ Assistant Secretary CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF BROWN MOULDING HOLDING CORP. Brown Moulding Holding Corp. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That all of the Directors of said corporation by written consent, adopted the following resolution: RESOLVED That all of the Directors hereby declare it advisable and in the best interest of the Corporation that Article One of the Certificate of Incorporation be amended to read as follows: FIRST: The name of this Corporation is MW Windows Holding Corp. SECOND: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by Mark Genender, Vice President. EXECUTED this 28th day of May 1998 /s/ Mark Genender ------------------------------ Mark Genender Vice President 118 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF MW WINDOWS HOLDING CORP. MW Windows Holding Corp. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That all of the Directors of the Corporation by written consent, adopted the following resolution: RESOLVED: That the Board of Directors hereby declares it advisable and in the best interests of this Corporation that Article 1 of the Certificate of Incorporation be amended to read as follows, and that such amendment be submitted to the Corporation's stockholders for their consideration and approval: "1. The name of this Corporation is MW Manufacturers Holding Corp. SECOND: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Section 242 of die General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, die Corporation has caused this Certificate to be signed by Richard C. Dresdale, its Vice President. EXECUTED this 5th day of March, 1999. /s/ Richard C. Dresdale ------------------------------ Richard C. Dresdale Vice President 119 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF MW MANUFACTURERS HOLDING CORP. MW MANUFACTURERS HOLDING CORP. (the "Corporation"), a corporation duly organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS: FIRST: That by written consent, dated April 7, 1999 of the Board of Directors of the Corporation, resolutions were duly adopted setting forth the proposed amendment to the Certificate of Incorporation of the Corporation, declaring such amendment to be advisable and directing that the amendment be presented to the stockholders of the Corporation for their consideration. The resolution setting forth the proposed amendment is as follows: RESOLVED: That the Board of Directors of this Corporation deems it advisable that the Certificate of Incorporation of the Corporation be amended so that Section 4 thereof reads in its entirety as set forth in Exhibit A hereto and directs that such amendment be submitted to the stockholders of the Corporation for their approval; that upon approval by the stockholders of the Corporation, the officers of this Corporation are severally authorized and directed to execute and to cause the amended Certificate of Incorporation to be duly filed with the Secretary of State of the State of Delaware and to take any and all such further action as such officer or officers deem necessary or appropriate to effectuate said amendment. SECOND: That, thereafter, pursuant to the aforementioned resolution adopted by the Board of Directors, the stockholders of this Corporation duly adopted the proposed amendment of the Certificate of Incorporation of the Corporation set forth above in accordance with Section 242 of the General Corporation Law of the State of Delaware. THIRD: That said amendment was duly adopted hi accordance with the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the undersigned MW MANUFACTURES HOLDING CORP., has caused this Certificate of Amendment of Certificate of Incorporation to be executed and attested on its behalf by Oliver Goldstein, its Vice President and Gregory P. Meredith, its Assistant Secretary, on and as April 21, 1999. MW MANUFACTURERS HOLDING CORP. By: /s/ Oliver Goldstein ------------------------------ Title: Vice President ATTEST: /s/ Gregory P. Meredith - ------------------------------ Title: Assistant Secretary - 2 - EXHIBIT A 4. The total number of shares of capital stock that this Corporation shall have authority to issue is 210,000 shares, consisting of (a) 10,000 shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"), and (b) 200,000 shares of Common Stock, par value $0.01 per share ("Common Stock"). The following is a statement of the designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the shares of each such class of capital stock. A. PREFERRED STOCK The designations, powers, preferences, and rights, and the qualifications, limitations and restrictions, granted to or imposed on the Preferred Stock are as follows: 1. Dividends/Distributions. 1.1. Preferred Stock. 1.1.1. Dividends shall accrue on each share of Preferred Stock on a daily basis and at the Dividend Rate (as defined herein) from time to time in effect, beginning on the date of issuance of such share. The holders of shares of Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, dividends payable on September 30 in each year (each such date being a "Dividend Payment Date") in an amount equal to all accrued and unpaid dividends on the Preferred Stock; provided, however, that it and to the extent that the holder of a share of Preferred Stock does not receive on any given Dividend Payment Date payment of the accrued and unpaid dividend on such share of Preferred Stock or any previously cumulated dividend for the period ending on such given Dividend Payment Date and beginning on the immediately preceding Dividend Payment Date, such dividend shall be cumulative and shall itself accrue, whether or not declared, from and after such date dividends on a daily basis and an annual rate equal to the Dividend Rate from time to time in effect (calculated, for this purpose, as a percentage of such cumulated dividend equal to such Dividend Rate divided by $1,000.00 and expressed as a percentage). 1.1.2. As used herein, the term "Dividend Rate" shall mean (i) for all periods prior to March 12, 1999, $100.00 per annum and (ii) for all periods beginning on or after March 12,1999, $100.00 per annum; provided, however that in no event shall the Dividend Rate exceed the maximum rate permitted by applicable law if any such maximum rate shall exist. 1.1.3. Dividends may be paid on the Preferred Stock, from time to time at the option of the Board of Directors, (a) in cash, (b) in shares of Preferred Stock, with each such share being ascribed a value of $1,000.00 or (c) in any combination of the forms described in the immediately preceding clauses (a) and (b). 122 1.1.4. No dividend shall be paid or declared, and no distribution shall be made, on the Common Stock (other than a stock dividend payable solely in shares of Common Stock) at any time when any shares of Prefer Stock are outstanding. 2. Redemptions Preferred Stock. 2.1. Preferred Stock Redemption Price. The Preferred Stock shall be redeemable as hereinafter set forth upon payment in cash in respect of each share redeemed of the sum of $1,000.00 plus an amount equal to dividends accrued but unpaid to the date of redemption (the "Preferred Stock Redemption Price"). Subject to the provisions hereof, the Board of Directors shall have authority to prescribe the manner in which the Preferred Stock shall be redeemed from time to time. 2.2. Optional Redemption. At any time and from time to time the Corporation may at its option by resolution of its Board of Directors redeem, at the Preferred Stock Redemption Price, all or any part of the shares of the Preferred Stock then outstanding; provided, however, that in the case of any redemption of only a part of the outstanding shares of Preferred Stock, there shall be so redeemed from each record holder thereof in whole shares of Preferred Stock, as nearly as possible to the nearest whole share, the proportion of all shares of Preferred Stock to be redeemed which the number of shares of Preferred Stock held of record as of the record date for such redemption by such holder bears to the total number of shares of Preferred Stock of record outstanding as of such date. Not fewer than 15 nor more than 60 days' prior written notice shall be given by certified mail, postage prepaid, to each holder of record of the shares of Preferred Stock to be redeemed, at such holder's post office address as shown in the records of the Corporation, and said notice shall specify the amount to be paid per share upon such redemption, the place and the date, which date shall not be a legal holiday, on which the shares called for redemption will be redeemed. 2.3. Payment of Redemption Price. The redemption price of shares of Preferred Stock shall be paid in cash. 3. Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in the following manner and subject to the following preferences. 3.1. Preferred Stock. The holders of Preferred Stock shall first be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of the Common Stock or any other class or series of capital stock of the Corporation, by reason of their ownership of such stock, an amount per share equal to the sum of (i) $1,000.00 plus (ii) all accrued and unpaid dividends on such share (such sum being hereinafter referred to as the "Preferential Amount"). If the assets and funds of the Corporation shall be insufficient to permit the payment in full to such holders of Preferred Stock of the full Preferential Amount, then the entire assets of the Corporation legally available for distribution to the stockholders shall be distributed ratably among the - 2 - holders of Preferred Stock in accordance with the aggregate Preferential Amount of the shares of Preferred Stock held by each of them. 3.2. Consolidations, Merger, Etc. The consolidation of the Corporation into or with any other entity or entities which results in the exchange of outstanding shares of the Common Stock of the Corporation for securities or other consideration issued or paid or caused to be issued or paid by any such entity or affiliate thereof, and the sale or transfer by the Corporation of all or substantially all its assets, shall be deemed to be a liquidation, absolution or winding up of the Corporation within the meaning of these provisions of the Preferred Stock. 4. Voting Rights of Preferred Stock. Except as otherwise hereinafter provided in this Certificate of Incorporation or as required by applicable law which cannot be superseded by the provisions of this Certificate of Incorporation, the holders of the outstanding shares of Preferred Stock shall possess no voting power whatsoever, either general or specific. 4.1. Amendments to Terms of Preferred Stock. So long as any shares of Preferred Stock shall be outstanding, the holders of the Preferred Stock shall be entitled to vote together as a single class on any amendments to the terms of the Preferred Stock, and such terms shall not be without the affirmative vote of the holders of a majority of the outstanding shares of Preferred Stock. 5. Covenants. 5.1. No Impairment. The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of all or a substantial portion of its assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 4 of its Certificate of Incorporation by the Corporation, but will at all times in good faith assist in carrying out all the provisions of this Section 4 and in taking all such action as may be necessary or appropriate in order to protect the rights and privileges of the holders of Preferred Stock against impairment. 5.2. Notice of Certain Events. If at any time: (a) the Corporation shall declare any dividend or distribution payable to the holders of its Common Stock; (b) the Corporation shall offer for subscription pro rata to the holders of Common Stock any additional shares of stock of any class or any other rights; (c) there shall be any recapitalization of the Corporation, or consolidation or merger of the Corporation with, or sale of substantially all of its assets to, another corporation, business organization or other person; or - 3 - (d) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Corporation; then, in any one or more of such cases, the Corporation shall give the registered holders of the Preferred Stock written notice, by registered or certified mail, of the date on which a record shall be taken for such dividend, distribution or subscription rights or for determining stockholders entitled to vote upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be. Such written notice shall be given at least 20 days prior to the applicable record date. Such notice shall also specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such recapitalization, consolidation, merger, sale, dissolution, liquidation or winding up, as the case may be. 6. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue. The Corporation may from time to time take such appropriate corporate action as may be necessary to reduce the authorized number of shares of Preferred Stock accordingly. B. COMMON STOCK The designations, powers, presences, and rights, and the qualifications, limitations and restrictions, granted to or imposed upon the Common Stock shall be as follows: 1. Dividends. Subject to the rights of holders of any class or series of capital stock entitled to a preference, the holders of shares of the Common Stock will be entitled to receive, when, as, and if declared by the Board of Directors, out of funds legally available therefor, dividends in such amounts and payable on such dates as shall be determined by the Board of Directors. 2. Distribution of Assets. In the event of the voluntary or involuntary liquidation, or winding up of the Corporation, the holders of shares of the Common Stock will be entitled to receive on a ratable basis all of the remaining assets of the Corporation available for distribution to its stockholders after payment to the holders of shares of any class or series of capital stock having preferential rights to receive distribution of such assets. 3. Voting Rights. The holders of shares of the Common Stock shall have the general right to vote for all purposes, including the election of directors, as provided by law. Each holder of shares of the Common Stock shall be entitled to one vote for each share thereof registered in the name on the books of the Corporation. - 4 - AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF MW MANUFACTURERS HOLDING CORP. The undersigned, in his capacity as the duly elected and acting Secretary of MW Manufacturers Holding Corp., a Delaware corporation (the "Corporation"), hereby certifies as of this 13th day of February, 2004 that: FIRST: The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on September 1, 1995, under the name "Brown Moulding Holding Corp." SECOND: The Board of Directors of the Corporation, by unanimous written consent in lieu of a meeting, dated February 13, 2004, in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL"), duly adopted a resolution proposing and declaring advisable this Amended and Restated Certificate of Incorporation of the Corporation and authorizing the appropriate officers of the Corporation to solicit the consent of the stockholders of the Corporation therefor. THIRD: The sole stockholder of the Corporation, by unanimous written consent in lieu of a meeting, dated February 13, 2004, in accordance with the provisions of Section 228 of the DGCL, duly adopted this Amended and Restated Certificate of Incorporation of the Corporation. FOURTH: The text of the Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows: 1. The name of this corporation is MW Manufacturers Holding Corp. 2. The registered office of this corporation in the State of Delaware is located at 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company. 3. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 126 2 4. The total number of shares of stock that this corporation shall have authority to issue is 100,000 shares of Common Stock, $.01 par value per share. Each share of Common Stock shall be entitled to one vote. 5. Except as otherwise provided in the provisions establishing a class of stock, the number of authorised shares of any class or series of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the corporation entitled to vote irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware. 6. The election of directors need not be by written ballot unless the bylaws shall so require. 7. In furtherance and not in limitation of the power conferred upon the board of directors by law, the board of directors shall have the power to make, adopt, alter, amend and repeal from time to time bylaws of this corporation, subject to the right of the stockholders entitled to vote with respect thereto to alter and repeal bylaws made by the board of directors. 8. A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the General Corporation Law of the State of Delaware as in effect at the time such liability is determined. No amendment or repeal of this paragraph 8 shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 9. This corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any bylaw, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this paragraph 9 shall be deemed to have met the standard of conduct required for such 3 indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this paragraph 9 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. 10. The books of this corporation may (subject to any statutory requirements) be kept outside the State of Delaware as may be designated by the board of directors or in the bylaws of this corporation. 11. If at any time this corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, for so long as such class is so registered, any action by the stockholders of such class must be taken at an annual or special meeting of stockholders and may not be taken by written consent. [Remainder of this page intentionally left blank.] 4 IN WITNESS WHEREOF, the undersigned executed this Amended and Restated Certificate of Incorporation on the 13th day of February, 2004. /s/ Lynn Morstad ------------------------------ Lynn Morstad Secretary EX-3.26 5 y95660a4exv3w26.txt BYLAWS EXHIBIT 3.26 BY-LAWS OF MW MANUFACTURERS HOLDING CORP. Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1. These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time, to time in effect. Section 2. STOCKHOLDERS 2.1. Annual Meeting. The annual meeting of stockholders shall be held at 10:00 a.m. on the second Tuesday in May in each year, unless that day be a legal holiday at the place where the meeting is to be held, in which case the meeting shall be held at the same hour on the next succeeding day not a legal holiday, or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may properly come before the meeting. 2.2. Special Meetings. A special meeting of the stockholders may be called at any time by the chairman of the board, if any, the president or the board of directors. A special meeting of the stockholders shall be called by the secretary, of in the case of the death, absence, incapacity or refusal of the secretary, by an assistant secretary or some other officer, upon application of a majority of the directors. Any such application shall state the purpose or purposes of the proposed meeting. Any such call shall state the place, date, hour, and purposes of the meeting. 2.3. Place of Meeting. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the chairman of the board, if any, the president or the board of directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment. 2.4. Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be given not less then ten nor more than sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the 2 corporation. Such notice shall be given by the secretary, or by an officer or person designated by the board of directors, or in the case of a special meeting by the officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice. 2.5. Quorum of Stockholders. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.6. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.7. Action without Meetings. Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken by stockholders for or in connection with any corporate action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or 3 to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Each such written consent shall bear the date of signature of each stockholder who signs the consent. No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a number of stockholders sufficient to take such action are delivered to the corporation in the manner specified in this paragraph within sixty days of the earliest dated consent so delivered. If action is taken by consent of stockholders and in accordance with the foregoing, there shall be filed with the records of the meetings of stockholders the writing or writings comprising such consent. If action is taken by less than unanimous consent of stockholders, prompt notice of the taking of such action without a meeting shall be given to those who have not consented in writing and a certificate signed and attested to by the secretary that such notice was given shall be filed with the records of the meetings of stockholders. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the General Corporation Law of the State of Delaware, if such action had been voted upon by the stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning a vote of stockholders, that written consent has been given under Section 228 of said General Corporation Law and that written notice has been given as provided in such Section 228. 2.8. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may not need be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.9. Inspectors. The directors or the person presiding at the meeting may, but need not, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the 4 voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.10. List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1. Number. The number of directors which shall constitute the whole board shall not be less than one nor more than eleven in number. Thereafter, within the foregoing limits, the stockholders at the annual meeting shall determine the number of directors and shall elect the number of directors as determined. Within the foregoing limits, the number of directors may be increased at any time or from time to time by the stockholders or by the directors by vote of a majority of the directors then in office. The number of directors may be decreased to any number permitted by the foregoing at any time either by the stockholders or by the directors by vote of a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation or removal of one or more directors. Directors need not to be stockholders. 3.2. Tenure. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3. Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4. Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the stockholders at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations 5 shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.5. Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.6. Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 3.7. Special Meetings. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chairman of the board, if any, the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary or by the chairman of the board, if any, the president or any one of the directors calling the meeting. 3.8. Notice. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of 6 notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.9. Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.10. Action by Vote. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.11. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such, committee, as me case may be. 3.12. Participation in Meetings by Conference Telephone. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 3.13. Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 3.14. Interested Directors and Officers. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: 7 (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to me board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1. Enumeration; Qualification. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 4.2. Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate. 4.3. Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.4. Tenure. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of 8 the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power. 4.5. Chairman of the Board of Directors, President and Vice President. The chairman of the board, if any, shall have such duties and powers as shall be designated from time to time by the board of directors. Unless the board of directors otherwise specifies, the chairman of the board, or if there is none the chief executive officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the board of directors. Unless the board of directors otherwise specifies, the president shall be the chief executive officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designed from time to time by the board of directors or by the president. 4.6. Treasurer and Assistant Treasurers. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the board of directors or by the president. If no controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and powers of the controller. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer. 4.7. Controller and Assistant Controllers. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller. 4.8. Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He 9 shall have such other duties and powers as may from time to time be designated by the board of directors or the president. Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1. Any director or officer may resign at any time by delivering his resignation in writing to the chairman of the board, if any, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. A director (including persons elected by directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in the election of directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. No director or officer resigning and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation) no director or officer removed shall have any right to any compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise; unless, in the case of a resignation, the directors, or, in the case of removal, the body acting on the removal, shall in their or its discretion provide for compensation. Section 6. VACANCIES 6.1. If the office of the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. Section 7. CAPITAL STOCK 7.1. Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose 10 facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue. 7.2. Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as me board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or the transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2. Record Date and Closing Transfer Books. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the 11 record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no such record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by the General Corporation Law of the State of Delaware, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been fixed by the board of directors and prior action by the board of directors is required by the General Corporation Law of the State of Delaware, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1. Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. Section 10. EXECUTION OF PAPERS 10.1. Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chairman of the board, if any, the president, a vice president or the treasurer. Section 11. FISCAL YEAR 11.1. The fiscal year of the corporation shall end on the 31st day of December. 12 Section 12. AMENDMENTS 12.1. These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office or by vote of a majority of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. EX-3.27 6 y95660a4exv3w27.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.27 CERTIFICATE OF INCORPORATION of MW MANUFACTURERS INC. 1. The name of this corporation is MW Manufacturers Inc. 2. The registered office of this corporation in the State of Delaware is located at 1013 Centre Road, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company. 3. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 4. The total number of shares of stock that this corporation shall have authority to issue is 3,000 shares of Common Stock, $.01 par value per share. Each share of Common Stock shall be entitled to one vote. 5. The name and mailing address of the incorporator is: April A. Coluntino Ropes & Gray One International Place Boston, Massachusetts 02110 6. Except as otherwise provided in the provisions establishing a class of stock, the number of authorized shares of any class or series of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the corporation entitled to vote irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware. 7. The election of directors need not be by written ballot unless the by-laws shall so require. 8. In furtherance and not in limitation of the power conferred upon the board of directors by law, the board of directors shall have power to make, adopt, alter, amend and repeal from time to time by-laws of this corporation, subject to the right of the stockholders entitled to vote with respect thereto to alter and repeal by-laws made by the board of directors. 9. A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the General Corporation 142 Law of the State of Delaware as in effect at the time such liability is determined. No amendment or repeal of this paragraph 9 shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 10. This corporation shall, to the maximum extent permitted from tune to time under the law of the State of Delaware, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this paragraph 10 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this paragraph 10 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. 11. The books of this corporation may (subject to any statutory requirements) be kept outside the State of Delaware as may be designated by the board of directors or in the by-laws of this corporation. 12. If at any time this corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, for so long as such class is so registered, any action by the stockholders of such class must be taken at an annual or special meeting of stockholders and may not be taken by written consent. - 2 - THE UNDERSIGNED, the sole incorporator named above, hereby certifies that the facts stated above are true as of this 8th day of March, 1999. /s/ April A. Coluntino ------------------------------ April A. Coluntino - 3 - CERTIFICATE OF MERGER OF MW WINDOWS INC. WITH AND INTO MW MANUFACTURERS INC. In accordance with the provisions of Section 252 of the Delaware Corporation Law, MW Windows Inc., an Alabama corporation and MW Manufacturers Inc., a Delaware corporation, adopt the following Certificate of Merger for purposes of merging MW Windows Inc., an Alabama corporation into MW Manufacturers Inc., a Delaware corporation: 1. An Agreement and Plan of Merger dated March 10, 1999 has been approved, adopted, certified, executed and acknowledged by MW Manfacturers Inc., a Delaware corporation, and MW Windows Inc., an Alabama corporation, in accordance with the provisions of Section 252 of the Delaware Corporation Law. 2. The name of the surviving corporation is MW Manufacturers Inc. 3. The certificate of incorporation of MW Manufacturers Inc., as in effect immediately prior to the merger, shall be the certificate of incorporation of the surviving corporation after the merger. 4. The executed Agreement and Plan of Merger is on file at the principal place of business of MW Manufacturers Inc., which is at 433 North Main Street, Rocky Mount, VA 24151. 5. A copy of the Agreement and Plan of Merger will be furnished by the surviving corporation. MW Manufacturers Inc., on request and without cost, to any stockholder of MW Manufacturers Inc. or MW Windows Inc. 6. MW Manufacturers Inc.. a Delaware corporation, has issued and there are outstanding 1,000 shares of its Common Stock, $0.01 par value, each of which was entitled to one vote with respect to the plan of merger. MW Windows Inc., an Alabama corporation, has issued and outstanding 1.000 shares of its Common Stock, $0.01 par value per share, each of which was entitled to one vote with respect to the plan of merger. 7. The effective time and date of the merger herein provided for in the State of Delaware shall be the time and date of filing. 2 IN WITNESS WHEREOF, MW Manufacturers Inc., the surviving corporation to the aforementioned merger, has duly caused this Certificate of Merger to be executed by its duly authorized officers of this 10th day of March, 1999. MW MANUFACTURERS INC. /s/ Oliver Goldstein ------------------------------- Name: Oliver Goldstein Title: Vice President and /s/ Oliver Goldstein ------------------------------- Assistant Secretary EX-3.28 7 y95660a4exv3w28.txt BYLAWS EXHIBIT 3.28 BY-LAWS OF MW MANUFACTURERS INC. Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1 These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time to time in effect. Section 2. STOCKHOLDERS 2.1 Annual Meeting. The annual meeting of stockholders shall be held at 10:00 a.m. on the second Tuesday in May in each year, unless that day be a legal holiday at the place where the meeting is to be held, in which case the meeting shall be held at the same hour on the next succeeding day not a legal holiday, or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may properly come before the meeting. 2.2 Special Meetings. A special meeting of the stockholders may be called at any time by the chairman of the board, if any, the president or the board of directors. A special meeting of the stockholders shall be called by the secretary, or in the case of the death, absence, incapacity or refusal of the secretary, by an assistant secretary or some other officer, upon application of a majority of the directors. Any such application shall state the purpose or purposes of the proposed meeting. Any such call shall state the place, date, hour, and purposes of the meeting. 2.3 Place of Meeting. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the chairman of the board, if any, the president or the board of directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment. 2.4 Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be given not less then ten nor more man sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary, or by an officer or person designated by the board of directors, or in the case of a special meeting by the officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of in any written waiver of notice. 2.5 Quorum of Stockholders. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.6 Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law; by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.7 Action without Meetings. Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken by stockholders for or in connection with any corporate action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings 2 of meetings of stockholders are recorded. Each such written consent shall bear the date of signature of each stockholder who signs the consent. No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a number of stockholders sufficient to take such action are delivered to the corporation in the manner specified in this paragraph within sixty days of the earliest dated consent so delivered. If action is taken by consent of stockholders and in accordance with the foregoing, there shall be filed with the records of the meetings of stockholders the writing or writings comprising such consent. If action is taken by less than unanimous consent of stockholders, prompt notice of the taking of such action without a meeting shall be given to those who have not consented in writing and a certificate signed and attested to by the secretary that such notice was given shall be filed with the records of the meetings of stockholders. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the General Corporation Law of the State of Delaware, if such action had been voted upon by the stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning a vote of stockholders, that written consent has been given under Section 228 of said General Corporation Law and that written notice has been given as provided in such Section 228. 2.8 Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.9 Inspectors. The directors or the person presiding at the meeting may, and shall if required by applicable law, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the 3 meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.10 List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1 Number. The corporation shall have one or more directors, the number of directors to be determined from time to time by vote of a majority of the directors then in office. Except in connection with the election of directors at the annual meeting of stockholders, the number of directors may be decreased only to eliminate vacancies by reason of death, resignation or removal of one or more directors . No director need be a stockholder. 3.2 Tenure. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3 Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4 Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the holders of the particular class or series of stock entitled to elect such director at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, in each case elected by the particular class or series of stock entitled to elect such directors. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, who were elected by the particular class or series of stock entitled to elect such resigning director or directors shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any 4 requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.5 Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.6 Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 3.7 Special Meetings. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chairman of the board, if any, the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary or by the chairman of the board, if any, the president or any one of the directors calling the meeting. 3.8 Notice. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at 5 its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.9 Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.10 Action by Vote. Except as maybe otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.11 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be. 3.12 Participation in Meetings by Conference Telephone. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 3.13 Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 3.14 Interested Directors and Officers. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the 6 committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1 Enumeration; Qualification. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 4.2 Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from, time to time designate. 4.3 Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.4 Tenure. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors , or the officer by whom he was appointed or by the officer who then holds agent appointive power. 7 4.5 Chairman of the Board of Directors, President and Vice President. The chairman of the board, if any, shall have such duties and powers as shall be designated from time to time by the board of directors. Unless the board of directors otherwise specifies, the chairman of the board, or if there is none the chief executive officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the board of directors. Unless the board of directors otherwise specifies, the president shall be the chief executive officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the president. 4.6 Treasurer and Assistant Treasurers. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the directors or by the president. If no controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and power of the controller. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer. 4.7 Controller and Assistant Controllers. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller. 4.8 Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or the president. 8 Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1 Any director or officer may resign at any time by delivering his resignation in writing to the chairman of the board, if any, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, a director (including persons elected by stockholders or directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the issued and outstanding shares of the particular class or series entitled to vote in the election of such directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. Section 6. VACANCIES 6.1 If the office of the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. Section 7. CAPITAL STOCK 7.1 Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue. 7.2 Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, 9 upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1 Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2 Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no such record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by the General Corporation Law of the State of Delaware, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered 10 to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been fixed by the board of directors and prior action by the board of directors is required by the General Corporation Law of the State of Delaware, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1 Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. Section 10. EXECUTION OF PAPERS 10.1 Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chairman of the board, if any, the president, a vice president or the treasurer. Section 11. FISCAL YEAR 11.1 The fiscal year of the corporation shall end on the 31st of December. Section 12. AMENDMENTS 12.1 These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office or by vote of a majority of the voting power of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. 11 EX-3.29 8 y95660a4exv3w29.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.29 CERTIFICATE OF INCORPORATION OF PMI ACQUISITION, INC. 1. The name of this corporation is PMI Acquisition, Inc. 2. The registered office of this corporation in the State of Delaware is located at 1013 Centre Road, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company. 3. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 4. The total number of shares of stock that this corporation shall have authority to issue is 3,000 shares of Common Stock, $.01 par value per share. Each share of Common Stock shall be entitled to one vote. 5. The name and mailing address of the incorporator is James Clair Devereaux, c/o Ropes & Gray, One International Place, Boston, MA 02110-2624. 6. Except as otherwise provided in the provisions establishing a class of stock, the number of authorized shares of any class or series of stock be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the corporation entitled to vote irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware. 7. The election of directors need not be by written ballot unless the by-laws shall so require. 8. In furtherance and not in limitation of the power conferred upon the board of directors by law, the board of directors shall have power to make, adopt, alter, amend and repeal from time to time by-laws of this corporation, subject to the right of the stockholders entitled to vote with respect thereto to alter and repeal by-laws made by the board of directors. 9. A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the General Corporation Law of the State of Delaware as in effect at the time such liability is determined. No amendment or repeal of this paragraph 9 shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 10. This corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this paragraph 10 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this paragraph 10 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. 11. The books of this corporation may (subject to any statutory requirements) be kept outside the State of Delaware as may be designated by the board of directors or in the by-laws of this corporation. 12. If at any time this corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, for so long as such class is so registered, any action by the stockholders of such class must be taken at an annual or special meeting of stockholders and may not be taken by written consent. 13. The provisions of Section 203 of the Delaware General Corporation Law shall not apply to this corporation. THE UNDERSIGNED, the sole incorporator named above, hereby certifies that the facts stated above are true as of this eleventh day of March, 1999. /s/ James Clair Devereaux -------------------------- James Clair Devereaux Sole Incorporator -2- CERTIFICATE OF MERGER OF PATRIOT MANUFACTURING, INC. a New Jersey corporation with and into PMI ACQUISITION, INC. a Delaware corporation ************ In accordance with the provisions of Section 252 of the Delaware Corporation Law, PMI Acquisition, Inc., a Delaware corporation, hereby certifies to the following information relating to the merger of Patriot Manufacturing, Inc., a New Jersey corporation, with and into PMI Acquisition, Inc., a Delaware corporation (the "Merger"): 1. The names and states of incorporation of the constituent corporations in the merger (the "Constituent Corporations"), are as follows: NAME STATE OF INCORPORATION Patriot Manufacturing, Inc. New Jersey PMI Acquisition, Inc. Delaware 2. An Agreement and Plan of Merger dated April 30, 1999 has been approved, adopted, certified, executed and acknowledged by each of the Constituent Corporations in accordance with the provisions of Section 252 of the Delaware Corporation Law. 3. The name of the surviving corporation of the Merger is PMI Acquisition, Inc., which will continue its corporate existence under the name "Patriot Manufacturing, Inc." upon the effective date of the Merger pursuant to the amendment of the certificate of incorporation of the surviving corporation described in section 4 below. 4. The certificate of incorporation of PMI Acquisition, Inc., as in effect immediately prior to the merger, shall be the certificate of incorporation of the surviving corporation after the Merger, except that such Certificate of Incorporation of the Surviving Corporation shall be amended to change the name of the Surviving Corporation to "Patriot Manufacturing, Inc." by amending and restating Article 1 of such Certificate of Incorporation to be and read in its entirety as follows: "1. The name of this corporation is Patriot Manufacturing, Inc." 5. That the executed Agreement and Plan of Merger is on file at the principal place of business of the surviving corporation, at the following address: 582 South Egg Harbor Road, P.O. Box 498, Hammonton, New Jersey, 08037. 6. That a copy of the Agreement and Plan of Merger will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of any Constituent Corporations. 7. The authorized capital stock of the Patriot Manufacturing, Inc., a New Jersey corporation and one of the Constituent Corporations, consists of ten thousand (10,000) shares of common stock, no par value per share. 8. That this Certificate of Merger shall be effective upon filing. (The remainder of this page intentionally left blank.) 2 IN WITNESS WHEREOF, PMI Acquisition, Inc., the surviving corporation to the aforementioned Merger, has duly caused this Certificate of Merger to be executed by its duly authorized officers of this 30th day of April, 1999. PMI ACQUISITION, INC. By /s/ John B. Ayer ------------------------------ Name: John B. Ayer Title: Vice President CERTIFICATE OF RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION OF PATRIOT MANUFACTURING, INC. It is hereby certified that: 1. The name of the corporation (hereinafter called the "corporation") is Patriot Manufacturing, Inc. 2. The corporation was organized under the provisions of the General Corporation Law of the State of Delaware. The date of filing of its original certificate of incorporation with the Secretary of State of the State of Delaware is March 11, 1999. 3. The address, including the street, city, and county, of the registered office of the corporation in the State of Delaware and the name of the registered agent at such address are as follows: Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, County of New Castle. 4. The corporation hereby procures a renewal and revival of its certificate of incorporation, which became inoperative by law on March 1, 2001 for failure to file annual reports and non-payment of taxes payable to the State of Delaware. 5. The certificate of incorporation of the corporation, which provides for and will continue to provide for, perpetual duration, shall, upon the filing of this Certificate of Renewal and Revival of the Certificate of Incorporation in the Department of State of the State of Delaware, be renewed and revived and shall become fully operative on February 28, 2001. 6. This Certificate of Renewal and Revival of the Certificate of Incorporation is filed by authority of the duly elected directors as prescribed by Section 312 of the General Corporation Law of the State of Delaware. Signed on April 17, 2001 /s/ Andrea Geisser - ------------------------------ Andrea Geisser, Vice President EX-3.30 9 y95660a4exv3w30.txt BYLAWS EXHIBIT 3.30 BY-LAWS OF PATRIOT MANUFACTURING, INC. Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1. These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time to time in effect. Section 2. STOCKHOLDERS 2.1. Annual Meeting. The annual meeting of stockholders shall be held at noon on the first Monday in April in each year, unless that day be a legal holiday at the place where the meeting is to be held, in which case the meeting shall be held at the same hour on the next succeeding day not a legal holiday, or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may properly come before the meeting. 2.2. Special Meetings. A special meeting of the stockholders may be called at any time by the chairman of the board, if any, the president or the board of directors. A special meeting of the stockholders shall be called by the secretary, or in the case of the death, absence, incapacity or refusal of the secretary, by an assistant secretary or some other officer, upon application of a majority of the directors. Any such application shall state the purpose or purposes of the proposed meeting. Any such call shall state the place, date, hour, and purposes of the meeting. 2.3. Place of Meeting. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the chairman of the board, if any, the president or the board of directors. Any adjourned session of any meeting of the stockholder shall be held at the place designated in the vote of adjournment. 2.4. Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary, or by an officer or person 2 designated by the board of directors, or in the case of a special meeting by the officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in written waiver of notice. 2.5. Quorum of Stockholders. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.6. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.7. Action without Meetings. Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken by stockholders for or in connection with any corporate action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to a vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Each such written consent shall bear the date 3 of signature of each stockholder who signs the consent. No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a number of stockholders sufficient to take such action are delivered to the corporation in the manner specified in this paragraph within sixty days of the earliest dated consent so delivered. If action is taken by consent of stockholders and in accordance with the foregoing, there shall be filed with the records of the meetings of stockholders the writing or writings comprising such consent. If action is taken by less than unanimous consent of stockholders, prompt notice of the taking of such action without a meeting shall be given to those who have not consented in writing and a certificate signed and attested to by the secretary that such notice was given shall be filed with the records of the meetings of stockholders. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the General Corporation Law of the State of Delaware, if such action had been voted upon by the stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning a vote of stockholders, that written consent has been given under Section 228 of said General Corporation Law and that written notice has been given as provided in such Section 228. 2.8. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.9. Inspectors. The directors or the person presiding at the meeting may, and shall if required by applicable law, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive 4 votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.10. List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1. Number. The corporation shall have one or more directors, the number of directors to be determined from time to time by vote of a majority of the directors then in office. Except in connection with the election of directors at the annual meeting of stockholders, the number of directors may be decreased only to eliminate vacancies by reason of death, resignation or removal of one or more directors. No director need be a stockholder. 3.2. Tenure. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3. Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4. Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the holders of the particular class or series of stock entitled to elect such director at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, in each case elected by the particular class or series of stock entitled to elect such directors. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, who were elected by the particular class or series of stock entitled to elect such resigning director or directors shall have power to fill such vacancy or vacancies, the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any 5 requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.5. Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.6. Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 3.7. Special Meetings. Special meetings of the board of directors may be held at any time and at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chairman of the board, if any, the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary or by the chairman of the board, if any, the president or any one of the directors calling the meeting. 3.8. Notice. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at 6 its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.9. Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.10. Action by Vote. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.11. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be. 3.12. Participation in Meetings by Conference Telephone. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 3.13. Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 3.14. Interested Directors and Officers. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participants in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the 7 committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1. Enumeration; Qualification. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any two or more offices may be held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 4.2. Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties and powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate. 4.3. Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.4. Tenure. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power. 8 4.5. Chairman of the Board of Directors, President and Vice President. The chairman of the board, if any, shall have such duties and powers as shall be designated from time to time by the board of directors. Unless the board of directors otherwise specifies, the chairman of the board, or if there is none the chief executive officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the board of directors. Unless the board of directors otherwise specifies, the president shall be the chief executive officer and shall direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. Any vice presidents shall have such duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the president. 4.6. Treasurer and Assistant Treasurers. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and powers as may be designated from time to time by the board of directors or by the president. If no controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and powers of the controller. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer. 4.7. Controller and Assistant Controllers. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller. 4.8. Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record he proceedings thereof. Unless a transfer agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or the president. 9 Any assistant secretaries shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1. Any director or officer may resign at any time by delivering his resignation in writing to the chairman of the board, if any, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective at some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, a director (including persons elected by stockholders or directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the issued and outstanding shares of the particular class or series entitled to vote in the election of such directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. Section 6. VACANCIES 6.1. If the office of the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. Section 7. CAPITAL STOCK 7.1. Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or register before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue. 7.2. Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, 10 upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assignments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no such record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by the General Corporation Law of the State of Delaware, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered 11 to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been fixed by the board of directors and prior action by the board of directors is required by the General Corporation Law of the State of Delaware, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1. Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. Section 10. EXECUTION OF PAPERS 10.1. Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chairman of the board, if any, the president, a vice president or the treasurer. Section 11. FISCAL YEAR 11.1. The fiscal year of the corporation shall end on December 31. Section 12. AMENDMENT 12.1. These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office or by vote of a majority of the voting power of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. EX-3.31 10 y95660a4exv3w31.txt CERTIFICATE OF INCORPORATION EXHIBIT 3.31 CERTIFICATE OF INCORPORATION OF LINEAL ACQUISITION CORPORATION 1. The name of this corporation is Lineal Acquisition Corporation. 2. The registered office of this corporation in the State of Delaware is located at 1013 Centre Road, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is Corporation Service Company. 3. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. 4. The total number of shares of stock that this corporation shall have authority to issue is 3,000 shares of Common Stock, $.01 par value per share. Each share of Common Stock shall be entitled to one vote. 5. The name and mailing address of the incorporator is Denise M. Annunciata, c/o Ropes & Gray, One International Place, Boston, Massachusetts 02110-2624. 6. Except as otherwise provided in the provisions establishing a class of stock, the number of authorized shares of any class or series of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the corporation entitled to vote irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware. 7. The election of directors need not be by written ballot unless the by-laws shall so require. 8. In furtherance and not in limitation of the power conferred upon the board of directors by law, the board of directors shall have power to make, adopt, alter, amend and repeal from time to time by-laws of this corporation, subject to the right of the stockholders entitled to vote with respect thereto to after and repeal by-laws made by the board of directors. 9. A director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that exculpation from liability is not permitted under the General Corporation Law of the State of Delaware as in effect at the time such liability is 2 determined. No amendment or repeal of this paragraph 9 shall apply to or have any effect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. 10. This corporation shall, to the maximum extent permitted from time to time under the law of the State of Delaware, indemnify and upon request advance expenses to any person who is or was a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or claim, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was or has agreed to be a director or officer of this corporation or while a director or officer is or was serving at the request of this corporation as a director, officer, partner, trustee, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, against expenses (including attorney's fees and expenses), judgments, fines, penalties and amounts paid in settlement incurred (and not otherwise recovered) in connection with the investigation, preparation to defend or defense of such action, suit, proceeding or claim; provided, however, that the foregoing shall not require this corporation to indemnify or advance expenses to any person in connection with any action, suit, proceeding, claim or counterclaim initiated by or on behalf of such person. Such indemnification shall not be exclusive of other indemnification rights arising under any by-law, agreement, vote of directors or stockholders or otherwise and shall inure to the benefit of the heirs and legal representatives of such person. Any person seeking indemnification under this paragraph 10 shall be deemed to have met the standard of conduct required for such indemnification unless the contrary shall be established. Any repeal or modification of the foregoing provisions of this paragraph 10 shall not adversely affect any right or protection of a director or officer of this corporation with respect to any acts or omissions of such director or officer occurring prior to such repeal or modification. 11. The books of this corporation may (subject to any statutory requirements) be kept outside the State of Delaware as may be designated by the board of directors or in the by-laws of this corporation. 12. If at any time this corporation shall have a class of stock registered pursuant to the provisions of the Securities Exchange Act of 1934, for so long as such class is so registered, any action by the stockholders of such class must be taken at an annual or special meeting of stockholders and may not be taken by written consent. 3 THE UNDERSIGNED, the sole incorporator named above, hereby certifies that the facts stated above are true as of this 28th day of December, 1998. /s/ Denise M. Annunciata -------------------------------------- Denise M. Annunciata c/o Ropes & Gray One International Place Boston, Massachusetts 02110-2624 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF LINEAL ACQUISITION CORPORATION Lineal Acquisition Corporation (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: First: That the Board of Directors of said corporation by unanimous written consent, adopted the following resolution: RESOLVED That the Board of Directors hereby declares it advisable and in the best interest of the Corporation that Article 1 of the Certificate of Incorporation be amended to read as follows: "1. The name of this Corporation is "Lineal Technologies, Inc." Second: That said amendment has been consented to and authorized by the holders of a majority of the issued and outstanding stock entitled to vote thereon by written consent given in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware and that prompt notice of the taking of the foregoing action without a meeting has been given to those stockholders who have not consented in writing pursuant to Section 228(d) thereof. Third: That said amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said corporation has caused this Certificate to be signed by John B. Ayer, its Vice President. EXECUTED this 12th day of January, 1999. /s/ John B. Ayer --------------------------------- John B. Ayer, Vice President EX-3.32 11 y95660a4exv3w32.txt BYLAWS EXHIBIT 3.32 BY-LAWS OF LINEAL ACQUISITION CORPORATION Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS 1.1. These by-laws are subject to the certificate of incorporation of the corporation. In these by-laws, references to law, the certificate of incorporation and by-laws mean the law, the provisions of the certificate of incorporation and the by-laws as from time to time in effect. Section 2. STOCKHOLDERS 2.1. Annual Meeting. The annual meeting of stockholders shall be held at 10:00 a.m. on the second Tuesday in May in each year, unless that day be a legal holiday at the place where the meeting is to be held, in which case the meeting shall be held at the same hour on the next succeeding day not a legal holiday, or at such other date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting, at which they shall elect a board of directors and transact such other business as may be required by law or these by-laws or as may properly come before the meeting. 2.2. Special Meetings. A special meeting of the stockholders may be called at any time by the chairman of the board, if any, the president or the board of directors. A special meeting of the stockholders shall be called by the secretary, or in the case of the death, absence, incapacity or refusal of the secretary, by an assistant secretary or some other officer, upon application of a majority of the directors. Any such application shall state the purpose or purposes of the proposed meeting. Any such call shall state the place, date, hour, and purposes of the meeting. 2.3. Place of Meeting. All meetings of the stockholders for the election of directors or for any other purpose shall be held at such place within or without the State of Delaware as may be determined from time to time by the chairman of the board, if any, the president or the board of directors. Any adjourned session of any meeting of the stockholders shall be held at the place designated in the vote of adjournment. 2.4. Notice of Meetings. Except as otherwise provided by law, a written notice of each meeting of stockholders stating the place, day and hour thereof and, in the case of a special meeting, the purposes for which the meeting is called, shall be given not less then ten nor more than sixty days before the meeting, to each stockholder entitled to vote thereat, and to each stockholder who, by law, by the certificate of incorporation or by these by-laws, is entitled to notice, by leaving such notice with him or at his residence or usual place of business, or by depositing it in the United States mail, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Such notice shall be given by the secretary, or by an officer or person designated by the board of directors, or in the case of a special meeting by the officer calling the meeting. As to any adjourned session of any meeting of stockholders, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment was taken except that if the adjournment is for more than thirty days or if after the adjournment a new record date is set for the adjourned session, notice of any such adjourned session of the meeting shall be given in the manner heretofore described. No notice of any meeting of stockholders or any adjourned session thereof need be given to a stockholder if a written waiver of notice, executed before or after the meeting or such adjourned session by such stockholder, is filed with the records of the meeting or if the stockholder attends such meeting without objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders or any adjourned session thereof need be specified in any written waiver of notice. 2.5. Quorum of Stockholders. At any meeting of the stockholders a quorum as to any matter shall consist of a majority of the votes entitled to be cast on the matter, except where a larger quorum is required by law, by the certificate of incorporation or by these by-laws. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. 2.6. Action by Vote. When a quorum is present at any meeting, a plurality of the votes properly cast for election to any office shall elect to such office and a majority of the votes properly cast upon any question other than an election to an office shall decide the question, except when a larger vote is required by law, by the certificate of incorporation or by these by-laws. No ballot shall be required for any election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. 2.7. Action without Meetings. Unless otherwise provided in the certificate of incorporation, any action required or permitted to be taken by stockholders for or in connection with any corporate action may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in Delaware by hand or 2 certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Each such written consent shall bear the date of signature of each stockholder who signs the consent. No written consent shall be effective to take the corporate action referred to therein unless written consents signed by a number of stockholders sufficient to take such action are delivered to the corporation in the manner specified in this paragraph within sixty days of the earliest dated consent so delivered. If action is taken by consent of stockholders and in accordance with the foregoing, there shall be filed with the records of the meetings of stockholders the writing or writings comprising such consent. If action is taken by less than unanimous consent of stockholders, prompt notice of the taking of such action without a meeting shall be given to those who have not consented in writing and a certificate signed and attested to by the secretary that such notice was given shall be filed with the records of the meetings of stockholders. In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the General Corporation Law of the State of Delaware, if such action had been voted upon by the stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning a vote of stockholders, that written consent has been given under Section 228 of said General Corporation Law and that written notice has been given as provided in such Section 228. 2.8. Proxy Representation. Every stockholder may authorize another person or persons to act for him by proxy in all matters in which a stockholder is entitled to participate, whether by waiving notice of any meeting, objecting to or voting or participating at a meeting, or expressing consent or dissent without a meeting. Every proxy must be signed by the stockholder or by his attorney-in-fact. No proxy shall be voted or acted upon after three years from its date unless such proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and, if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. The authorization of a proxy may but need not be limited to specified action, provided, however, that if a proxy limits its authorization to a meeting or meetings of stockholders, unless otherwise specifically provided such proxy shall entitle the holder thereof to vote at any adjourned session but shall not be valid after the final adjournment thereof. 2.9. Inspectors. The directors or the person presiding at the meeting may, but need not, appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. 3 The inspectors, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. 2.10. List of Stockholders. The secretary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in his name. The stock ledger shall be the only evidence as to who are stockholders entitled to examine such list or to vote in person or by proxy at such meeting. Section 3. BOARD OF DIRECTORS 3.1. Number. The number of directors which shall constitute the whole board shall not be less than one nor more than ten in number. Thereafter, within the foregoing limits, the stockholders at the annual meeting shall determine the number of directors and shall elect the number of directors as determined. Within the foregoing limits, the number of directors may be increased at any time or from time to time by the stockholders or by the directors by vote of a majority of the directors then in office. The number of directors may be decreased to any number permitted by the foregoing at any time either by the stockholders or by the directors by vote of a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation or removal of one or more directors. Directors need not be stockholders. 3.2. Tenure. Except as otherwise provided by law, by the certificate of incorporation or by these by-laws, each director shall hold office until the next annual meeting and until his successor is elected and qualified, or until he sooner dies, resigns, is removed or becomes disqualified. 3.3. Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors who shall have, and may exercise all the powers of the corporation and do all such lawful acts and things as are not by law, the certificate of incorporation or these by-laws directed or required to be exercised or done by the stockholders. 3.4. Vacancies. Vacancies and any newly created directorships resulting from any increase in the number of directors may be filled by vote of the stockholders at a meeting called for the purpose, or by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. When one or more directors shall resign from the board, effective at a future date, a majority of the directors then in office, including those who have resigned, shall have power to fill such vacancy or vacancies, 4 the vote or action by writing thereon to take effect when such resignation or resignations shall become effective. The directors shall have and may exercise all their powers notwithstanding the existence of one or more vacancies in their number, subject to any requirements of law or of the certificate of incorporation or of these by-laws as to the number of directors required for a quorum or for any vote or other actions. 3.5. Committees. The board of directors may, by vote of a majority of the whole board, (a) designate, change the membership of or terminate the existence of any committee or committees, each committee to consist of one or more of the directors; (b) designate one or more directors as alternate members of any such committee who may replace any absent or disqualified member at any meeting of the committee; and (c) determine the extent to which each such committee shall have and may exercise the powers of the board of directors in the management of the business and affairs of the corporation, including the power to authorize the seal of the corporation to be affixed to all papers which require it and the power and authority to declare dividends or to authorize the issuance of stock; excepting, however, such powers which by law, by the certificate of incorporation or by these by-laws they are prohibited from so delegating. In the absence or disqualification of any member of such committee and his alternate, if any, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the board or such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these by-laws for the conduct of business by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors upon request. 3.6. Regular Meetings. Regular meetings of the board of directors may be held without call or notice at such places within or without the State of Delaware and at such times as the board may from time to time determine, provided that notice of the first regular meeting following any such determination shall be given to absent directors. A regular meeting of the directors may be held without call or notice immediately after and at the same place as the annual meeting of stockholders. 3.7. Special Meetings. Special meetings of the board of directors may be held at any place within or without the State of Delaware designated in the notice of the meeting, when called by the chairman of the board, if any, the president, or by one-third or more in number of the directors, reasonable notice thereof being given to each director by the secretary or the chairman of the board, if any, the president or any one of the directors calling the meeting. 3.8. Notice. It shall be reasonable and sufficient notice to a director to send notice by mail at least forty-eight hours or by telegram at least twenty-four hours before the meeting addressed to him at his usual or last known business or residence address or to give notice to him in person or by telephone at least twenty-four hours before the 5 meeting. Notice of a meeting need not be given to any director if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Neither notice of a meeting nor a waiver of a notice need specify the purposes of the meeting. 3.9. Quorum. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, at any meeting of the directors a majority of the directors then in office shall constitute a quorum; a quorum shall not in any case be less than one-third of the total number of directors constituting the whole board. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present, and the meeting may be held as adjourned without further notice. 3.10. Action by Vote. Except as may be otherwise provided by law, by the certificate of incorporation or by these by-laws, when a quorum is present at any meeting the vote of a majority of the directors present shall be the act of the board of directors. 3.11. Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors or a committee thereof may be taken without a meeting if all the members of the board or of such committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the records of the meetings of the board or of such committee. Such consent shall be treated for all purposes as the act of the board or of such committee, as the case may be. 3.12. Participation in Meetings by Conference Telephone. Members of the board of directors, or any committee designated by such board, may participate in a meeting of such board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other or by any other means permitted by law. Such participation shall constitute presence in person at such meeting. 3.13. Compensation. In the discretion of the board of directors, each director may be paid such fees for his services as director and be reimbursed for his reasonable expenses incurred in the performance of his duties as director as the board of directors from time to time may determine. Nothing contained in this section shall be construed to preclude any director from serving the corporation in any other capacity and receiving reasonable compensation therefor. 3.14. Interested Directors and Officers. (a) No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of the corporation's directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates 6 in the meeting of the board or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. (b) Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. Section 4. OFFICERS AND AGENTS 4.1. Enumeration; Qualification. The officers of the corporation shall be a president, a treasurer, a secretary and such other officers, if any, as the board of directors from time to time may in its discretion elect or appoint including without limitation a chairman of the board, one or more vice presidents and a controller. The corporation may also have such agents, if any, as the board of directors from time to time may in its discretion choose. Any officer may be but none need be a director or stockholder. Any two or more offices maybe held by the same person. Any officer may be required by the board of directors to secure the faithful performance of his duties to the corporation by giving bond in such amount and with sureties or otherwise as the board of directors may determine. 4.2. Powers. Subject to law, to the certificate of incorporation and to the other provisions of these by-laws, each officer shall have, in addition to the duties and powers herein set forth, such duties arid powers as are commonly incident to his office and such additional duties and powers as the board of directors may from time to time designate. 4.3. Election. The officers may be elected by the board of directors at their first meeting following the annual meeting of the stockholders or at any other time. At any time or from time to time the directors may delegate to any officer their power to elect or appoint any other officer or any agents. 4.4. Tenure. Each officer shall hold office until the first meeting of the board of directors following the next annual meeting of the stockholders and until his respective 7 successor is chosen and qualified unless a shorter period shall have been specified by the terms of his election or appointment, or in each case until he sooner dies, resigns, is removed or becomes disqualified. Each agent shall retain his authority at the pleasure of the directors, or the officer by whom he was appointed or by the officer who then holds agent appointive power. 4.5. Chairman of the Board of Directors, President and Vice President The chairman of the board, if any, shall have such duties and powers as shall be designated from time to time by the board of directors. Unless the board of directors otherwise specifies, the chairman of the board, or if there is none the chief executive officer, shall preside, or designate the person who shall preside, at all meetings of the stockholders and of the board of directors. Unless the board of directors otherwise specifies, the president shall be the chief executive officer and shall have direct charge of all business operations of the corporation and, subject to the control of the directors, shall have general charge and supervision of the business of the corporation. Any vice presidents shall have duties and powers as shall be set forth in these by-laws or as shall be designated from time to time by the board of directors or by the president. 4.6. Treasurer and Assistant Treasurers. Unless the board of directors otherwise specifies, the treasurer shall be the chief financial officer of the corporation and shall be in charge of its funds and valuable papers, and shall have such other duties and power as may be designated from time to time by the board of directors or by the president. If no controller is elected, the treasurer shall, unless the board of directors otherwise specifies, also have the duties and powers of the controller. Any assistant treasurers shall have such duties and powers as shall be designated from time to time by the board of directors, the president or the treasurer. 4.7. Controller and Assistant Controllers. If a controller is elected, he shall, unless the board of directors otherwise specifies, be the chief accounting officer of the corporation and be in charge of its books of account and accounting records, and of its accounting procedures. He shall have such other duties and powers as may be designated from time to time by the board of directors, the president or the treasurer. Any assistant controller shall have such duties and powers as shall be designated from time to time by the board of directors, the president, the treasurer or the controller. 4.8. Secretary and Assistant Secretaries. The secretary shall record all proceedings of the stockholders, of the board of directors and of committees of the board of directors in a book or series of books to be kept therefor and shall file therein all actions by written consent of stockholders or directors. In the absence of the secretary from any meeting, an assistant secretary, or if there be none or he is absent, a temporary secretary chosen at the meeting, shall record the proceedings thereof. Unless a transfer 8 agent has been appointed the secretary shall keep or cause to be kept the stock and transfer records of the corporation, which shall contain the names and record addresses of all stockholders and the number of shares registered in the name of each stockholder. He shall have such other duties and powers as may from time to time be designated by the board of directors or the president. Any assistant secretaries shall have such duties and powers as shall be designated from time to time by thee board of directors, the president or the secretary. Section 5. RESIGNATIONS AND REMOVALS 5.1. Any director or officer may resign at any time by delivering his resignation in writing to the chairman of the board, if any, the president, or the secretary or to a meeting of the board of directors. Such resignation shall be effective upon receipt unless specified to be effective some other time, and without in either case the necessity of its being accepted unless the resignation shall so state. A director (including persons elected by directors to fill vacancies in the board) may be removed from office with or without cause by the vote of the holders of a majority of the shares issued and outstanding and entitled to vote in for election of directors. The board of directors may at any time remove any officer either with or without cause. The board of directors may at any time terminate or modify the authority of any agent. No director or officer resigning and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the corporation) no director or officer removed shall have any right to any compensation as such director or officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise; unless, in the case of a resignation, the directors, or, in the case of removal, the body acting on the removal, shall in their or its discretion provide for compensation. Section 6. VACANCIES 6.1. If the office of the president or the treasurer or the secretary becomes vacant, the directors may elect a successor by vote of a majority of the directors then in office. If the office of any other officer becomes vacant, any person or body empowered to elect or appoint that officer may choose a successor. Each such successor shall hold office for the unexpired term, and in the case of the president, the treasurer and the secretary until his successor is chosen and qualified or in each case until he sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a directorship shall be filled as specified in Section 3.4 of these by-laws. Section 7. CAPITAL STOCK 7.1. Stock Certificates. Each stockholder shall be entitled to a certificate stating the number and the class and the designation of the series, if any, of the shares held by him, in such form as shall, in conformity to law, the certificate of incorporation and the by-laws, be prescribed from time to time by the board of directors. Such certificate shall be signed by the chairman or vice chairman of the board, if any, or the 9 president or a vice president and by the treasurer or an assistant treasurer or by the secretary or an assistant secretary. Any of or all the signatures on the certificate may be a facsimile. In case an officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent, or registrar at the time of its issue. 7.2. Loss of Certificates. In the case of the alleged theft, loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms, including receipt of a bond sufficient to indemnify the corporation against any claim on account thereof, as the board of directors may prescribe. Section 8. TRANSFER OF SHARES OF STOCK 8.1. Transfer on Books. Subject to the restrictions, if any, stated or noted on the stock certificate, shares of stock may be transferred on the books of the corporation by the surrender to the corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly executed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the board of directors or the transfer agent of the corporation may reasonably require. Except as may be otherwise required by law, by the certificate of incorporation or by these by-laws, the corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to receive notice and to vote or to give any consent with respect thereto and to be held liable for such calls and assessments, if any, as may lawfully be made thereon, regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. It shall be the duty of each stockholder to notify the corporation of his post office address. 8.2. Record Date and Closing Transfer Books. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no such record date is fixed by the board of directors, the record date for determining the stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. 10 In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no such record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by the General Corporation Law of the State of Delaware, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in Delaware by hand or certified or registered mail, return receipt requested, to its principal place of business or to an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. If no record date has been fixed by the board of directors and prior action by the board of directors is required by the General Corporation Law of the State of Delaware, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be more than sixty days prior to such payment, exercise or other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto. Section 9. CORPORATE SEAL 9.1. Subject to alteration by the directors, the seal of the corporation shall consist of a flat-faced circular die with the word "Delaware" and the name of the corporation cut or engraved thereon, together with such other words, dates or images as may be approved from time to time by the directors. Section 10. EXECUTION OF PAPERS 10.1. Except as the board of directors may generally or in particular cases authorize the execution thereof in some other manner, all deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the corporation shall be signed by the chairman of the board, if any, the president, a vice president or the treasurer. Section 11. FISCAL YEAR 11.1. The fiscal year of the corporation shall end on the 31st of December. 11 Section 12. AMENDMENTS 12.1. These by-laws may be adopted, amended or repealed by vote of a majority of the directors then in office or by vote of a majority of the stock outstanding and entitled to vote. Any by-law, whether adopted, amended or repealed by the stockholders or directors, may be amended or reinstated by the stockholders or the directors. 12 EX-4.4 12 y95660a4exv4w4.txt FIRST SUPPLEMENTAL INDENTURE Exhibit 4.4 FIRST SUPPLEMENTAL INDENTURE FIRST SUPPLEMENTAL INDENTURE, dated as of August 27, 2004, among Ply Gem Industries, Inc., a Delaware corporation (the "Company"), MWM Holding, Inc., a Delaware corporation ("MWM Holding"), MW Manufacturers Corp., a Delaware corporation ("MW Manufacturers"), MW Manufacturers, Inc., a Delaware corporation ("MW"), Patriot Manufacturing, Inc., a Delaware corporation ("Patriot"), Lineal Technologies, Inc., a Delaware corporation ("Lineal"), and U.S. Bank National Association, as trustee (the "Trustee"). WHEREAS, the Company, its parent, Ply Gem Holdings, Inc., a Delaware corporation ("Holdings"), its domestic subsidiaries, Great Lakes Window, Inc., an Ohio 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 Trustee entered into an indenture dated as of February 12, 2004 (the "Indenture") to provide for the issuance of the Company's 9% Senior Subordinated Notes due 2012; WHEREAS, on the date hereof, the Company has acquired all of the issued and outstanding stock of MWM Holding and has become the indirect owner of all the issued and outstanding stock of MW Manufacturers, MW, Patriot and Lineal, all wholly-owned domestic subsidiaries of MWM Holding; WHEREAS, pursuant to Section 4.16 of the Indenture, MWM Holding, MW Manufacturers, MW, Patriot and Lineal, as new Restricted Subsidiaries, are required to enter into this Supplemental Indenture (the "Supplemental Indenture") as Guarantors; WHEREAS, the Company, MWM Holding, MW Manufacturers, MW, Patriot and Lineal and the Trustee are authorized to enter into this Supplemental Indenture; NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained in this Supplemental Indenture and for other good and valuable consideration, the receipt and sufficiency of which are herein acknowledged, the Company, MWM Holding, MW Manufacturers, MW, Patriot and Lineal and the Trustee hereby agree for the equal and the ratable benefit of all Holders of the Notes as follows: ARTICLE I DEFINITIONS 1.1 Definitions. For purposes of this Supplemental Indenture, the terms defined in the recitals shall have the meanings therein specified; any terms defined in the Indenture and not defined herein shall have the same meanings herein as therein defined; and references to Articles or Sections shall, unless the context indicates otherwise, be references to Articles or Sections of the Indenture. ARTICLE II GUARANTEES OF NOTES AND OTHER PROVISIONS 2.1 MWM Holding Guarantee. (a) MWM Holding hereby, jointly and severally with the other Guarantors, unconditionally and irrevocably guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers or any other Guarantors to the Holders or the Trustee hereunder or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all other obligations of the Issuers and all other obligations of the other Guarantors (including under the Note Guarantees), in each case, to the Holders or the Trustee hereunder or thereunder (including amounts due the Trustee under Section 7.07 of the Indenture), all in accordance with the terms hereof and thereof (collectively, the "Guarantee Obligations"); and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuers to the Holders under the Indenture or under the Notes, for whatever reason, MWM Holding shall be obligated to pay, or to perform or cause the performance of, the same immediately. A Default under the Indenture or the Notes shall constitute an event of default under the Note Guarantees, and shall entitle the Holders of Notes to accelerate the obligations of MWM Holding thereunder in the same manner and to the same extent as the obligations of the Issuers. (b) MWM Holding, the Trustee and each Holder by its acceptance of a Note hereby agrees that the Note Guarantee of MWM Holding provided hereunder shall be subject to all terms, provisions and conditions in the Indenture that relate to a Note Guarantee (including, without limitation, Article 11 of the Indenture). MWM Holding further agrees to be bound by, and to comply with, all provisions of the Indenture and Note Guarantee that are applicable to a Guarantor that is a Restricted Subsidiary. 2.2 MW Manufacturers Guarantee. (a) MW Manufacturers hereby, jointly and severally with the other Guarantors, unconditionally and irrevocably guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers or any other Guarantors to the Holders or the Trustee hereunder 2 or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all Guarantee Obligations in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuers to the Holders under the Indenture or under the Notes, for whatever reason, MW Manufacturers shall be obligated to pay, or to perform or cause the performance of, the same immediately. A Default under the Indenture or the Notes shall constitute an event of default under the Note Guarantees, and shall entitle the Holders of Notes to accelerate the obligations of MW Manufacturers thereunder in the same manner and to the same extent as the obligations of the Issuers. (b) MW Manufacturers, the Trustee and each Holder by its acceptance of a Note hereby agrees that the Note Guarantee of MW Manufacturers provided hereunder shall be subject to all terms, provisions and conditions in the Indenture that relate to a Note Guarantee (including, without limitation, Article 11 of the Indenture). MW Manufacturers further agrees to be bound by, and to comply with, all provisions of the Indenture and Note Guarantee that are applicable to a Guarantor that is a Restricted Subsidiary. 2.3 MW Guarantee. (a) MW hereby, jointly and severally with the other Guarantors, unconditionally and irrevocably guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers or any other Guarantors to the Holders or the Trustee hereunder or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all Guarantee Obligations in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuers to the Holders under the Indenture or under the Notes, for whatever reason, MW shall be obligated to pay, or to perform or cause the performance of, the same immediately. A Default under the Indenture or the Notes shall constitute an event of default under the 3 Note Guarantees, and shall entitle the Holders of Notes to accelerate the obligations of MW thereunder in the same manner and to the same extent as the obligations of the Issuers. (b) MW, the Trustee and each Holder by its acceptance of a Note hereby agrees that the Note Guarantee of MW provided hereunder shall be subject to all terms, provisions and conditions in the Indenture that relate to a Note Guarantee (including, without limitation, Article 11 of the Indenture). MW further agrees to be bound by, and to comply with, all provisions of the Indenture and Note Guarantee that are applicable to a Guarantor that is a Restricted Subsidiary. 2.4 Patriot Guarantee. (a) Patriot hereby, jointly and severally with the other Guarantors, unconditionally and irrevocably guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers or any other Guarantors to the Holders or the Trustee hereunder or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all Guarantee Obligations in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuers to the Holders under the Indenture or under the Notes, for whatever reason, Patriot shall be obligated to pay, or to perform or cause the performance of, the same immediately. A Default under the Indenture or the Notes shall constitute an event of default under the Note Guarantees, and shall entitle the Holders of Notes to accelerate the obligations of Patriot thereunder in the same manner and to the same extent as the obligations of the Issuers. (b) Patriot, the Trustee and each Holder by its acceptance of a Note hereby agrees that the Note Guarantee of Patriot provided hereunder shall be subject to all terms, provisions and conditions in the Indenture that relate to a Note Guarantee (including, without limitation, Article 11 of the Indenture). Patriot further agrees to be bound by, and to comply with, all provisions of the Indenture and Note Guarantee that are applicable to a Guarantor that is a Restricted Subsidiary. 2.5 Lineal Guarantee. (a) Lineal hereby, jointly and severally with the other Guarantors, unconditionally and irrevocably guarantees to each Holder of a Note 4 authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Notes or the obligations of the Issuers or any other Guarantors to the Holders or the Trustee hereunder or thereunder: (a) (x) the due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, upon redemption or repurchase, by acceleration or otherwise, (y) the due and punctual payment of interest on the overdue principal and (to the extent permitted by law) interest, if any, on the Notes and (z) the due and punctual payment and performance of all Guarantee Obligations in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, the due and punctual payment and performance of Guarantee Obligations in accordance with the terms of the extension or renewal, whether at maturity, upon redemption or repurchase, by acceleration or otherwise. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of the Issuers to the Holders under the Indenture or under the Notes, for whatever reason, Lineal shall be obligated to pay, or to perform or cause the performance of, the same immediately. A Default under the Indenture or the Notes shall constitute an event of default under the Note Guarantees, and shall entitle the Holders of Notes to accelerate the obligations of Lineal thereunder in the same manner and to the same extent as the obligations of the Issuers. (b) Lineal, the Trustee and each Holder by its acceptance of a Note hereby agrees that the Note Guarantee of Lineal provided hereunder shall be subject to all terms, provisions and conditions in the Indenture that relate to a Note Guarantee (including, without limitation, Article 11 of the Indenture). Lineal further agrees to be bound by, and to comply with, all provisions of the Indenture and Note Guarantee that are applicable to a Guarantor that is a Restricted Subsidiary. 2.6 Execution and Delivery of Note Guarantees. The delivery of any Note by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of the Note Guarantees on behalf of MWM Holding, MW Manufacturers, MW, Patriot or Lineal. 2.7 Additional Notes. For avoidance of doubt, it is understood that on the first Interest Payment Date for any Additional Notes, the interest payable in respect of each $1,000.00 principal amount of such Additional Notes may, as determined by the Issuer at the time of issuance of such Additional Notes, be less than the interest payable in respect of each $1,000.00 principal amount of the other outstanding Notes. 2.8 No Personal Liability. No stockholder, officer, director, employee or incorporator, past, present or future, of MWM Holding, MW Manufacturers, MW, Patriot or Lineal, as such, shall have any personal liability under the Note Guarantees of MWM Holding, MW Manufacturers, MW, Patriot or Lineal by reason of his, her or its status as such stockholder, officer, director, employee or incorporator. 5 ARTICLE III MISCELLANEOUS 3.1 Effect of the Supplemental Indenture. This Supplemental Indenture supplements the Indenture and shall be a part and subject to all the terms thereof. Except as supplemented hereby, the Indenture and the Notes issued thereunder shall continue in full force and effect. 3.2 Counterparts. This Supplemental Indenture may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. 3.3 GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 6 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed on this 27th day of August, 2004. PLY GEM INDUSTRIES, INC. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer President and Chief Executive Officer MWM HOLDING, INC. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer Vice President MWM MANUFACTURERS, CORP. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer Vice President MW MANUFACTURERS, INC. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer Vice President 7 PATRIOT MANUFACTURING, INC. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer Vice President LINEAL TECHNOLOGIES, INC. By: /s/ Lee D. Meyer ----------------------------------- Lee D. Meyer Vice President 8 U.S. BANK NATIONAL ASSOCIATION, as Trustee By: /s/ Richard Prokosch ------------------------------------- Name: Richard Prokosch Title: Vice President 9 EX-5.1 13 y95660a4exv5w1.txt OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP Exhibit 5.1 September 9, 2004 Ply Gem Industries, Inc. 185 Platt Clay Way 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"), Variform, Inc., a Missouri corporation ("Variform"), MWM Holding, Inc., a Delaware corporation ("MWM Holding"), MW Manufacturers Holding Corp., a Delaware corporation ("MW Manufacturers Holding"), MW Manufacturers, Inc., a Delaware corporation ("MW"), Patriot Manufacturing, Inc., a Delaware corporation ("Patriot"), and Lineal Technologies, Inc., a Delaware corporation ("Lineal") (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, dated as of February 12, 2004 (the "Indenture"), as supplemented by the First Supplemental Indenture, dated as of August 27, 2004 (the "Supplemental Indenture"), among the Company, the Guarantors and U.S. Bank National Association, as trustee. 3 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; 3. the Supplemental Indenture, included as Exhibit 4.4 to the Registration Statement; and 4. the Registration Rights Agreement, dated as of February 12, 2004 (the "Registration Rights Agreement), among the Company, the Guarantors referenced therein 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 4 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 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, as supplemented, and Registration Rights Agreement, the Exchange Notes will be legal, valid and binding obligations of the 5 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, as supplemented, 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 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, PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP EX-5.2 14 y95660a4exv5w2.txt OPINION OF LATHROP & GAGE L.C. Exhibit 5.2 September 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 Ply Gem Industries, Inc. September 2, 2004 Page 2 corporate records and other documents as we have considered relevant and necessary for the purposes of this opinion. 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. 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. Ply Gem Industries, Inc. September 2, 2004 Page 3 (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. 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, LATHROP & GAGE L.C. EX-10.21 15 y95660a4exv10w21.txt SECOND AND RESTATED CREDIT AGREEMENT EXHIBIT 10.21 ================================================================================ $381,000,000 SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF FEBRUARY 12, 2004, AS FIRST AMENDED AND RESTATED AS OF MARCH 3, 2004, AS FURTHER AMENDED AND RESTATED AS OF AUGUST 27, 2004, AMONG PLY GEM INDUSTRIES, INC., AS U.S. BORROWER, CWD WINDOWS AND DOORS, INC. AS CANADIAN BORROWER, PLY GEM HOLDINGS, INC. AND THE OTHER GUARANTORS PARTY HERETO, AS GUARANTORS, THE LENDERS PARTY HERETO, UBS SECURITIES LLC AND DEUTSCHE BANK SECURITIES INC., AS JOINT LEAD ARRANGERS AND BOOKRUNNERS, J.P. MORGAN SECURITIES INC., AS CO-ARRANGER, UBS AG, STAMFORD BRANCH, AS ISSUING BANK, ADMINISTRATIVE AGENT AND COLLATERAL AGENT, UBS LOAN FINANCE LLC, AS SWINGLINE LENDER, DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, AS SYNDICATION AGENT, AND JPMORGAN CHASE BANK, AS DOCUMENTATION AGENT Cahill Gordon & Reindel LLP 80 Pine Street New York, NY 10005 ================================================================================ TABLE OF CONTENTS

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ANNEXES Annex I Applicable Margin Annex II Amortization Table SCHEDULES Schedule 1.01(a) Assumed Debt Schedule 1.01(b) Consolidated EBITDA Adjustments Schedule 1.01(c) Material Indebtedness Schedule 1.01(d) Mortgaged Property Schedule 1.01(e) Refinancing Indebtedness to Be Repaid Schedule 1.01(f) U.S. Subsidiary Guarantors Schedule 3.03 Governmental Approvals; Compliance with Laws Schedule 3.05(b) Real Property Schedule 3.07(a) Subsidiaries

-iv- Schedule 3.07(c) Corporate Organizational Chart Schedule 3.09(c) Material Agreements Schedule 3.17 Employee Benefit Plans Schedule 3.18 Environmental Matters Schedule 3.19 Insurance Schedule 3.21 Acquisition Documents Schedule 3.24 MW Acquisition Documents Schedule 4.01(g) Local Counsel Schedule 4.01(n)(vi) Landlord Access Agreements Schedule 4.01(o)(iii) Title Insurance Amounts Schedule 5.13(a) Post-Closing Matters Schedule 6.01(b) Existing Indebtedness Schedule 6.02(c) Existing Liens Schedule 6.04(b) Existing Investments Schedule 6.09(n) Existing Affiliate Agreements EXHIBITS Exhibit A Form of Administrative Questionnaire Exhibit B Form of Assignment and Assumption Exhibit C-1 Form of U.S. Borrowing Request Exhibit C-2 Form of Canadian Borrowing Request Exhibit D Form of Compliance Certificate Exhibit E Form of Interest Election Request Exhibit F Form of Joinder Agreement Exhibit G-1 Form of U.S. Landlord Access Agreement Exhibit G-2 Form of Canadian Landlord Access Agreement Exhibit H Form of LC Request Exhibit I Form of Lender Addendum Exhibit J-1 Form of Mortgage Exhibit J-2 Form of Canadian Mortgage Exhibit J-3 Form of Leasehold Mortgage Exhibit K-1 Form of Existing U.S. Term Note Exhibit K-2 Form of Canadian Term Note Exhibit K-3 Form of Revolving Note Exhibit K-4 Form of Swingline Note Exhibit K-5 Form of Additional U.S. Term Note Exhibit L-1 Form of Perfection Certificate Exhibit L-2 Form of Perfection Certificate Supplement Exhibit L-3 Form of Second Amendment Perfection Certificate Supplement Exhibit M-1 Form of U.S. Security Agreement Exhibit M-2 Form of Canadian Security Agreement Exhibit N-1 Form of Opinion of Company Counsel Exhibit N-2 Form of Opinion of Local Counsel Exhibit N-3 Form of Opinion of Canadian Counsel Exhibit O Form of Solvency Certificate Exhibit P-1 Form of Amended and Restated U.S. Intercompany Note Exhibit P-2 Form of Amended and Restated Canadian Intercompany Note Exhibit Q Form of U.S. Tax Compliance Certificate

-v- CREDIT AGREEMENT This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT") dated as of February 12, 2004, first amended and restated as of March 3, 2004 and further amended and restated as of August 27, 2004, among PLY GEM INDUSTRIES, INC., a Delaware corporation ("U.S. BORROWER"), CWD Windows and Doors, Inc., a corporation organized under the federal laws of Canada ("CANADIAN BORROWER" and, together with U.S. Borrower, each a "BORROWER" and collectively the "BORROWERS"), PLY GEM HOLDINGS, INC., a Delaware corporation ("PARENT"), the Subsidiary Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I), the Lenders, UBS SECURITIES LLC and DEUTSCHE BANK SECURITIES INC., as joint lead arrangers and bookrunners (in such capacity, "JOINT LEAD ARRANGERS"), J.P. MORGAN SECURITIES INC., as co-arranger (in such capacity, "CO-ARRANGER"), JPMORGAN CHASE BANK, as documentation agent (in such capacity, "DOCUMENTATION AGENT"), DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as syndication agent (in such capacity, "SYNDICATION AGENT"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, "SWINGLINE LENDER"), and UBS AG, STAMFORD BRANCH, as issuing bank (in such capacity, "ISSUING BANK"), as administrative agent (in such capacity, "ADMINISTRATIVE AGENT") for the Lenders and as collateral agent (in such capacity, "COLLATERAL AGENT") for the Secured Parties and the Issuing Bank. WITNESSETH: WHEREAS, Holdings entered into a stock purchase agreement, dated as of December 19, 2003, as amended on January 23, 2004 and February 12, 2004 (as further amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof and thereof, the "ACQUISITION AGREEMENT"), with Nortek Inc., a Delaware corporation, and WDS LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Nortek, Inc. (collectively, the "SELLER"), to acquire (the "ACQUISITION") all of the capital stock of U.S. Borrower, and on the Original Closing Date, Holdings transferred its rights and obligations under the Acquisition Agreement to Parent. WHEREAS, the Refinancing, the Acquisition, the issuance of the Senior Subordinated Notes and the Equity Financing were consummated on the Original Closing Date. WHEREAS, the Borrowers, the Agents and the Lenders entered into this Agreement on February 12, 2004 and first amended and restated this Agreement on March 3, 2004 (as so amended and restated as of such date, the "ORIGINAL CREDIT AGREEMENT"). WHEREAS, the Borrowers requested various Commitments and Credit Extensions on the Original Closing Date and the First Amendment Effectiveness Date, which occurred on such dates. WHEREAS, U.S. Borrower shall acquire (the "MW ACQUISITION") all of the Equity Interests of MWM Holding, Inc., a Delaware corporation ("MW"), pursuant to a stock purchase agreement dated as of July 23, 2004 among MW, the stockholders listed on Schedule 1 attached thereto (the "MW SELLERS") and U.S. Borrower (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof and thereof, the "MW PURCHASE AGREEMENT"). WHEREAS, in connection with the MW Acquisition, U.S. Borrower shall repay all existing indebtedness of MW and its subsidiaries (the "MW REFINANCING"). WHEREAS, in connection with the MW Acquisition, (i) U.S. Borrower requests that the Additional U.S. Term Loan Lenders extend credit to it in the form of Additional U.S. Term Loans on the Second Amendment Effectiveness Date in an aggregate principal amount of $111.0 million, (ii) U.S. Borrower requests that the Revolving Commitment be increased to $70.0 million as of the Second Amendment Effectiveness Date and that the Revolving Lenders extend credit to it in the form of Revolving Loans from time to time on and after the Second Amendment Effectiveness Date and prior to the Revolving Maturity Date, provided not more than an aggregate of $15.0 million of Revolving Loans will be drawn or outstanding on the Second Amendment Effectiveness Date, (iii) U.S. Borrower requests that the Swingline Commitment be increased to $15.0 million on the Second Amendment Effectiveness Date and (iv) U.S. Borrower requests that the LC Commitment be increased to $35.0 million on the Second Amendment Effectiveness Date. WHEREAS, the MW Refinancing, the MW Acquisition, the issuance of the New Senior Subordinated Notes and the Supplemental Financing will be consummated on the Second Amendment Effectiveness Date. WHEREAS, the Borrowers, the Administrative Agent and the Lenders desire, subject to Section 11.06, to further amend and restate this Agreement as set forth herein. WHEREAS, the proceeds of the Loans are to be used in accordance with Section 3.12. NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrowers and the Issuing Bank is willing to issue letters of credit for the account of U.S. Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings specified below: "ABR," when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "ABR BORROWING" shall mean a Borrowing comprised of ABR Loans. "ABR LOAN" shall mean any ABR Term Loan or ABR Revolving Loan. "ABR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ABR TERM LOAN" shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II. "ACQUISITION" shall have the meaning assigned to such term in the first recital hereto. "ACQUISITION AGREEMENT" shall have the meaning assigned to such term in the first recital hereto. "ACQUISITION CONSIDERATION" shall mean the purchase consideration for any Permitted Acquisition and all other payments by Parent or any of its Subsidiaries in exchange for, or as part of, or in -2- connection with, any Permitted Acquisition (other than fees and expenses related to such Permitted Acquisition), whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, "earn-outs" and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Parent or any of its Subsidiaries. "ACQUISITION DOCUMENTS" shall mean the collective reference to the Acquisition Agreement and the other documents listed on Schedule 3.21. "ADDITIONAL TERM LOANS" shall have the meaning assigned to such term in Section 11.02(d). "ADDITIONAL U.S. TERM LOAN" shall mean the term loans made by the Additional U.S. Term Loan Lenders to U.S. Borrower pursuant to Section 2.01(e). Each Additional U.S. Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan. "ADDITIONAL U.S. TERM LOAN COMMITMENT" shall mean, with respect to each Additional U.S. Term Loan Lender, the commitment, if any, of such Additional U.S. Term Loan Lender to make an Additional U.S. Term Loan hereunder on the Second Amendment Effectiveness Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Additional U.S. Term Loan Lender. The aggregate amount of the Lenders' Additional U.S. Term Loan Commitments as of the Second Amendment Effectiveness Date is $111.0 million. "ADDITIONAL U.S. TERM LOAN LENDER" shall mean each U.S. Lender that has an Additional U.S. Term Loan Commitment or is the holder of an Additional U.S. Term Loan. "ADJUSTED LIBOR RATE" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, (a) an interest rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) determined by the Administrative Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period. "ADMINISTRATIVE AGENT" shall have the meaning assigned to such term in the preamble hereto and includes each other person appointed as the successor pursuant to Article X. "ADMINISTRATIVE AGENT FEES" shall have the meaning assigned to such term in Section 2.05(b). "ADMINISTRATIVE QUESTIONNAIRE" shall mean an Administrative Questionnaire in the form of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent. "ADVISORY SERVICES AGREEMENT" means the advisory services agreement, dated as of February 12, 2004, among U.S. Borrower and Sponsor. "AFFILIATE" shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under com- -3- mon Control with the person specified; provided, however, that, for purposes of Section 6.09, the term "Affiliate" shall also include (i) any person that directly or indirectly owns more than 10% of any class of Equity Interests of the person specified or (ii) any person that is an executive officer or director of the person specified. "AGENTS" shall mean the Arrangers, the Documentation Agent, the Syndication Agent, the Administrative Agent and the Collateral Agent; and "AGENT" shall mean any of them. "AGREEMENT" shall have the meaning assigned to such term in the preamble hereto. "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate or the Federal Funds Effective Rate, respectively. "ANTI-TERRORISM LAWS" shall have the meaning assigned to such term in Section 3.22. "APPLICABLE FEE" shall mean, for any day, with respect to any Commitment, the applicable percentage set forth in Annex I under the caption "Applicable Fee". "APPLICABLE MARGIN" shall mean, for any day, with respect to any (i) Term Loan, (x) 2.50% for Eurodollar Loans and (y) 1.50% for ABR Loans, and (ii) Revolving Loan, the applicable percentage set forth in Annex I. "ARRANGERS" shall mean the Joint Lead Arrangers and the Co-Arranger. "ASSET SALE" shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any Sale and Leaseback Transaction) of any property excluding sales of inventory and dispositions of cash equivalents, in each case, in the ordinary course of business, by Parent or any of its Subsidiaries and (b) any issuance or sale of any Equity Interests of any Subsidiary of Parent, in each case, to any person other than (i) either Borrower, (ii) any Subsidiary Guarantor or (iii) other than for purposes of Section 6.06, any other Subsidiary. "ASSIGNMENT AND ASSUMPTION" shall mean an assignment and assumption entered into by a Lender and an assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit B, or such other form as shall be approved by the Administrative Agent. "ASSUMED DEBT" shall mean the Indebtedness set forth on Schedule 1.01(a) hereto. "BAILEE LETTER" shall have the meaning assigned thereto in the Security Agreement. "BASE RATE" shall mean, for any day, a rate per annum that is equal to the corporate base rate of interest established by the Administrative Agent in the United States for dollars from time to time; each change in the Base Rate shall be effective on the date such change is effective. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers. -4- "BOARD" shall mean the Board of Governors of the Federal Reserve System of the United States. "BOARD OF DIRECTORS" shall mean, 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. "BORROWER" shall have the meaning assigned to such term in the preamble hereto. "BORROWING" shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan. "BORROWING REQUEST" shall mean either a U.S. Borrowing Request or a Canadian Borrowing Request as the context shall require. "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. "CALCULATION PERIOD" shall have the meaning assigned to such term in Section 2.06(f). "CANADIAN BORROWER" shall have the meaning assigned to such term in the preamble hereto. "CANADIAN BORROWING REQUEST" shall mean a request by Canadian Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-2, or such other form as shall be approved by the Administrative Agent. "CANADIAN COLLATERAL ACCOUNT" shall mean a collateral account or sub-account established and maintained by the Collateral Agent for the benefit of the Canadian Secured Parties, in accordance with the provisions of Section 9.01. "CANADIAN GUARANTEED OBLIGATIONS" shall have the meaning assigned to such term in Section 7.01. "CANADIAN GUARANTORS" shall have the meaning assigned to such term in Section 7.01. "CANADIAN INTERCOMPANY NOTE" shall mean a promissory note substantially in the form of Exhibit P-2. "CANADIAN LOAN PARTIES" shall mean Canadian Borrower and the Canadian Guarantors; provided that Parent and U.S. Borrower shall only constitute Canadian Loan Parties in their capacities as Canadian Guarantors. "CANADIAN MORTGAGED PROPERTY" shall mean the Mortgaged Property owned or leased by the Canadian Loan Parties. -5- "CANADIAN OBLIGATIONS" shall mean (a) obligations of Canadian Borrower and the other Canadian Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Canadian Term Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of Canadian Borrower and the other Canadian Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Canadian Borrower and the other Canadian Loan Parties under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of Canadian Borrower and the other Canadian Loan Parties under each Hedging Agreement relating to either the Canadian Term Loans or foreign currency exchange rates entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into (provided that each shall provide that it terminates or expires upon, or prior to, the repayment of all Loans hereunder) (each, a "PERMITTED CANADIAN HEDGING AGREEMENT") and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any Canadian Term Loan Lender, any Affiliate of a Canadian Term Loan Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds, in each case, with respect to Canadian Term Loans. "CANADIAN SECURED PARTIES" shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders and each party to a Permitted Canadian Hedging Agreement if such person executes and delivers to the Administrative Agent a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Sections 11.03 and 11.09. "CANADIAN SECURITY AGREEMENT" shall mean a Security Agreement substantially in the form of Exhibit M-2 among the Canadian Loan Parties and Collateral Agent for the benefit of the Canadian Secured Parties. "CANADIAN SECURITY AGREEMENT COLLATERAL" shall mean all property pledged or granted as collateral pursuant to the Canadian Security Agreement delivered on the Original Closing Date or thereafter pursuant to Section 5.10. "CANADIAN SECURITY DOCUMENTS" shall mean the Canadian Security Agreement, the Mortgages entered into by the Canadian Loan Parties and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Canadian Obligations, and all financing statements or instruments of perfection required by this Agreement, the Canadian Security Agreement or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to the Canadian Security Agreement and any other document or instrument utilized to pledge as collateral for the Canadian Obligations any property. "CANADIAN SUBSIDIARY" shall mean a Subsidiary of Canadian Borrower. "CANADIAN SUBSIDIARY GUARANTOR" shall mean a Canadian Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.10. -6- "CANADIAN TERM LOAN" shall mean the term loans made by the Canadian Term Loan Lenders to Canadian Borrower pursuant to Section 2.01(b). Each Canadian Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan. "CANADIAN TERM LOAN COMMITMENT" shall mean, with respect to each Canadian Term Loan Lender, the commitment, if any, of such Canadian Term Loan Lender to make a Canadian Term Loan hereunder on the Original Closing Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Canadian Term Loan Lender. The aggregate amount of the Lenders' Canadian Term Loan Commitments was $30.0 million on the Original Closing Date. "CANADIAN TERM LOAN LENDERS" shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum that provide Canadian Term Loan Commitments or make Canadian Term Loans and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption that provides Canadian Term Loan Commitments or makes Canadian Term Loans, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption. "CAPEX CARRYFOWARD AMOUNT" shall have the meaning assigned to such term in Section 6.10(c). "CAPITAL EXPENDITURES" shall mean, for any period, without duplication, the increase during that period in the gross property, plant or equipment account in the consolidated balance sheet of U.S. Borrower and its Subsidiaries, determined in accordance with GAAP, whether such increase is due to purchase of properties for cash or financed by the incurrence of Indebtedness, but excluding (i) expenditures made in connection with the replacement, substitution or restoration of property pursuant to Section 2.10(f) and (ii) any portion of such increase attributable solely to acquisitions of property, plant and equipment in Permitted Acquisitions. "CAPITAL LEASE OBLIGATIONS" of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "CASH EQUIVALENTS" shall mean, as to any person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or Canada or any agency or instrumentality thereof (provided that the full faith and credit of the United States or Canada is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (b) time deposits and certificates of deposit of (1) any Lender or Agent or (2) any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States or Canada, any state or province thereof or the District of Columbia having, capital and surplus aggregating in excess of $500.0 million and a rating of "A" (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such person; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (d) commercial paper issued by any person incorporated in the United States or Canada rated at least A-1 or the equivalent thereof by Standard & Poor's Rating Service or at least P-1 or the equivalent thereof by Moody's Investors Service Inc., and in each case maturing not more than one year after the date of acquisition by such person; (e) investments in money market funds substantially all of whose as- -7- sets are comprised of securities of the types described in clauses (a) through (d) above; and (f) demand deposit accounts maintained in the ordinary course of business. "CASH INTEREST EXPENSE" shall mean, for any period, Consolidated Interest Expense for such period, less the sum of (a) interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind and (b) items described in clause (c) or, other than to the extent paid in cash, clauses (f) and (g) of the definition of "Consolidated Interest Expense." "CASUALTY EVENT" shall mean any loss of title or any loss of or damage to or destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of Parent or any of its Subsidiaries. "Casualty Event" shall include but not be limited to any taking of all or any part of any Real Property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof. "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq. A "CHANGE IN CONTROL" shall be deemed to have occurred if: (a) Parent at any time ceases to own 100% of the Equity Interests of U.S. Borrower or, prior to an IPO at Parent, Holdings ceases to own 100% of the Equity Interests of Parent; (b) at any time a change of control (as defined in the documentation for any Material Indebtedness) shall occur; (c) prior to an IPO, (i) the Permitted Holders cease to own (directly or indirectly), or to have the power to vote or direct the voting of, Voting Stock of U.S. Borrower representing a majority of the voting power of the total outstanding Voting Stock of U.S. Borrower or (ii) the Permitted Holders cease to own (directly or indirectly) Equity Interests representing a majority of the total economic interests of the Equity Interests of U.S. Borrower; (d) following an IPO, (i) the Permitted Holders shall fail to own (directly or indirectly), or to have the power to vote or direct the voting of, Voting Stock of U.S. Borrower representing more than 35% of the voting power of the total outstanding Voting Stock of U.S. Borrower, (ii) the Permitted Holders cease to own (directly or indirectly) Equity Interests representing more than 35% of the total economic interests of the Equity Interests of U.S. Borrower or (iii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), 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 such person or group shall be deemed to have "beneficial ownership" of all securities that 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 of U.S. Borrower representing more than the voting power of the Voting Stock of U.S. Borrower owned by the Permitted Holders; or (e) following an IPO, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the IPO Entity (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of a majority of the members of the Board of Directors of the IPO Entity, which members comprising such majority are then still in office and were either directors at the -8- 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 IPO Entity. For purposes of this definition, a person shall not be deemed to have beneficial ownership of Equity Interests subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement. "CHANGE IN LAW" shall mean (a) the adoption of any law, treaty, order, policy, rule or regulation or any interpretation or application thereof by any Governmental Authority after the date of this Agreement, (b) any change in any law, treaty, order, policy, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or Issuing Bank (or for purposes of Section 2.12(b), by any lending office of such Lender or by such Lender's or Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "CHARGES" shall have the meaning assigned to such term in Section 11.13. "CLASS," when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Existing U.S. Term Loans, Additional U.S. Term Loans, Canadian Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Existing U.S. Term Loan Commitment, Additional U.S. Term Loan Commitment, Canadian Term Loan Commitment or Swingline Commitment, in each case, under this Agreement as originally in effect or pursuant to Sections 11.02(d) or (f), of which such Loan, Borrowing or Commitment shall be a part. "CO-ARRANGER" shall have the meaning assigned to such term in the preamble hereto. "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time. "COLLATERAL" shall mean, collectively, all of the U.S. Security Agreement Collateral, the Canadian Security Agreement Collateral, the Mortgaged Property and all other property of whatever kind and nature pledged as collateral under any Security Document. "COLLATERAL ACCOUNT" shall mean the Canadian Collateral Account or the U.S. Collateral Account, as applicable. "COLLATERAL AGENT" shall have the meaning assigned to such term in the preamble hereto. "COMMERCIAL LETTER OF CREDIT" shall mean any letter of credit or similar instrument issued for the purpose of providing credit support in connection with the purchase of materials, goods or services by U.S. Borrower or any of its Subsidiaries in the ordinary course of their businesses. "COMMITMENT" shall mean, with respect to any Lender, such Lender's Revolving Commitment, Existing U.S. Term Loan Commitment, Additional U.S. Term Loan Commitment, Canadian Term Loan Commitment or Swingline Commitment, and any Commitment to make Term Loans of a new Class extended by such Lender as provided in Section 11.02(d). "COMMITMENT FEE" shall have the meaning assigned to such term in Section 2.05(a). -9- "COMPANIES" shall mean Parent and its Subsidiaries; and "COMPANY" shall mean any one of them. "COMPLIANCE CERTIFICATE" shall mean a certificate of a Financial Officer substantially in the form of Exhibit D. "CONFIDENTIAL INFORMATION MEMORANDUM" shall mean that certain confidential information memorandum dated as of January 2004 relating to U.S. Borrower and its subsidiaries. "CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any period, the amortization expense of U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED CURRENT ASSETS" shall mean, as at any date of determination, the total assets of U.S. Borrower and its Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of U.S. Borrower and its Subsidiaries in accordance with GAAP. "CONSOLIDATED CURRENT LIABILITIES" shall mean, as at any date of determination, the total liabilities of U.S. Borrower and its Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Loans) on a consolidated balance sheet of U.S. Borrower and its Subsidiaries in accordance with GAAP. "CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any period, the depreciation expense of U.S. Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED EBITDA" shall mean, for any period, Consolidated Net Income for such period, adjusted by (x) adding thereto, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income (and with respect to the portion of Consolidated Net Income attributable to any Subsidiary of U.S. Borrower (other than any Foreign Subsidiary or any U.S. Subsidiary Guarantor) only if a corresponding amount would be permitted at the date of determination to be distributed to U.S. Borrower by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its Organizational Documents and all agreements (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds), instruments, judgments, decrees, orders, statutes, rules and regulations applicable to such Subsidiary or its equityholders): (a) Consolidated Interest Expense for such period, (b) Consolidated Amortization Expense for such period, (c) Consolidated Depreciation Expense for such period, (d) Consolidated Tax Expense for such period, (e) costs and expenses directly incurred (i) in connection with the Transactions during such period (not to exceed $30.0 million) to the extent actually incurred and expensed within one year of the Original Closing Date and (ii) in connection with the Second Amendment Transactions during such period (not to exceed $17.5 million) to the extent actually incurred and expensed within one year of the Second Amendment Effectiveness Date, -10- (f) the aggregate amount of all other non-cash items reducing 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, (g) the amount of management fees and transaction fees paid to Sponsor for such period pursuant to the Advisory Services Agreement in accordance with Section 6.09(e), (h) Restructuring Expenses in an aggregate amount not to exceed $15.0 million in any Test Period and any Restructuring Expenses in connection with the disposition of Thermal-Gard, Inc., (i) other expenses incurred by MW in such period and prior to the Second Amendment Effectiveness Date for management fees and abandoned transaction costs in an aggregate amount not to exceed $30.114 million for the fiscal year ended December 27, 2003 and $250,000 for the six months ended July 3, 2004, (j) amounts relating to items substantially similar to those listed on Schedule 1.01(b) not to exceed $1.929 million in the third quarter of 2004, $1.629 million in the fourth quarter of 2004, $1.433 million in the first quarter of 2005, $1.107 million in the second quarter of 2005 and $217,000 in the third quarter of 2005, and (y) subtracting therefrom the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the accrual of revenue or recording of receivables in the ordinary course of business) for such period, and (z) adding thereto or subtracting therefrom, without duplication of amounts included as Restructuring Expenses, with respect to any part of a Test Period, the adjustments to Consolidated EBITDA set forth on Schedule 1.01(b). Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a Pro Forma Basis (including any Pro Forma Cost Savings) to give effect to the Acquisition, the MW Acquisition, any Permitted Acquisition, each Permitted Sale and Leaseback Transaction and other Asset Sales for consideration individually or in the aggregate in excess of $3.0 million during any Test Period consummated at any time on or after the first day of the Test Period thereof as if the Acquisition, the MW Acquisition and each such Permitted Acquisition had been effected on the first day of such period and as if each such Permitted Sale and Leaseback Transaction and other Asset Sale had been consummated on the day prior to the first day of such period. Notwithstanding the foregoing, Consolidated EBITDA for the last two fiscal quarters of 2003 and for each fiscal quarter of 2004 shall be increased by the amounts indicated on Schedule 1.01(b) to account for the items described thereon to the extent any such amounts were deducted in computing Consolidated Net Income and do not duplicate amounts already added back in computing Consolidated EBITDA. "CONSOLIDATED INDEBTEDNESS" shall mean, as at any date of determination, without duplication, (x) the aggregate amount of all Indebtedness of U.S. Borrower and its Subsidiaries less (y) cash and Cash Equivalents on hand of U.S. Borrower and its Subsidiaries in excess of $2.0 million other than restricted cash that is not held in a Collateral Account (but including, without regard to such $2.0 million threshold, cash held in the Ply Gem LC Restricted Account), determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED INTEREST COVERAGE RATIO" shall mean, for any Test Period, the ratio of (x) Consolidated EBITDA for such Test Period to (y) Cash Interest Expense for such Test Period. -11- "CONSOLIDATED INTEREST EXPENSE" shall mean, for any period, the total consolidated interest expense (less interest income) of U.S. Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP plus, without duplication: (a) imputed interest on Capital Lease Obligations of U.S. Borrower and its Subsidiaries for such period; (b) commissions, discounts and other fees and charges owed by U.S. Borrower or any of its Subsidiaries with respect to letters of credit securing financial obligations, bankers' acceptance financing and receivables financings for such period; (c) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses incurred by U.S. Borrower or any of its Subsidiaries for such period; (d) cash contributions to any employee stock ownership plan or similar trust made by U.S. Borrower or any of its Subsidiaries to the extent such contributions are used by such plan or trust to pay interest or fees to any person (other than U.S. Borrower or a Wholly Owned Subsidiary) in connection with Indebtedness incurred by such plan or trust for such period; (e) all interest paid or payable with respect to discontinued operations of U.S. Borrower or any of its Subsidiaries for such period; (f) the interest portion of any deferred payment obligations of U.S. Borrower or any of its Subsidiaries for such period; and (g) all interest on any Indebtedness of U.S. Borrower or any of its Subsidiaries of the type described in clause (f) or (j) of the definition of "Indebtedness" for such period; provided that (A) to the extent directly related to the Transactions or the Second Amendment Transactions, debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded from the calculation of Consolidated Interest Expense and (B) the amortization during such period of other capitalized financing costs shall be excluded from the calculation of Consolidated Interest Expense; provided 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 on a Pro Forma Basis (including any Pro Forma Cost Savings) to give effect to any Indebtedness incurred, assumed or permanently repaid or extinguished during the relevant Test Period in connection with the Acquisition, the MW Acquisition, any Permitted Acquisitions, each Permitted Sale and Leaseback Transaction and other Asset Sales for consideration individually or in the aggregate in excess of $3.0 million during any Test Period as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period. "CONSOLIDATED NET INCOME" shall mean, for any period, the consolidated net income (or loss) of U.S. Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication: (a) the net income (or loss) of any person (other than a Subsidiary of U.S. Borrower) in which any person other than U.S. Borrower and its Subsidiaries has an ownership interest, ex- -12- cept to the extent that cash in an amount equal to any such income has actually been received by U.S. Borrower or (subject to clause (b) below) any of its Subsidiaries during such period; (b) the net income of any Subsidiary of U.S. Borrower (other than a Foreign Subsidiary or a U.S. Subsidiary Guarantor) during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement (other than any municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds), instrument, judgment, decree, order, statute, rule or regulation applicable to that Subsidiary during such period, except that U.S. Borrower's equity in net loss of any such Subsidiary for such period, other than any non-cash loss that does not result in an accrual or reserve for cash charges in any future period, shall be included in determining Consolidated Net Income; (c) 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 U.S. Borrower or any of its Subsidiaries upon (i) any Asset Sale (other than any dispositions in the ordinary course of business) by U.S. Borrower or any of its Subsidiaries, (ii) the disposition of any Cash Equivalents or (iii) the repayment or cancellation of any Indebtedness of U.S. Borrower or any of its Subsidiaries; (d) gains and losses due solely to fluctuations in currency values and the related tax effects determined in accordance with GAAP for such period; (e) earnings resulting from any reappraisal, revaluation or write-up of assets; (f) unrealized gains and losses with respect to Hedging Obligations for such period; (g) other than for purposes of the definition of Excess Cash Flow, any extraordinary or nonrecurring gain (or extraordinary or nonrecurring loss), together with any related provision for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by U.S. Borrower or any of its Subsidiaries during such period; provided that such nonrecurring losses shall not exceed $7.5 million in any Test Period; (h) any expenses or reserves for liabilities to the extent that the U.S. Borrower or any of its Subsidiaries is entitled to indemnification therefore under binding agreements; provided that any liabilities for which the U.S. Borrower or such Subsidiary is not actually indemnified shall reduce Consolidated Net Income in the period in which it is determined that the U.S. Borrower or such Subsidiary will not be indemnified; and (i) the net income (or loss) of Thermal-Gard, Inc., so long as U.S. Borrower is using commercially reasonable efforts to dispose of it or discontinue its operations. For purposes of this definition of "Consolidated Net Income," "NONRECURRING" means any gain or loss as of any date that is not reasonably likely to recur within 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 and (2) Consolidated Net Income shall be reduced (to the extent not already reduced thereby) by the amount of any payments to or on behalf of Parent made pursuant to Sections 6.08(c) and (d). -13- "CONSOLIDATED SENIOR INDEBTEDNESS" shall mean, as at any date of determination, the difference of Consolidated Indebtedness on such date less the aggregate amount of all Subordinated Indebtedness of the Borrowers and the Subsidiary Guarantors determined on a consolidated basis in accordance with GAAP. "CONSOLIDATED TAX EXPENSE" shall mean, for any period, the tax expense of U.S. Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP. "CONTESTED COLLATERAL LIEN CONDITIONS" shall mean, with respect to any Permitted Lien of the type described in clauses (a), (b), (e) and (f) of Section 6.02, the following conditions: (a) any proceeding instituted contesting such Lien shall operate to stay the sale or forfeiture of any portion of the Collateral on account of such Lien; (b) to the extent such Lien is in an amount in excess of $1,000,000, the appropriate Loan Party shall maintain cash reserves in accordance with GAAP; and (c) such Lien shall in all respects be subject and subordinate in priority to the Lien and security interest created and evidenced by the Security Documents, except if and to the extent that the law or regulation creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Lien and security interest created and evidenced by the Security Documents. "CONTINGENT OBLIGATION" shall mean, as to any person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of any other person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including any obligation of such person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers' acceptances, letters of credit and similar credit arrangements, until a reimbursement obligation arises (which reimbursement obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term "Contingent Obligation" shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith. "CONTROL" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto. "CONTROL AGREEMENT" shall have the meaning assigned to such term in the U.S. Security Agreement. -14- "CREDIT EXTENSION" shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the amendment, extension or renewal of any existing Letter of Credit, by the Issuing Bank. "DEBT ISSUANCE" shall mean the incurrence by Parent or any of its Subsidiaries of any Indebtedness after the Original Closing Date (other than as permitted by Section 6.01). "DEBT SERVICE" shall mean, for any period, Cash Interest Expense for such period plus scheduled principal amortization of all Indebtedness for such period. "DEFAULT" shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default. "DEFAULT RATE" shall have the meaning assigned to such term in Section 2.06(c). "DISQUALIFIED CAPITAL STOCK" shall mean any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations; provided, further, however, that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of a change in control or an asset sale occurring prior to the first anniversary of the Final Maturity Date shall not constitute Disqualified Capital Stock if such Equity Interests provide that the issuer thereof will not redeem any such Equity Interests pursuant to such provisions prior to the repayment in full of the Obligations. "DIVIDEND" with respect to any person shall mean that such person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or authorized or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants issued by such person with respect to its Equity Interests), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for consideration any of the Equity Interests of such person outstanding (or any options or warrants issued by such person with respect to its Equity Interests). Without limiting the foregoing, "Dividends" with respect to any person shall also include all payments made or required to be made by such person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes. "DOCUMENTATION AGENT" shall have the meaning assigned to such term in the preamble hereto. "DOLLARS" or "$" shall mean lawful money of the United States. -15- "DOMESTIC SUBSIDIARY" shall mean any Subsidiary that is organized or existing under the laws of the United States, any state thereof or the District of Columbia. "EMBARGOED PERSON" shall have the meaning assigned to such term in Section 6.21. "ENVIRONMENT" shall mean ambient air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, the workplace or as otherwise defined in any Environmental Law. "ENVIRONMENTAL CLAIM" shall mean any claim, notice, demand, order, action, suit, proceeding or other communication alleging liability for investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation of Environmental Law, and shall include any claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to health, safety or the Environment. "ENVIRONMENTAL LAW" shall mean any and all applicable present and future treaties, laws, statutes, ordinances, regulations, rules, decrees, orders, judgments, consent orders, consent decrees, code or other binding requirements, and the common law and judicial or agency interpretation, policy or guidance, relating to protection of public health or the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or occupational safety or health. "ENVIRONMENTAL PERMIT" shall mean any permit, license, approval, consent or other authorization required by or from a Governmental Authority under Environmental Law. "EQUIPMENT" shall have the meaning assigned to such term in the U.S. Security Agreement. "EQUITY FINANCING" shall mean the cash contribution of approximately $136.7 million by Sponsor, its affiliates and certain members of U.S. Borrower's management to Holdings in return for Equity Interests in Holdings, and the contribution of such cash by Holdings to Parent in connection with the funding of the Acquisition. "EQUITY INTEREST" shall mean, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the Original Closing Date or issued after the Original Closing Date, but excluding debt securities convertible or exchangeable into such equity. "EQUITY INVESTORS" shall mean Sponsor and one or more investors reasonably satisfactory to the Administrative Agent and the Arrangers. "EQUITY ISSUANCE" shall mean, without duplication, (i) any issuance or sale by Parent or Holdings after the Original Closing Date of any Equity Interests in Parent or Holdings (including any Equity Interests issued upon exercise of any warrant or option), as applicable, or any warrants or options to purchase such Equity Interests or (ii) any contribution to the capital of Parent or Holdings; provided, however, that an Equity Issuance shall not include (x) any Preferred Stock Issuance or Debt Issuance, (y) any -16- such sale or issuance by Holdings of its Equity Interests (including its Equity Interests issued upon exercise of any warrant or option or warrants or options to purchase its Equity Interests but excluding Disqualified Capital Stock), in each case, to directors, officers or employees of any Company and (z) any Excluded Issuance. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time. "ERISA AFFILIATE" shall mean, with respect to any person, any trade or business (whether or not incorporated) that, together with such person, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA EVENT" shall mean (a) any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived by regulation); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) except as set forth on Schedule 3.17, the incurrence by any Company or any of its ERISA Affiliates of any liability with respect to the withdrawal from any Plan or Multiemployer Plan; (g) except as set forth on Schedule 3.17, the receipt by any Company or its ERISA Affiliates of any notice concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the making of any amendment to any Plan which could result in the imposition of a lien or the posting of a bond or other security; and (i) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to result in liability to any Company. "EURODOLLAR BORROWING" shall mean a Borrowing comprised of Eurodollar Loans. "EURODOLLAR LOAN" shall mean any Eurodollar Revolving Loan or Eurodollar Term Loan. "EURODOLLAR REVOLVING BORROWING" shall mean a Borrowing comprised of Eurodollar Revolving Loans. "EURODOLLAR REVOLVING LOAN" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II. "EURODOLLAR TERM BORROWING" shall mean a Borrowing comprised of Eurodollar Term Loans. "EURODOLLAR TERM LOAN" shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II. -17- "EVENT OF DEFAULT" shall have the meaning assigned to such term in Article VIII. "EXCESS AMOUNT" shall have the meaning assigned to such term in Section 2.10(h)(ii). "EXCESS CASH FLOW" shall mean, for any Excess Cash Flow Period, Consolidated EBITDA for such Excess Cash Flow Period, minus, without duplication: (a) Debt Service for such Excess Cash Flow Period actually paid during such Excess Cash Flow Period; (b) Capital Expenditures during such Excess Cash Flow Period (excluding Capital Expenditures made in such Excess Cash Flow Period where a certificate in the form contemplated by the following clause (c) was previously delivered) that are paid in cash; (c) (x) Capital Expenditures that U.S. Borrower or any of its Subsidiaries shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period; provided that U.S. Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of U.S. Borrower and certifying that such Capital Expenditures will be made in the following Excess Cash Flow Period or (y) the CapEx Carryforward Amount for such Excess Cash Flow Period less the CapEx Carryforward Amount from the prior Excess Cash Flow Period that is not used in such Excess Cash Flow Period; (d) the aggregate amount of investments made in cash during such period pursuant to Sections 6.04(e), (i), (j), (k) and (m) (other than investments made with Excluded Issuances); (e) taxes of U.S. Borrower and its Subsidiaries that were paid in cash during such Excess Cash Flow Period or will be paid within six months after the end of such Excess Cash Flow Period and for which reserves have been established; (f) Permitted Tax Distributions that are paid during the respective Excess Cash Flow Period or will be paid within six months after the close of such Excess Cash Flow Period; (g) the absolute value of the difference, if negative, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period over the amount of Net Working Capital at the end of such Excess Cash Flow Period; (h) losses excluded from the calculation of Consolidated Net Income by operation of clause (c) or (g) of the definition thereof that are paid in cash during such Excess Cash Flow Period; (i) to the extent added to determine Consolidated EBITDA, costs and expenses incurred in connection with the Acquisition and the MW Acquisition; (j) to the extent added to determine Consolidated EBITDA, all items that did not result from a cash payment to U.S. Borrower or any of its Subsidiaries on a consolidated basis during such Excess Cash Flow Period; and (k) permanent repayments and prepayments of Indebtedness (other than the Obligations) made by U.S. Borrower and its Subsidiaries during such fiscal year to the extent funded with internally generated funds; -18- provided that any amount deducted pursuant of any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; plus, without duplication: (i) the difference, if positive, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period over the amount of Net Working Capital at the end of such Excess Cash Flow Period; (ii) all proceeds received during such Excess Cash Flow Period of any Indebtedness to the extent used to finance any Capital Expenditure (other than Indebtedness under this Agreement to the extent there is no corresponding deduction to Excess Cash Flow above in respect of the use of such borrowings); (iii) to the extent any permitted Capital Expenditures referred to in (c) above do not occur in the Excess Cash Flow Period specified in the certificate of U.S. Borrower provided pursuant to (c) above, such amounts of Capital Expenditures that were not so made in the Excess Cash Flow Period specified in such certificates; (iv) any return of capital on or in respect of investments received in cash during such period other than proceeds of an Asset Sale, which investments were made pursuant to Section 6.04(e), (i), (j), (k) or (m) (other than investments made from Excluded Issuances); (v) income or gain excluded from the calculation of Consolidated Net Income by operation of clause (c) or (g) of the definition thereof that is realized in cash during such Excess Cash Flow Period (except to the extent such gain is subject to Section 2.10); (vi) if deducted in the computation of Consolidated EBITDA, interest income; and (vii) to the extent subtracted in determining Consolidated EBITDA, all items that did not result from a cash payment by U.S. Borrower or any of its Subsidiaries on a consolidated basis during such Excess Cash Flow Period; provided further that Excess Cash Flow for the fiscal year of U.S. Borrower ending on December 31, 2004 shall be deemed to be Excess Cash Flow for the final fiscal quarter of such fiscal year. "EXCESS CASH FLOW PERIOD" shall mean each fiscal year of U.S. Borrower. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "EXCLUDED ISSUANCE" shall mean an issuance and sale of Qualified Capital Stock of Holdings to the Permitted Holders and any corresponding issuance and sale of Qualified Capital Stock of Parent to Holdings financed with the net proceeds thereof. "EXCLUDED TAXES" shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient (each a "RECIPIENT," and collectively the "RECIPIENTS") of any payment to be made by or on account of any obligation of either Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income as a result of a present or former connection between the Recipient and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Recipient having executed, delivered or performed its obligations or received a payment under, or enforced, or otherwise in connection with, this Agreement or any other Loan Document), (b) in the case of a For- -19- eign Lender, any U.S. federal withholding taxes that are attributable to such Foreign Lender's failure to comply with the requirements of Section 2.15(e), (c) Taxes that are United States withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if any) was entitled, immediately prior to such assignment, to receive additional amounts or indemnification from either Borrower with respect to such withholding taxes pursuant to Section 2.15 (or would have been so entitled had the assignor's tax status (residence, etc.) immediately before such assignment been the same as the assignee's tax status immediately after such assignment) and (d) U.S. federal withholding taxes that are imposed as a result of an event occurring after the Lender becomes a Lender other than a Change in Law or regulation or interpretation thereof. "EXECUTIVE ORDER" shall have the meaning assigned to such term in Section 3.22. "EXECUTIVE ORDERS" shall have the meaning assigned to such term in Section 6.21. "EXISTING LIEN" shall have the meaning assigned to such term in Section 6.02(c). "EXISTING U.S. TERM LOAN" shall mean the term loans made by the U.S. Lenders to U.S. Borrower pursuant to Sections 2.01(a) and (d). Each Existing U.S. Term Loan shall be either an ABR Term Loan or a Eurodollar Term Loan. "EXISTING U.S. TERM LOAN COMMITMENT" shall mean, with respect to each Existing U.S. Term Loan Lender, the commitment, if any, of such Existing U.S. Term Loan Lender to make an Existing U.S. Term Loan hereunder on the Original Closing Date and on the First Amendment Effectiveness Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Existing U.S. Term Loan Lender. The aggregate amount of the U.S. Lenders' Existing U.S. Term Loan Commitments as of the First Amendment Effectiveness Date was $170.0 million. "EXISTING U.S. TERM LOAN LENDER" shall mean each U.S. Lender that has an Existing U.S. Term Loan Commitment or is the holder of an Existing U.S. Term Loan. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. "FEE LETTER" shall mean the confidential Fee Letter, dated July 22, 2004, among Holdings, the Arrangers, UBS Loan Finance LLC, Deutsche Bank AG Cayman Islands Branch and JPMorgan Chase Bank. "FEES" shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees and the Fronting Fees. "FINAL MATURITY DATE" shall mean the latest of the Revolving Maturity Date and the Term Loan Maturity Date. "FINANCIAL OFFICER" of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person. -20- "FIRREA" shall mean the Federal Institutions Reform, Recovery and Enforcement Act of 1989, as amended. "FIRST AMENDMENT EFFECTIVENESS DATE" shall mean March 3, 2004. "FOREIGN LENDER" shall mean any Lender that is not, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation or partnership or entity treated as a corporation or partnership created or organized in or under the laws of the United States, or any political subdivision thereof, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust. "FOREIGN PLAN" shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by any Company with respect to employees employed outside the United States. "FOREIGN SUBSIDIARY" shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia. "FRONTING FEE" shall have the meaning assigned to such term in Section 2.05(c). "GAAP" shall mean generally accepted accounting principles in the United States applied on a consistent basis; provided that with respect to Canadian Borrower and any Canadian Subsidiaries organized under the laws of Canada or a province thereof, for purposes of Sections 3.13, 5.05, 5.07 and 5.09 "GAAP" shall mean generally accepted accounting principles in Canada applied on a consistent basis. "GOVERNMENTAL AUTHORITY" shall mean any federal, state, provincial, local or foreign court, central bank or governmental agency, authority, instrumentality or regulatory body or any subdivision thereof. "GOVERNMENTAL REAL PROPERTY DISCLOSURE REQUIREMENTS" shall mean any Requirement of Law of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, facility, establishment or business, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including any transfer of control) of any Real Property, facility, establishment or business, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Material on, at, under or near the Real Property, facility, establishment or business to be sold, leased, mortgaged, assigned or transferred. "GUARANTEED OBLIGATIONS" shall mean the U.S. Guaranteed Obligations and/or the Canadian Guaranteed Obligations, as applicable. "GUARANTEES" shall mean the guarantees issued pursuant to Article VII by Parent and the Subsidiary Guarantors. "GUARANTORS" shall mean Parent and the Subsidiary Guarantors. "HAZARDOUS MATERIALS" shall mean the following: hazardous substances; hazardous wastes; polychlorinated biphenyls ("PCBS") or any substance or compound containing PCBs; asbestos or -21- any asbestos-containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by-product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant or chemicals, wastes, materials, compounds, constituents or substances, subject to regulation or which can give rise to liability under any Environmental Laws. "HEDGING AGREEMENT" shall mean any 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. "HEDGING OBLIGATIONS" shall mean obligations under or with respect to Hedging Agreements. "HOLDINGS" shall mean Ply Gem Investment Holdings, Inc. (formerly known as CI Investment Holdings, Inc.), a Delaware corporation. "HOLDINGS SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of Holdings owing to any Permitted Holder issued pursuant to the Subordinated Note Purchase Agreement dated the Original Closing Date as supplemented on the Second Amendment Effectiveness Date. "INCREMENTAL REVOLVING COMMITMENT" shall have the meaning assigned to such term in Section 11.02(f). "INDEBTEDNESS" of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such person upon which interest charges are customarily paid or accrued; (d) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person; (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days); (f) all Indebtedness of others secured by any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, but limited to the fair market value of such property; (g) all Capital Lease Obligations, Purchase Money Obligations and synthetic lease obligations of such person; (h) all Hedging Obligations to the extent required to be reflected on a balance sheet of such person; (i) all obligations of such person (not including any contingent obligations) for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers' acceptances and similar credit transactions; and (j) all Contingent Obligations of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent that terms of such Indebtedness expressly provide that such person is not liable therefor. "INDEMNIFIED TAXES" shall mean all Taxes other than Excluded Taxes. "INDEMNITEE" shall have the meaning assigned to such term in Section 11.03(b). "INFORMATION" shall have the meaning assigned to such term in Section 11.12. "INSURANCE POLICIES" shall mean the insurance policies and coverages required to be maintained by each Loan Party which is an owner of Mortgaged Property with respect to the applicable Mortgaged Property pursuant to Section 5.04 and all renewals and extensions thereof. -22- "INSURANCE REQUIREMENTS" shall mean, collectively, all provisions of the Insurance Policies, all requirements of the issuer of any of the Insurance Policies and all orders, rules, regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon each Loan Party which is an owner of Mortgaged Property and applicable to the Mortgaged Property or any use or condition thereof. "INTELLECTUAL PROPERTY" shall have the meaning assigned to such term in Section 3.06(a). "INTERCOMPANY NOTE" shall mean the U.S. Intercompany Note and the Canadian Intercompany Note. "INTEREST ELECTION REQUEST" shall mean a request by either Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.08(b), substantially in the form of Exhibit E. "INTEREST PAYMENT DATE" shall mean (a) with respect to any ABR Loan (including Swingline Loans), the last Business Day of each March, June, September and December to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, (c) with respect to any Revolving Loan or Swingline Loan, the Revolving Maturity Date or such earlier date on which the Revolving Commitments are terminated and (d) with respect to any Term Loan, the Term Loan Maturity Date. "INTEREST PERIOD" shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if available to all affected Lenders, nine or twelve months) thereafter, as the applicable Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing; provided, however, that an Interest Period shall be limited to the extent required under Section 2.03(e). "INVESTMENTS" shall have the meaning assigned to such term in Section 6.04. "IPO" shall mean the first underwritten public offering by Parent or Holdings of its Equity Interests after the Second Amendment Effectiveness Date pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act. "IPO ENTITY" shall mean whichever of Parent or Holdings effects an IPO. "ISSUING BANK" shall mean, as the context may require, (a) UBS AG, Stamford Branch, with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to Sections 2.18(j) and (k) with respect to Letters of Credit issued by such Lender; or (c) collectively, all of the foregoing. -23- "JOINDER AGREEMENT" shall mean a joinder agreement substantially in the form of Exhibit F. "JOINT LEAD ARRANGERS" shall have the meaning assigned to such term in the preamble hereto. "JUDGMENT CURRENCY" shall have the meaning assigned to such term in Section 11.16. "JUDGMENT CURRENCY CONVERSION DATE" shall have the meaning assigned to such term in Section 11.16. "LANDLORD ACCESS AGREEMENT" shall mean (x) with respect to a Real Property located in the United States, a U.S. Landlord Access Agreement, substantially in the form of Exhibit G-1 and (y) with respect to a Real Property located in Canada, a Canadian Landlord Access Agreement, substantially in the form of Exhibit G-2, or, in either case, a landlord access agreement in such other form as may reasonably be acceptable to the Collateral Agent. "LC COMMITMENT" shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18, as the same shall be reduced from time to time pursuant to Section 2.07 or Section 2.18. The amount of the LC Commitment shall be $35.0 million as of the Second Amendment Effectiveness Date, but in no event exceed the Revolving Commitments. "LC DISBURSEMENT" shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit. "LC EXPOSURE" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time; provided that the amount in clause (a) will be reduced by (x) for any purpose other than calculating a fee due under this Agreement, the amount of industrial or economic revenue bonds issued in connection with the Assumed Debt and held by a remarketing agent or trustee for the benefit of the Collateral Agent and (y) the amount of cash deposited by U.S. Borrower in the Ply Gem LC Restricted Account. The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time. "LC PARTICIPATION FEE" shall have the meaning assigned to such term in Section 2.05(c). "LC REQUEST" shall mean a request by U.S. Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit H, or such other form as shall be approved by the Administrative Agent. "LC SUB-ACCOUNT" shall have the meaning assigned to such term in Section 9.01(d). "LEASES" shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any Real Property. "LENDER ADDENDUM" shall mean with respect to any Lender on the Original Closing Date, the First Amendment Effectiveness Date or the Second Amendment Effectiveness Date, a lender addendum in the form of Exhibit I, to be executed and delivered by such Lender on the Original Closing -24- Date, the First Amendment Effectiveness Date or the Second Amendment Effectiveness Date as provided in Section 11.14. "LENDER AFFILIATE" shall mean with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such advisor. "LENDERS" shall mean the U.S. Lenders and the Canadian Term Loan Lenders. "LETTER OF CREDIT" shall mean any (i) Standby Letter of Credit and (ii) Commercial Letter of Credit, in each case, issued or to be issued by an Issuing Bank for the account of U.S. Borrower pursuant to Section 2.18. "LETTER OF CREDIT EXPIRATION DATE" shall mean the date which is fifteen days prior to the Revolving Maturity Date. "LIBOR RATE" shall mean, with respect to any Eurodollar Borrowing for any Interest Period therefor, the rate per annum determined by the Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for deposits in dollars with a term comparable to such Interest Period that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; provided, however, that (i) if no comparable term for an Interest Period is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such Interest Period and (ii) if there shall at any time no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, "LIBOR Rate" shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in dollars at approximately 11:00 a.m., London, England time, two Business Days prior to the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period. "TELERATE BRITISH BANKERS ASSOC. INTEREST SETTLEMENT RATES PAGE" shall mean the display designated as Page 3750 on the Telerate System Incorporated Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which dollar deposits are offered by leading banks in the London interbank deposit market). "LIEN" shall mean, with respect to any property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security interest or encumbrance of any kind or any arrangement to provide priority or preference or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, right-of-way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing; (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities. "LOAN DOCUMENTS" shall mean this Agreement, each LC Request or application, the Notes (if any), the Security Documents, each Permitted U.S. Hedging Agreement, each Permitted Canadian Hedging Agreement and, solely for purposes of Section 8.01(e) hereof, the Fee Letter. -25- "LOAN PARTIES" shall mean Parent, the Borrowers and the Subsidiary Guarantors. "LOANS" shall mean, as the context may require, a Revolving Loan, a U.S. Term Loan, a Canadian Term Loan or a Swingline Loan (and shall include any Loans contemplated by Sections 11.02(d) or (f)). "MARGIN STOCK" shall have the meaning assigned to such term in Regulation U. "MATERIAL ADVERSE EFFECT" shall mean (a) a material adverse effect on the condition (financial or otherwise), business, operations, assets, liabilities or prospects of Parent and its Subsidiaries, taken as a whole; (b) material impairment of the ability of the Loan Parties to fully and timely perform any of their obligations under any Loan Document; (c) material impairment of the rights of or benefits or remedies available to the Lenders or the Collateral Agent under any Loan Document; or (d) a material adverse effect on the Liens in favor of the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral or the priority of such Liens. "MATERIAL INDEBTEDNESS" shall mean (a) the Indebtedness listed on Schedule 1.01(c) and (b) any other Indebtedness (other than the Loans and Letters of Credit) or Hedging Obligations of Parent or any of its Subsidiaries in an aggregate outstanding principal amount exceeding $15.0 million. For purposes of determining Material Indebtedness, the "principal amount" in respect of any Hedging Obligations of any Loan Party at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if the related Hedging Agreement were terminated at such time. "MAXIMUM RATE" shall have the meaning assigned to such term in Section 11.13. "MORTGAGE" shall mean an agreement, including, but not limited to, a mortgage, deed of trust or any other document, creating and evidencing a Lien on a Mortgaged Property, which (i) in the case of Real Property owned in fee by a U.S. Loan Party, shall be substantially in the form of Exhibit J-1, (ii) in the case of Real Property owned in fee by a Canadian Loan Party, shall be substantially in the form of Exhibit J-2, and (iii) in the case of leased Real Property, shall be substantially in the form of Exhibit J-3, or, in each case, another form reasonably satisfactory to the Collateral Agent, and, in each case, with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign law. "MORTGAGED PROPERTY" shall mean (a) each Real Property identified on Schedule 1.01(d) hereto and (b) each Real Property, if any, which shall be subject to a Mortgage delivered after the Original Closing Date pursuant to Section 5.10(d) or (e) or Section 5.13. "MULTIEMPLOYER PLAN" shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any ERISA Affiliate is then making or accruing an obligation to make contributions; (b) to which any Company or any ERISA Affiliate has within the preceding five plan years made contributions; or (c) with respect to which any Company could incur liability. "MW" shall have the meaning assigned to such term in the recitals hereto. "MW ACQUISITION" shall have the meaning assigned to such term in the recitals hereto. "MW ACQUISITION DOCUMENTS" shall mean the collective reference to the MW Acquisition Agreement and the other documents listed on Schedule 3.24. -26- "MW PURCHASE AGREEMENT" shall have the meaning assigned to such term in the recitals hereto. "MW REFINANCING" shall have the meaning assigned to such term in the recitals hereto. "MW SELLERS" shall have the meaning assigned to such term in the recitals hereto. "NET CASH PROCEEDS" shall mean: (a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the cash proceeds received by Parent or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by Parent or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers' fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and U.S. Borrower's good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by Parent or any of its Subsidiaries associated with the properties sold in such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) U.S. Borrower's good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 90 days of such Asset Sale (provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties); (b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or sale of Equity Interests by Holdings or any of its Subsidiaries, the cash proceeds thereof, net of customary fees, commissions, costs and other expenses incurred in connection therewith; and (c) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event. "NET WORKING CAPITAL" shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time. "NEW SENIOR SUBORDINATED NOTE AGREEMENT" shall mean any indenture, note purchase agreement or other agreement (including the Senior Subordinated Note Agreement) pursuant to which the New Senior Subordinated Notes are issued as in effect on the Second Amendment Effectiveness Date and thereafter amended from time to time subject to the requirements of this Agreement. "NEW SENIOR SUBORDINATED NOTE DOCUMENTS" shall mean the New Senior Subordinated Notes, the New Senior Subordinated Note Agreement, the New Senior Subordinated Note Guarantees and all other documents executed and delivered with respect to the New Senior Subordinated Notes or the New Senior Subordinated Note Agreement. -27- "NEW SENIOR SUBORDINATED NOTE GUARANTEES" shall mean the guarantees of Parent and the U.S. Subsidiary Guarantors pursuant to the New Senior Subordinated Note Agreement. "NEW SENIOR SUBORDINATED NOTES" shall mean U.S. Borrower's 9.0% Senior Subordinated Notes due 2012 issued on the Second Amendment Effectiveness Date pursuant to the New Senior Subordinated Note Agreement and any registered notes issued by U.S. Borrower in exchange for, and as contemplated by, such notes with substantially identical terms as such notes. "NON-GUARANTOR SUBSIDIARY" shall mean each Subsidiary that is not a Subsidiary Guarantor. "NOTES" shall mean any notes evidencing the Term Loans, Revolving Loans or Swingline Loans issued pursuant to this Agreement, if any, substantially in the form of Exhibit K-1, K-2, K-3, K-4 or K-5. "OBLIGATIONS" shall mean the Canadian Obligations and the U.S. Obligations. "OFAC" shall have the meaning assigned to such term in Section 3.22. "OFFER TO REDEEM" shall have the meaning assigned to such term in Section 2.10(j). "OFFICERS' CERTIFICATE" shall mean a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer or the president and one of the Financial Officers, each in his or her official (and not individual) capacity. "ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such person, (iv) in the case of any general partnership, the partnership agreement (or similar document) of such person and (v) in any other case, the functional equivalent of the foregoing. "ORIGINAL AGENTS" shall mean the Agents under the Original Credit Agreement. "ORIGINAL CLOSING DATE" shall mean February 12, 2004. "ORIGINAL CREDIT AGREEMENT" shall have the meaning assigned to such term in the recitals hereto. "OTHER LIST" shall have the meaning assigned to such term in Section 6.21. "OTHER TAXES" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including all interest, fines, penalties and additions to tax and related expenses with regard thereto) arising from any payment made or required to be made under any Loan Document or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Loan Document. "PARENT" shall have the meaning assigned to such term in the preamble hereto. -28- "PARENT CONSOLIDATED LEVERAGE RATIO" shall mean, at any date of determination, the ratio of Consolidated Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended, in each case calculated on a consolidated basis for Parent and its Subsidiaries notwithstanding the fact that such definitions and some components thereof only call for calculations based upon U.S. Borrower and its Subsidiaries. "PARTICIPANT" shall have the meaning assigned to such term in Section 11.04(e). "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA. "PERFECTION CERTIFICATE" shall mean a certificate in the form of Exhibit L-1 or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by the Second Amendment Perfection Certificate Supplement, a Perfection Certificate Supplement or otherwise. "PERFECTION CERTIFICATE SUPPLEMENT" shall mean a certificate supplement in the form of Exhibit L-2 or any other form approved by the Collateral Agent. "PERMITTED ACQUISITION" shall mean any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any person, or of any business or division of any person; (b) acquisition of in excess of 50% of the Equity Interests of any person, and otherwise causing such person to become a Subsidiary of such person; or (c) merger or consolidation or any other combination with any person (other than (x) among U.S. Borrower and/or its Subsidiaries as permitted by Sections 6.05(c) and (d) and (y) between Parent and Holdings in connection with an IPO), if each of the following conditions is met: (i) no Default then exists or would result therefrom; (ii) after giving effect to such transaction on a Pro Forma Basis, (A) U.S. Borrower shall be in compliance with all covenants set forth in Section 6.10 as of the most recent Test Period (assuming, for purposes of Section 6.10, that such transaction, and all other Permitted Acquisitions consummated since the first day of the relevant Test Period for each of the financial covenants set forth in Section 6.10 ending on or prior to the date of such transaction, had occurred on the first day of such relevant Test Period), and (B) unless expressly approved by the Administrative Agent, the person or business to be acquired shall have generated positive cash flow for the Test Period most recently ended prior to the date of consummation of such acquisition; (iii) no Company shall, in connection with any such transaction, assume or remain liable with respect to any Indebtedness or other liability (including any material tax or ERISA liability) of the related seller or the business, person or properties acquired, except (A) to the extent permitted under Section 6.01 and (B) obligations not constituting Indebtedness incurred in the ordinary course of business and necessary or desirable to the continued operation of the underlying properties, and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Company hereunder shall be paid in full or released as to the business, persons or properties being so acquired on or before the consummation of such acquisition; (iv) the person or business to be acquired shall be, or shall be engaged in, a business of the type that U.S. Borrower and its Subsidiaries are permitted to be engaged in under Section 6.15 and the property acquired in connection with any such transaction shall be made subject to the Lien of the Security Documents to the extent required by Section 5.10 and shall be free and clear of any Liens, other than Permitted Collateral Liens; -29- (v) the Board of Directors of the person to be acquired shall not have indicated publicly its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn); (vi) all transactions in connection therewith shall be consummated in accordance with all applicable laws of all applicable Governmental Authorities; (vii) with respect to any transaction involving Acquisition Consideration of more than $10.0 million, unless the Administrative Agent shall otherwise agree, U.S. Borrower shall have provided the Administrative Agent and the Lenders with (A) historical financial statements for the last three fiscal years (or, if less, the number of years since formation) of the person or business to be acquired (audited if available and, in the case of a transaction involving Acquisition Consideration of more than $25.0 million, if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period which are available, (B) reasonably detailed projections for the succeeding five years pertaining to the person or business to be acquired and updated projections for U.S. Borrower after giving effect to such transaction, (C) a reasonably detailed description of all material information relating thereto and copies of all material documentation pertaining to such transaction, and (D) all such other information and data relating to such transaction or the person or business to be acquired as may be reasonably requested by the Administrative Agent or the Required Lenders; and (viii) at least 5 Business Days prior to the proposed date of consummation of the transaction, U.S. Borrower shall have delivered to the Agents and the Lenders an Officers' Certificate certifying that (A) such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance), and (B) such transaction could not reasonably be expected to result in a Material Adverse Effect. "PERMITTED CANADIAN HEDGING AGREEMENT" shall have the meaning assigned to such term in the definition of "Canadian Obligations." "PERMITTED COLLATERAL LIENS" means (i) Contested Liens (as defined in the Security Agreement), (ii) the Liens described in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (m) and (n) of Section 6.02 and (iii) in the case of Mortgaged Property, "Permitted Collateral Liens" shall mean the Liens described in clauses (a), (b), (c), (d), (e), (g), (k) and (n) of Section 6.02; provided, however upon the Original Closing Date or upon the date of delivery of each additional Mortgage under Section 5.10, 5.11 or 5.13, Permitted Collateral Liens shall mean only those Liens set forth in Schedule B to the applicable Mortgage. "PERMITTED HOLDERS" shall mean (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, Michael Haley, Robert A. Ferris, Steven M. Lefkowitz, Lynn Morstad, John D. Roach 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 U.S. Borrower) be a Permitted Holder. "PERMITTED LIENS" shall have the meaning assigned to such term in Section 6.02. "PERMITTED PARENT DEBT" shall have the meaning assigned to such term in Section 6.01. -30- "PERMITTED SALE AND LEASEBACK TRANSACTION" means one or more Sale and Leaseback Transactions effected as operating leases involving the properties securing the Assumed Debt on the Original Closing Date or involving plants located in Calgary, Alberta or Rocky Mount, Virginia; provided that (i) 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 (ii) the proceeds are used to fund the MW Acquisition. "PERMITTED TAX DISTRIBUTIONS" means payments, dividends or distributions by U.S. Borrower to Holdings or Parent or Parent to Holdings in order to pay consolidated or combined federal, state or local taxes not payable directly by U.S. Borrower or its Subsidiaries which payments by U.S. Borrower are not in excess of the tax liabilities that would have been payable by U.S. Borrower and its Subsidiaries on a stand-alone basis. "PERMITTED U.S. HEDGING AGREEMENT" shall have the meaning assigned to such term in the definition of "U.S. Obligations." "PERSON" shall mean any natural person, corporation, business trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof, in any case, whether acting in a personal, fiduciary or other capacity. "PLAN" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Company or its ERISA Affiliate or with respect to which any Company could incur liability (including under Section 4069 of ERISA). "PLY GEM LC RESTRICTED ACCOUNT" shall mean a restricted deposit account held at the Collateral Agent the amounts in which serve to cash collateralize outstanding Letters of Credit. By its execution of this Agreement, U.S. Borrower consents to and authorizes the establishment and maintenance of such account by the Collateral Agent and pledges and grants to the Collateral Agent for the benefit of the Secured Parties, a lien on and security interest in, such account and all funds therein. It is understood and agreed that the funds in such account shall be invested only in overnight investments denominated in U.S. dollars. "PPSA" shall mean the Personal Property Security Act as in effect from time to time (except as otherwise specified) in any applicable Province of Canada. "PREFERRED STOCK" shall mean, with respect to any person, any and all preferred or preference Equity Interests (however designated) of such person whether now outstanding or issued after the Original Closing Date. "PREFERRED STOCK ISSUANCE" shall mean the issuance or sale by Holdings or any of its Subsidiaries of any Preferred Stock after the Original Closing Date (other than (x) as permitted by Section 6.01 or (y) any Excluded Issuance). "PREMISES" shall have the meaning assigned thereto in the applicable Mortgage. "PRO FORMA BASIS" shall mean on a basis reasonably satisfactory to the Administrative Agent. "PRO FORMA COST SAVINGS" shall mean, with respect to any Test Period, the reductions in costs that occurred during the Test Period that are (1) directly attributable to an asset acquisition and cal- -31- culated on a basis that is consistent with Article 11 of Regulation S-X 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 Test Period in order to achieve such reduction in costs. "PRO RATA PERCENTAGE" of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitments of all Revolving Lenders represented by such Lender's Revolving Commitment. "PROPERTY" shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property. "PURCHASE MONEY OBLIGATION" shall mean, for any person, the obligations of such person in respect of Indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any property (including Equity Interests of any person) or the cost of installation, construction or improvement of any property and any refinancing thereof; provided, however, that (i) such Indebtedness is incurred within one year after such acquisition of such property by such person and (ii) the amount of such Indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be. "QUALIFIED CAPITAL STOCK" of any person shall mean any Equity Interests of such person that are not Disqualified Capital Stock. "REAL PROPERTY" shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned, leased or operated by any person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof. "REFINANCING" shall mean the repayment in full, and the termination of any commitment to make extensions of credit in connection with, all of the outstanding indebtedness of Parent or any of its Subsidiaries listed on Schedule 1.01(e). "REGISTER" shall have the meaning assigned to such term in Section 11.04(c). "REGULATION D" shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REGULATION S-X" shall mean Regulation S-X promulgated under the Securities Act. "REGULATION T" shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REGULATION U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. -32- "REGULATION X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "REIMBURSEMENT OBLIGATIONS" shall mean U.S. Borrower's obligations under Section 2.18(e) to reimburse LC Disbursements. "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. "RELEASE" shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment. "REQUIRED LENDERS" shall mean, at any time, Lenders having Loans, LC Exposure and unused Revolving and Term Loan Commitments representing more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving and Term Loan Commitments at such time. "REQUIREMENTS OF LAW" shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, ordinances, rules, regulations or similar statutes or case law. "RESPONSE" shall mean (a) "response" as such term is defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above. "RESPONSIBLE OFFICER" of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof with responsibility for the administration of the obligations of such person in respect of this Agreement. "RESTRUCTURING EXPENSES" shall mean losses, expenses and charges incurred in connection with restructuring by U.S. Borrower and/or one or more of its 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. "REVOLVING AVAILABILITY PERIOD" shall mean the period from and including the Original Closing Date to but excluding the earlier of (i) the Business Day preceding the Revolving Maturity Date and (ii) the date of termination of the Revolving Commitments. "REVOLVING BORROWING" shall mean a Borrowing comprised of Revolving Loans. -33- "REVOLVING COMMITMENT" shall mean, with respect to each U.S. Lender, the commitment, if any, of such U.S. Lender to make Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender Addendum executed and delivered by such U.S. Lender or by an amendment to this Agreement pursuant to Section 11.02(f), or in the Assignment and Assumption pursuant to which such U.S. Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such U.S. Lender pursuant to Section 11.04. The aggregate amount of the Lenders' Revolving Commitments as of the Second Amendment Effectiveness Date is $70.0 million. "REVOLVING EXPOSURE" shall mean, with respect to any U.S. Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such U.S. Lender, plus the aggregate amount at such time of such Lender's LC Exposure, plus the aggregate amount at such of such Lender's Swingline Exposure. "REVOLVING LENDER" shall mean a U.S. Lender with a Revolving Commitment. "REVOLVING LOAN" shall mean a Loan made by the U.S. Lenders to U.S. Borrower pursuant to Section 2.01(c). Each Revolving Loan shall either be an ABR Revolving Loan or a Eurodollar Revolving Loan. "REVOLVING MATURITY DATE" shall mean the date which is five years after the Original Closing Date or, if such date is not a Business Day, the first Business Day thereafter. "ROLLOVER EQUITY" shall mean the phantom equity interest of certain existing equityholders of Seller in Holdings valued at $4.3 million on terms and conditions satisfactory to the Administrative Agent in its reasonable judgment. "SALE AND LEASEBACK TRANSACTION" has the meaning assigned to such term in Section 6.03. "SDN LIST" shall have the meaning assigned to such term in Section 6.21. "SECOND AMENDMENT EFFECTIVENESS DATE" shall have the meaning assigned to such term in Section 4.03. "SECOND AMENDMENT PERFECTION CERTIFICATE SUPPLEMENT" shall mean a certificate in the form of Exhibit L-3 (which shall be completed after giving effect to the MW Acquisition) or any other form approved by the Collateral Agent. "SECOND AMENDMENT TRANSACTION DOCUMENTS" shall mean the MW Acquisition Documents, the New Senior Subordinated Note Documents and the Loan Documents. "SECOND AMENDMENT TRANSACTIONS" shall mean, collectively, the transactions to occur on or prior to the Second Amendment Effectiveness Date pursuant to the Second Amendment Transaction Documents, including (a) the consummation of the MW Acquisition; (b) the execution, delivery and performance of those Loan Documents which need to be amended or otherwise modified on the Second Amendment Effectiveness Date to the extent contemplated hereby and the borrowings to occur on the Second Amendment Effectiveness Date hereunder; (c) the MW Refinancing; (d) the Supplemental Financing; (e) the issuance of the New Senior Subordinated Notes; (f) the issuance of the Supplemental Rollover Equity; and (g) the payment of all fees and expenses to be paid on or prior to the Second Amendment Effectiveness Date and owing in connection with the foregoing. -34- "SECOND CONFIDENTIAL INFORMATION MEMORANDUM" shall mean that certain confidential information memorandum dated as of August 2004 relating to U.S. Borrower and its subsidiaries. "SECURED PARTIES" shall mean the U.S. Secured Parties and the Canadian Secured Parties. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SECURITIES COLLATERAL" shall have the meaning assigned to such term in the U.S. Security Agreement or the Canadian Security Agreement, as applicable. "SECURITY AGREEMENT" shall mean the U.S. Security Agreement or the Canadian Security Agreement, as applicable. "SECURITY DOCUMENTS" shall mean the U.S. Security Documents and the Canadian Security Documents. "SELLER" shall have the meaning assigned to such term in the first recital hereto. "SENIOR LEVERAGE RATIO" shall mean, at any date of determination, the ratio of Consolidated Senior Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended. "SENIOR SUBORDINATED NOTE AGREEMENT" shall mean any indenture, note purchase agreement or other agreement pursuant to which the Senior Subordinated Notes are issued as in effect on the Original Closing Date and thereafter amended from time to time subject to the requirements of this Agreement. "SENIOR SUBORDINATED NOTE DOCUMENTS" shall mean the Senior Subordinated Notes, the Senior Subordinated Note Agreement, the Senior Subordinated Note Guarantees and all other documents executed and delivered with respect to the Senior Subordinated Notes or the Senior Subordinated Note Agreement. "SENIOR SUBORDINATED NOTE GUARANTEES" shall mean the guarantees of Parent and the U.S. Subsidiary Guarantors pursuant to the Senior Subordinated Note Agreement. "SENIOR SUBORDINATED NOTES" shall mean U.S. Borrower's 9.0% Senior Subordinated Notes due 2012 issued pursuant to the Senior Subordinated Note Agreement and any registered notes issued by U.S. Borrower in exchange for, and as contemplated by, such notes with substantially identical terms as such notes. "SPONSOR" shall mean Caxton-Iseman Capital, Inc. "STANDBY LETTER OF CREDIT" shall mean any standby letter of credit or similar instrument issued for the purpose of supporting (a) workers' compensation liabilities of U.S. Borrower or any of its Subsidiaries, (b) the obligations of third-party insurers of U.S. Borrower or any of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring third-party insurers to obtain such letters of credit, (c) performance, payment, deposit or surety obligations of U.S. Borrower or any of its Subsidiaries if required by law or governmental rule or regulation or in accordance with custom and practice in the industry, (d) Indebtedness of U.S. Borrower or any of its Subsidiaries permitted to be incurred under Section 6.01 or (e) any other purpose not prohibited hereunder and acceptable to the Issuing Bank. -35- "STATUTORY RESERVES" shall mean for any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollars against "Eurodollar liabilities" (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D. "SUBORDINATED INDEBTEDNESS" shall mean Indebtedness of either Borrower or any Guarantor that is by its terms subordinated in right of payment to the Obligations of such Borrower and such Guarantor, as applicable, including the Senior Subordinated Notes and the New Senior Subordinated Notes. "SUBSIDIARY" shall mean, with respect to any person (the "PARENT") at any date, (i) any person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date and (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent. Unless the context requires otherwise, "Subsidiary" refers to a Subsidiary of U.S. Borrower. "SUBSIDIARY GUARANTOR" shall mean each U.S. Subsidiary Guarantor and each Canadian Subsidiary Guarantor. "SUCCESSFUL SYNDICATION" shall have the meaning given to such term in the Fee Letter. "SUPPLEMENTAL FINANCING" shall mean the contribution of $32,291,379 million by Equity Investors to Holdings in return for Equity Interests in Holdings, and the contribution of such cash by Holdings to Parent in connection with the funding of the MW Acquisition. "SUPPLEMENTAL ROLLOVER EQUITY" shall mean the phantom equity interest of certain members of MW's senior management in Holdings valued at $2,008,621 million on terms and conditions satisfactory to the Administrative Agent in its reasonable judgment. "SURVEY" shall mean a survey of any Mortgaged Property (and all improvements thereon) which is (a) (i) prepared by a surveyor or engineer licensed to perform surveys in the jurisdiction where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property or any easement, right of way or other interest in the Mortgaged Property has been granted or become effective through operation of law or otherwise with respect to such Mortgaged Property which, in either case, can be depicted on a survey, in which events, as applicable, such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, or after the grant or effectiveness of any such easement, right of way or other interest in the Mortgaged Property, (iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the -36- Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property and issue the endorsements of the type required by Section 4.01(o)(iii) or (b) otherwise acceptable to the Collateral Agent. "SWINGLINE COMMITMENT" shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.17, as the same may be reduced from time to time pursuant to Section 2.07 or Section 2.17. The amount of the Swingline Commitment shall be $15.0 million as of the Second Amendment Effectiveness Date, but in no event shall exceed the Revolving Commitments. "SWINGLINE EXPOSURE" shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time. "SWINGLINE LENDER" shall have the meaning assigned to such term in the preamble hereto. "SWINGLINE LOAN" shall mean any loan made by the Swingline Lender pursuant to Section 2.17. "SYNDICATION AGENT" shall have the meaning assigned to such term in the preamble hereto. "TAX RETURN" shall mean all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes. "TAXES" shall mean (i) any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by the U.S. Internal Revenue Service or any other taxing authority (whether domestic or foreign and including any federal, state, U.S. possession, county, local, provincial or foreign government or any subdivision or taxing agency thereof), whether computed on a separate, consolidated, unitary, combined or other basis and any and all liabilities (including interest, fines, penalties or additions to tax) with respect to the foregoing, and (ii) any transferee, successor, joint and several, contractual or other liability (including liability pursuant to Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or non-U.S. law)) in respect of any item described in clause (i). "TERM BORROWING" shall mean a Borrowing comprised of Term Loans. "TERM LOAN COMMITMENTS" shall mean the U.S. Term Loan Commitments and the Canadian Term Loan Commitments. "TERM LOAN LENDER" shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan. "TERM LOAN MATURITY DATE" shall mean the date which is seven years after the Original Closing Date or, if such date is not a Business Day, the first Business Day thereafter. "TERM LOAN REPAYMENT DATE" shall have the meaning assigned to such term in Section 2.09(a). "TERM LOANS" shall mean the U.S. Term Loans and the Canadian Term Loans. -37- "TEST PERIOD" shall mean, at any time, the four consecutive fiscal quarters of U.S. Borrower then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.01(a) or (b). "TITLE COMPANY" shall mean any title insurance company as shall be retained by U.S. Borrower and reasonably acceptable to the Administrative Agent. "TITLE POLICY" shall have the meaning assigned to such term in Section 4.01(o)(iii). "TOTAL LEVERAGE RATIO" shall mean, at any date of determination, the ratio of Consolidated Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended. "TRANSACTION DOCUMENTS" shall mean the Acquisition Documents, the Senior Subordinated Note Documents and the Loan Documents. "TRANSACTIONS" shall mean, collectively, the transactions to occur on or prior to the Original Closing Date pursuant to the Transaction Documents, including (a) the consummation of the Acquisition; (b) the execution, delivery and performance of the Loan Documents and the initial borrowings hereunder; (c) the Refinancing; (d) the Equity Financing; (e) the issuance of the Senior Subordinated Notes; (f) the issuance of the Rollover Equity; and (g) the payment of all fees and expenses to be paid on or prior to the Original Closing Date and owing in connection with the foregoing. "TRANSFERRED GUARANTOR" shall have the meaning assigned to such term in Section 7.09. "TYPE," when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate. "UCC" shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction. "UNITED STATES" shall mean the United States of America. "U.S. BORROWER" shall have the meaning assigned to such term in the preamble hereto. "U.S. BORROWING REQUEST" shall mean a request by U.S. Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-1, or such other form as shall be approved by the Administrative Agent. "U.S. COLLATERAL ACCOUNT" shall mean a collateral account or sub-account established and maintained by the Collateral Agent for the benefit of the U.S. Secured Parties, in accordance with the provisions of Section 9.01. "U.S. GUARANTEED OBLIGATIONS" shall have the meaning assigned to such term in Section 7.01. "U.S. GUARANTORS" shall have the meaning assigned to such term in Section 7.01. "U.S. INTERCOMPANY NOTE" shall mean a promissory note substantially in the form of Exhibit P-1. -38- "U.S. LENDERS" shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum that make U.S. Loans or provide Commitments to U.S. Borrower and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption that makes U.S. Loans or provides a Commitment to U.S. Borrower, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption. Unless the context clearly indicates otherwise, the term "U.S. Lenders" shall include the Swingline Lender. "U.S. LOAN PARTIES" shall mean Parent, U.S. Borrower and the U.S. Subsidiary Guarantors. "U.S. LOANS" shall mean all Loans other than the Canadian Term Loans. "U.S. MORTGAGED PROPERTY" shall mean the Mortgaged Properties owned or leased by the U.S. Loan Parties. "U.S. OBLIGATIONS" shall mean (a) obligations of U.S. Borrower and the other U.S. Loan Parties from time to time arising (including by way of Article VII) under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the U.S. Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by U.S. Borrower and the other U.S. Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of U.S. Borrower and the other U.S. Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of U.S. Borrower and the other U.S. Loan Parties under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of U.S. Borrower and the other U.S. Loan Parties under each Hedging Agreement relating to either the U.S. Loans or foreign currency exchange rates entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into (provided that each shall provide that it terminates or expires upon, or prior to, the repayment of all Loans hereunder) (each, a "Permitted U.S. Hedging Agreement") and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any U.S. Lender, any Affiliate of a U.S. Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds, in each case, with respect to U.S. Loans. "U.S. SECURED PARTIES" shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the U.S. Lenders and each party to a Permitted U.S. Hedging Agreement if such person executes and delivers to the Administrative Agent a letter agreement in form and substance reasonably acceptable to the Administrative Agent pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Sections 11.03 and 11.09. "U.S. SECURITY AGREEMENT" shall mean a Security Agreement substantially in the form of Exhibit M-1 among the U.S. Loan Parties and Collateral Agent for the benefit of the Secured Parties. -39- "U.S. SECURITY AGREEMENT COLLATERAL" shall mean all property pledged or granted as collateral pursuant to the U.S. Security Agreement delivered on the Original Closing Date or thereafter pursuant to Section 5.10. "U.S. SECURITY DOCUMENTS" shall mean the U.S. Security Agreement, the Mortgages entered into by the U.S. Loan Parties and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement, the U.S. Security Agreement, any Mortgage or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to the U.S. Security Agreement or any Mortgage and any other document or instrument utilized to pledge as collateral for the Obligations any property. "U.S. SUBSIDIARIES" shall mean all Subsidiaries of U.S. Borrower other than Canadian Borrower and Canadian Subsidiaries. "U.S. SUBSIDIARY GUARANTOR" shall mean each U.S. Subsidiary listed on Schedule 1.01(f), and each other U.S. Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.10. "U.S. TERM LOAN" shall mean the Additional U.S. Term Loans and the Existing U.S. Term Loans. "U.S. TERM LOAN LENDER" shall mean each Additional U.S. Term Loan Lender and each Existing U.S. Term Loan Lender. "VOTING STOCK" shall mean, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person. "WHOLLY OWNED SUBSIDIARY" shall mean, as to any person, (a) any corporation 100% of whose capital stock (other than directors' qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time. "WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02 CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "REVOLVING LOAN") or by Type (e.g., a "EURODOLLAR LOAN") or by Class and Type (e.g., a "EURODOLLAR REVOLVING LOAN"). Borrowings also may be classified and referred to by Class (e.g., a "REVOLVING BORROWING," "BORROWING OF CANADIAN TERM LOANS") or by Type (e.g., a "EURODOLLAR BORROWING") or by Class and Type (e.g., a "EURODOLLAR REVOLVING BORROWING"). SECTION 1.03 TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." The word -40- "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein," "hereof" and "hereunder," and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, unless otherwise indicated. SECTION 1.04 ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the Second Amendment Effectiveness Date unless otherwise agreed to by U.S. Borrower and the Required Lenders. SECTION 1.05 RESOLUTION OF DRAFTING AMBIGUITIES. Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof. ARTICLE II THE CREDITS SECTION 2.01 COMMITMENTS. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly: (a) to make an Existing U.S. Term Loan to U.S. Borrower on the Original Closing Date in the principal amount not to exceed its Existing U.S. Term Loan Commitment on the Original Closing Date; and (b) to make a Canadian Term Loan to Canadian Borrower on the Original Closing Date in the principal amount not to exceed its Canadian Term Loan Commitment; and (c) to make Revolving Loans to U.S. Borrower, at any time and from time to time on or after the Original Closing Date until the earlier of the Revolving Maturity Date and the termination of the Revolving Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment; provided that U.S. Borrower may only borrow $2.7 million of Revolving Loans on the Original Closing Date; provided further, that U.S. Borrower may only borrow an amount of additional Revolving Loans on the Second Amendment Effectiveness Date such that the aggregate amount of Revolving Loans outstanding on the Second Amendment Effectiveness Date does not exceed $15.0 million; (d) to make an Existing U.S. Term Loan to U.S. Borrower on the First Amendment Effectiveness Date in the principal amount not to exceed its Existing U.S. Term Loan Commitment on the First Amendment Effectiveness Date; and -41- (e) to make an Additional U.S. Term Loan to U.S. Borrower on the Second Amendment Effectiveness Date in the principal amount not to exceed its Additional U.S. Term Loan Commitment on the Second Amendment Effectiveness Date. Amounts paid or prepaid in respect of Term Loans may not be reborrowed. Within the limits set forth in clause (b) above and subject to the terms, conditions and limitations set forth herein, U.S. Borrower may borrow, pay or prepay and reborrow Revolving Loans. SECTION 2.02 LOANS. (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.18(e)(ii), (x) ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $500,000 and not less than $2.5 million or (ii) equal to the remaining available balance of the applicable Commitments and (y) the Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $500,000 and not less than $2.5 million or (ii) equal to the remaining available balance of the applicable Commitments. (b) Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the applicable Borrower may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided that the Borrowers shall not be entitled to request any Borrowing that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings. (c) Except with respect to Loans made pursuant to Section 2.18(e)(ii), each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 12:00 noon, New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by U.S. Borrower in the applicable U.S. Borrowing Request maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. (d) Unless the Administrative Agent shall have received notice from a Lender prior to 11:00 a.m. on the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above, and the Administrative Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and such Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest -42- thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of either Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement, and such Borrower's obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.02(d) shall cease. (e) Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or Term Loan Maturity Date, as applicable. SECTION 2.03 BORROWING PROCEDURE. To request a Revolving Borrowing or Term Borrowing, the applicable Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02: (a) whether the requested Borrowing is to be a Borrowing of Revolving Loans, U.S. Term Loans or Canadian Term Loans; (b) the aggregate amount of such Borrowing; (c) the date of such Borrowing, which shall be a Business Day; (d) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; (e) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; provided that until the earlier of (x) the date on which the Syndication Agent shall have notified U.S. Borrower that a Successful Syndication has been achieved and (y) 60 days after the Second Amendment Effectiveness Date, the Interest Period for any Additional U.S. Term Loans shall be seven days; (f) the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.02(c); and (g) that the conditions set forth in Sections 4.02(b) through (d) have been satisfied as of the date of the notice. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (e) above). Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. -43- SECTION 2.04 EVIDENCE OF DEBT; REPAYMENT OF LOANS. (a) U.S. Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each U.S. Term Loan Lender, the principal amount of each U.S. Term Loan of such U.S. Term Loan Lender as provided in Section 2.09, (ii) to the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Revolving Lender on the Revolving Maturity Date and (iii) to the Swingline Lender, the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, U.S. Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested. (b) Canadian Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Canadian Term Loan Lender, the principal amount of each Canadian Term Loan of such Canadian Term Loan Lender as provided in Section 2.09. (c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (d) The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. (e) The entries made in the accounts maintained pursuant to paragraphs (c) and (d) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Loans in accordance with their terms. (f) Any Lender by written notice to the applicable Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibit K-I, K-2, K-3, K-4 or K-5, as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 11.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.05 FEES. (a) Commitment Fee. Each Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (a "COMMITMENT FEE") equal to the Applicable Fee per annum on the average daily unused amount of each Commitment of such Lender to such Borrower during the period from and including the Original Closing Date to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears (A) on the last Business Day -44- of March, June, September and December of each year, commencing on the first such date to occur after the Original Closing Date, and (B) on the date on which such Commitment terminates. Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose). (b) Administrative Agent Fees. U.S. Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter or such other fees payable in the amounts and at the times separately agreed upon between U.S. Borrower and the Administrative Agent (the "ADMINISTRATIVE AGENT FEES"). (c) LC and Fronting Fees. U.S. Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee ("LC PARTICIPATION FEE") with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the later of the Original Closing Date and the date on which such fee was last paid to and including the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee ("FRONTING FEE"), which shall accrue at the rate of 0.25% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the later of the Original Closing Date and the date on which such fee was last paid to and including the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Accrued LC Participation Fees and Fronting Fees shall be payable in arrears (i) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Original Closing Date, and (ii) on the date on which the Revolving Commitments terminate. Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand therefor. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (d) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that U.S. Borrower shall pay the Fronting Fees directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.06 INTEREST ON LOANS. (a) Subject to the provisions of Section 2.06(c), the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time. (b) Subject to the provisions of Section 2.06(c), the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time. -45- (c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by either Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall, to the extent permitted by applicable law, bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal and premium, if any, of or interest on any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.06 or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in Section 2.06(a) (in either case, the "DEFAULT RATE"). (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 2.06(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or a Swingline Loan), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error. (f) For purposes of the Interest Act (Canada), whenever interest payable pursuant to this Agreement is calculated with respect to any monetary Obligation relating to the Canadian Term Loans on the basis of a period other than a calendar year (the "CALCULATION PERIOD"), each rate of interest determined pursuant to such calculation expressed as an annual rate is equivalent to such rate as so determined, multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days in the Calculation Period. (g) The principle of deemed reinvestment of interest with respect to any monetary Obligation relating to the Canadian Term Loans shall not apply to any interest calculation under this Agreement. (h) The rates of interest with respect to any monetary Obligation relating to the Canadian Term Loans stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. SECTION 2.07 TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Additional U.S. Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Second Amendment Effectiveness Date; all other Term Loan Commitments have already terminated. The Revolving Commitments, the Swingline Commitment and the LC Commitment shall automatically terminate on the Revolving Maturity Date. (b) At its option, the applicable Borrower may at any time terminate, or from time to time permanently reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect -46- to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the aggregate amount of Revolving Exposures would exceed the aggregate amount of Revolving Commitments. (c) The applicable Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Commitments under Section 2.07(b) at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by a Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by a Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by a Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class. (d) The LC Commitment shall automatically be reduced on a dollar for dollar basis by the face amount of letters of credit terminated in connection with any Permitted Sale and Leaseback Transaction one Business Day after the receipt of such proceeds; provided that the LC Commitment shall not be reduced below $20.0 million pursuant to this Section 2.07(d). SECTION 2.08 INTEREST ELECTIONS. (a) Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the applicable Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrowers may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, the Borrowers shall not be entitled to request any conversion or continuation that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. This Section shall not apply to Swingline Borrowings, which may not be converted or continued. Any interest or conversion election pursuant to this Agreement does not constitute a new Borrowing but simply an adjustment of the basis on which interest payable to the applicable Lenders will be calculated. (b) To make an election pursuant to this Section, the applicable Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing or Term Borrowing of the Type resulting from such election to be made on the effective date of such election. Each Interest Election Request shall be irrevocable. (c) Each Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); -47- (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period"; provided that until the earlier of (x) the date on which the Syndication Agent shall have notified U.S. Borrower that a Successful Syndication has been achieved and (y) 60 days after the Second Amendment Effectiveness Date, the Interest Period for Additional U.S. Term Loans shall be seven days. If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the applicable Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (iv) above). (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to U.S. Borrower, that (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. SECTION 2.09 AMORTIZATION OF TERM BORROWINGS. (a) U.S. Borrower shall pay to the Administrative Agent, for the account of the applicable U.S. Term Loan Lenders, on the dates set forth on Annex II, or if any such date is not a Business Day, on the immediately preceding Business Day (each such date, a "TERM LOAN REPAYMENT DATE"), a principal amount of the U.S. Term Loans equal to the amount set forth on Annex II for such date (as adjusted from time to time pursuant to Section 2.10(h)), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment. (b) Canadian Borrower shall pay to the Administrative Agent, for the account of the Canadian Term Loan Lenders, on the Term Loan Repayment Dates, a principal amount of the Canadian Term Loans equal to the amount set forth on Annex II for such date (as adjusted from time to time pursuant to Section 2.10(h)), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment. (c) To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date. -48- SECTION 2.10 OPTIONAL AND MANDATORY PREPAYMENTS OF LOANS AND MANDATORY OFFERS TO REDEEM. (a) Optional Prepayments. Each Borrower shall have the right at any time and from time to time to prepay any Borrowing made by such Borrower, in whole or in part, subject to the requirements of this Section 2.10; provided that each partial prepayment shall be in an amount that is an integral multiple of $500,000 and not less than $2.5 million. (b) Revolving Loan Prepayments. (i) In the event of the termination of all the Revolving Commitments, U.S. Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit or cash collateralize all outstanding Letter of Credit in accordance with the procedures set forth in Section 2.18(i). (ii) In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify U.S. Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then U.S. Borrower shall, on the date of such reduction, first, repay or prepay Swingline Loans, second, repay or prepay Revolving Borrowings and third, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), in an aggregate amount sufficient to eliminate such excess. (iii) In the event that the sum of all Lenders' Revolving Exposures exceeds the Revolving Commitments then in effect, U.S. Borrower shall, without notice or demand, immediately first, repay or prepay Revolving Borrowings, and second, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), in an aggregate amount sufficient to eliminate such excess. (iv) In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, U.S. Borrower shall, without notice or demand, immediately replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), in an aggregate amount sufficient to eliminate such excess. (c) Asset Sales. (I) Not later than three Business Days following the receipt of any Net Cash Proceeds from an Asset Sale pursuant to Section 6.06(h), U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to such Offer to Redeem in accordance with Sections 2.10(h), (i) and (j); provided that in the case of an Asset Sale pursuant to Section 6.06(h)(X) (i) notwithstanding anything to the contrary in Section 2.10(h) such amount shall first be applied to redeem the Canadian Term Loans on behalf of the Canadian Borrower and (ii) any such amount remaining after the redemption in full of the Canadian Term Loans shall be applied in accordance with Section 2.10(c)(II). (II) Not later than three Business Days following the receipt of any Net Cash Proceeds of any Asset Sale (other than a Permitted Sale and Leaseback Transaction or an Asset Sale pursuant to Section 6.06(h)) by Parent, U.S. Borrower or any U.S. Subsidiary, U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h), (i) and (j); and not later than one Business Day following the receipt of any Net Cash Proceeds of any Asset Sale (other than a Permitted Sale and Leaseback Transaction) by Canadian Borrower or any Canadian -49- Subsidiary, the Borrowers shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h), (i) and (j); provided, in each case, that: (i) so long as no Default shall then exist or would arise therefrom, no such Offer to Redeem shall be required under this Section 2.10(c)(II)(i) with respect to (A) any Asset Sale permitted by Section 6.06(a), (B) the disposition of property which constitutes a Casualty Event, or (C) Asset Sales for fair market value resulting in no more than $500,000 in Net Cash Proceeds per Asset Sale (or series of related Asset Sales) and less than $3.0 million in Net Cash Proceeds in any fiscal year; provided that clause (C) shall not apply in the case of any Asset Sale described in clause (b) of the definition thereof or to an Asset Sale pursuant to Section 6.06(h); and (ii) so long as no Default shall then exist or would arise therefrom and the aggregate of Net Cash Proceeds of Asset Sales shall not exceed $30.0 million in any fiscal year of U.S. Borrower (not including for purposes of this limit only, Net Cash Proceeds of Permitted Sale and Leaseback Transactions or an Asset Sale pursuant to Section 6.06(h)), no Offer to Redeem shall be required on such date to the extent that (A) U.S. Borrower shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds are expected to be reinvested in fixed or capital assets within 365 days following the date of such Asset Sale (which Officers' Certificate shall set forth the estimates of the proceeds to be so expended); and (B) all Net Cash Proceeds in respect of all Asset Sales (other than those referred to in clause (C) of Section 2.10(c)(II)(i)) in excess of $15.0 million in the aggregate at any time shall be held in the applicable Collateral Account and released therefrom only in accordance with the provisions of Article IX; provided that if all or any portion of such Net Cash Proceeds is not so reinvested within such 365-day period, such unused portion shall be applied to make an Offer to Redeem on the last day of such period as provided in this Section 2.10(c)(II); and provided, further, that if the property subject to such Asset Sale constituted Collateral, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.10 and 5.11. (d) Debt Issuance. Not later than one Business Day following the receipt of any Net Cash Proceeds of any Debt Issuance by Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h), (i) and (j). Not later than one Business Day following the receipt of any Net Cash Proceeds of any Debt Issuance by Canadian Borrower or any Canadian Subsidiary, the Borrowers, shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h) , (i) and (j). (e) Equity Issuance or Preferred Stock Issuance. Not later than one Business Day following the receipt of any Net Cash Proceeds of any Equity Issuance, U.S. Borrower shall apply an amount equal to 50% of such Net Cash Proceeds to make prepayments in accordance with Sections 2.10(h) and (i). Not later than one Business Day following the receipt of any Net Cash Proceeds of any Preferred Stock Issuance by Holdings, Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. Borrower shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with Sections 2.10(h) and (i). (f) Casualty Events. Not later than one Business Day following the receipt of any Net Cash Proceeds from a Casualty Event by Parent, U.S. Borrower or any of its U.S. Subsidiaries, U.S. -50- Borrower shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h), (i) and (j); and not later than one Business Day following the receipt of any Net Cash Proceeds from a Casualty Event by Canadian Borrower or any Canadian Subsidiary, the Borrowers, shall make an Offer to Redeem the maximum principal amount of Borrowings that may be redeemed by applying an amount equal to 100% of such Net Cash Proceeds to make redemptions in accordance with Sections 2.10(h), (i) and (j); provided, in each case, that: (i) so long as no Default shall then exist or arise therefrom, no Offer to Redeem shall be required on such date to the extent that U.S. Borrower shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such proceeds are expected to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid or to invest in other fixed or capital assets, no later than 365 days (or such longer period as may be approved by the Administrative Agent) following the date of receipt of such proceeds; provided that if the property subject to such Casualty Event constituted Collateral under the Security Documents, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.10 and 5.11; (ii) all Net Cash Proceeds in respect of all Casualty Events in excess of $15.0 million in the aggregate shall be held in the applicable Collateral Account and released therefrom only in accordance with the provisions of Article IX; and (iii) if any portion of such Net Cash Proceeds shall not be so applied within such 365-day (or longer) period, such unused portion shall be applied to make an Offer to Redeem on the last day of such period as provided in this Section 2.10(f). (g) Excess Cash Flow. No later than the earlier of (i) 90 days after the end of each Excess Cash Flow Period and (ii) the date on which the financial statements with respect to such fiscal year in which such Excess Cash Flow Period occurs are delivered pursuant to Section 5.01(a), U.S. Borrower shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate amount equal to the excess of (x) 50% of Excess Cash Flow for the Excess Cash Flow Period then ended less (y) any voluntary prepayments of Term Loans and any permanent voluntary reductions to the Revolving Commitments to the extent that an equal amount of the Revolving Loans simultaneously is repaid, in each case so long as such amounts are not already reflected in Debt Service, during such Excess Cash Flow Period; provided that only 25% of Excess Cash Flow for the Excess Cash Flow Period then ended need be applied pursuant to this Section 2.10(g) if the Senior Leverage Ratio is less than 1.5:1.0 as of the end of such Excess Cash Flow Period. (h) Application of Prepayments and Redemptions. (i) Prior to any optional (subject to Section 2.10(a)) or mandatory prepayment or redemption pursuant to any Offer to Redeem hereunder, the applicable Borrower shall select the Borrowing or Borrowings to be prepaid or redeemed and shall specify such selection in the notice of such prepayment or Offer to Redeem pursuant to Section 2.10(i), subject to the provisions of this Section 2.10(h). Subject to Section 2.10(h)(iii), any prepayments or redemptions of Term Loans pursuant to Section 2.10(a), (c), (d), (e), (f) or (g) shall be applied to reduce scheduled prepayments required under Sections 2.09(a) and (b) on a pro rata basis among the prepayments remaining to be made on each Term Loan Repayment Date and shall be applied, in the case of prepayments or redemptions to be made solely by U.S. Borrower, first, to U.S. Term Loans (on a pro rata basis between Existing U.S. Term Loans and -51- Additional U.S. Term Loans) and second if all U.S. Term Loans have been repaid, to Canadian Term Loans on behalf of Canadian Borrower, and, in the case of prepayments or redemptions by the Borrowers, first, by Canadian Borrower to Canadian Term Loans and second, if all Canadian Term Loans have been repaid, by U.S. Borrower to U.S. Term Loans (on a pro rata basis between Existing U.S. Term Loans and Additional U.S. Term Loans). After application of redemptions and mandatory prepayments described above in this Section 2.10(h) and to the extent there are redemption or mandatory prepayment amounts remaining after such application, the Revolving Commitments shall be permanently reduced ratably among the Revolving Lenders in accordance with their applicable Revolving Commitments in an aggregate amount equal to such excess, and U.S. Borrower shall comply with Section 2.10(b). (ii) Amounts to be applied pursuant to this Section 2.10 to the prepayment or redemption of Term Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively. Any amounts remaining after each such application shall be applied to prepay or redeem Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding (an "EXCESS AMOUNT"), only the portion of the amount of such prepayment or redemption as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid or redeemed and, at the election of the applicable Borrower, the balance of such required prepayment shall be either (A) deposited in the applicable Collateral Account and applied to the prepayment or redemption of Eurodollar Loans on the last day of the then next-expiring Interest Period for Eurodollar Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while a Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit in either Collateral Account to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 2.13. (iii) Notwithstanding Sections 2.10(e) and 2.10(g), the aggregate amount of all prepayments by the Borrowers with respect to each Canadian Term Loan pursuant to Sections 2.10(e) and 2.10(g) and Section 2.09 as in effect on the Original Closing Date within the first five years following the Original Closing Date shall not exceed 25% of the initial principal amount of that Canadian Term Loan, except for payments required as a result of an acceleration of the Obligations of the Borrowers pursuant to Article VIII. For greater certainty and notwithstanding any other provision of this Agreement, the failure of the Borrowers to make any prepayment of the Canadian Term Loans contemplated in Sections 2.10(e) and 2.10(g) or Section 2.09 solely as a consequence of the immediately preceding sentence shall not constitute a Default. Nothing in this Section 2.10(h)(iii) shall affect prepayments of U.S. Loans pursuant to Sections 2.10(e) and 2.10(g) or Section 2.09. (i) Notice of Prepayment or Offer to Redeem. The applicable Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice of any prepayment or Offer to Redeem hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment, (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment and (iv) in the case of an Offer to Redeem, five Business Days prior to the proposed date of redemption. Each such notice shall be irrevocable; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such termination is revoked in accordance with Section 2.07. Each such notice shall specify the prepayment or redemption date, the principal amount of each Borrowing or portion thereof to be pre- -52- paid or redeemed and, in the case of a mandatory prepayment or Offer to Redeem, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Such notice to the Lenders may be by electronic communication. Each partial prepayment or Offer to Redeem of any Borrowing shall be in an amount that would be permitted in the case of a Credit Extension of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment or Offer to Redeem of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.10. Prepayments and Offers to Redeem shall be accompanied by accrued interest to the extent required by Section 2.06. The Administrative Agent shall advise the applicable Borrower if an Offer to Redeem is accepted or declined by the Lenders on the Business Day prior to the proposed redemption date. If an Offer to Redeem is declined all funds that were to be used to redeem Borrowings shall revert to the applicable Borrower. (j) Mandatory Offers to Redeem. When required by Sections 2.10(c), (d) and (f), each Borrower shall make an offer to redeem Borrowings made by the Borrowers in accordance with the terms of Section 2.10(i), which offer may be accepted or declined by the Lenders in accordance with Section 11.02(e) (an "OFFER TO REDEEM"). If any Offer to Redeem is accepted, all redemptions shall be made in accordance with Section 2.10(h). SECTION 2.11 ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a Eurodollar Borrowing: (a) the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or (b) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give written notice thereof to U.S. Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies U.S. Borrower and the Lenders that the circumstances giving rise to such notice no longer exist (which the Administrative Agent agrees to use its commercially reasonable efforts to do promptly after it learns such circumstances cease to exist), (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing. SECTION 2.12 INCREASED COSTS. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against property of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or -53- (ii) impose on any Lender or the Issuing Bank or the London interbank market any other condition or expense affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such Lender's or the Issuing Bank's holding company, if any, of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the applicable Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered, it being understood that, to the extent duplicative of the provisions of Section 2.15, this Section 2.12 shall not apply to Taxes. (b) If any Lender or the Issuing Bank determines (in good faith, but in its sole absolute discretion) that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the applicable Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth in reasonable detail the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 2.12 shall be delivered to the applicable Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. Such Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that neither Borrower shall be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies such Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall not begin earlier than the date of effectiveness of the Change in Law. SECTION 2.13 BREAKAGE PAYMENTS. In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by a Borrower pursuant to Section 2.16, then, in -54- any such event, such Borrower shall compensate each Lender for the loss (other than lost profit or spread), cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to the applicable Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. Such Borrower shall pay such Lender the amount shown as due on any such certificate within 5 days after receipt thereof. SECTION 2.14 PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS. (a) Each Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or Reimbursement Obligations, or of amounts payable under Section 2.12, 2.13 or 2.15, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 677 Washington Boulevard, Stamford, Connecticut, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.12, 2.13, 2.15 and 11.03 shall be made directly to the persons entitled thereto and payments pursuant to other Loan Documents shall be made to the persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars, except as expressly specified otherwise. (b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties. (c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise (including by exercise of its rights under Section 9.1 of the Security Agreement), obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Re- -55- volving Loans, Term Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by either Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to U.S. Borrower or any of its Subsidiaries or Affiliates (as to which the provisions of this paragraph shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation. If under applicable bankruptcy, insolvency or any similar law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.14(c) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.14(c) to share in the benefits of the recovery of such secured claim. (d) Unless the Administrative Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c), 2.14(d), 2.17(d), 2.18(d), 2.18(e) or 11.03(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.15 TAXES. (a) Any and all payments by or on account of any obligation of either Borrower hereunder or under any other Loan Document shall be made without setoff, counterclaim or other defense and free and clear of and without deduction or withholding for any and all Indemnified Taxes; provided that if either Borrower or any Secured Party shall be required by law to deduct or pay any Indemnified Taxes from or in respect of such payments, then (i) the sum payable shall be increased as necessary so that after making or allowing for all required deductions and payments (including deductions, withholdings or payments applicable to additional sums payable under this Section 2.15) the Administrative Agent, any Lender or the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions, withholdings or payments been required, (ii) such Borrower shall make such deductions or withholdings, as are required to be made by it and (iii) such Borrower shall pay -56- the full amount deducted or withheld by it to the relevant Governmental Authority in accordance with applicable law. (b) In addition, such Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) Each Borrower shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of such Borrower hereunder or under any other Loan Document, or otherwise with regard to any Loan Document, (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to either Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes and in any event within 30 days of any such payment being due, by either Borrower to a Governmental Authority, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Each Foreign Lender shall deliver to the Borrowers and the Administrative Agent two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Foreign Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a statement substantially in the form of Exhibit Q and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Foreign Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrowers under this Agreement and the other Loan Documents. Such forms shall be delivered by each Foreign Lender on or before the date it becomes a party to this Agreement. In addition, each Foreign Lender shall deliver such forms within ten (10) Business Days after receipt of a written notification from the Borrowers that any form previously delivered by such Foreign Lender is invalid or is due to expire or to become obsolete. Each Foreign Lender shall promptly notify the Borrowers at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrowers (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this paragraph, a Foreign Lender shall not be required to deliver any form pursuant to this paragraph that such Foreign Lender is not legally able to deliver. (f) If the Administrative Agent or a Lender determines in its reasonable discretion that it is entitled to claim a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section 2.15, it promptly shall notify the applicable Borrower of the availability of such refund claim. Upon receipt of a written request from a Borrower, such Administrative Agent or Lender shall use reasonable efforts to file a timely claim to such taxation authority for such refund, solely at the Borrower's expense. If the Administrative Agent or a Lender receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) or in respect of any Indemnified Taxes or Other Taxes with respect to which a Borrower has paid additional amounts pursuant to this Section 2.15, it shall within 30 days from the date of such receipt pay over the amount of such refund to the applicable Borrower, net -57- of all reasonable out-of-pocket expenses of such Administrative Agent or Lender (as determined in the Administrative Agent's or Lender's reasonable discretion) and without interest (other than interest paid by the relevant taxation authority with respect to such refund); provided, however, that (i) each Borrower, upon the request of the Administrative Agent or such Lender (or assignee), agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges (including Taxes) imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender (or assignee) within a reasonable time (not to exceed 20 days) after receipt of written notice that the Administrative Agent or such Lender (or assignee) is required to repay such refund to such Governmental Authority and (ii) such Administrative Agent or Lender shall not be required to make any payment under this Section 2.15(f) if an Event of Default shall have occurred and be continuing. Nothing contained in this Section 2.15(f) shall require the Administrative Agent or any Lender (or assignee) to make available its Tax Returns or any other information which it deems confidential to a Borrower or any other person. Notwithstanding anything to the contrary, in no event will any Lender be required to pay any amount to a Borrower the payment of which would place such Lender in a less favorable net after-tax position than such Lender would have been in if the additional amounts giving rise to such refund of any Indemnified Taxes had never been paid. (g) The Administrative Agent and each Lender agrees, upon written request from a Borrower, to use reasonable efforts (subject to overall policy considerations of the Administrative Agent or such Lender, as the case may be, and legal and regulatory restrictions) to avoid or minimize any amounts that might otherwise be payable by a Borrower pursuant to this Section 2.15; provided that such effort shall not impose on the Administrative Agent or any Lender any additional costs or any other economic, legal, regulatory or other disadvantage, as determined in the Administrative Agent's or such Lender's sole discretion; provided, further, that nothing in this Section 2.15(g) shall affect or postpone any of the obligations of a Borrower or the rights of any Administrative Agent or Lender pursuant to this Section 2.15. (h) The agreements in this Section shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. SECTION 2.16 MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) Mitigation of Obligations. If any Lender requests compensation under Section 2.12, or if a Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers, as applicable, hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. A certificate setting forth such costs and expenses in reasonable detail submitted by such Lender to the Administrative Agent shall be conclusive absent manifest error. (b) Replacement of Lenders. If any Lender requests compensation under Section 2.12, or if a Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, or any Lender is a non-consenting Lender under Section 11.02(c), or if any Lender defaults in its obligation to fund Loans hereunder, then the applicable Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and sub- -58- ject to the restrictions contained in Section 11.04), all of its interests, rights and obligations under this Agreement to an assignee selected by such Borrower that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) such Borrower shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender), which consents shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (assuming for this purpose that the Loans of such Lender were being prepaid) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or such Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.15, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling a Borrower to require such assignment and delegation cease to apply. SECTION 2.17 SWINGLINE LOANS. (a) Swingline Commitment. Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to U.S. Borrower from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $15.0 million or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, U.S. Borrower may borrow, repay and reborrow Swingline Loans. (b) Swingline Loans. To request a Swingline Loan, U.S. Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed U.S. Borrowing Request to the Administrative Agent and the Swingline Lender, not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and the amount of the requested Swingline Loan. Each Swingline Loan shall be an ABR Loan. The Swingline Lender shall make each Swingline Loan available to U.S. Borrower by means of a credit to the general deposit account of U.S. Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.18(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. U.S. Borrower shall not request a Swingline Loan if at the time of or immediately after giving effect to the Extension of Credit contemplated by such request a Default has occurred and is continuing or would result therefrom. Swingline Loans shall be made in minimum amounts of $500,000 and integral multiples of $250,000 above such amount. (c) Prepayment. U.S. Borrower shall have the right at any time and from time to time to repay any Swingline Loan, in whole or in part, upon giving written notice to the Swingline Lender and the Administrative Agent before 12:00 (noon), New York City time, on the proposed date of repayment. (d) Participations. The Swingline Lender may at any time in its discretion by written notice given to the Administrative Agent (provided such notice requirement shall not apply if the Swingline Lender and the Administrative Agent are the same entity) not later than 11:00 A.M., New York City time, on the next succeeding Business Day following such notice require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans then outstanding. -59- Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (so long as such payment shall not cause such Lender's Revolving Exposure to exceed such Lender's Revolving Commitment). Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify U.S. Borrower of any participations in any Swingline Loan acquired by the Revolving Lenders pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from U.S. Borrower (or other party on behalf of U.S. Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent. Any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve U.S. Borrower of any default in the payment thereof. SECTION 2.18 LETTERS OF CREDIT (a) General. Subject to the terms and conditions set forth herein, U.S. Borrower may request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of Credit for its own account or the account of a Subsidiary in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period (provided that U.S. Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary). The Issuing Bank shall have no obligation to issue, and U.S. Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, the LC Exposure would exceed the LC Commitment or the total Revolving Exposure would exceed the total Revolving Commitments. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by U.S. Borrower to, or entered into by U.S. Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) Request for Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, U.S. Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) an LC Request to the Issuing Bank and the Administrative Agent not later than 11:00 a.m. on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the Issuing Bank). A request for an initial issuance of a Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank: -60- (i) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (ii) the amount thereof; (iii) the expiry date thereof (which shall not be later than the close of business on the Letter of Credit Expiration Date); (iv) the name and address of the beneficiary thereof; (v) whether the Letter of Credit is to be issued for its own account or for the account of one of its Subsidiaries (provided that U.S. Borrower shall be a co-applicant, and therefore jointly and severally liable, with respect to each Letter of Credit issued for the account of a Subsidiary); (vi) the documents to be presented by such beneficiary in connection with any drawing thereunder; (vii) the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and (viii) such other matters as the Issuing Bank may require. A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended, renewed or extended; (ii) the proposed date of amendment, renewal or extension thereof (which shall be a Business Day); (iii) the nature of the proposed amendment, renewal or extension; and (iv) such other matters as the Issuing Bank may require. If requested by the Issuing Bank, U.S. Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and, upon issuance, amendment, renewal or extension of each Letter of Credit, U.S. Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension, (i) the LC Exposure shall not exceed the LC Commitment, (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments and (iii) the conditions set forth in Article IV in respect of such issuance, amendment, renewal or extension shall have been satisfied. Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000, in the case of a Commercial Letter of Credit, or $500,000, in the case of a Standby Letter of Credit, or is to be denominated in a currency other than Dollars. (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) in the case of a Standby Letter of Credit, (x) the date which is no later than one year after the date of the issuance of such Standby Letter of Credit (or, in the case of any renewal or extension thereof, no later than one year after such renewal or extension) and (y) the Letter of Credit Expiration Date and (ii) in the case of a Commercial Letter of Credit, (x) the date that is no later than -61- 180 days after the date of issuance of such Commercial Letter of Credit (or, in the case of any renewal or extension thereof, no later than 180 days after such renewal or extension) and (y) the Letter of Credit Expiration Date. (d) Participations. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby irrevocably grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Revolving Lender's Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Revolving Lender's Pro Rata Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by U.S. Borrower on the date due as provided in Section 2.18(e), or of any reimbursement payment required to be refunded to U.S. Borrower for any reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit, the occurrence and continuance of a Default, reduction or termination of the Commitments, or expiration, termination or cash collateralization of any Letter of Credit and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. The Administrative Agent shall notify the Revolving Lenders promptly after the issuance, amendment or expiration of any Letter of Credit. (e) Reimbursement. (i) If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, U.S. Borrower shall reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to such LC Disbursement not later than 3:00 p.m., New York City time, on the date that such LC Disbursement is made if U.S. Borrower shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by U.S. Borrower prior to such time on such date, then not later than 3:00 p.m., New York City time, on the Business Day immediately following the day that U.S. Borrower receives such notice; provided that U.S. Borrower may, subject to the conditions to borrowing set forth herein, request (x) in accordance with Section 2.03 that such payment be financed with ABR Revolving Loans in an equivalent amount and, to the extent so financed, U.S. Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Loans or (y) that such payment be satisfied with the proceeds of Term Loans held in the Ply Gem LC Restricted Account. (ii) If U.S. Borrower fails to make such payment when due, the Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from U.S. Borrower in respect thereof and such Revolving Lender's Pro Rata Percentage thereof. Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent not later than 2:00 p.m., New York City time, on such date (or, if such Revolving Lender shall have received such notice later than 12:00 noon, New York City time, on any day, not later than 11:00 a.m., New York City time, on the immediately following Business Day), an amount equal to such Revolving Lender's Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as provided in Section 2.02(c) with respect to Revolving Loans made by such Revolving Lender, and the Administrative Agent will promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from U.S. Borrower pursuant to the above paragraph prior to the time that any Revolving Lender makes any payment pursuant to the preceding sentence and any such amounts received by the Administrative Agent from U.S. Borrower thereafter will be promptly remitted -62- by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as appropriate. (iii) If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, each of such Revolving Lender and U.S. Borrower severally agrees to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of U.S. Borrower, the rate per annum set forth in Section 2.18(h) and (ii) in the case of such Lender, at a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation. (f) Obligations Absolute. The Reimbursement Obligation of U.S. Borrower as provided in Section 2.18(e) shall be absolute, unconditional and irrevocable, and shall be paid and performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit being proved to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that fails to comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.18, constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of U.S. Borrower hereunder; (v) the fact that a Default shall have occurred and be continuing; or (vi) any material adverse change in the business, property, results of operations, prospects or condition, financial or otherwise, of U.S. Borrower and its Subsidiaries. None of the Agents, the Lenders, the Issuing Bank or any of their Affiliates shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to U.S. Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by U.S. Borrower to the extent permitted by applicable law) suffered by U.S. Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly give written notice to the Administrative Agent and U.S. Borrower of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve U.S. Borrower -63- of its Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.18(e)). (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless U.S. Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that U.S. Borrower reimburses such LC Disbursement, at the rate per annum determined pursuant to Section 2.06(a) until the day after U.S. Borrower is notified of such LC Disbursement and thereafter pursuant to Section 2.06(c). Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to Section 2.18(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. (i) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that U.S. Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, U.S. Borrower shall deposit in the LC Sub-Account, in the name of the Collateral Agent and for the benefit of the Revolving Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to U.S. Borrower described in paragraph (g) or (h) of Article VIII. Funds in the LC Sub-Account shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of outstanding Reimbursement Obligations or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations of U.S. Borrower under this Agreement. If U.S. Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount plus any accrued interest or realized profits with respect to such amounts (to the extent not applied as aforesaid) shall be returned to U.S. Borrower within three Business Days after all Events of Default have been cured or waived. (j) Additional Issuing Banks. U.S. Borrower may, at any time and from time to time, designate one or more additional Revolving Lenders to act as an issuing bank under the terms of this Agreement, with the consent of the Administrative Agent (which consent shall not be unreasonable withheld), the Issuing Bank and such Revolving Lender(s). Any Lender designated as an issuing bank pursuant to this paragraph (j) shall be deemed (in addition to being a Revolving Lender) to be the Issuing Bank with respect to Letters of Credit issued or to be issued by such Revolving Lender, and all references herein and in the other Loan Documents to the term "Issuing Bank" shall, with respect to such Letters of Credit, be deemed to refer to such Revolving Lender in its capacity as Issuing Bank, as the context shall require. (k) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign as Issuing Bank hereunder at any time upon at least 30 days' prior notice to the Lenders, the Administrative Agent and U.S. Borrower. The Issuing Bank may be replaced at any time by written agreement among U.S. Borrower, each Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank or any such additional Issuing Bank. At the time any such resignation or replacement shall become effective, U.S. Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.05(c). -64- From and after the effective date of any such resignation or replacement or addition, as applicable, (i) the successor or additional Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or such addition or to any previous Issuing Bank, or to such successor or such addition and all previous Issuing Banks, as the context shall require. After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. If at any time there is more than one Issuing Bank hereunder, U.S. Borrower may, in its discretion, select which Issuing Bank is to issue any particular Letter of Credit. (l) Other. The Issuing Bank shall be under no obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Second Amendment Effectiveness Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Second Amendment Effectiveness Date and which the Issuing Bank in good faith deems material to it; or (ii) the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank. The Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. (m) Foreign Curreny Letters of Credit. If the Issuing Bank agrees pursuant to the last sentence of Section 2.18(b) to issue a Letter of Credit denominated in a currency other than Dollars, then notwithstanding anything herein to the contrary, with respect to any such Letter of Credit, the related LC Exposure, the related Reimbursement Obligation of U.S. Borrower, any reimbursement obligation of any Revolving Lender pursuant to Section 2.18(e), any other obligation owed by or to any Revolving Lender, and any LC Participation Fee or Fronting Fee owed pursuant to Section 2.05(c) shall be calculated and due solely in Dollars. The exchange rate for conversion into Dollars utilized shall be the Dollar equivalent of the applicable foreign currency as reasonably determined by the Issuing Bank and the Administrative Agent based on the rate at which the Issuing Bank could convert or has converted any such foreign currency into Dollars taking into account all transaction costs. Any such exchange rate shall be updated at intervals reasonably determined by the Issuing Bank and the Administrative Agent. -65- ARTICLE III REPRESENTATIONS AND WARRANTIES Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders (with references to the Companies being references thereto after giving effect to the Second Amendment Transactions and the Transactions unless otherwise expressly stated) that: SECTION 3.01 ORGANIZATION; POWERS. Each Company (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease its property and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. There is no existing default under any Organizational Document of any Company or any event which, with the giving of notice or passage of time or both, would constitute a default by any party thereunder. SECTION 3.02 AUTHORIZATION; ENFORCEABILITY. The Transactions and the Second Amendment Transactions to be entered into by each Loan Party are within such Loan Party's powers and have been duly authorized by all necessary action on the part of such Loan Party. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.03 NO CONFLICTS. Except as set forth on Schedule 3.03, the Transactions and the Second Amendment Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents and (iii) consents, approvals, registrations, filings, permits or actions the failure to obtain or perform which could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the Organizational Documents of any Company or any law, judgment, decree or order of any Governmental Authority, (c) will not violate or result in a default or require any consent or approval under any indenture, agreement, Organizational Document or other instrument binding upon any Company or its property, or give rise to a right thereunder to require any payment to be made by any Company, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any property of any Company, except Liens created by the Loan Documents and Permitted Liens. SECTION 3.04 FINANCIAL STATEMENTS; PROJECTIONS. (a) U.S. Borrower has, prior to the Original Closing Date, delivered to the Lenders the consolidated balance sheets and related statements of income, stockholders' equity and cash flows of U.S. Borrower (i) as of and for the fiscal years ended December 31, 2000, December 31, 2001 and December 31, 2002, audited by and accompanied by the unqualified opinion of Ernst & Young, LLP, independent public accountants, and (ii) as of and for the nine-month period ended September 30, 2003 and for the comparable period of the preceding fiscal year, in each case, certified by the chief financial officer -66- of U.S. Borrower. Such financial statements and all financial statements delivered pursuant to Sections 5.01(a) and (b) have been prepared in accordance with GAAP and present fairly and accurately, in all material respects, the financial condition and results of operations and cash flows of U.S. Borrower as of the dates and for the periods to which they relate. Except as set forth in such financial statements, there are no liabilities of any Company of any kind, whether accrued, contingent, absolute, determined, determinable or otherwise, which could reasonably be expected to result in a Material Adverse Effect, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than liabilities under the Loan Documents, the Senior Subordinated Note Documents and the New Senior Subordinated Note Documents. (b) U.S. Borrower has, prior to the Original Closing Date, delivered to the Lenders U.S. Borrower's unaudited pro forma consolidated balance sheet and statements of income and cash flows and pro forma EBITDA for the fiscal year ended December 31, 2002, and as of and for the nine-month period ended September 30, 2003 and for the four-quarter period ended September 30, 2003, in each case after giving effect to the Transactions as if they had occurred on such date in the case of the balance sheet and as of the beginning of all periods presented in the case of the statements of income and cash flows. Such pro forma financial statements have been prepared in good faith by the Loan Parties, based on the assumptions stated therein (which assumptions were believed by the Loan Parties on the Original Closing Date to be reasonable), are based on the best information available to the Loan Parties as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Transactions, and present fairly in all material respects the pro forma consolidated financial position and results of operations of U.S. Borrower as of such date and for such periods, assuming that the Transactions had occurred at such dates. (c) U.S. Borrower has, prior to the Second Amendment Effectiveness Date, delivered to the Lenders the unaudited consolidated balance sheets and related statements of income and cash flows of each of U.S. Borrower and MW as of and for July 3, 2004 and the comparable six-month period of the preceding fiscal year, in each case, subject to a review in accordance with the standards of the Public Company Accounting Oversight Board performed by Ernst & Young, LLP, the independent registered public accounting firm used by the Companies, and in each case, certified by the chief financial officer of U.S. Borrower. Such financial statements have been prepared in accordance with GAAP and present fairly and accurately, in all material respects, the financial condition and results of operations and cash flows of U.S. Borrower or MW, as applicable, as of the dates and for the periods to which they relate. (d) U.S. Borrower has, prior to the Second Amendment Effectiveness Date, delivered to the Lenders U.S. Borrower's unaudited pro forma statement of income and pro forma EBITDA for the fiscal year ended December 31, 2003, and for the six-month period ended July 3, 2004, as well as its pro forma consolidated balance sheet as of July 3, 2004 and pro forma EBITDA for the twelve-month period ended July 3, 2004, in each case after giving effect to the Second Amendment Transactions as if they had occurred on such date in the case of the balance sheet and as of the beginning of all periods presented in the case of the statement of income. Such pro forma financial statements have been prepared in good faith by the Loan Parties, based on the assumptions stated therein (which assumptions are believed by the Loan Parties on the date hereof and on the Second Amendment Effectiveness Date to be reasonable), are based on the best information available to the Loan Parties as of the date of delivery thereof, accurately reflect all adjustments required to be made to give effect to the Second Amendment Transactions, and present fairly in all material respects the pro forma consolidated financial position and results of operations of U.S. Borrower as of such date and for such periods, assuming that the Second Amendment Transactions had occurred at such dates. -67- (e) The forecasts of financial performance of Parent and its subsidiaries furnished to the Lenders have been prepared in good faith by U.S. Borrower and based on assumptions believed by U.S. Borrower to reasonable. (f) Since December 31, 2002, there has been no event, change, circumstance or occurrence that, individually or in the aggregate, has had or could reasonably be expected to result in a Material Adverse Effect. SECTION 3.05 PROPERTIES. (a) Each Company has good title to, or valid leasehold interests in, all its property material to its business, free and clear of all Liens except for, in the case of Collateral, Permitted Collateral Liens and, in the case of all other material property, Permitted Liens and minor irregularities or deficiencies in title that, individually or in the aggregate, do not interfere with its ability to conduct its business as currently conducted or to utilize such property for its intended purpose. The property of the Companies, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted), except to the extent that the failure to be in such condition could not reasonably be expected to result in a Material Adverse Effect, and (ii) constitutes all the property which is required for the business and operations of the Companies as presently conducted. (b) Schedule 3.05(b) contains a true and complete list of each interest in Real Property (i) owned by any Company as of the date hereof, and describes the type of interest therein held by such Company and (ii) leased, subleased or otherwise occupied or utilized by any Company, as lessee, sublessee, franchisee or licensee, as of the date hereof and describes the type of interest therein held by such Company and whether such lease, sublease or other instrument requires the consent of the landlord thereunder or other parties thereto to the Transactions or the Second Amendment Transactions. (c) No Company has received any notice of, nor has any knowledge of, the occurrence or pendency or contemplation of any Casualty Event in excess of $7.5 million affecting all or any portion of its property. No Mortgage encumbers improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards within the meaning of the National Flood Insurance Act of 1968 unless flood insurance available under such Act has been obtained in accordance with Section 5.04. (d) Each Company owns or has rights to use all of the Collateral and all material rights with respect to any of the foregoing used in, necessary for or material to each Company's business as currently conducted. The use by each Company of such Collateral and all such rights with respect to the foregoing do not infringe on the rights of any person other than such infringement which could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. No claim has been made and remains outstanding that any Company's use of any Collateral does or may violate the rights of any third party that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. (e) The Equipment of each Company is in good repair, working order and condition, reasonable wear and tear excepted. Each Company shall cause the Equipment to be maintained and preserved in good repair, working order and condition, reasonable wear and tear excepted, and shall as quickly as commercially practicable make or cause to be made all repairs, replacements and other improvements which are necessary or appropriate in the conduct of each Company's business. -68- SECTION 3.06 INTELLECTUAL PROPERTY. (a) Ownership/No Claims. Each Loan Party owns, or is licensed to use, all patents, patent applications, trademarks, trade names, servicemarks, copyrights, technology, trade secrets, proprietary information, domain names, know-how and processes necessary for the conduct of its business as currently conducted (the "INTELLECTUAL PROPERTY"), except for those the failure to own or license which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No claim has been asserted and is pending by any person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Loan Party know of any valid basis for any such claim. To the knowledge of the Loan Parties, the use of such Intellectual Property by each Loan Party does not infringe the rights of any person, except for such claims and infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) Registrations. Except pursuant to licenses and other user agreements entered into by each Loan Party in the ordinary course of business (including those that are listed in Schedules 14(a) and 14(b) to the Perfection Certificate), on and as of the date hereof (i) each Loan Party owns and possesses the right to use, and has taken no affirmative action to authorize or enable any other person to use, any copyright, patent or trademark (as such terms are defined in the U.S. Security Agreement) listed in Schedules 14(a) and 14(b) to the Perfection Certificate and (ii) to the knowledge of the Loan Parties, all issuances and registrations listed in Schedules 14(a) and 14(b) to the Perfection Certificate are valid and in full force and effect. (c) No Violations or Proceedings. To each Loan Party's knowledge, on and as of the date hereof, there is no material violation by others of any right of such Loan Party with respect to any copyright, patent or trademark listed in Schedules 14(a) and 14(b) to the Perfection Certificate, respectively, pledged by it under the name of such Loan Party. SECTION 3.07 EQUITY INTERESTS AND SUBSIDIARIES. (a) Schedule 3.07(a) sets forth a list of (i) all the Subsidiaries of Parent and their jurisdiction of organization as of the Second Amendment Effectiveness Date and (ii) the number of each class of its Equity Interests authorized, and the number outstanding, on the Second Amendment Effectiveness Date and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the Second Amendment Effectiveness Date. All Equity Interests of each Company owned by Parent and its Subsidiaries are duly and validly issued and are fully paid and non-assessable, and, other than the Equity Interests of U.S. Borrower, are owned by U.S. Borrower, directly or indirectly through Subsidiaries. All Equity Interests of U.S. Borrower are owned directly by Parent (or, after an IPO, the IPO Entity) and, prior to an IPO, all Equity Interests of Parent are owned directly by Holdings. Each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Equity Interests pledged by it under the U.S. Security Agreement, free of any and all Liens, rights or claims of other persons, except the security interest created by the U.S. Security Agreement and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Equity Interests. (b) No consent of any person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or reasonably desirable (from the perspective of a secured party) in connection with the creation, perfection or first priority status of the security interest of the Collateral Agent in any Equity Interests pledged to the Collateral Agent for the benefit of the Secured Parties under the Security Agreement or the -69- exercise by the Collateral Agent of the voting or other rights provided for in the Security Agreement or the exercise of remedies in respect thereof. (c) An accurate organization chart, showing the ownership structure of Parent, U.S. Borrower and each Subsidiary on the Second Amendment Effectiveness Date, and after giving effect to the Second Amendment Transactions, is set forth on Schedule 3.07(c). SECTION 3.08 LITIGATION; COMPLIANCE WITH LAWS. (a) There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of any Company, threatened against or affecting any Company or any business, property or rights of any Company (i) that involve any Loan Document or any of the Transactions or the Second Amendment Transactions or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. (b) Except for matters covered by Section 3.18, no Company or any of its property is in violation of, nor will the continued operation of its property as currently conducted violate, any Requirements of Law (including any zoning or building ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting any Company's Real Property or is in default with respect to any judgment, writ, injunction, decree, rule or order of any Governmental Authority, where such violation or default, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. SECTION 3.09 AGREEMENTS. (a) No Company is a party to any agreement or instrument or subject to any corporate or other constitutional restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect. (b) No Company is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other agreement or instrument to which it is a party or by which it or any of its property is or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect, and no condition exists which, with the giving of notice or the lapse of time or both, would constitute such a default. (c) Schedule 3.09(c) accurately and completely lists all material agreements (other than leases of Real Property set forth on Schedule 3.05(b)) to which any Company is a party which are in effect on the date hereof in connection with the operation of the business conducted thereby and U.S. Borrower has delivered to the Administrative Agent complete and correct copies of all such material agreements, including any amendments, supplements or modifications with respect thereto, and as of the date hereof all such agreements are in full force and effect. SECTION 3.10 FEDERAL RESERVE REGULATIONS. (a) No Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board, including Regula- -70- tion T, U or X. The pledge of the Securities Collateral pursuant to the Security Agreement does not violate such regulations. SECTION 3.11 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. No Company is (a) an "investment company" or a company "controlled" by a person required to register as an "investment company," as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) a "holding company," an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company," as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. SECTION 3.12 USE OF PROCEEDS. The Borrowers will use the proceeds of (a) the Revolving Loans after the Original Closing Date for general corporate purposes; provided that no more than $15.0 million of Revolving Loans may be borrowed or outstanding on the Second Amendment Effectiveness Date and then only for working capital needs and to pay fees and expenses in connection with the Second Amendment Transactions, (b) the Additional Term Loans extended on the Second Amendment Effectiveness Date to effect the MW Acquisition and the MW Refinancing and to pay related fees and expenses, and (c) the Swingline Loans after the Original Closing Date for general corporate purposes. SECTION 3.13 TAXES. Each Company has (a) timely filed or caused to be timely filed all federal Tax Returns and all state, local and foreign Tax Returns or materials required to have been filed by it and all such Tax Returns are true and correct in all material respects and (b) duly and timely paid, collected or remitted or caused to be duly and timely paid, collected or remitted all Taxes (whether or not shown on any Tax Return) due and payable, collectible or remittable by it and all assessments received by it, except Taxes (i) that are being contested in good faith by appropriate proceedings and for which such Company has set aside on its books adequate reserves in accordance with GAAP and (ii) which could not, individually or in the aggregate, have a Material Adverse Effect. Each Company has made adequate provision in accordance with GAAP for all Taxes not yet due and payable. Each Company is unaware of any proposed or pending tax assessments, deficiencies or audits that could be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect. No Company has ever been a party to any understanding or arrangement constituting a "tax shelter" within the meaning of Section 6111(c), Section 6111(d) or Section 6662(d)(2)(C)(iii) of the Code, or has ever "participated" in a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4, except as could not be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect. SECTION 3.14 NO MATERIAL MISSTATEMENTS. No information, report, financial statement, certificate, Borrowing Request, LC Request, exhibit or schedule furnished by or on behalf of any Company to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto (including the Confidential Information Memorandum and the Second Confidential Information Memorandum), taken as a whole, contained or contains any material misstatement of fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading as of the date such information is dated or certified; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each Company represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule. SECTION 3.15 LABOR MATTERS. As of the date hereof and the Original Closing Date, there are no strikes, lockouts or slowdowns against any Company pending or, to the knowledge of any Company, threatened. The hours worked by and payments made to employees of any Company have not been in violation of the Fair Labor Standards Act of 1938, as amended, or any other applicable federal, state, local or foreign law dealing with such matters in any manner which could reasonably be ex- -71- pected to result in a Material Adverse Effect. All payments due from any Company, or for which any claim may be made against any Company, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Company except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The consummation of the Transactions and the Second Amendment Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Company is bound. SECTION 3.16 SOLVENCY. Immediately after the consummation of the Transactions to occur on the Original Closing Date, immediately after the consummation of the Second Amendment Transactions on the Second Amendment Effectiveness Date and immediately following the making of each Loan and after giving effect to the application of the proceeds of each Loan, (a) the fair value of the properties of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will not have unreasonably small capital with which to conduct its business in which it is engaged as such business is now conducted and is proposed to be conducted following the Second Amendment Effectiveness Date. SECTION 3.17 EMPLOYEE BENEFIT PLANS. (a) Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, each Company and its ERISA Affiliates is in compliance with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on any of the property of any Company. The present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $10.0 million the fair market value of the property of all such underfunded Plans. Except as set forth on Schedule 3.17, using actuarial assumptions and computation methods consistent with subpart I of subtitle E of Title IV of ERISA, the aggregate liabilities of each Company or its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, could not reasonably be expected to result in a Material Adverse Effect. (b) Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, to the extent applicable, each Foreign Plan has been maintained in substantial compliance with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. No Company has incurred any material unpaid obligation in connection with the termination of or withdrawal from any Foreign Plan. Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect, the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan which is funded, determined as of the end of the most recently ended fiscal year of the respective Company on the basis of actuarial assumptions, each of which -72- is reasonable, did not exceed the current value of the property of such Foreign Plan, and for each Foreign Plan which is not funded, the obligations of such Foreign Plan are properly accrued. SECTION 3.18 ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule 3.18 and except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect: (i) The Companies and their businesses, operations and Real Property are and in the last six years have been in compliance with, and the Companies have no liability under, Environmental Law; (ii) The Companies have obtained all Environmental Permits required for the conduct of their businesses and operations, and the ownership, operation and use of their property, under Environmental Law, all such Environmental Permits are valid and in good standing; (iii) There has been no Release or threatened Release of Hazardous Material on, at, under or from any Real Property or facility presently or formerly owned, leased or operated by the Companies or their predecessors in interest that could result in liability by the Companies under Environmental Law; (iv) There is no Environmental Claim pending or, to the knowledge of the Companies, threatened against the Companies, or relating to the Real Property currently or formerly owned, leased or operated by the Companies or relating to the operations of the Companies, and to the knowledge of the Companies, there are no actions, activities, circumstances, conditions, events or incidents that could form the basis of such an Environmental Claim; (v) No person with an indemnity or contribution obligation to the Companies relating to compliance with or liability under Environmental Law is in default with respect to such obligation; and (vi) No Company is obligated to perform any action or otherwise incur any expense under Environmental Law pursuant to any order, decree, judgment or agreement by which it is bound or has assumed by contract or agreement, and no Company is conducting or financing any Response pursuant to any Environmental Law with respect to any Real Property or any other location. (b) Except as set forth in Schedule 3.18: (i) No Real Property or facility owned, operated or leased by the Companies and, to the knowledge of the Companies, no Real Property or facility formerly owned, operated or leased by the Companies or any of their predecessors in interest is (i) listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response, Compensation and Liability Information System promulgated pursuant to CERCLA or (iii) included on any similar list maintained by any Governmental Authority including any such list relating to petroleum; (ii) No Lien has been recorded or, to the knowledge of any Company, threatened under any Environmental Law with respect to any Real Property or property of the Companies; -73- (iii) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup pursuant to any Governmental Real Property Disclosure Requirements or any other Environmental Law; and (iv) The Companies have made available to the Lenders all material records and files in the possession, custody or control of, or otherwise reasonably available to, the Companies concerning compliance with or liability under Environmental Law, including those concerning the existence of Hazardous Material at Real Property or facilities currently or formerly owned, operated, leased or used by the Companies. SECTION 3.19 INSURANCE. Schedule 3.19 sets forth a true, complete and correct description of all insurance maintained by each Company as of the Second Amendment Effectiveness Date. All insurance maintained by the Companies is in full force and effect, all premiums have been duly paid, no Company has received notice of violation or cancellation thereof, the Premises, and the use, occupancy and operation thereof, comply in all material respects with all Insurance Requirements, and there exists no material default under any Insurance Requirement. Each Company has insurance in such amounts and covering such risks and liabilities as are customary for companies of a similar size engaged in similar businesses in similar locations. SECTION 3.20 SECURITY DOCUMENTS. (a) The U.S. Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, legal, valid and enforceable Liens on, and security interests in, the U.S. Security Agreement Collateral and (i) when financing statements and other filings in appropriate form are filed in the offices specified on Schedule 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Collateral Agent of the U.S. Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the U.S. Security Agreement), the Liens created by the U.S. Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the U.S. Security Agreement Collateral (other than (A) the Intellectual Property Collateral (as defined in the U.S. Security Agreement) and (B) such U.S. Security Agreement Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Collateral Liens. (b) The Canadian Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Canadian Secured Parties, legal, valid and enforceable Liens on, and security interests in, the Canadian Security Agreement Collateral and (i) when financing statements and other filings in appropriate form are filed in the offices specified on Schedule 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Collateral Agent of the Canadian Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by the Canadian Security Agreement), the Liens created by the Canadian Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Canadian Security Agreement Collateral (other than (A) the Intellectual Property Collateral (as defined in the Canadian Security Agreement) and (B) such Canadian Security Agreement Collateral in which a security interest cannot be perfected under the PPSA as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Collateral Liens. -74- (c) When the U.S. Security Agreement or a short form thereof is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Liens created by such U.S. Security Agreement shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the grantors thereunder in the Intellectual Property Collateral (as defined in such Security Agreement) in which a security interest may be perfected under applicable U.S. law, in each case subject to no Liens other than Permitted Collateral Liens. (d) Each Mortgage granted by a U.S. Loan Party is effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, legal, valid and enforceable first priority Liens on, and security interests in, all of such U.S. Loan Party's right, title and interest in and to the U.S. Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent, and when such Mortgages are filed in the offices specified on Schedule 1.01(d) (or, in the case of any such Mortgage executed and delivered after the date thereof in accordance with the provisions of Sections 5.10, 5.11 and 5.13, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 5.10, 5.11 and 5.13), such Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the U.S. Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens permitted by such Mortgage. (e) Each Mortgage granted by a Canadian Loan Party is effective to create, in favor of the Collateral Agent or its sub-agent, for its benefit and the benefit of the Canadian Secured Parties, legal, valid and enforceable first priority Liens on, and security interests in, all of such Canadian Loan Party's right, title and interest in and to the Canadian Mortgaged Properties thereunder and the proceeds thereof, subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent, and when such Mortgages are filed in the offices specified on Schedule 1.01(d) (or, in the case of any such Mortgage executed and delivered after the date thereof in accordance with the provisions of Sections 5.10 and 5.11, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 5.10 and 5.11), such Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the Canadian Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens permitted by such Mortgage. (f) Each Security Document delivered pursuant to Sections 5.10, 5.11 and 5.13 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, legal, valid and enforceable Liens on, and security interests in, all of the Loan Parties' right, title and interest in and to the Collateral thereunder, and when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law, such Security Document will constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in such Collateral, in each case subject to no Liens other than the applicable Permitted Collateral Liens. SECTION 3.21 ACQUISITION DOCUMENTS; REPRESENTATIONS AND WARRANTIES IN ACQUISITION AGREEMENT. (a) Schedule 3.21 lists (i) each exhibit, schedule, annex or other attachment to the Acquisition Agreement and (ii) each agreement, certificate, instrument, letter or other document contemplated by the Acquisition Agreement or any item referred to in clause (i) to be entered into, executed or delivered or to become effective in connection with the Acquisition or otherwise entered into, executed or delivered in connection with the Acquisition. The Lenders have been furnished true and complete copies -75- of each Acquisition Document to the extent executed and delivered on or prior to the Original Closing Date. (b) All representations and warranties of each Company set forth in the Acquisition Agreement were true and correct in all material respects as of the time such representations and warranties were made and shall be true and correct in all material respects as of the Original Closing Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. SECTION 3.22 ANTI-TERRORISM LAW. (a) No Loan Party and, to the knowledge of the Loan Parties, none of its Affiliates is in violation of any laws relating to terrorism or money laundering ("ANTI-TERRORISM LAWS"), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the "EXECUTIVE ORDER"), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56. (b) No Loan Party and to the knowledge of the Loan Parties, no Affiliate or broker or other agent of any Loan Party acting or benefiting in any capacity in connection with the Loans is any of the following: (i) a person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (ii) a person owned or controlled by, or acting for or on behalf of, any person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order; (iii) a person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; (iv) a person that commits, threatens or conspires to commit or supports "terrorism" as defined in the Executive Order; or (v) a person that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control ("OFAC") at its official website or any replacement website or other replacement official publication of such list. (c) No Loan Party and, to the knowledge of the Loan Parties, no broker or other agent of any Loan Party acting in any capacity in connection with the Loans (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in paragraph (b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. SECTION 3.23 SUBORDINATION OF SENIOR SUBORDINATED NOTES. The Obligations are "Senior Debt," the U.S. Guaranteed Obligations are "Guarantor Senior Debt" and the Obligations and U.S. Guaranteed Obligations are "Designated Senior Debt," in each case, within the meaning of the Senior Subordinated Note Documents and the New Senior Subordinated Note Documents. -76- SECTION 3.24 MW ACQUISITION DOCUMENTS; REPRESENTATIONS AND WARRANTIES IN MW ACQUISITION AGREEMENT. (a) Schedule 3.24 lists (i) each exhibit, schedule, annex or other attachment to the MW Acquisition Agreement and (ii) each agreement, certificate, instrument, letter or other document contemplated by the MW Acquisition Agreement or any item referred to in clause (i) to be entered into, executed or delivered or to become effective in connection with the MW Acquisition or otherwise entered into, executed or delivered in connection with the MW Acquisition. The Lenders have been furnished true and complete copies of each MW Acquisition Document to the extent executed and delivered on or prior to the Second Amendment Effectiveness Date. (b) All representations and warranties of each Company set forth in the MW Acquisition Agreement were true and correct in all material respects as of the time such representations and warranties were made and shall be true and correct in all material respects as of the Second Amendment Effectiveness Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date. ARTICLEIV CONDITIONS TO CREDIT EXTENSIONS SECTION 4.01 CONDITIONS TO INITIAL CREDIT EXTENSION. The obligation of each Lender and, if applicable, each Issuing Bank to fund the initial Credit Extension requested to be made by it was subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.01. (a) Loan Documents. All legal matters incident to this Agreement, the Credit Extensions hereunder and the other Loan Documents shall be reasonably satisfactory to the Lenders, to the Issuing Bank and to the Administrative Agent and there shall have been delivered to the Administrative Agent an executed counterpart of each of the Loan Documents and the Perfection Certificate. (b) Corporate Documents. The Administrative Agent shall have received: (i) a certificate of the secretary or assistant secretary of each Loan Party dated the Original Closing Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of each Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this clause (i)); (ii) a certificate as to the good standing of each Loan Party (in so-called "long-form" if available) as of a recent date, from such Secretary of State (or other applicable Governmental Authority); and -77- (iii) such other documents as the Lenders, the Issuing Bank or the Administrative Agent may reasonably request. (c) Officers' Certificate. The Administrative Agent shall have received a certificate, dated the Original Closing Date and signed by the chief executive officer and the chief financial officer of U.S. Borrower, confirming compliance with the conditions precedent set forth in this Section 4.01 and Sections 4.02(b), (c) and (d). (d) Financings and Other Transactions, Etc. (i) The Transactions shall have been consummated or shall be consummated simultaneously on the Original Closing Date, in each case in all material respects in accordance with the terms hereof and the terms of the Transaction Documents, without the waiver or amendment of any such terms not approved by the Joint Lead Arrangers (such consent not to be unreasonably withheld). (ii) U.S. Borrower shall have received not less than $225.0 million in gross proceeds from the issuance and sale of the Senior Subordinated Notes, and the Senior Subordinated Note Agreement shall be in form and substance reasonably satisfactory to the Lenders. (iii) The Equity Financing shall have been consummated. The terms of the Equity Financing and the Rollover Equity shall not require any payments or other distributions of cash or property in respect thereof other than payments in kind, or any purchases, redemptions or other acquisitions thereof for cash or property other than payments in kind, in each case prior to the payment in full of all obligations under the Loan Documents and the Senior Subordinated Notes, except as permitted by the Loan Documents. (iv) The Refinancing shall have been consummated in full to the reasonable satisfaction of the Lenders with all liens in favor of the existing lenders being unconditionally released; the Administrative Agent shall have received a "pay-off" letter in form and substance reasonably satisfactory to the Administrative Agent with respect to all debt being refinanced in the Refinancing; and the Administrative Agent shall have received from any person holding any Lien securing any such debt, such UCC termination statements, mortgage releases, releases of assignments of leases and rents, releases of security interests in Intellectual Property and other instruments, in each case in proper form for recording, as the Administrative Agent shall have reasonably requested to release and terminate of record the Liens securing such debt. (e) Financial Statements, Pro Forma Balance Sheet; Projections. The Lenders shall have received and shall be reasonably satisfied with the form and substance of the financial statements described in Section 3.04(b) and with the forecasts of the financial performance of Parent and its Subsidiaries. (f) Indebtedness and Minority Interests. After giving effect to the Transactions and the other transactions contemplated hereby, no Company shall have outstanding any Indebtedness or preferred stock other than (i) the Loans and Credit Extensions hereunder, (ii) the Senior Subordinated Notes, (iii) the Indebtedness listed on Schedule 6.01(b), (iv) the Assumed Debt and (v) Indebtedness owed to either Borrower or any Guarantor. (g) Opinions of Counsel. The Administrative Agent shall have received, on behalf of itself, the other Agents, the Arrangers, the Lenders and the Issuing Bank, a favorable written opinion of (i) Paul Weiss, Rifkind, Wharton & Garrison LLP, special counsel for the Loan Parties, substantially to the effect set forth in Exhibit N-1, (ii) each local counsel listed on Schedule 4.01(g), substantially to the -78- effect set forth in Exhibit N-2, and (iii) Bennett Jones LLP, Canadian counsel for the Loan Parties, substantially to the effect set forth in Exhibit N-3, in each case (A) dated the Original Closing Date and (B) addressed to the Agents, the Issuing Bank and the Lenders, and (iii) a copy of each legal opinion delivered under the other Transaction Documents, accompanied by reliance letters from the party delivering such opinion authorizing the Agents, Lenders and the Issuing Bank to rely thereon as if such opinion were addressed to them. (h) Solvency Certificate. The Administrative Agent shall have received a solvency certificate in the form of Exhibit O, dated the Original Closing Date and signed by the treasurer or the chief financial officer of U.S. Borrower. (i) Requirements of Law. The Lenders shall be satisfied that Parent, its Subsidiaries and the Transactions shall be in full compliance with all material Requirements of Law, including Regulations T, U and X of the Board, and shall have received reasonably satisfactory evidence of such compliance reasonably requested by them. (j) Consents. The Lenders shall be reasonably satisfied that all requisite Governmental Authorities and third parties shall have approved or consented to the Transactions, and there shall be no governmental or judicial action, actual or threatened, that has or would have, singly or in the aggregate, a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby. (k) Litigation. There shall be no litigation, public or private, or administrative proceedings, governmental investigation or other legal or regulatory developments, actual or threatened, that, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or could materially and adversely affect the ability of Holdings, Parent, U.S. Borrower and their respective Subsidiaries to fully and timely perform their respective obligations under the Transaction Documents, or the ability of the parties to consummate the financings contemplated hereby or the other Transactions. (l) Sources and Uses. The sources and uses of the Loans shall be as set forth in Section 3.12. (m) Fees. The Arrangers and the Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Original Closing Date, including reimbursement or payment of all out-of-pocket expenses (including the legal fees and expenses of Cahill Gordon & Reindel LLP, special counsel to the Agents, and the fees and expenses of any local counsel, foreign counsel, appraisers, consultants and other advisors) required to be reimbursed or paid by either Borrower hereunder or under any other Loan Document. (n) Personal Property Requirements. The Collateral Agent shall have received: (i) all certificates, agreements or instruments representing or evidencing the Securities Collateral accompanied by instruments of transfer and stock powers undated and endorsed in blank; (ii) the Intercompany Note executed by and among Parent and each of its Subsidiaries (other than Canadian Borrower) and the Canadian Intercompany Note executed by and among Canadian Borrower, Parent and each of its Subsidiaries, each accompanied by instruments of transfer undated and endorsed in blank; -79- (iii) all other certificates, agreements, including control agreements, or instruments necessary to perfect the Collateral Agent's security interest in all Chattel Paper, all Instruments, all Deposit Accounts and all Investment Property of each Loan Party (as each such term is defined in either Security Agreement and to the extent required by either Security Agreement); (iv) financing statements in appropriate form for filing under the UCC and PPSA, filings with the United States Patent and Trademark Office, and the United States Copyright Office and such other documents under applicable Requirements of Law in each jurisdiction as may be necessary or appropriate or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents under the laws of the United States, Canada or any State or Province thereof and, with respect to all UCC financing statements required to be filed pursuant to the Loan Documents, evidence satisfactory to the Administrative Agent that U.S. Borrower has retained, at its sole cost and expense, a service provider acceptable to the Administrative Agent for the tracking of all such financing statements and notification to the Administrative Agent, of, among other things, the upcoming lapse or expiration thereof; (v) certified copies of UCC, PPSA, United States Patent and Trademark Office, United States Copyright Office, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name any Loan Party as debtor and that are filed in those state and county jurisdictions in which any property of any Loan Party is located and the state and county jurisdictions in which any Loan Party is organized or maintains its principal place of business and such other searches that the Collateral Agent deems necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Security Documents (other than Permitted Collateral Liens or any other Liens acceptable to the Collateral Agent); (vi) with respect to each location set forth on Schedule 4.01(n)(vi), a Landlord Access Agreement or Bailee Letter, as applicable; provided that no such Landlord Access Agreement shall be required with respect to any Real Property that could not be obtained after the Loan Party that is the lessee or owner of the inventory or other personal property Collateral stored with the bailee thereof, as applicable, shall have used all commercially reasonable efforts to do so; and (vii) evidence acceptable to the Collateral Agent of payment or arrangements for payment by the Loan Parties of all applicable recording taxes, fees, charges, costs and expenses required for the recording of the Security Documents. (o) Real Property Requirements. The Collateral Agent shall have received: (i) a Mortgage, encumbering each Mortgaged Property in favor of the Collateral Agent, for the benefit of the applicable Secured Parties, duly executed and acknowledged by each Loan Party that is the owner of or holder of any interest in such Mortgaged Property, and otherwise in form for recording in the recording office of each applicable political subdivision where each such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under applicable law, and such financing statements and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, all of which shall be in form and substance reasonably satisfactory to Collateral Agent; (ii) with respect to each Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as necessary to -80- consummate the Transactions or as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee or leasehold interest constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect to such Mortgaged Property; (iii) with respect to each Mortgage, a policy of title insurance (or marked up title insurance commitment having the effect of a policy of title insurance) insuring the Lien of such Mortgage as a valid first mortgage Lien on the Mortgaged Property and fixtures described therein in the amount equal to not less than 115% of the fair market value of such Mortgaged Property and fixtures, which fair market value is set forth on Schedule 4.01(o)(iii), which policy (or such marked-up commitment) (each, a "TITLE POLICY") shall (A) be issued by the Title Company, (B) to the extent necessary, include such reinsurance arrangements (with provisions for direct access, if necessary) as shall be reasonably acceptable to the Collateral Agent, (C) contain a "tie-in" or "cluster" endorsement, if available under applicable law (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount), (D) have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent) as shall be reasonably requested by the Collateral Agent (including endorsements on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit, doing business, non-imputation, public road access, survey, variable rate, environmental lien, subdivision, separate tax lot revolving credit, and so-called comprehensive coverage over covenants and restrictions), and (E) contain no exceptions to title other than Permitted Collateral Liens and exceptions acceptable to the Collateral Agent; (iv) with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including a so-called "gap" indemnification) as shall be required to induce the Title Company to issue the Title Policy/ies and endorsements contemplated above; (v) evidence reasonably acceptable to the Collateral Agent of payment by U.S. Borrower of all Title Policy premiums, search and examination charges, escrow charges and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the Title Policies referred to above; (vi) with respect to each Real Property or Mortgaged Property, copies of all Leases in which U.S. Borrower or any Subsidiary holds the lessor's interest or other agreements relating to possessory interests, if any. To the extent any of the foregoing affect any Mortgaged Property, such agreement shall be subordinate to the Lien of the Mortgage to be recorded against such Mortgaged Property, either expressly by its terms or pursuant to a subordination, non-disturbance and attornment agreement, and shall otherwise be acceptable to the Collateral Agent; (vii) with respect to each Mortgaged Property, each Company shall have made all notifications, registrations and filings, to the extent required by, and in accordance with, all Governmental Real Property Disclosure Requirements applicable to such Mortgaged Property; and (viii) Surveys with respect to each Mortgaged Property. (p) Insurance. The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable or mortgagee endorsement (as applicable) and shall name the Collat- -81- eral Agent, on behalf of the Secured Parties, as additional insured, in form and substance satisfactory to the Administrative Agent. (q) No Material Change. No change shall have occurred since October 4, 2003, and no additional information shall be disclosed to or discovered by the Administrative Agent (including, without limitation, information contained in any review or report required to be provided to it in connection with this Agreement), which the Administrative Agent determines 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 Parent, U.S. Borrower and their respective subsidiaries taken as a whole. SECTION 4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender and each Issuing Bank to make any Credit Extension (including the initial Credit Extension and any Credit Extension on the Second Amendment Effectiveness Date) shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below. (a) Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) if Loans are being requested or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.18(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent shall have received a U.S. Borrowing Request as required by Section 2.17(b). (b) No Default. The Borrowers and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after giving effect to such Credit Extension and the application of the proceeds thereof, no Default shall have occurred and be continuing on such date. (c) Representations and Warranties. Each of the representations and warranties made by any Loan Party set forth in Article III hereof (other than, in the case of the initial Credit Extension and the Credit Extension on the Second Amendment Effectiveness Date only, Section 3.04(f) or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. (d) No Legal Bar. No order, judgment or decree of any Governmental Authority shall purport to restrain any Lender from making any Loans to be made by it. No injunction or other restraining order shall have been issued, shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder. Each of the delivery of a Borrowing Request or notice requesting the issuance, amendment, extension or renewal of a Letter of Credit and the acceptance by a Borrower of the proceeds of such Credit Extension shall constitute a representation and warranty by such Borrower and each other Loan Party that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the conditions contained in this Section 4.02 -82- have been satisfied. Each Borrower shall provide such information (including calculations in reasonable detail of the covenants in Section 6.10) as the Administrative Agent may reasonably request to confirm that the conditions in this Section 4.02 have been satisfied. SECTION 4.03 CONDITIONS TO EFFECTIVENESS OF THE SECOND AMENDMENT AND RESTATEMENT. The effectiveness of this Agreement shall be subject to, and occur upon the date of (the "SECOND AMENDMENT EFFECTIVENESS DATE"), the satisfaction of each of the conditions precedent set forth below. (a) Financings and Other Second Amendment Transactions, Etc. (i) The Second Amendment Transactions shall have been consummated or shall be consummated simultaneously on the Second Amendment Effectiveness Date, in each case in all material respects in accordance with the terms hereof and the terms of the Second Amendment Transaction Documents, without the waiver or amendment of any such terms unless approved by the Joint Lead Arrangers (such approval not to be unreasonably withheld). (ii) U.S. Borrower shall have received not less than $135.0 million in gross proceeds from the issuance and sale of the New Senior Subordinated Notes, and the New Senior Subordinated Note Agreement (and the other documentation relating to the issuance of the New Senior Subordinated Notes) shall be in form and substance reasonably satisfactory to the Lenders (it being understood that any New Senior Subordinated Notes issued under the indenture governing the Senior Subordinated Notes with covenants and defaults substantially similar to the Senior Subordinated Notes are satisfactory to the Lenders). (iii) The Supplemental Financing shall have been consummated. The terms of the Supplemental Financing and the Supplemental Rollover Equity shall not require any payments or other distributions of cash or property in respect thereof other than payments in kind, or any purchases, redemptions or other acquisitions thereof for cash or property other than payments in kind, in each case prior to the payment in full of all obligations under the Loan Documents, the Senior Subordinated Notes and the New Senior Subordinated Notes except as permitted by the Loan Documents. (iv) The MW Refinancing shall have been consummated in full to the reasonable satisfaction of the Joint Lead Arrangers with all liens in favor of the applicable existing lenders to MW and its Subsidiaries being unconditionally released; the Administrative Agent shall have received a "pay-off" letter in form and substance reasonably satisfactory to the Administrative Agent with respect to all debt being refinanced in the MW Refinancing; and the Administrative Agent shall have received from any person holding any Lien securing any such debt, such UCC termination statements, mortgage releases, releases of assignments of leases and rents, releases of security interests in Intellectual Property and other instruments, in each case in proper form for recording, as the Administrative Agent shall have reasonably requested, to release and terminate of record the Liens securing such debt. (b) Indebtedness and Minority Interests. After giving effect to the Second Amendment Transactions and the other transactions contemplated hereby, no Company shall have outstanding any Indebtedness or preferred stock other than (i) the Loans and Credit Extensions hereunder, (ii) the Senior Subordinated Notes, (iii) the New Senior Subordinated Notes, (iv) the Supplemental Financing, (v) Indebtedness permitted under the Original Credit Agreement and (vi) Indebtedness owed to either Borrower or any Guarantor. (c) Opinions of Counsel. The Administrative Agent shall have received, on behalf of itself, the other Agents, the Arrangers, the Lenders and the Issuing Bank, (x) a favorable written opinion of (i) Paul Weiss, Rifkind, Wharton & Garrison LLP, special counsel for the Loan Parties, substan- -83- tially to the effect set forth in Exhibit N-1 modified as appropriate for the Second Amendment Transactions, (ii) each local counsel listed on Schedule 4.01(g), substantially to the effect set forth in Exhibit N-2 modified as appropriate for the Second Amendment Transactions, and (iii) Bennett Jones LLP, Canadian counsel for the Loan Parties substantially to the effect set forth in Exhibit N-3 modified as appropriate for the Second Amendment Transactions, in each case (A) dated the Second Amendment Effectiveness Date and (B) addressed to the Agents, the Issuing Bank and the Lenders, and (y) a copy of each legal opinion delivered under the other Second Amendment Transaction Documents, accompanied by reliance letters from the party delivering such opinion authorizing the Agents, Lenders and the Issuing Bank to rely thereon as if such opinion were addressed to them. (d) Solvency Certificate. The Administrative Agent shall have received a solvency certificate in the form of Exhibit O, dated the Second Amendment Effectiveness Date and signed by the treasurer or the chief financial officer of U.S. Borrower. (e) Requirements of Law. The Lenders shall be satisfied that Parent, its Subsidiaries and the Second Amendment Transactions shall be in full compliance with all material Requirements of Law, including Regulations T, U and X of the Board, and shall have received reasonably satisfactory evidence of such compliance reasonably requested by them. (f) Consents. The Lenders shall be reasonably satisfied that all requisite Governmental Authorities and third parties shall have approved or consented to the Second Amendment Transactions, and there shall be no governmental or judicial action, actual or threatened, that has or would have, singly or in the aggregate, a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Second Amendment Transactions or the other transactions contemplated hereby. (g) Litigation. There shall be no litigation, public or private, or administrative proceedings, governmental investigation or other legal or regulatory developments, actual or threatened, that, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or could materially and adversely affect the ability of Holdings, Parent, U.S. Borrower and their respective Subsidiaries to fully and timely perform their respective obligations under the Second Amendment Transaction Documents, or the ability of the parties to consummate the financings contemplated hereby or by the other Second Amendment Transactions. (h) Sources and Uses. The sources and uses of the Loans shall be as set forth in Section 3.12. (i) Fees. The Arrangers and the Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Second Amendment Effectiveness Date, including reimbursement or payment of all out-of-pocket expenses (including the reasonable legal fees and expenses of Cahill Gordon & Reindel LLP, special counsel to the Agents, and the fees and expenses of any local counsel and foreign counsel) required to be reimbursed or paid by either Borrower hereunder, under any other Loan Document or under the Fee Letter. (j) Collateral Requirements. (A) The Borrowers shall have complied with Section 5.10(b) and (c) with respect to the MW Acquisition (provided that all actions required to be taken under Sections 5.10(b) and (c) shall have been taken on or prior to the Second Amendment Effectiveness Date without giving effect to the 30-day period referred to in such Sections); (B) the Collateral Agent shall have received financing statements in appropriate form for filing under the UCC and PPSA, filings with the United States Patent and Trademark Office and the United States Copyright Office and such other documents under applicable Requirements of Law in each jurisdiction as may be necessary or appropriate or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported to -84- be created, by the Security Documents under the laws of the United States, Canada or any State or Province thereof; (C) the Collateral Agent shall have received the Second Amendment Perfection Certificate Supplement (together with all schedules thereto); (D) the Borrowers shall have performed such other lien searches in relevant jurisdictions with respect to Parent and its Subsidiaries as the Collateral Agent may reasonably request; and (E) with respect to any property which has been or will be the subject of a Permitted Sale and Leaseback Transaction on or prior to the Second Amendment Effectiveness Date and will not be the subject of a Mortgage on the Second Amendment Effectiveness Date, the Borrowers shall have delivered to the Collateral Agent consents to a Mortgage thereon from the lessor or prospective lessor thereof that are reasonably satisfactory to the Collateral Agent. (k) Insurance. The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable or mortgagee endorsement (as applicable) and shall name the Collateral Agent, on behalf of the Secured Parties, as additional insured, in form and substance satisfactory to the Administrative Agent. (l) No Material Change. No change shall have occurred since March 31, 2004, and no additional information shall be disclosed to or discovered by the Administrative Agent (including, without limitation, information contained in any review or report required to be provided to it in connection with this Agreement), which the Administrative Agent determines 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 Parent, U.S. Borrower, MW and their respective subsidiaries taken as a whole. (m) Authorization. The Administrative Agent shall have received evidence satisfactory to it that this amendment and restatement shall have been approved by the Required Lenders and a majority of the Existing U.S. Term Loan Lenders in accordance with the provisions of Section 11.02(b). (n) Corporate Documents. The Administrative Agent shall have received: (i) a certificate of the secretary or assistant secretary of each Loan Party dated the Second Amendment Effectiveness Date, certifying (A) that attached thereto is a true and complete copy of each Organizational Document of such Loan Party certified (to the extent applicable) as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of each Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (C) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the secretary or assistant secretary executing the certificate in this clause (i)); (ii) a certificate as to the good standing of each Loan Party (in so-called "long-form" if available) as of a recent date, from such Secretary of State (or other applicable Governmental Authority); and (iii) such other documents as the Administrative Agent may reasonably request. -85- (o) Officers' Certificate. The Administrative Agent shall have received a certificate, dated the Second Amendment Effectiveness Date and signed by the chief executive officer and the chief financial officer of U.S. Borrower, confirming compliance with the conditions precedent set forth in this Section 4.03 and Sections 4.02(b), (c) and (d). ARTICLE V AFFIRMATIVE COVENANTS Each Loan Party warrants, covenants and agrees with each Lender that so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, each Loan Party will, and will cause each of its Subsidiaries to: SECTION 5.01 FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the Administrative Agent and each Lender: (a) Annual Reports. As soon as available and in any event within 90 days after the end of each fiscal year (but no later than the date on which Parent would be required to file a Form 10-K under the Exchange Act if it were subject to Section 15 and 13(d) of the Exchange Act), (i) the consolidated balance sheet of Parent as of the end of such fiscal year and related consolidated statements of income, cash flows and stockholders' equity for such fiscal year, in comparative form with such financial statements as of the end of, and for, the preceding fiscal year, and notes thereto (including a note with a consolidating balance sheet and statements of income and cash flows separating out Parent, U.S. Borrower and the Subsidiaries), all prepared in accordance with Regulation S-X and accompanied by an opinion of Ernst & Young LLP or other independent public accountants of recognized national standing reasonably satisfactory to the Administrative Agent (which opinion shall not be qualified as to scope or contain any going concern or other qualification), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Parent as of the dates and for the periods specified in accordance with GAAP and (ii) a management's discussion and analysis of the financial condition and results of operations for such fiscal year, including a discussion of sales by product category, as compared to the previous fiscal year and budgeted amounts (it being understood that the information required by clause (i) may be furnished in the form of a Form 10-K); (b) Quarterly Reports. As soon as available and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year (but no later than the date on which Parent would be required to file a Form 10-Q under the Exchange Act if it were subject to Section 15 and 13(d) of the Exchange Act), (i) the consolidated balance sheet of Parent as of the end of such fiscal quarter and related consolidated statements of income and cash flows for such fiscal quarter and for the then elapsed portion of the fiscal year, in comparative form with the consolidated statements of income and cash flows for the comparable periods in the previous fiscal year, and notes thereto (including a note with a consolidating balance sheet and statements of income and cash flows separating out Parent, U.S. Borrower and the Subsidiaries), all prepared in accordance with Regulation S-X under the Securities Act and accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of Parent as of the date and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent -86- with audited financial statements referred to in clause (a) of this Section, subject to normal year-end audit adjustments and (ii) a management's discussion and analysis of the financial condition and results of operations for such fiscal quarter and the then elapsed portion of the fiscal year, including a discussion of sales by product category, as compared to the comparable periods in the previous fiscal year and budgeted amounts (it being understood that the information required by clause (i) may be furnished in the form of a Form 10-Q); (c) Financial Officer's Certificate. (i) Concurrently with any delivery of financial statements under Section 5.01(a) or (b) above, a Compliance Certificate certifying that no Default has occurred or, if such a Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (ii) concurrently with any delivery of financial statements under Section 5.01 (a) or (b) above, a Compliance Certificate setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenants contained in Sections 6.07(f) and 6.10 (including the aggregate amount of Excluded Issuances for such period and the uses therefor) and, in the case of Section 5.01(a) above, setting forth U.S. Borrower's calculation of Excess Cash Flow; and (iii) in the case of Section 5.01(a) above, a report of the accounting firm opining on or certifying such financial statements stating that in the course of its regular audit of the financial statements of Parent and its Subsidiaries, which audit was conducted in accordance with GAAP, such accounting firm obtained no knowledge that any Default insofar as it relates to financial or accounting matters has occurred or, if in the opinion of such accounting firm such a Default has occurred, specifying the nature and extent thereof; (d) Financial Officer's Certificate Regarding Collateral. Concurrently with any delivery of financial statements under Section 5.01(a) above, a certificate of a Financial Officer setting forth the information required pursuant to the Perfection Certificate Supplement or confirming that there has been no change in such information since the date of the Perfection Certificate, Second Amendment Perfection Certificate or latest Perfection Certificate Supplement; (e) Public Reports. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any Company with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor), as the case may be; (f) Management Letters. Promptly after the receipt thereof by any Company, a copy of any final "management letter" received by any such person from its certified public accountants and the management's responses thereto; (g) Budgets. No later than (x) 60 days after the first day of the next fiscal year of Parent and U.S. Borrower and (y) 45 days after the first day of each other fiscal year of Parent and U.S. Borrower, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income for each of U.S. Borrower's business units and sources and uses of cash and balance sheets and a projection of sales by product category) prepared by each of Parent and U.S. Borrower, respectively, for each quarter of such fiscal year prepared in summary form, in each case, of Parent, Borrower and their respective subsidiaries, with appropriate presentation and discussion of the principal assumptions upon which such budgets are based, accompanied by the statement of a Financial Officer of each of Parent and U.S. Borrower to the effect that the budget of Parent and U.S. Borrower, respectively, is a reasonable estimate for the period covered thereby and, promptly when available, any significant revisions of such budget; -87- (h) Organization. Within 90 days after the close of each fiscal year of Parent, Parent shall deliver an accurate organization chart as required by Section 3.07(c), or confirm that there are no changes to Schedule 3.07(c); (i) Organizational Documents. Promptly provide copies of any Organizational Documents that have been amended or modified in accordance with the terms hereof and deliver a copy of any notice of default given or received by any Company under any Organizational Document within 15 days after such Company gives or receives such notice; and (j) Other Information. Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Company, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request. SECTION 5.02 LITIGATION AND OTHER NOTICES. Furnish to the Administrative Agent and each Lender written notice of the following promptly (and, in any event, within three Business Days of any Company becoming aware thereof): (a) any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; (b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit, litigation or proceeding, whether at law or in equity by or before any Governmental Authority, (i) against any Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect or (ii) with respect to any Loan Document; (c) any development that has resulted in, or could reasonably be expected to result in a Material Adverse Effect; (d) the occurrence of a Casualty Event in excess of $5.0 million; and (e) (i) the incurrence of any material Lien (other than Permitted Collateral Liens) on, or claim asserted against any of the Collateral or (ii) the occurrence of any other event which could materially affect the value of the Collateral. SECTION 5.03 EXISTENCE; BUSINESSES AND PROPERTIES. (a) Do or cause to be done all things necessary to preserve, renew and maintain in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05 or Section 6.06 or, in the case of any Subsidiary, where the failure to perform such obligations, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, privileges, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; comply with all applicable Requirements of Law (including any and all zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Real Property) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except where the failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; pay and perform its obligations under all Leases, Transac- -88- tion Documents and Second Amendment Transaction Documents except, in the case of all such documents other than the Loan Documents, where the failure to comply, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; and at all times maintain, preserve and protect all property material to the conduct of such business and keep such property in good repair, working order and condition (other than wear and tear occurring in the ordinary course of business) and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times; provided that nothing in this Section 5.03(b) shall prevent (i) sales of property, consolidations or mergers by or involving any Company in accordance with Section 6.05 or Section 6.06; (ii) the withdrawal by any Company of its qualification as a foreign corporation in any jurisdiction where such withdrawal, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; or (iii) the abandonment by any Company of any rights, franchises, licenses, trademarks, trade names, copyrights or patents that such person reasonably determines are not useful to its business or no longer commercially desirable. SECTION 5.04 INSURANCE. (a) Keep its insurable property adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks as is customary with companies in the same or similar businesses operating in the same or similar locations, including insurance with respect to Mortgaged Properties and other properties material to the business of the Companies against such casualties and contingencies and of such types and in such amounts with such deductibles as is customary in the case of similar businesses operating in the same or similar locations, including (i) physical hazard insurance on an "all risk" basis, (ii) commercial general liability against claims for bodily injury, death or property damage covering any and all insurable claims, (iii) explosion insurance in respect of any boilers, machinery or similar apparatus constituting Collateral, (iv) business interruption insurance, (v) worker's compensation insurance and such other insurance as may be required by any Requirement of Law and (vi) such other insurance against risks as the Administrative Agent may from time to time require (such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Collateral Agent); provided that with respect to physical hazard insurance, neither the Collateral Agent nor the applicable Company shall agree to the adjustment of any claim thereunder without the consent of the other (such consent not to be unreasonably withheld or delayed); provided, further, that no consent of any Company shall be required during an Event of Default. (b) All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Collateral Agent of written notice thereof, (ii) name the Collateral Agent as mortgagee (in the case of property insurance) or additional insured on behalf of the applicable Secured Parties (in the case of liability insurance) or loss payee (in the case of property insurance), as applicable, (iii) if reasonably requested by the Collateral Agent, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Collateral Agent. (c) Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.04 is taken out by any Company; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies. (d) With respect to each U.S. Mortgaged Property, obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any Mortgaged Property is designated a "flood haz- -89- ard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency), and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1973, as amended from time to time. (e) Deliver to the Administrative Agent and the Collateral Agent and the Lenders a report of a reputable insurance broker with respect to such insurance and such supplemental reports with respect thereto as the Administrative Agent or the Collateral Agent may from time to time reasonably request. (f) No Loan Party that is an owner of Mortgaged Property shall take any action that is reasonably likely to be the basis for termination, revocation or denial of any insurance coverage required to be maintained under such Loan Party's respective Mortgage or that could be the basis for a defense to any claim under any Insurance Policy maintained in respect of the Premises, and each Loan Party shall otherwise comply in all material respects with all Insurance Requirements in respect of the Premises; provided, however, that each Loan Party may, at its own expense and after written notice to the Administrative Agent, (i) contest the applicability or enforceability of any such Insurance Requirements by appropriate legal proceedings, the prosecution of which does not constitute a basis for cancellation or revocation of any insurance coverage required under this Section 5.04 or (ii) cause the Insurance Policy containing any such Insurance Requirement to be replaced by a new policy complying with the provisions of this Section 5.04. SECTION 5.05 OBLIGATIONS AND TAXES. (a) Pay its material Indebtedness and other material obligations promptly and in accordance with their terms and pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, services, materials and supplies or otherwise that, if unpaid, might give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; provided that such payment and discharge shall not be required with respect to any such Tax, assessment, charge, levy or claim so long as (i) the validity or amount thereof shall be contested in good faith by appropriate proceedings timely instituted and diligently conducted and the applicable Company shall have set aside on its books adequate reserves or other appropriate provisions with respect thereto in accordance with GAAP and such contested amounts, individually or in the aggregate, are not reasonably expected to have a Material Adverse Effect, (ii) such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Lien and (iii) in the case of Collateral, the applicable Company shall have otherwise complied with the Contested Collateral Lien Conditions. (b) Timely and correctly file all material Tax Returns required to be filed by it. Withhold, collect and remit all Taxes that it is required to collect, withhold or remit. (c) U.S. Borrower does not intend to treat the Loans as being a "reportable transaction" within the meaning of Treasury Regulation Section 1.6011-4. In the event U.S. Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. SECTION 5.06 EMPLOYEE BENEFITS. (a) Comply in all material respects with the applicable provisions of ERISA and the Code and (b) furnish to the Administrative Agent (x) as soon as possible after, and in any event within 10 days after any Responsible Officer of any Company or any ERISA Affiliates of any Company knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in liability of the -90- Companies or any of their ERISA Affiliates in an aggregate amount exceeding $1.0 million or the imposition of a Lien, a statement of a Financial Officer of U.S. Borrower setting forth details as to such ERISA Event and the action, if any, that the Companies propose to take with respect thereto, and (y) upon request by the Administrative Agent, copies of (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the Internal Revenue Service with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all notices received by any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan (or employee benefit plan sponsored or contributed to by any Company) as the Administrative Agent shall reasonably request. SECTION 5.07 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS; ANNUAL MEETINGS. (a) Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law are made of all dealings and transactions in relation to its business and activities. Each Company will permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the property of such Company at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances, accounts and condition of any Company with the officers and employees thereof and advisors therefor (including independent accountants). (b) Within 120 days after the close of each fiscal year of the Companies, at the request of the Administrative Agent or Required Lenders, hold a meeting (at a mutually agreeable location and time or, at the option of the Administrative Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of the Companies and the budgets presented for the current fiscal year of the Companies. SECTION 5.08 USE OF PROCEEDS. Use the proceeds of the Loans only for the purposes set forth in Section 3.12 and request the issuance of Letters of Credit only for the purposes set forth in the definition of Commercial Letter of Credit or Standby Letter of Credit, as the case may be. SECTION 5.09 COMPLIANCE WITH ENVIRONMENTAL LAWS; ENVIRONMENTAL REPORTS. (a) Comply, and cause all lessees and other persons occupying Real Property owned, operated or leased by any Company to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its operations and Real Property; obtain and renew all material Environmental Permits applicable to its operations and Real Property; and conduct all Responses required by, and in accordance with, Environmental Laws; provided that no Company shall be required to undertake any Response to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP. (b) If a Default caused by reason of a breach of Section 3.18 or Section 5.09(a) shall have occurred and be continuing for more than 20 days without the Companies commencing activities reasonably likely to cure such Default, at the written request of the Administrative Agent or the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of U.S. Borrower, an environmental assessment report regarding the matters which are the subject of such Default, including, where appropriate, any soil and/or groundwater sampling, prepared by -91- an environmental consulting firm and, in the form and substance, reasonably acceptable to the Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Response to address them. (c) Each Loan Party that is an owner of Mortgaged Property shall not install nor permit to be installed in the Mortgaged Property any Hazardous Materials, other than in compliance with applicable Environmental Laws. SECTION 5.10 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS. (a) Subject to this Section 5.10, with respect to any property acquired after the Second Amendment Effectiveness Date by any Loan Party that is intended to be subject to the Lien created by any of the Security Documents but is not so subject, promptly (and in any event within 30 days after the acquisition thereof) (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem reasonably necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other applicable Secured Parties, a Lien on such property subject to no other Liens other than Permitted Collateral Liens, and (ii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Document in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent. The Borrowers shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall reasonably require to confirm the validity, perfection and priority of the Lien of the Security Documents against such after-acquired properties. (b) With respect to any person that is or becomes a U.S. Subsidiary after the Second Amendment Effectiveness Date, promptly (and in any event within 30 days after such person becomes a U.S. Subsidiary) (i) deliver to the Collateral Agent the certificates, if any, representing all of the Equity Interests of such U.S. Subsidiary owned by Parent or any of its Subsidiaries, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such U.S. Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new U.S. Subsidiary (A) to execute a Joinder Agreement or such comparable documentation to become a U.S. Subsidiary Guarantor and a joinder agreement to the U.S. Security Agreement, substantially in the form annexed thereto or, in the case of a Foreign Subsidiary (other than a Canadian Subsidiary), execute a security agreement compatible with the laws of such Foreign Subsidiary's jurisdiction in form and substance reasonably satisfactory to the Administrative Agent, and (B) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the U.S. Security Agreement to be duly perfected to the extent required by such agreement in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Collateral Agent pursuant to clause (i) of this Section 5.10(b) shall not include any Equity Interests of a Foreign Subsidiary created or acquired after the Second Amendment Effectiveness Date and (2) no Foreign Subsidiary shall be required to take the actions specified in clause (ii) of this Section 5.10(b), if, in the case of either clause (1) or (2), doing so would constitute an investment of earnings in United States property under Section 956 (or a successor provision) of the Code, which investment would or could reasonably be expected to trigger a non de minimis increase in the net income of a United States shareholder of such Subsidiary pursuant to Section 951 (or a successor provision) of the Code, as reasonably determined by the Administrative Agent; provided that this exception shall not apply to (A) Voting Stock of any Subsidiary which is a first-tier controlled foreign corporation (as defined -92- in Section 957(a) of the Code) representing 65% of the total voting power of all outstanding Voting Stock of such Subsidiary and (B) 100% of the Equity Interests not constituting Voting Stock of any such Subsidiary, except that any such Equity Interests constituting "stock entitled to vote" within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this Section 5.10(b). (c) With respect to any person that is or becomes a Canadian Subsidiary after the Second Amendment Effectiveness Date, promptly (and in any event within 30 days after such person becomes a Canadian Subsidiary) (i) deliver to the Collateral Agent, a pledge agreement in a form reasonably satisfactory to the Collateral Agent, the certificates, if any, representing all of the Equity Interests of such Canadian Subsidiary owned by Canadian Borrower or a Canadian Subsidiary, together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of the holder(s) of such Equity Interests, and all intercompany notes owing from such Canadian Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Loan Party and (ii) cause such new Subsidiary (A) to execute a Joinder Agreement or such comparable documentation to become a Canadian Subsidiary Guarantor and a joinder agreement to the Canadian Security Agreement, substantially in the form annexed thereto or, in the case of a Subsidiary not organized under the laws of Canada, execute a security agreement compatible with the laws of such Subsidiary's jurisdiction in form and substance reasonably satisfactory to the Administrative Agent, and (B) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by such security document to be duly perfected to the extent required by such agreement in accordance with all applicable Requirements of Law, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent. (d) Promptly grant to the Collateral Agent, within 60 days of the acquisition thereof, a security interest in and Mortgage on (i) each Real Property owned in fee by such U.S. Loan Party as is acquired by such U.S. Loan Party after the Original Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $1.0 million, and (ii) unless the Collateral Agent otherwise consents, each leased Real Property of such U.S. Loan Party which lease individually has a fair market value of at least $1.0 million, in each case, as additional security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted by Section 6.02). Such Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Administrative Agent and the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such U.S. Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Real Property (including a Title Policy, a Survey and local counsel opinion (in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage). (e) Promptly grant to the Collateral Agent, within 60 days of the acquisition thereof, a security interest in and Mortgage creating a Lien on (i) each Real Property owned in fee by such Canadian Loan Party as is acquired by such Canadian Loan Party after the Original Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $1.0 million, and (ii) unless the Collateral Agent otherwise consents, each leased Real Property of such Canadian Loan Party which lease individually has a fair market value of at least $1.0 million, in each case, as additional -93- security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted by Section 6.02). Such Mortgages shall be granted pursuant to documentation reasonably satisfactory in form and substance to the Administrative Agent and the Collateral Agent and shall constitute valid and enforceable perfected Liens subject only to Permitted Collateral Liens or other Liens acceptable to the Collateral Agent. The Mortgages or instruments related thereto shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such Canadian Loan Party shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of any existing Mortgage or new Mortgage against such after-acquired Real Property (including a Title Policy (if available in the relevant jurisdiction), Survey and local counsel opinion (including as to title if a Title Policy is unavailable and otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent) in respect of such Mortgage). (f) The parties hereto agree that the provisions of this Section 5.10 (other than this Section 5.10(f)) shall not apply to Non-Guarantor Subsidiaries. Either Borrower may designate any of its Subsidiaries acquired or formed after the Second Amendment Effectiveness Date as a Non-Guarantor Subsidiary by written notice to the Administrative Agent; provided, however, that if at any time any Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries in the aggregate (other than any Foreign Subsidiary that is not required to take the actions specified in Section 5.10(b)(ii) by operation of the last sentence of Section 5.10(b)) not otherwise subject to Section 5.10(b) has assets with either a book value or fair market value in excess of $2.0 million, then such Borrower shall, and shall cause one or more of such Subsidiaries to, comply with Section 5.10(b) within the time frames set forth therein so that no Non-Guarantor Subsidiary or group of Non-Guarantor Subsidiaries in the aggregate holds property having either a book value or fair market value in excess of $2.0 million. SECTION 5.11 SECURITY INTERESTS; FURTHER ASSURANCES. Promptly, upon the reasonable request of the Administrative Agent, the Collateral Agent or any Lender, at U.S. Borrower's expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby subject to no other Liens except as permitted by the applicable Security Document, or obtain any consents or waivers as may be necessary or appropriate in connection therewith. Deliver or cause to be delivered to the Administrative Agent and the Collateral Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent as the Administrative Agent and the Collateral Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents. Upon the exercise by the Administrative Agent, the Collateral Agent or the Required Lenders of any power, right, privilege or remedy pursuant to any Loan Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority execute and deliver all applications, certifications, instruments and other documents and papers that the Administrative Agent, the Collateral Agent or the Required Lenders may require. If the Administrative Agent, the Collateral Agent or the Required Lenders reasonably determine that they are required by law or regulation to have appraisals prepared in respect of the Real Property of any Loan Party constituting Collateral, the Borrowers shall provide to the Administrative Agent appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA or other applicable law and are otherwise in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent. -94- SECTION 5.12 INFORMATION REGARDING COLLATERAL. (a) Not effect any change (i) in any Loan Party's legal name, (ii) in the location of any Loan Party's chief executive office, (iii) in any Loan Party's identity or organizational structure, (iv) in any Loan Party's Federal Taxpayer Identification Number or organizational identification number, if any, (v) in any Loan Party's jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction) or (vi) in the case of tangible personal property in Canada, the Province in which such property is located, unless a PPSA financing statement has already been filed in respect of the Loan Party in the province to which the property is re-located until (A) it shall have given the Collateral Agent and the Administrative Agent not less than 30 days' prior written notice (in the form of an Officers' Certificate), or such lesser notice period agreed to by the Collateral Agent, of its intention so to do, clearly describing such change and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request and (B) it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, if applicable. Each Loan Party agrees to promptly provide the Collateral Agent with certified Organizational Documents reflecting any of the changes described in the preceding sentence. Each Loan Party also agrees to promptly notify the Collateral Agent of any change in the location of any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral is located (including the establishment of any such new office or facility), other than changes in location to a Mortgaged Property or a leased property subject to a Landlord Access Agreement. (b) Concurrently with the delivery of financial statements pursuant to Section 5.01(a), deliver to the Administrative Agent and the Collateral Agent a Perfection Certificate Supplement and a certificate of a Financial Officer and the chief legal officer of U.S. Borrower certifying that all UCC financing statements (including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction necessary to protect and perfect the security interests and Liens under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period). SECTION 5.13 POST-CLOSING MATTERS. (a) If while any Obligations are outstanding, the mortgage(s) or deed(s) of trust encumbering, as of the Original Closing Date, any of the Real Properties identified on Schedule 5.13(a) (which mortgage(s) or deed(s) of trust are more particularly described in the applicable title commitments referred to in Schedule 6.02(c)) are satisfied or released, the applicable Loan Party shall deliver to Collateral Agent with respect to any such Real Property, within thirty (30) days thereafter, the documents, instruments, opinions and other items set forth as follows: (1) a duly executed and acknowledged Mortgage, financing statements and other instruments meeting the requirements of Section 4.01(o)(i) hereof; (2) such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements or other instruments as required by Section 4.01(o)(ii); (3) a policy of title insurance meeting the requirements of Section 4.01(o)(iii); (4) policies or certificates of insurance as required by Section 4.01(p); -95- (5) a Survey meeting the requirements of the definition of "Survey" contained in this Agreement; (6) such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so-called "gap" indemnification) as required by Section 4.01(o)(iv); (7) evidence of payment of all applicable premiums, charges, costs, taxes, etc. as required by Section 4.01(o)(v); (8) copies of all leases or other agreements, and subordination of such, as required by Section 4.01(o)(vi); (9) the notices, registration and filings required by Section 4.01(o)(vii); and (10) favorable written opinions of local counsel in the states in which each such Real Property is located, as required by Section 4.01(g). (b) The Borrowers shall comply with Sections 5.10(d) and (e) with respect to the MW Acquisition; provided that the Administrative Agent may extend in its sole discretion the 60-day period referred to in each such Section. (c) The Borrowers shall comply with Sections 5.10(d) and (e) with respect to properties that are the subject of Permitted Sale and Leaseback Transactions on or prior to the Second Amendment Effectiveness Date and that constitute Mortgaged Properties at such time regardless of whether such properties or the applicable leasehold interests meet the thresholds referenced in such sections; provided that the 60-day period referred to in each such Section shall be a 15-day period for purposes of this clause (subject to extension by the Administrative Agent in its sole discretion). ARTICLE VI NEGATIVE COVENANTS Each Loan Party warrants, covenants and agrees with each Lender that, so long as this Agreement shall remain in effect and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, no Loan Party will, nor will they cause or permit any Subsidiaries to: SECTION 6.01 INDEBTEDNESS. Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except (a) Indebtedness incurred under this Agreement and the other Loan Documents; (b) (i) Indebtedness outstanding on the Second Amendment Effectiveness Date and listed on Schedule 6.01(b), (ii) refinancings or renewals thereof or of the Indebtedness under clauses (iii) and (iv) below; provided that (A) any such refinancing Indebtedness is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being renewed or refinanced, plus the amount of any premiums required to be paid thereon and reasonable fees and expenses associated therewith, (B) such refinancing Indebtedness has a later or -96- equal final maturity and longer or equal weighted average life than the Indebtedness being renewed or refinanced and (C) the covenants, events of default, subordination and other provisions thereof (including any guarantees thereof) shall be, in the aggregate in all material respects, no less favorable to the Lenders than those contained in the Indebtedness being renewed or refinanced; (iii) the Senior Subordinated Notes and Senior Subordinated Note Guarantees issued on the Original Closing Date (including any notes and guarantees issued in exchange therefor in accordance with the registration rights document entered into in connection with the issuance of the Senior Subordinated Notes and Senior Subordinated Note Guarantees); (iv) the New Senior Subordinated Notes and New Senior Subordinated Note Guarantees issued on the Second Amendment Effectiveness Date (including any notes and guarantees issued in exchange therefor in accordance with the registration rights document entered into in connection with the issuance of the New Senior Subordinated Notes and New Senior Subordinated Note Guarantees); and (v) additional Senior Subordinated Notes and Senior Subordinated Note Guarantees issued after the Second Amendment Effectiveness Date (including any notes and guarantees issued in exchange therefor in accordance with the registration rights document entered into in connection with the issuance of such additional Senior Subordinated Notes and Senior Subordinated Note Guarantees) in an aggregate amount not to exceed $100.0 million less the aggregate amount of any Additional Term Loans, and additional Senior Subordinated Note Guarantees issued after the Original Closing Date in accordance with the indenture governing the Senior Subordinated Notes by any Subsidiary Guarantor formed or acquired after the Original Closing Date; (c) Indebtedness under Hedging Obligations that are designed to protect against fluctuations in interest rates, foreign currency exchange rates or commodity prices, in each case not entered into for speculative purposes; provided that if such Hedging Obligations relate to interest rates, (a) such Hedging Obligations relate to payment obligations on Indebtedness otherwise permitted to be incurred by the Loan Documents 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; (d) Indebtedness permitted by Section 6.04(f); (e)Indebtedness in respect of Purchase Money Obligations and Capital Lease Obligations, and refinancings or renewals thereof, in an aggregate amount not to exceed $15.0 million at any time outstanding; (f) Indebtedness incurred by Foreign Subsidiaries in an aggregate amount not to exceed $25.0 million (not including the Canadian Intercompany Note) at any time outstanding; (g) Indebtedness in respect of bid, performance or surety bonds, workers' compensation claims, self-insurance obligations and bankers acceptances issued for the account of any Company in the ordinary course of business, including guarantees or obligations of any Company with respect to letters of credit supporting such bid, performance or surety bonds, workers' compensation claims, self-insurance obligations and bankers acceptances (in each case other than for an obligation for money borrowed), in an aggregate amount not to exceed $15.0 million at any time outstanding; (h) Contingent Obligations of any Loan Party in respect of Indebtedness otherwise permitted under this Section 6.01; (i) 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 -97- against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence; (j) the Canadian Intercompany Note; (k) Indebtedness arising in connection with endorsement of instruments for deposit in the ordinary course of business; (l) unsecured Indebtedness of any Company in an aggregate amount not to exceed $30.0 million at any time outstanding; (m) Indebtedness assumed in connection with any Permitted Acquisition, and refinancing or renewals thereof, in an aggregate amount not to exceed $30.0 million at any time outstanding; (n) 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 property of U.S. Borrower or any Subsidiary of U.S. Borrower or Equity Interests of any Subsidiary of U.S. Borrower, other than guarantees of Indebtedness incurred by any person acquiring all or any portion of such business, property or Equity Interests for the purpose of financing any such acquisition; provided that the maximum aggregate liability in respect of all such obligations outstanding under this clause (n) shall at no time exceed (a) in the case of an acquisition, $15.0 million (provided that the amount of such liability shall be deemed to be the amount thereof, if any, reflected on the balance sheet of U.S. Borrower or any 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 U.S. Borrower and its Subsidiaries in connection with such disposition; (o) Indebtedness 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 made pursuant to Section 6.04(j), not to exceed $7.5 million at any time outstanding; and (p) unsecured Indebtedness of Parent ("PERMITTED PARENT DEBT") that (A) is not subject to any Guarantee by U.S. Borrower or any of its Subsidiaries, (B) will not mature prior to the date that is 181 days after the Term Loan Maturity Date, (C) has no scheduled amortization, mandatory prepayment events or payments of principal (other than prepayments related to asset sales or a change of control, subject to prior payment of all Obligations), (D) does not permit any payments in cash of interest or other amounts in respect of the principal thereof for at least five (5) years from the date of the issuance or incurrence thereof, and (E) has mandatory prepayment, repurchase or redemption, covenant, default and remedy provisions customary for senior discount notes of an issuer that is the parent of a borrower under senior secured credit facilities, and in any event, with respect to covenant, default and remedy provisions, no more restrictive than those contained in the Senior Subordinated Note Agreement, taken as a whole (other than provisions customary for senior discount notes of a holding company); provided any such Indebtedness shall constitute Permitted Parent Debt only if (i) both before and after giving effect to the issuance or incurrence thereof, no Default or Event of Default shall have occurred and be continuing and the public ratings of the Loans by S&P and Moody's are not lower than the respective ratings of the Loans by such rating agencies existing on the Second Amendment Effectiveness Date, and (ii) after giving pro forma effect to the issuance or incurrence thereof, the Parent Consolidated -98- Leverage Ratio shall be less than 5.50:1.00 and the Total Leverage Ratio shall be less than 4.00:1.00. SECTION 6.02 LIENS. Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except the following (collectively, the "PERMITTED LIENS"): (a) inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or delinquent and Liens for taxes, assessments or governmental charges or levies, which (i) are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, (ii) in the case of any such charge or claim which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions and (iii) individually or in the aggregate, could not reasonably expected to have a Material Adverse Effect; (b) Liens in respect of property of any Company imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers', warehousemen's, materialmen's, landlords', workmen's, suppliers', repairmen's and mechanics' Liens and other similar Liens arising in the ordinary course of business, and (i) which do not in the aggregate materially detract from the value of the property of the Companies, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Companies, taken as a whole, (ii) which, if they secure obligations that are then due and unpaid, are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property subject to any such Lien, and (iii) in the case of any such Lien which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions; (c) any Lien in existence on the Second Amendment Effectiveness Date and set forth on Schedule 6.02(c) and any Lien granted as a replacement or substitute therefor; provided that any such replacement or substitute Lien (i) except as permitted by Section 6.01(b)(ii)(A), does not secure an aggregate amount of Indebtedness, if any, greater than that secured on the Second Amendment Effectiveness Date and (ii) does not encumber any property other than the property subject thereto on the Original Closing Date (any such Lien, an "EXISTING LIEN"); (d) easements, rights-of-way, restrictions (including zoning restrictions), covenants, licenses, encroachments, protrusions and other similar charges or encumbrances, and minor title deficiencies on or with respect to any Real Property, in each case whether now or hereafter in existence, not (i) securing Indebtedness, (ii) individually or in the aggregate materially impairing the value or marketability of such Real Property or (iii) individually or in the aggregate materially interfering with the ordinary conduct of the business of the Companies at such Real Property; (e) Liens arising out of judgments, attachments or awards not resulting in a Default and in respect of which such Company shall in good faith be prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings and, in the case of any such Lien which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions; -99- (f) Liens (other than any Lien imposed by ERISA) (x) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security legislation, (y) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (z) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that (i) with respect to clauses (x), (y) and (z) of this paragraph (f), such Liens are for amounts not yet due and payable or delinquent or, to the extent such amounts are so due and payable, such amounts are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings for orders entered in connection with such proceedings have the effect of preventing the forfeiture or sale of the property subject to any such Lien, (ii) to the extent such Liens are not imposed by law, such Liens shall in no event encumber any property other than cash and Cash Equivalents, (iii) in the case of any such Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions and (iv) the aggregate amount of deposits at any time pursuant to clause (y) and clause (z) of this paragraph (f) shall not exceed $3.5 million in the aggregate; (g) Leases of the properties of any Company, in each case entered into in the ordinary course of such Company's business so long as such Leases are subordinate in all respects to the Liens granted and evidenced by the Security Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of any Company or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto; (h) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Company in the ordinary course of business; (i) Liens securing Indebtedness incurred pursuant to Section 6.01(e); provided that any such Liens attach only to the property being financed pursuant to such Indebtedness and do not encumber any other property of any Company; (j) bankers' Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Company, 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, unless such Liens are non-consensual and arise by operation of law, in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness; (k) Liens on property of a person existing at the time such person is acquired or merged with or into or consolidated with any Company to the extent permitted hereunder (and not created in anticipation or contemplation thereof); provided that such Liens do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon) and are no more favorable to the lienholders than such existing Lien; (l) Liens granted pursuant to the Security Documents to secure the Obligations; -100- (m) licenses of Intellectual Property granted by any Company in the ordinary course of business and not interfering in any material respect with the ordinary conduct of business of the Companies; (n) the filing of UCC or PPSA financing statements solely as a precautionary measure in connection with operating leases or consignment of goods; (o) Liens securing Indebtedness incurred pursuant to Section 6.01(f); provided that (i) such Liens do not extend to, or encumber, property which constitutes Collateral and (ii) such Liens extend only to the property (or Equity Interests) of the Foreign Subsidiary incurring such Indebtedness; (p) the existence of the "equal and ratable" clause in the Senior Subordinated Note Documents and the New Senior Subordinated Note Documents (but not any security interests granted pursuant thereto); and (q) Liens incurred in the ordinary course of business of any Company with respect to obligations that do not in the aggregate exceed $7.5 million at any time outstanding, so long as such Liens, to the extent covering any Collateral, are junior to the Liens granted pursuant to the Security Documents; provided, however, that no consensual Liens shall be permitted to exist, directly or indirectly, on any Securities Collateral, other than Liens granted pursuant to the Security Documents. SECTION 6.03 SALE AND LEASEBACK TRANSACTIONS. Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred (a "SALE AND LEASEBACK TRANSACTION") (other than a Permitted Sale and Leaseback Transaction) unless (i) the sale of such property is permitted by Section 6.06 and (ii) any Liens arising in connection with its use of such property are permitted by Section 6.02. SECTION 6.04 INVESTMENT, LOAN AND ADVANCES. Directly or indirectly, lend money or credit (by way of guarantee or otherwise) or make advances to any person, or purchase or acquire any stock, bonds, notes, debentures or other obligations or securities of, or any other interest in, or make any capital contribution to, any other person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract (all of the foregoing, collectively, "INVESTMENTS"), except that the following shall be permitted: (a) the Companies may consummate (i) the Transactions in accordance with the provisions of the Transaction Documents and (ii) the Second Amendment Transactions with the in accordance with the provisions of the Second Amendment Transaction Documents; (b) Investments outstanding on the Second Amendment Effectiveness Date and identified on Schedule 6.04(b); (c) the Companies may (i) acquire and hold accounts receivables owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) invest in, acquire and hold cash and Cash Equivalents, -101- (iii) endorse negotiable instruments held for collection in the ordinary course of business or (iv) make lease, utility and other similar deposits in the ordinary course of business; (d) Hedging Obligations incurred pursuant to Section 6.01(c); (e) loans and advances to directors, employees and officers of U.S. Borrower and the Subsidiaries for bona fide business purposes and to purchase Equity Interests of Holdings, in aggregate amount not to exceed $5.0 million at any time outstanding; (f) Investments (i) by Parent, U.S. Borrower or any U.S. Subsidiary Guarantor in U.S. Borrower or any U.S. Subsidiary Guarantor, (ii) by Canadian Borrower or any Canadian Subsidiary Guarantor in Canadian Borrower or any Canadian Subsidiary Guarantor and (iii) by a Subsidiary that is not a Subsidiary Guarantor in any other Subsidiary that is not a Subsidiary Guarantor; provided that any Investment in the form of a loan or advance by or in a Loan Party shall be evidenced by an Intercompany Note and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents; (g) Investments in securities of trade creditors or customers in the ordinary course of business received upon foreclosure or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments made by U.S. Borrower or any Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with Section 6.06; (i) (x) Investments in Foreign Subsidiaries in an aggregate amount not to exceed $15.0 million at any time outstanding, after taking into account amounts returned in cash (including upon disposition) and (y) Investments in Foreign Subsidiaries with the proceeds of Excluded Issuances to the extent such proceeds have not been utilized for any other purpose; provided that any such Investment made in the form of a loan or advance shall be evidenced by an Intercompany Note and, in the case of a loan or advance by a Loan Party, pledged by such Loan Party as Collateral pursuant to the Security Documents; (j) loans and advances to suppliers, licensees, franchisees or customers of U.S. Borrower or any of its Subsidiaries made in the ordinary course of business in an aggregate amount, together with the aggregate amount of Indebtedness incurred pursuant to Section 6.01(o), not to exceed $7.5 million at any time outstanding; (k) Investments in Subsidiaries as a result of the consummation of Permitted Acquisitions; (l) Guarantees of Indebtedness not prohibited by Section 6.01; and (m) other investments in an aggregate amount not to exceed $30.0 million at any time outstanding. SECTION 6.05 MERGERS AND CONSOLIDATIONS. Wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation (or agree to do any of the foregoing at any future time), except that the following shall be permitted: (a) Asset Sales in compliance with Section 6.06; -102- (b) acquisitions in compliance with Section 6.07; (c) (x) any Company (other than Canadian Borrower or any Canadian Subsidiaries) may merge or consolidate with or into U.S. Borrower or any U.S. Subsidiary Guarantor (as long as U.S. Borrower or a U.S. Subsidiary Guarantor is the surviving person in such merger or consolidation and remains a Wholly Owned Subsidiary of Parent); provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.10 or Section 5.11, as applicable and (y) any Non-Guarantor Subsidiary may transfer property or lease to or acquire or lease property from any Non-Guarantor Subsidiary or may be merged into any other Non-Guarantor Subsidiary; and (d) Canadian Borrower or any Canadian Subsidiaries may merge or consolidate with or into Canadian Borrower or any Canadian Subsidiary Guarantor (as long as Canadian Borrower or a Canadian Subsidiary Guarantor is the surviving person in such merger or consolidation and remains a Wholly Owned Subsidiary of Parent); provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.10 or Section 5.11, as applicable; and (e) any Subsidiary (other than Canadian Borrower) may dissolve, liquidate or wind up its affairs at any time; provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect; and (f) Holdings may merge with or into or consolidate with or into Parent in connection with any IPO, as long as the surviving person assumes all of the obligations of Parent under the Loan Documents and no Default shall have occurred and be continuing. To the extent the Required Lenders waive the provisions of this Section 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.05, such Collateral (unless sold to a Company) shall be sold free and clear of the Liens created by the Security Documents, and the Agents shall take all actions they deem appropriate in order to effect the foregoing. SECTION 6.06 ASSET SALES. Effect any Asset Sale, or agree to effect any Asset Sale, except that the following shall be permitted subject to Section 2.10(c): (a) disposition of used, worn out, obsolete or surplus property by any Loan Party in the ordinary course of business and the abandonment or other disposition of Intellectual Property that is, in the reasonable judgment of U.S. Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Companies taken as a whole; (b) Asset Sales (other than Asset Sales of Equity Interests in Canadian Borrower); provided that the aggregate consideration received in respect of all Asset Sales pursuant to this clause (b) shall not exceed $40.0 million in any four consecutive fiscal quarters of U.S. Borrower; (c) leases of real or personal property in the ordinary course of business and in accordance with the applicable Security Documents; (d) the Transactions as contemplated by the Transaction Documents and the Second Amendment Transactions as contemplated by the Second Amendment Transaction Documents; -103- (e) mergers and consolidations in compliance with Section 6.05; (f) Investments in compliance with Section 6.04; (g) Permitted Sale and Leaseback Transactions; (h) the sale of (X) (i) all, but not less than all, of the Equity Interests in Canadian Borrower or (ii) all or substantially all of the assets of Canadian Borrower; provided that, in the case of (ii), all Canadian Term Loans and Obligations related thereto are repaid prior to or simultaneously with such Asset Sale, (Y) all, but not less than all, of the Equity Interests in, or all or substantially all of the assets of, Kroy Building Products, Inc. or (Z) all, but not less than all, of the Equity Interests in, or all or substantially all of the assets of, Great Lakes Window, Inc. and/or Napco Window Systems, Inc.; (i) U.S. Borrower and the Subsidiaries may sell Cash Equivalents in the ordinary course of business; (j) sales, transfers and dispositions of accounts receivable in connection with the compromise, settlement or collection thereof; and (k) within 365 days after the consummation of a Permitted Acquisition, the sale, transfer or disposition for cash, and for fair market value, of assets acquired in connection with such Permitted Acquisition and not required in the operation of the business of U.S. Borrower or any of the Subsidiaries. To the extent the Required Lenders waive the provisions of this Section 6.06 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.06, such Collateral (unless sold to a Company) shall be sold free and clear of the Liens created by the Security Documents, and the Agents shall take all actions they deem appropriate in order to effect the foregoing. SECTION 6.07 ACQUISITIONS. Purchase or otherwise acquire (in one or a series of related transactions) any part of the property (whether tangible or intangible) of any person (or agree to do any of the foregoing at any future time), except that the following shall be permitted: (a) Capital Expenditures by U.S. Borrower and the Subsidiaries shall be permitted to the extent permitted by Section 6.10(c); (b) purchases and other acquisitions of inventory, materials, equipment and intangible property in the ordinary course of business; (c) Investments in compliance with Section 6.04; (d) leases of real or personal property in the ordinary course of business and in accordance with the applicable Security Documents; (e) the Transactions as contemplated by the Transaction Documents and the Second Amendment Transactions as contemplated by the Second Amendment Transaction Documents; (f) Permitted Acquisitions; and (g) mergers and consolidations in compliance with Section 6.05; -104- provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.10 or Section 5.11, as applicable. SECTION 6.08 DIVIDENDS. Authorize, declare or pay, directly or indirectly, any Dividends with respect to any Company, except that the following shall be permitted: (a) Dividends by any Company to U.S. Borrower, Canadian Borrower or any Subsidiary of U.S. Borrower and to minority equityholders of any Subsidiary paid ratably; (b) payments by U.S. Borrower or by Holdings to permit Holdings or Parent, and which are used by Holdings or Parent, to redeem Equity Interests of U.S. Borrower, Holdings or Parent 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) $7.5 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 U.S. Borrower from the issuance and sale after the Original Closing Date of Qualified Capital Stock of Parent, Holdings or U.S. Borrower to its officers, directors or employees that have not been applied to the payment of Dividends pursuant to this clause (b), plus (C) the Net Cash Proceeds of any "key-man" life insurance policies that have not been applied to the payment of Dividends pursuant to this clause (b); (c) (A) to the extent actually used by Parent and Holdings to pay such taxes, costs and expenses, payments by U.S. Borrower to or on behalf of Parent and Holdings in an amount sufficient to pay franchise taxes and other fees required to maintain the legal existence of Parent and Holdings and (B) payments by U.S. Borrower to or on behalf of Parent and Holdings in an amount sufficient to pay out-of-pocket legal, accounting and filing costs and other expenses in the nature of overhead of Parent and Holdings, in the case of clauses (A) and (B) in an aggregate amount not to exceed $750,000 in any fiscal year; (d) Permitted Tax Distributions by U.S. Borrower to Parent or Holdings, so long as Parent or Holdings uses such distributions to pay its taxes; (e) distributions of the proceeds of any Permitted Parent Debt to Holdings; and (f) distributions to Parent in order to enable Parent or Holdings to pay, and which are used by Parent or Holdings to pay, customary and reasonable costs and expenses of an offering of securities of Parent or Holdings that is not consummated. SECTION 6.09 TRANSACTIONS WITH AFFILIATES. Enter into, directly or indirectly, any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of any Company (other than between or among U.S. Borrower and one or more U.S. Subsidiary Guarantors or between or among Canadian Borrower and one or more Canadian Subsidiary Guarantors), other than on terms and conditions at least as favorable to such Company as would reasonably be obtained by such Company at that time in a comparable arm's-length transaction with a person other than an Affiliate, except that the following shall be permitted: (a) Dividends permitted by Section 6.08; -105- (b Investments permitted by Sections 6.04(e), (f), (i) and, to the extent such Investments are in Subsidiaries, (m); (c) reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification, compensation, employment and severance agreements, in each case approved by the Board of Directors; (d) transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case in the ordinary course of business and otherwise not prohibited by the Loan Documents; (e) so long as no Default exists, the payment of regular management fees and transaction fees payable upon acquisitions, divestitures and the sale of Parent, to Sponsor in the amounts and at the times specified in the Advisory Services Agreement, as in effect on the Original Closing Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Lenders in any material respect than such agreement as it was in effect on the Original Closing Date; (f) sales or issuances of Qualified Capital Stock to Affiliates of U.S. Borrower not otherwise prohibited by the Loan Documents and the granting of registration and other customary rights in connection therewith; (g) any transaction with an Affiliate where the only consideration paid by any Loan Party is Qualified Capital Stock; (h) the Transactions as contemplated by the Transaction Documents and the Second Amendment Transactions as contemplated by the Second Amendment Transaction Documents; (i) the entering into of a tax sharing agreement, or payments pursuant thereto, between U.S. Borrower and/or one or more Subsidiaries, on the one hand, and any other person with which U.S. Borrower or such Subsidiaries are required or permitted to file a consolidated tax return or with which U.S. Borrower or such Subsidiaries are part of a consolidated group for tax purposes, on the other hand, which payments by U.S. Borrower and its Subsidiaries are not in excess of the tax liabilities that would have been payable by them on a stand-alone basis; (j) entering into an agreement that provides registration rights to the shareholders of U.S. Borrower, Holdings or Parent or amending any such agreement with shareholders of U.S. Borrower, Holdings or Parent and the performance of such agreements; (k) any transaction with a joint venture or similar entity which would constitute a transaction with an Affiliate solely because U.S. Borrower or any of its Subsidiaries owns an equity interest in or otherwise controls such joint venture or similar entity; provided that no Affiliate of U.S. Borrower or any of its Subsidiaries other than U.S. Borrower or any Subsidiary of U.S. Borrower shall have a beneficial interest in such joint venture or similar entity; (l) any merger, consolidation or reorganization of U.S. Borrower with an Affiliate, solely for the purposes of (a) reorganizing to facilitate an IPO of securities of U.S. Borrower, Holdings, Parent or other holding company, (b) forming a holding company or (c) reincorporating U.S. Borrower in a new jurisdiction; -106- (m) sales of inventory between or among U.S. Borrower and/or one or more of its Subsidiaries in the ordinary course of business; and (n) (i) any agreement in effect on the Second Amendment Effectiveness Date listed on Schedule 6.09(n), as in effect on the Second Amendment Effectiveness Date or as thereafter amended or replaced in any manner, that, taken as a whole, is not more adverse to the interests of the Lenders in any material respect than such agreement as it was in effect on the Second Amendment Effectiveness Date or (ii) any transaction pursuant to any agreement referred to in the immediately preceding clause (i). SECTION 6.10 FINANCIAL COVENANTS. (a) Maximum Total Leverage Ratio. 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:
TEST PERIOD LEVERAGE RATIO ----------- -------------- Closing Date - March 31, 2005 6.35 to 1.0 April 1, 2005 - September 30, 2005 6.25 to 1.0 October 1, 2005 - December 31, 2005 6.10 to 1.0 January 1, 2006 - June 30, 2006 6.00 to 1.0 July 1, 2006 - September 30, 2006 5.90 to 1.0 October 1, 2007 - March 31, 2007 5.65 to 1.0 April 1, 2007 - June 30, 2007 5.50 to 1.0 July 1, 2007 - September 30, 2007 5.25 to 1.0 October 1, 2007 - June 30, 2008 5.00 to 1.0 July 1, 2008 - September 30, 2008 4.75 to 1.0 October 1, 2008 - March 31, 2009 4.50 to 1.0 April 1, 2009 - September 30, 2009 4.25 to 1.0 October 1, 2009 and thereafter 4.00 to 1.0
(b) Minimum Interest Coverage Ratio. 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:
INTEREST TEST PERIOD COVERAGE RATIO ----------- -------------- Closing Date - March 31, 2005 1.80 to 1.0 April 1, 2005 - March 31, 2006 1.90 to 1.0 April 1, 2006 - December 31, 2006 2.00 to 1.0 January 1, 2007 - June 30, 2007 2.10 to 1.0 July 1, 2007 - December 31, 2007 2.15 to 1.0
-107-
INTEREST TEST PERIOD COVERAGE RATIO ----------- -------------- January 1, 2008 - March 31, 2008 2.20 to 1.0 April 1, 2008 - September 30, 2008 2.25 to 1.0 October 1, 2008 - September 30, 2009 2.35 to 1.0 October 1, 2009 and thereafter 2.50 to 1.0
(c) Limitation on Capital Expenditures. Permit the aggregate amount of Capital Expenditures made in any period set forth below, to exceed the amount set forth opposite such period below:
PERIOD AMOUNT (IN MILLIONS) ------ -------------------- Closing Date - December 31, 2004 $25.0 January 1, 2005 - December 31, 2005 $25.0 January 1, 2006 - December 31, 2006 $25.0 January 1, 2007 - December 31, 2007 $27.5 January 1, 2008 - December 31, 2008 $27.5 Each calendar year ending after 2008 $30.0
; provided, however, that (x) if the aggregate amount of Capital Expenditures made in any fiscal year shall be less than the maximum amount of Capital Expenditures permitted under this Section 6.10(c) for such fiscal year (before giving effect to any carryover), then an amount of such shortfall not exceeding 50% of such maximum amount (without giving effect to clause (z) below) (the "CAPEX CARRYFORWARD AMOUNT") may be added to the amount of Capital Expenditures permitted under this Section 6.10(c) for the immediately succeeding (but not any other) fiscal year, (y) in determining whether any amount is available for carryover, the amount expended in any fiscal year shall first be deemed to be from the amount allocated to such fiscal year (before giving effect to any carryover) and (z) the amount set forth in the table above for any period may be increased by the amount of Net Cash Proceeds of Excluded Issuances designated for Capital Expenditures for such period during such period. SECTION 6.11 PREPAYMENTS OF OTHER INDEBTEDNESS; MODIFICATIONS OF ORGANIZATIONAL DOCUMENTS AND OTHER DOCUMENTS, etc. Directly or indirectly: (a) make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any Indebtedness outstanding under the Senior Subordinated Notes, the New Senior Subordinated Notes or any other Subordinated Indebtedness, except as otherwise permitted by this Agreement; (b) amend or modify, or permit the amendment or modification of, any provision of any Transaction Document or any Second Amendment Transaction Document in any manner that is adverse in any material respect to the interests of the Lenders; (c) terminate, amend, modify (not including electing to treat any Pledged Interests (as defined in the U.S. Security Agreement) as a "security" under Section 8-103 of the UCC so -108- long as it has followed the Collateral Agent's reasonable requests to ensure the perfection of the Collateral Agent's security interest in such Pledged Interests) or change any of its Organizational Documents (including by the filing or modification of any certificate of designation) or any agreement to which it is a party with respect to its Equity Interests (including any stockholders' agreement), or enter into any new agreement with respect to its Equity Interests, other than any such amendments, modifications or changes or such new agreements which are not adverse in any material respect to the interests of the Lenders; provided that Parent may issue such Equity Interests, so long as such issuance is not prohibited by Section 6.13 or any other provision of this Agreement, and may amend its Organizational Documents to authorize any such Equity Interests; or (d) cause or permit any other obligation (other than the Obligations and the Guaranteed Obligations) to constitute Designated Senior Debt (as defined in the Senior Subordinated Note Documents or the New Senior Subordinated Note Documents). Notwithstanding the foregoing, the MW Refinancing shall not be prohibited by this Section 6.11. SECTION 6.12 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its capital stock or any other interest or participation in its profits owned by U.S. Borrower or any Subsidiary, or pay any Indebtedness owed to U.S. Borrower or a Subsidiary, (b) make loans or advances to U.S. Borrower or any Subsidiary or (c) transfer any of its properties to U.S. Borrower or any Subsidiary, except for such encumbrances or restrictions existing under or by reason of (i) applicable law; (ii) this Agreement and the other Loan Documents; (iii) the Senior Subordinated Note Documents as in effect on the Original Closing Date or the New Senior Subordinated Note Documents as in effect on the Second Amendment Effectiveness Date; (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of a Subsidiary; (v) customary provisions restricting assignment of any agreement entered into by a Subsidiary in the ordinary course of business; (vi) any Lien permitted by Section 6.02 restricting the transfer of the property subject thereto; (vii) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.06 pending the consummation of such sale; (viii) any agreement applicable to such Subsidiary in effect at the time such Subsidiary becomes a Subsidiary of U.S. Borrower, so long as such agreement was not entered into in connection with or in contemplation of such person becoming a Subsidiary of U.S. Borrower; (ix) customary provisions in partnership agreements, limited liability company organizational governance documents, asset sales 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 or similar person; (x) restrictions on cash or other deposits or net worth imposed by suppliers or landlords under contracts entered into in the ordinary course of business; (xi) any instrument governing Indebtedness assumed in connection with any Permitted Acquisition, 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; (xii) in the case of any joint venture which is not a Loan Party in respect of any matters referred to in clauses (b) and (c) above, restrictions in such person's Organizational Documents or pursuant to any joint venture agreement or stockholders agreements solely to the extent of the Equity Interests of or property held in the subject joint venture or other entity; (xiii) any encumbrances or restrictions imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clauses (iii), (viii) or (xi) 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; or (xiv) encumbrances or restrictions contained in Indebtedness of Foreign Subsidiaries, or municipal loan or related agreements entered into in connection with the incurrence of industrial or economic revenue bonds, permitted to be incurred under -109- this Agreement; 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 U.S. Borrower, materially impair either Borrower's ability to make payment on the Obligations when due. SECTION 6.13 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) With respect to Parent, issue any Equity Interest that is not Qualified Capital Stock. (b) With respect to U.S. Borrower or any Subsidiary, issue any Equity Interest (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, any Equity Interest, except (i) for stock splits, stock dividends and additional issuances of Equity Interests which do not decrease the percentage ownership of U.S. Borrower or any Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii) Subsidiaries of U.S. Borrower formed after the Original Closing Date in accordance with Section 6.14 may issue Equity Interests to U.S. Borrower or the Subsidiary of Borrower which is to own such Equity Interests; and (iii) U.S. Borrower may issue common stock that is Qualified Capital Stock to Parent. All Equity Interests issued in accordance with this Section 6.13(b) shall, to the extent required by Sections 5.10 and 5.11 or any Security Document, be delivered to the Collateral Agent for pledge pursuant to the applicable Security Document. SECTION 6.14 LIMITATION ON CREATION OF SUBSIDIARIES. Establish, create or acquire any additional Subsidiaries without the prior written consent of the Required Lenders; provided that, without such consent, U.S. Borrower may (i) establish or create one or more Wholly Owned Subsidiaries of U.S. Borrower, (ii) establish, create or acquire one or more Subsidiaries in connection with an Investment made pursuant to Sections 6.04(f), (k) or (m) or (iii) acquire one or more Subsidiaries in connection with a Permitted Acquisition, so long as, in each case, Section 5.10(b) shall be complied with. SECTION 6.15 BUSINESS. (a) With respect to Parent, engage in any business activities or have any properties or liabilities, other than (i) its ownership of the Equity Interests of U.S. Borrower, (ii) obligations under the Loan Documents, the Senior Subordinated Note Documents and the New Senior Subordinated Note Documents and (iii) activities and properties incidental, ancillary or complementary to the foregoing clauses (i) and (ii). (b) With respect to U.S. Borrower and the Subsidiaries, engage (directly or indirectly) in any business other than those businesses in which U.S. Borrower and its Subsidiaries are engaged on the Second Amendment Effectiveness Date as described in the Second Confidential Information Memorandum (or, in the good faith judgment of the Board of Directors, which are substantially related thereto or are reasonable extensions thereof). SECTION 6.16 LIMITATION ON ACCOUNTING CHANGES. Make or permit, any significant change in accounting policies or reporting practices, without the consent of the Administrative Agent, which consent shall not be unreasonably withheld, except changes that are required by GAAP. SECTION 6.17 FISCAL YEAR. Change its fiscal year-end to a date other than December 31. SECTION 6.18 LEASE OBLIGATIONS. Create, incur, assume or suffer to exist any obligations as lessee for the rental or hire of real or personal property of any kind under leases or agreements -110- to lease having an original term of one year or more other than (1) such obligations existing on the Second Amendment Effectiveness Date, (2) such obligations acquired in connection with a Permitted Acquisition that are not incurred in anticipation of such Permitted Acquisition and are obligations only of any legal entities acquired in such Permitted Acquisition and (3) with respect to other obligations, created, incurred, assumed or suffered to exist after the Second Amendment Effectiveness Date, such obligations that would cause the direct and contingent liabilities of U.S. Borrower and its Subsidiaries, on a consolidated basis, in respect of all such obligations created, incurred, assumed or suffered to exist after the Second Amendment Effectiveness Date not to exceed the sum of (i) $7.5 million and (ii) amounts payable in respect of leases entered into in connection with Permitted Sale and Leaseback Transactions, payable in any period of 12 consecutive months. SECTION 6.19 NO FURTHER NEGATIVE PLEDGE. Enter into any agreement, instrument, deed or lease which prohibits or limits the ability of any Loan Party to create, incur, assume or suffer to exist any Lien upon any of their respective properties or revenues, whether now owned or hereafter acquired, or which requires the grant of any security for an obligation if security is granted for another obligation, except the following: (1) this Agreement and the other Loan Documents; (2) covenants in documents creating Liens permitted by Section 6.02 prohibiting further Liens on the properties encumbered thereby; (3) the Senior Subordinated Note Documents as in effect on the Original Closing Date and the New Senior Subordinated Note Documents as in effect on the Second Amendment Effectiveness Date; (4) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on any Collateral securing the Obligations and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of any Loan Party to secure the Obligations; and (5) any prohibition or limitation that (a) exists pursuant to applicable law, (b) consists of customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.06 pending the consummation of such sale, (c) restricts subletting or assignment of any lease governing a leasehold interest of U.S. Borrower or a Subsidiary, (d) exists in any agreement in effect at the time such Subsidiary becomes a Subsidiary of U.S. Borrower, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary or (e) is imposed by any amendments or refinancings that are otherwise permitted by the Loan Documents of the contracts, instruments or obligations referred to in clause (3) or (5)(e); provided that such amendments and refinancings are no more materially restrictive with respect to such prohibitions and limitations than those prior to such amendment or refinancing. SECTION 6.20 ANTI-TERRORISM LAW; ANTI-MONEY LAUNDERING. (a) Directly or indirectly, (i) knowingly conduct any business or engage in making or receiving any contribution of funds, goods or services to or for the benefit of any person described in Section 3.22, (ii) knowingly deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order or any other Anti-Terrorism Law, or (iii) knowingly engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law (and the Loan Parties shall deliver to the Lenders any certification or other evidence requested from time to time by any Lender in its reasonable discretion, confirming the Loan Parties' compliance with this Section 6.20). (b) Cause or permit any of the funds of such Loan Party that are used to repay the Loans to be derived from any unlawful activity with the result that the making of the Loans would be in violation of law. SECTION 6.21 EMBARGOED PERSON. Cause or permit (a) any of the funds or properties of the Loan Parties that are used to repay the Loans to constitute property of, or be beneficially -111- owned directly or indirectly by, any person subject to sanctions or trade restrictions under United States law ("EMBARGOED PERSON" or "EMBARGOED PERSONS") that is identified on (1) the "List of Specially Designated Nationals and Blocked Persons" (the "SDN LIST") maintained by OFAC and/or on any other similar list ("OTHER LIST") maintained by OFAC pursuant to any authorizing statute including, but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Order or regulation promulgated thereunder, with the result that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law, or the Loans made by the Lenders would be in violation of law, or (2) the Executive Order, any related enabling legislation or any other similar Executive Orders (collectively, "EXECUTIVE ORDERS"), or (b) any Embargoed Person to have any direct or indirect interest, of any nature whatsoever in the Loan Parties, with the result that the investment in the Loan Parties (whether directly or indirectly) is prohibited by law or the Loans are in violation of law. ARTICLE VII GUARANTEE SECTION 7.01 THE GUARANTEE. Parent and each U.S. Subsidiary Guarantor (the "U.S. GUARANTORS") hereby, jointly and severally guarantee, as a primary obligor and not as a surety to each U.S. Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) on the Loans made by the Lenders to, and the Notes held by each Lender of, U.S. Borrower, and all other U.S. Obligations from time to time owing to the Secured Parties by any U.S. Loan Party under any Loan Document in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "U.S. GUARANTEED OBLIGATIONS"). Parent, the U.S. Borrower and each Canadian Subsidiary Guarantor (the "CANADIAN GUARANTORS") hereby, jointly and severally guarantee, as a primary obligor and not as a surety to each Canadian Secured Party and their respective successors and assigns, the prompt payment in full when due (whether at stated maturity, by required prepayment, declaration, demand, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code or other applicable bankruptcy or insolvency legislation after any bankruptcy or insolvency petition under Title 11 of the United States Code or other applicable bankruptcy or insolvency legislation) on the Loans made by the Lenders to, and the Notes held by each Lender of, Canadian Borrower, and all other Canadian Obligations from time to time owing to the Canadian Secured Parties by any Canadian Loan Party under any Loan Document in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "CANADIAN GUARANTEED OBLIGATIONS"). The U.S. Guarantors hereby jointly and severally agree that if U.S. Borrower or other U.S. Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the U.S. Guaranteed Obligations, the U.S. Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the U.S. Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. The Canadian Guarantors hereby jointly and severally agree that if Canadian Borrower or other Canadian Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Canadian Guaranteed Obligations, the Canadian Guarantors will promptly pay the same in cash, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Canadian Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal. -112- SECTION 7.02 OBLIGATIONS UNCONDITIONAL. The obligations of the Guarantors under Section 7.01 shall constitute a guaranty of payment and to the fullest extent permitted by applicable law, are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of the Borrowers under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above: (i) at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived; (ii) any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted; (iii) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; (iv) any Lien or security interest granted to, or in favor of, Issuing Bank or any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or (v) the release of any other Guarantor pursuant to Section 7.09. The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or remedy or proceed against either Borrower under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between the Borrowers and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against either Borrower or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their -113- respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding. SECTION 7.03 REINSTATEMENT. The obligations of the Guarantors under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of the Borrowers or other Loan Party in respect of the applicable Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the applicable Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. SECTION 7.04 SUBROGATION; SUBORDINATION. Each Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all applicable Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall waive any claim and shall not exercise any right or remedy, direct or indirect, arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against either Borrower or any other Guarantor of any of the applicable Guaranteed Obligations or any security for any of the applicable Guaranteed Obligations. Any Indebtedness of any Loan Party permitted pursuant to Section 6.01(d) shall be subordinated to such Loan Party's Obligations in the manner set forth in the Intercompany Note evidencing such Indebtedness. SECTION 7.05 REMEDIES. The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of either Borrower under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Article VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in said Article VIII) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against either Borrower and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by either Borrower) shall forthwith become due and payable by the applicable Guarantors for purposes of Section 7.01. SECTION 7.06 INSTRUMENT FOR THE PAYMENT OF MONEY. Each Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion-action under New York CPLR Section 3213. SECTION 7.07 CONTINUING GUARANTEE. The guarantee in this Article VII is a continuing guarantee of payment, and shall apply to all applicable Guaranteed Obligations whenever arising. SECTION 7.08 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action or proceeding involving any state corporate limited partnership or limited liability company law, or any applicable state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding. SECTION 7.09 RELEASE OF GUARANTORS. If, in compliance with the terms and provisions of the Loan Documents, all or substantially all of the Equity Interests or property of any Guarantor -114- are sold or otherwise transferred (a "TRANSFERRED GUARANTOR") to a person or persons, none of which is U.S. Borrower or a Subsidiary, such Transferred Guarantor shall, upon the consummation of such sale or transfer, be released from its obligations under this Agreement (including under Section 11.03 hereof) and its obligations to pledge and grant any Collateral owned by it pursuant to any Security Document and, in the case of a sale of all or substantially all of the Equity Interests of the Transferred Guarantor, the pledge of such Equity Interests to the Collateral Agent pursuant to the Security Documents shall be released, and the Collateral Agent shall take such actions as are necessary to effect each release described in this Section 7.09 in accordance with the relevant provisions of the Security Documents. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.01 EVENTS OF DEFAULT. Upon the occurrence and during the continuance of the following events ("EVENTS OF DEFAULT"): (a) default shall be made in the payment of any principal of any Loan or any Reimbursement Obligation when and as the same shall become due and payable, whether at the due date thereof (including a Term Loan Repayment Date) or at a date fixed for prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise; (b) default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in paragraph (a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (c) any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (d) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in Section 5.02, 5.03(a) or 5.08 or in Article VI; (e) default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraphs (a), (b) or (d) immediately above) and such default shall continue unremedied or shall not be waived for a period of 30 days after written notice thereof from the Administrative Agent or the Required Lenders to U.S. Borrower; (f) any Company shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable beyond any applicable grace period, or (ii) fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee or other representative on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity or become subject to a mandatory offer purchase by the obligor; provided that it shall not constitute an Event of Default pursuant to -115- this paragraph (f) unless the aggregate amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $15.0 million at any one time (provided that, in the case of Hedging Obligations, the amount counted for this purpose shall be the amount payable by all Companies if such Hedging Obligations were terminated at such time); (g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Company, or of a substantial part of the property of any Company, under Title 11 of the Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property of any Company; or (iii) the winding-up or liquidation of any Company; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (h) any Company shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (g) above; (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property of any Company; (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (v) make a general assignment for the benefit of creditors; (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due; (vii) take any action for the purpose of effecting any of the foregoing; or (viii) wind up or liquidate; (i) one or more judgments, orders or decrees for the payment of money in an aggregate amount in excess of $15.0 million shall be rendered against any Company or any combination thereof and the same shall remain undischarged, unvacated or unbonded for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon properties of any Company to enforce any such judgment; (j) one or more ERISA Events or with respect to Foreign Plans noncompliance with applicable legal requirements or Foreign Plan underfunding shall have occurred that, in the reasonable opinion of the Required Lenders, when taken together with all other such ERISA Events and with respect to Foreign Plans noncompliance with applicable legal requirements or Foreign Plan underfunding that have occurred, could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien on any properties of a Company; (k) any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the applicable Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Documents (including a perfected first priority security interest in and Lien on, all of the Collateral thereunder (except as otherwise expressly provided in such Security Document)) in favor of the Collateral Agent, or shall be asserted by U.S. Borrower or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in or Lien on the Collateral covered thereby; -116- (l) any Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by any Loan Party or any other person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Loan Party shall repudiate or deny any portion of its liability or obligation for the Obligations; (m) there shall have occurred a Change in Control; (n) the Acquisition shall not have occurred on the Original Closing Date in accordance with the terms and conditions of the Acquisition Agreement; or (o) the MW Acquisition shall not have occurred on the Second Amendment Effectiveness Date in accordance with the terms and conditions of the MW Acquisition Agreement; or (p) the failure by either Borrower to make an Offer to Redeem when and as required by Section 2.10; then, and in every such event (other than an event with respect to Parent or either Borrower described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrowers, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans and Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event, with respect to Parent or either Borrower described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans and Reimbursement Obligations then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding. ARITCLE IX COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS SECTION 9.01 COLLATERAL ACCOUNT. (a) The Collateral Agent is hereby authorized to establish and maintain at its office at 677 Washington Boulevard, Stamford, Connecticut 06901, in the name of the Collateral Agent, a restricted deposit account designated "Ply Gem Industries, Inc. U.S. Collateral Account." Each U.S. Loan Party shall deposit into the U.S. Collateral Account from time to time (i) the cash proceeds of any of the U.S. Security Agreement Collateral (including pursuant to any disposition thereof) to the extent contemplated herein or in any other Loan Document, (ii) the cash proceeds of any Casualty Event with respect to U.S. Security Agreement Collateral, to the extent contemplated herein or in any other Loan Document, -117- and (iii) any cash such U.S. Loan Party is required to pledge as additional collateral security hereunder pursuant to the Loan Documents. The Collateral Agent is hereby authorized to establish and maintain at its office at 677 Washington Boulevard, Stamford, Connecticut 06901, in the name of the Collateral Agent, a restricted deposit account designated "CWD Windows and Doors, Inc. Canadian Collateral Account." Each Canadian Loan Party shall deposit into the Canadian Collateral Account from time to time (i) the cash proceeds of any of the Canadian Security Agreement Collateral (including pursuant to any disposition thereof) to the extent contemplated herein or in any other Loan Document, (ii) the cash proceeds of any Casualty Event with respect to Canadian Security Agreement Collateral, to the extent contemplated herein or in any other Loan Document, and (iii) any cash such Canadian Loan Party is required to pledge as additional collateral security hereunder pursuant to the Loan Documents. (b) The balance from time to time in either Collateral Account shall constitute part of the relevant Collateral and shall not constitute payment of the Obligations until applied as hereinafter provided. So long as no Event of Default has occurred and is continuing or will result therefrom, the Collateral Agent shall within two Business Days of receiving a request of the applicable Loan Party for release of cash proceeds (i) from the Collateral Account constituting Net Cash Proceeds relating to any Casualty Event or Asset Sale remit such cash proceeds on deposit in either Collateral Account to or upon the order of such Loan Party, so long as such Loan Party has satisfied the conditions relating thereto set forth in Section 9.02 and (ii) with respect to the LC Sub-Account, remit such Net Cash Proceeds on deposit in the LC Sub-Account to or upon the order of such U.S. Loan Party (x) at such time as all Letters of Credit shall have been terminated and all of the liabilities in respect of the Letters of Credit have been paid in full or (y) otherwise in accordance with Section 2.18(i). At any time following the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion apply or cause to be applied (subject to collection) the balance from time to time outstanding to the credit of either Collateral Account to the payment of the applicable Obligations in the manner specified in Section 9.03 hereof subject, however, in the case of amounts deposited in the LC Sub-Account, to the provisions of Sections 2.18(i) and 9.03. The Loan Parties shall have no right to withdraw, transfer or otherwise receive any funds deposited in either Collateral Account except to the extent specifically provided herein. (c) Amounts on deposit in either Collateral Account shall be invested and reinvested from time to time in Cash Equivalents as the applicable Loan Party (or, after the occurrence and during the continuance of an Event of Default, the Collateral Agent) shall determine by written instruction to the Collateral Agent, or if no such instructions are given, then as the Collateral Agent, in its sole discretion, shall determine which Cash Equivalents shall be held in the name and be under the control of the Collateral Agent (or any sub-agent); provided that at any time after the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such Cash Equivalents and to apply or cause to be applied the proceeds thereof to the payment of the applicable Obligations in the manner specified in Section 9.03 hereof subject, however, in the case of amounts deposited in the LC Sub-Account, to the provisions of Section 2.18(i). (d) Amounts deposited into the U.S. Collateral Account as cover for liabilities in respect of Letters of Credit under any provision of this Agreement requiring such cover shall be held by the Administrative Agent in a separate sub-account designated as the "LC Sub-Account" (the "LC SUB-ACCOUNT") and, subject to Section 2.18(i), all amounts held in the LC Sub-Account shall constitute collateral security to be applied in accordance with Section 2.18(i). -118- (e) Earnings on the amounts deposited in any Collateral Account shall be for the account of the applicable Loan Party and absent any Default will be released to the applicable Borrower upon its request. SECTION 9.02 PROCEEDS OF DESTRUCTION, TAKING AND COLLATERAL DISPOSITIONS. So long as no Event of Default shall have occurred and be continuing, in the event the applicable Loan Party elects to reinvest Net Cash Proceeds in respect of any Asset Sale or Casualty Event in accordance with the provisions of Sections 2.10(c) and 2.10(f) as applicable, the Collateral Agent shall receive at least 10 days' prior notice of each request for payment and shall not release any part of such Net Cash Proceeds, until the applicable Loan Party has furnished to the Collateral Agent (i) an Officers' Certificate setting forth: (A) a brief description of the reinvestment to be made, (B) the dollar amount of the expenditures to be made, or costs incurred by such Loan Party in connection with such reinvestment and (C) evidence that the properties acquired in connection with such reinvestment have a fair market value at least equal to the amount of such Net Cash Proceeds requested to be released from the applicable Collateral Account and (ii) all security agreements and Mortgages and other items required by the provisions of Sections 5.10 and 5.11 to, among other things, subject such reinvestment properties to the Lien of the Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties. SECTION 9.03 APPLICATION OF PROCEEDS. The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, in full or in part, together with any other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent as follows: (a) First, to the payment of all reasonable costs and expenses, fees, commissions and taxes of such sale, collection or other realization including compensation to the Collateral Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith and all amounts for which the Collateral Agent is entitled to indemnification pursuant to the provisions of any Loan Document, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (b) Second, to the payment of all other reasonable costs and expenses of such sale, collection or other realization including compensation to the other applicable Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other applicable Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full; (c) Third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the indefeasible payment in full in cash, pro rata, of interest and other amounts constituting applicable Obligations (other than principal and Reimbursement Obligations) in each case equally and ratably in accordance with the respective amounts thereof then due and owing; (d) Fourth, to the indefeasible payment in full in cash, pro rata, of principal amount of the applicable Obligations (including Reimbursement Obligations); and (e) Fifth, the balance, if any, to the person lawfully entitled thereto (including the applicable Loan Party or its successors or assigns) or as a court of competent jurisdiction may direct. -119- In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this Section 9.03, the applicable Loan Parties shall remain liable, jointly and severally, for any deficiency. ARTICLE X THE AGENTS SECTION 10.01 APPOINTMENT. Each Lender hereby irrevocably designates and appoints each of the Administrative Agent and the Collateral Agent as an agent of such Lender under this Agreement and the other Loan Documents. Each Lender irrevocably authorizes each Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. SECTION 10.02 AGENT IN ITS INDIVIDUAL CAPACITY. Each person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with U.S. Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder. SECTION 10.03 EXCULPATORY PROVISIONS. No Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.02), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose or shall be liable for the failure to disclose, any information relating to U.S. Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.02) or in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by a Borrower or a Lender, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document. SECTION 10.04 RELIANCE BY AGENT. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by a proper person. Each Agent also may rely upon any statement made to it orally and believed by it to be made by a proper person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for either Borrower), independent accountants and other advisors selected -120- by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or advisors. SECTION 10.05 DELEGATION OF DUTIES. Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Affiliates. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Affiliates of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. SECTION 10.06 SUCCESSOR AGENT. Each Agent may resign as such at any time upon at least 30 days' prior notice to the Lenders, the Issuing Bank and U.S. Borrower. Upon any such resignation, the Required Lenders shall have the right, with, if no Default shall have occurred and be continuing, the consent of Borrower (such consent not to be unreasonably withheld), to appoint a successor Agent from among the Lenders. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent, which successor shall be a commercial banking institution organized under the laws of the United States (or any State thereof) or a United States branch or agency of a commercial banking institution, in each case, having combined capital and surplus of at least $250 million; provided that if such retiring Agent is unable to find a commercial banking institution which is willing to accept such appointment and which meets the qualifications set forth above, the retiring Agent's resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent. Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by U.S. Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between U.S. Borrower and such successor. After an Agent's resignation hereunder, the provisions of this Article X and Section 11.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent. SECTION 10.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. SECTION 10.08 NAME AGENTS. The parties hereto acknowledge that the Documentation Agent and the Syndication Agent hold such titles in name only, and that such titles confer no additional rights or obligations relative to those conferred on any Lender hereunder. SECTION 10.09 INDEMNIFICATION. The Lenders severally agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrowers or the Guarantors and without limiting the obligation of the Borrowers or the Guarantors to do so), ratably according to their respec- -121- tive outstanding Loans and Commitments in effect on the date on which indemnification is sought under this Section 10.09 (or, if indemnification is sought after the date upon which all Commitments shall have terminated and the Loans and Reimbursement Obligations shall have been paid in full, ratably in accordance with such outstanding Loans and Commitments as in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans and Reimbursement Obligations) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder. ARTICLE XI MISCELLANEOUS SECTION 11.01 NOTICES. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to any Loan Party, to U.S. Borrower at: Ply Gem Industries, Inc. 303 West Major Kearney, Missouri 64060 Attention: Chief Financial Officer Telecopy No.: (816) 903-4330; (b) if to the Administrative Agent, the Collateral Agent or the Issuing Bank, to it at: UBS AG, Stamford Branch 677 Washington Boulevard Stamford, Connecticut 06901 Attention: Vladimira Holeckova Telecopy No.: (203) 719-4176; (c) if to a Lender, to it at its address (or telecopy number) set forth on the applicable Lender Addendum or in the Assignment and Assumption pursuant to which such Lender shall have become a party hereto; and (d) if to the Swingline Lender, to it at: UBS Loan Finance LLC 677 Washington Boulevard Stamford, Connecticut 06901 Attention: Vladimira Holeckova Telecopy No.: (203) 719-4176. -122- All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 11.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 11.01, and failure to deliver courtesy copies of notices and other communications shall in no event affect the validity or effectiveness of such notices and other communications. SECTION 11.02 WAIVERS; AMENDMENT. (a) No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Except as provided in paragraph (d) below, neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended, supplemented or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent, the Collateral Agent (in the case of any Security Document) and the Loan Party or Loan Parties that are parties thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall: (i) increase the Commitment of any Lender without the written consent of such Lender; (ii) reduce the principal amount or premium of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any Fees payable hereunder, or change the currency of payment of any Obligation, without the written consent of each Lender affected thereby; (iii) postpone or extend the maturity of any Loan, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Term Loan under Section 2.09, or the required date of payment of any Reimbursement Obligation, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment (except interest payable under Section 2.06(c)), or postpone the scheduled date of expiration of any Commitment or postpone the scheduled date of expiration of any Letter of Credit beyond the Revolving Maturity Date, without the written consent of each Lender affected thereby; (iv) change Section 2.14(b) or (c) in a manner that would alter the pro rata sharing of payments or setoffs required thereby, without the written consent of each Lender; -123- (v) change the percentage set forth in the definition of "Required Lenders" or any other provision of any Loan Document (including this Section) specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be); (vi) release any Guarantor from its Guarantee (except as expressly provided in Article VII), or limit its liability in respect of such Guarantee, without the written consent of each Lender; (vii) release all or a substantial portion of the Collateral from the Liens of the Security Documents or alter the relative priorities of the Obligations entitled to the Liens of the Security Documents (except in connection with securing additional Obligations equally and ratably with the other Obligations), in each case without the written consent of each Lender; (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class; (ix) without the consent of the Required Lenders and Term Loan Lenders holding more than 50% of the principal amount of the outstanding Term Loans, reduce the amount of, or extend the date of, any scheduled payment on the Term Loans required to be made under Section 2.09, change the order of application of prepayments among Term Loans and Revolving Commitments under Section 2.10(h) or change the application of prepayments of Term Loans set forth in Section 2.10(h) to the remaining scheduled amortization payments to be made thereon under Section 2.09; or (x) without the consent of Term Loan Lenders holding more than 50% of the principal amount of each of the outstanding U.S. Term Loans and Canadian Term Loans, change the order of application of prepayments amounts of the U.S. Term Loans and the Canadian Term Loans under Section 2.10(h); provided, further, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, (2) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term Loan Lenders), the Term Loan Lenders (but not the Revolving Lenders), or one Class of Term Loan Lenders (but no other Lenders) may be effected by an agreement or agreements in writing entered into by the Borrowers and requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time, and (3) any waiver, amendment or modification prior to the completion of the primary syndication of the Commitments and Loans (as determined by the Administrative Agent) may not be effected without the written consent of the Administrative Agent. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by the Borrowers, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, the Issuing Bank and the Swingline Lender) if (x) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (y) at the time such amendment becomes effective, each Lender not consenting thereto receives payment -124- in full of the principal of, premium, if any, and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement. (c) If, in connection with any proposed change, waiver, discharge or termination of the provisions of this Agreement as contemplated by Section 11.02(b), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right to replace all, but not less than all, of such non-consenting Lender or Lenders (so long as all non-consenting Lenders are so replaced) with one or more persons pursuant to Section 2.16 so long as at the time of such replacement each such new Lender consents to the proposed change, waiver, discharge or termination. (d) Notwithstanding anything in Section 11.02(b) to the contrary, this Agreement and the other Loan Documents may be amended at any time and from time to time to increase the aggregate principal amount of U.S. Term Loans or to establish additional Classes of U.S. Term Loans (collectively, "ADDITIONAL TERM LOANS") by an agreement in writing entered into by the Borrowers, the Administrative Agent, the Collateral Agent and each person (including any Lender) that shall agree to make an Additional Term Loan (and each such person that shall not already be a Lender shall be reasonably acceptable to the Administrative Agent and shall, at the time such agreement becomes effective, become a Lender with the same effect as if it had originally been a Lender under this Agreement with the Term Loans set forth in such agreement); provided that (1) no more than an amount equal to $100.0 million of Additional Term Loans less the principal amount of all Senior Subordinated Notes (other than the New Senior Subordinated Notes) issued after the Original Closing Date pursuant to Section 6.01(b) may be established pursuant to this Section 11.02(d) without the consent of the Required Lenders, (2) no Default or Event of Default has occurred and is continuing or would occur after giving effect thereto, (3) the covenants in Section 6.10 would be satisfied on a Pro Forma Basis on the date of any such amendment and for the most recent Test Period, after giving effect to such Additional Term Loans, and (4) the Senior Leverage Ratio would not be greater than 2.5:1.0 after giving effect thereto. Any such agreement shall be reasonably satisfactory to the Administrative Agent, shall amend the provisions of this Agreement and the other Loan Documents and shall set forth the terms of the Additional Term Loans established thereby (including the amount and final maturity thereof (which shall not be earlier than the Term Loan Maturity Date), any provisions relating to the amortization or mandatory prepayment thereof (which shall be no more than ratable or pari passu, as applicable, with the Term Loans), the interest to accrue and be payable thereon and any fees to be payable in respect thereof (provided that the Applicable Margins with respect to any Additional Term Loans shall not be more than 25 basis points higher than the Applicable Margins with respect to the Term Loans and that all other payment rights shall be pari passu with the Term Loans)) and effect such other changes (including changes to the provisions of this Section, Section 2.14 and the definition of "Required Lenders") as U.S. Borrower and the Administrative Agent shall deem necessary or advisable in connection with the Additional Term Loans; provided that no such agreement shall (i) effect any change described in Section 11.02(b)(i) through (ix) without the consent of each person required to consent to such change under such clause (it being agreed, however, that the Additional Term Loans will not, of themselves, be deemed to effect any of the changes described in Section 11.02(b)(vi) through (viii) and (1)), (ii) amend Article V, VI or VIII to establish any affirmative or negative covenant, Event of Default or remedy that by its terms benefits one or more Classes, but not all Classes, of Loans or Borrowings without the prior written consent of Lenders holding a majority in interest of the Loans and Commitments of each Class not so benefited (it being agreed that no provision requiring either Borrower to prepay Term Loans of one or more Classes pursuant to Sections 2.10(c) through (h) shall be deemed to violate this clause) or (iii) change any other provision of this Agreement or any other Loan Document that creates rights in favor of Lenders holding Loans or Commitments of any existing Class, other than as necessary or advisable in the judgment of the Administrative Agent to cause such provision to take into account, or to make the benefits of such provision available to, Lenders holding Additional Term Loans. The Loans and Borrowings established pursuant to this paragraph shall con- -125- stitute Loans and Borrowings under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after the establishment of any such Additional Term Loans. (e) Notwithstanding anything in this Agreement to the contrary, any Offer to Redeem shall be accepted by all Lenders to which such Offer to Redeem was made unless three Business Days prior to the proposed redemption date the Required Lenders give their consent for such Offer to Redeem to be declined by all such Lenders. (f) Notwithstanding anything in Section 11.02(b) to the contrary, this Agreement and the other Loan Documents may be amended at any time and from time to time to increase the aggregate principal amount of the Revolving Commitment by up to $10.0 million in the aggregate (the "INCREMENTAL REVOLVING COMMITMENT") in excess of the Revolving Commitment on the Second Amendment Effectiveness Date by an agreement in writing entered into by the Borrowers, the Administrative Agent, the Collateral Agent and each person (including any Lender) that shall agree to commit to a portion of the Incremental Revolving Commitment (and each such person that shall not already be a Lender shall be reasonably acceptable to the Administrative Agent and shall, at the time such agreement becomes effective, become a Lender with the same effect as if it had originally been a Lender under this Agreement with the Revolving Commitment set forth in such agreement); provided that (1) no Default or Event of Default has occurred and is continuing or would occur after giving effect thereto and (2) the covenants in Section 6.10 would be satisfied on a Pro Forma Basis on the date of any such amendment and for the most recent Test Period, after giving effect to any Revolving Loans made on such date pursuant to the Incremental Revolving Commitment. Any such agreement shall be reasonably satisfactory to the Administrative Agent, shall amend the provisions of this Agreement and the other Loan Documents and shall set forth the terms of the Revolving Loans to be made pursuant to the Incremental Revolving Commitment established thereby (which shall be the same as those of the Revolving Loans under this Agreement) and effect such other changes (including changes to the provisions of this Section, Section 2.14 and the definition of "Required Lenders") as U.S. Borrower and the Administrative Agent shall deem necessary or advisable in connection with the Incremental Revolving Commitment; provided that no such agreement shall (i) effect any change described in Section 11.02(b)(i) through (ix) without the consent of each person required to consent to such change under such clause (it being agreed, however, that the Incremental Revolving Commitment and any Revolving Loans made pursuant thereto will not, of themselves, be deemed to effect any of the changes described in Section 11.02(b)(vi) through (viii) and (1)), (ii) amend Article V, VI or VIII to establish any affirmative or negative covenant, Event of Default or remedy that by its terms benefits one or more Classes, but not all Classes, of Loans or Borrowings without the prior written consent of Lenders holding a majority in interest of the Loans and Commitments of each Class not so benefited or (iii) change any other provision of this Agreement or any other Loan Document that creates rights in favor of Lenders holding Loans or Commitments of any existing Class, other than as necessary or advisable in the judgment of the Administrative Agent to cause such provision to take into account, or to make the benefits of such provision available to, Lenders holding a portion of the Incremental Revolving Commitment. The Loans and Borrowings established pursuant to the Incremental Revolving Commitment shall constitute Loans and Borrowings under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after the establishment of such Incremental Revolving Commitment. -126- SECTION 11.03 EXPENSES; INDEMNITY. (a) The Loan Parties agree, jointly and severally, to pay, promptly upon demand: (i) all reasonable costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, including the reasonable fees, charges and disbursements of Advisors for the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender and the Issuing Bank, in connection with the syndication of the Loans and Commitments, the preparation, execution and delivery of the Loan Documents, the administration of the Loans and Commitments, the perfection and maintenance of the Liens securing the Collateral and any actual or proposed amendment, supplement or waiver of any of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be consummated); (ii) all costs and expenses incurred by the Administrative Agent or the Collateral Agent, including the reasonable fees, charges and disbursements of Advisors for the Administrative Agent and the Collateral Agent, in connection with any action, suit or other proceeding affecting the Collateral or any part thereof, in which action, suit or proceeding the Administrative Agent or the Collateral Agent is made a party or participates or in which the right to use the Collateral or any part thereof is threatened, or in which it becomes necessary in the judgment of the Administrative Agent or the Collateral Agent to defend or uphold the Liens granted by the Security Documents (including any action, suit or proceeding to establish or uphold the compliance of the Collateral with any Requirements of Law); (iii) all costs and expenses incurred by the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of Advisors for the Arrangers, the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or any Lender, incurred in connection with the enforcement or protection of its rights under the Loan Documents, including its rights under this Section 11.03(a), or in connection with the Loans made or Letters of Credit issued hereunder and the collection of the Obligations, including all such costs and expenses incurred during any workout, restructuring or negotiations in respect of the Obligations; and (iv) all documentary and similar taxes and charges in respect of the Loan Documents. For purposes of this Section 11.03(a), "ADVISORS" shall mean legal counsel (including local counsel), auditors, accountants, consultants, appraisers or other advisors; provided that (x) in the case of clause (i), the engagement of any Advisors other than legal counsel (including local counsel) shall be subject to approval by U.S. Borrower (which approval shall not be unreasonably withheld) and (y) in the case of clause (iii), the engagement of any Advisors other than one firm of legal counsel by any Lender shall be subject to approval by the Administrative Agent. (b) The Loan Parties agree, jointly and severally, to indemnify the Agents, each Lender, the Issuing Bank and the Swingline Lender, each Affiliate of any of the foregoing persons and each of their respective partners, controlling persons, directors, officers, trustees, employees and agents (each such person being called an "INDEMNITEE") against, and to hold each Indemnitee harmless from, all reasonable out-of-pocket costs and any and all losses, claims, damages, liabilities, penalties, judgments, suits and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution, delivery, performance, administration or enforcement of the Loan Documents, (ii) any actual or proposed use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investi- -127- gation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release or threatened Release of Hazardous Materials, on, at, under or from any property owned, leased or operated by any Company at any time, or any Environmental Claim related in any way to any Company; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted solely from the gross negligence or willful misconduct of such Indemnitee. (c) The provisions of this Section 11.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of the Loans and Reimbursement Obligations, the release of all or any portion of the Collateral, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agents, the Issuing Bank or any Lender. All amounts due under this Section 11.03 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested. (d) To the extent that either Borrower fails to promptly pay any amount required to be paid by it to the Agents, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Agents, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against any of the Agents, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposure, outstanding Term Loans and unused Commitments at the time. SECTION 11.04 SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that the Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent, the Collateral Agent, the Issuing Lender, the Swingline Lender and each Lender (and any attempted assignment or transfer by either Borrower without such consent shall be null and void). Nothing in this Agreement, express or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the other Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender shall have the right at any time to assign to one or more banks, insurance companies, investment companies or funds or other institutions (other than the Borrowers, Parent or any Subsidiary thereof) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, the Administrative Agent and U.S. Borrower (and, in the case of an assignment of all or a portion of a Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give its prior written consent to such assignment (which consents shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, any assignment made in connection with the syndication of the Commitments and Loans by the Arrangers or an assignment of the entire remaining amount of the assigning -128- Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) with respect to Term Loan Commitments and Term Loans, $1.0 million and (y) with respect to Revolving Commitments and Revolving Loans, $2.5 million, unless each of U.S. Borrower and the Administrative Agent otherwise consents, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans other than an assignment of any rights and obligations with respect to any Term Loans which may be assigned only on a pro rata basis between (x) Existing U.S. Term Loans and (y) Canadian Term Loans (i.e., an assignment of Existing U.S. Term Loans representing a percentage of the total principal amount of Existing U.S. Term Loans then outstanding shall be accompanied by an assignment of Canadian Term Loans representing the same percentage of the total principal amount of Canadian Term Loans then outstanding), (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and (vi) in the case of an assignment to an Affiliate of Parent, such Affiliate hereby agrees that, unless it holds all Loans of the applicable Class, its Loans and Commitments shall be disregarded for purposes of determining the requisite percentage or number of Lenders (or Lenders of any Class) required to waive, amend or modify any rights under any Loan Document or make any determination or grant any consent thereunder; and provided, further, that any consent of U.S. Borrower otherwise required under this paragraph shall not be required if a Default has occurred and is continuing or during the primary syndication of the Commitments. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement (provided that any liability of either Borrower to such assignee under Section 2.12 or 2.13 shall be limited to the amount, if any, that would have been payable thereunder by such Borrower in the absence of such assignment, except to the extent any such amounts are attributable to a Change in Law occurring after the date of such assignment), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.15 and 11.03). (c) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive in the absence of manifest error, and the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, the Issuing Bank, the Collateral Agent, the Swingline Lender and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this -129- Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender shall have the right at any time, without the consent of either Borrower, the Administrative Agent, the Issuing Bank or the Swingline Lender, to sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii) or (iii) of the first proviso to Section 11.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.15, so long as such Participant complies with the requirements of each such Section, to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees in writing to be subject to Section 2.14(c) as though it were a Lender. Each Lender shall, acting for this purpose as an agent of the Borrowers, maintain at one of its offices a register for the recordation of the names and addresses of its Participants, and the amount and terms of its participations; provided that no Lender shall be required to disclose or share the information contained in such register with the Borrowers or any other party, except as required by applicable law. (f) A Participant shall not be entitled to receive any greater payment under Section 2.12, 2.13 or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the prior written consent of the applicable Borrower (which consent shall not be unreasonably withheld or delayed). (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. In the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of the Borrowers or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities. SECTION 11.05 SURVIVAL OF AGREEMENT. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regard- -130- less of any investigation made by any such other party or on its behalf and notwithstanding that the Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.12, 2.14, 2.15 and 11.03 and Article X shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the payment of the Reimbursement Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 11.06 COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and the Fee Letter constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall become effective when the conditions precedent set forth in Section 4.03 have been met and when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Borrowers, the Guarantors, the Agents and the Lenders agree that (a) all obligations under the Original Credit Agreement, that is amended and restated hereby, shall continue to exist under and be evidenced by this Agreement and the other Loan Documents and shall constitute Obligations and (b) except as expressly stated herein or amended, the other Loan Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations. The Borrower, the Guarantors, the Agent and the Lenders agree that notwithstanding the foregoing or anything else herein to the contrary the provisions of Article X and Section 11.03 of the Original Credit Agreement survive and remain in full force and effect for the benefit of the Original Agents. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 11.07 SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 11.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of either Borrower against any and all of the obligations of such Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. -131- SECTION 11.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction. (b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction. (c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 11.09(b). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in any action or proceeding arising out of or relating to any Loan Document, in the manner provided for notices (other than telecopy) in Section 11.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by applicable law. SECTION 11.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT 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 AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 11.11 HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. -132- SECTION 11.12 CONFIDENTIALITY. Each of the Agents, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' and Lender Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof), (b) to the extent requested by any regulatory or self-regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 11.12, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the applicable Borrower and its obligations or (iii) any rating agency for the purpose of obtaining a credit rating applicable to any Loan or Loan Party, (g) with the consent of U.S. Borrower or (h) to the extent such Information (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than U.S. Borrower or any Subsidiary. For the purposes of this Section, "INFORMATION" means all information received from U.S. Borrower or any Subsidiary relating to U.S. Borrower or any Subsidiary or its business that is clearly identified at the time of delivery as confidential, other than any such information that is available to any Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by U.S. Borrower or any Subsidiary. Any person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential information. SECTION 11.13 INTEREST RATE LIMITATION. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the "CHARGES"), shall exceed the maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender. SECTION 11.14 LENDER ADDENDUM. Each Lender to become a party to this Agreement on the Original Closing Date, the First Amendment Effectiveness Date or the Second Amendment Effectiveness Date shall do so by delivering to the Administrative Agent a Lender Addendum duly executed by such Lender, the applicable Borrower and the Administrative Agent. SECTION 11.15 OBLIGATIONS ABSOLUTE. To the fullest extent permitted by applicable law, all obligations of the Loan Parties hereunder shall be absolute and unconditional irrespective of: (a) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any Loan Party; -133- (b) any lack of validity or enforceability of any Loan Document or any other agreement or instrument relating thereto against any Loan Party; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Loan Document or any other agreement or instrument relating thereto; (d) any exchange, release or non-perfection of any other Collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Obligations; (e) any exercise or non-exercise, or any waiver of any right, remedy, power or privilege under or in respect hereof or any Loan Document; or (f) any other circumstances which might otherwise constitute a defense available to, or a discharge of, the Loan Parties, except for the defense of payment or performance of such obligations. SECTION 11.16 JUDGMENT CURRENCY. (a) Each Borrower's obligation hereunder and under the other Loan Documents to make payments in dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than dollars, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agent or the respective Lender of the full amount of dollars expressed to be payable to the Administrative Agent or such Lender under this Agreement or the other Loan Documents. If, for the purpose of obtaining or enforcing judgment against a Borrower in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than dollars (such other currency being hereinafter referred to as the "JUDGMENT CURRENCY") an amount due in dollars, the conversion shall be made at the rate of exchange (as quoted by the Administrative Agent or if the Administrative Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Administrative Agent) determined, in each case, as of the Business Day immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "JUDGMENT CURRENCY CONVERSION DATE"). (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, each Borrower covenants and agrees to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount) as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. (c) For purposes of determining any rate of exchange for this Section 11.16, such amounts shall include any premium and costs payable in connection with the purchase of dollars. [Signature Pages Follow] -134- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. PLY GEM INDUSTRIES, INC. By:______________________________________ Name: Title: CWD WINDOWS AND DOORS, INC. By:______________________________________ Name: Title: PLY GEM HOLDINGS, INC. By:______________________________________ Name: Title: GREAT LAKES WINDOW, INC. KROY BUILDING PRODUCTS, INC. NAPCO, INC. NAPCO WINDOW SYSTEMS, INC. THERMAL-GARD, INC. VARIFORM, INC. By:______________________________________ Name: Title: S-1 MWM HOLDING, INC. MW MANUFACTURERS HOLDING CORP. MW MANUFACTURERS INC. LINEAL TECHNOLOGIES, INC. PATRIOT MANUFACTURING, INC. By:______________________________________ Name: Title: UBS SECURITIES LLC, as a Joint Lead Arranger By:______________________________________ Name: Title: By:______________________________________ Name: Title: DEUTSCHE BANK SECURITIES INC., as a Joint Lead Arranger By:______________________________________ Name: Title: J.P.MORGAN SECURITIES INC., as Co-Arranger By:______________________________________ Name: Title: S-2 UBS AG, STAMFORD BRANCH, as Issuing Bank, Administrative Agent and Collateral Agent By:______________________________________ Name: Title: By:______________________________________ Name: Title: DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH, as Syndication Agent By:______________________________________ Name: Title: By:______________________________________ Name: Title: JPMORGAN CHASE BANK, as Documentation Agent By:______________________________________ Name: Title: S-3 UBS LOAN FINANCE LLC, as Swingline Lender By:______________________________________ Name: Title: By:______________________________________ Name: Title: S-4 ANNEX I APPLICABLE MARGIN
REVOLVING LOANS TOTAL --------------------- APPLICABLE LEVERAGE RATIO EURODOLLAR ABR FEE - ------------------ ----------- ----- ---------- LEVEL I 2.50% 1.50% 0.50% > or = 4.50:1.0 LEVEL II 2.25% 1.25% 0.50% <4.50:1.0 BUT > or = 3.75:1.0 LEVEL III 2.00% 1.00% 0.375% <3.75:1.0 BUT > or = 3.00:1.0 LEVEL IV 1.75% 0.75% 0.375% <3.00:1.0
Each change in the Applicable Margin or Applicable Fee resulting from a change in the Total Leverage Ratio shall be effective with respect to all Loans and Letters of Credit outstanding on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing, the Leverage Ratio shall be deemed to be in Level I (i) from the Original Closing Date to the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c) for the fiscal period ended at least six months after the Original Closing Date, (ii) at any time during which U.S. Borrower has failed to deliver the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(c), respectively, and (iii) at any time during the existence of an Event of Default. ANNEX II AMORTIZATION TABLE
EXISTING U.S. TERM LOAN CANADIAN TERM LOAN ADDITIONAL U.S. DATE AMOUNT AMOUNT TERM LOAN AMOUNT - ------------------ ----------------------- ------------------ ------------------ June 30, 2004 $ 425,000 $ 75,000 - September 30, 2004 $ 425,000 $ 75,000 - December 31, 2004 $ 425,000 $ 75,000 - March 31, 2005 $ 425,000 $ 75,000 - June 30, 2005 $ 425,000 $ 75,000 - September 30, 2005 $ 425,000 $ 75,000 - December 31, 2005 $ 425,000 $ 75,000 - March 31, 2006 $ 425,000 $ 75,000 - June 30, 2006 $ 425,000 $ 75,000 - September 30, 2006 $ 425,000 $ 75,000 - December 31, 2006 $ 425,000 $ 75,000 - March 31, 2007 $ 425,000 $ 75,000 - June 30, 2007 $ 425,000 $ 75,000 - September 30, 2007 $ 425,000 $ 75,000 - December 31, 2007 $ 425,000 $ 75,000 - March 31, 2008 $ 425,000 $ 75,000 - June 30, 2008 $ 425,000 $ 75,000 - September 30, 2008 $ 425,000 $ 75,000 - December 31, 2008 $ 425,000 $ 75,000 - March 31, 2009 $ 425,000 $ 75,000 - June 30, 2009 $ 425,000 $ 75,000 - September 30, 2009 $ 425,000 $ 75,000 - December 31, 2009 $ 425,000 $ 75,000 - March 31, 2010 $ 425,000 $ 75,000 - June 30, 2010 $ 39,950,000 $ 7,050,000 - September 30, 2010 $ 39,950,000 $ 7,050,000 - December 31, 2010 $ 39,950,000 $ 7,050,000 - February 12, 2011 $ 39,950,000 $ 7,050,000 $ 111,000,000 Total $ 170,000,000 $ 30,000,000 $ 111,000,000
SCHEDULE 1.01(b) CONSOLIDATED EBITDA ADDBACKS (IN $ MILLIONS)
Q3 2003 Q4 2003 Q1 2004 Q2 2004 PLY GEM ADJUSTMENTS Non-cash write-off of Inventory - - 1,934 40 Elimination of Nortek's corporate charge 3,732 1,680 490 - Thermal Gard Window and Other 77 284 372 (362) Butler Closure One-time costs 149 85 93 53 One-time GLW Mgmt. Changes 164 66 - - Metal Price Increase - - 570 404 Kroy Reorganization - - 93 442 Kroy Balance Sheet Adj. 467 1,029 631 294 Kroy Product Relaunch - - 480 100 ---------- ------- ------ ------ TOTAL PLY GEM ADJUSTMENTS 4,589 3,144 4,663 971 ========== ======= ====== ====== MW ADJUSTMENTS Extrusion and automation savings 2,286 686 686 343 Non-recurring stand-alone costs 90 76 15 75 Non-recurring consulting and relocation costs 446 58 - 191 Pension savings 63 63 63 63 ---------- ------- ------ ------ TOTAL MW ADJUSTMENTS 2,885 883 764 672 ========== ======= ====== ====== COST SAVINGS AND SYNERGIES Labor productivity 434 434 434 434 Patio door and casement redesign 193 193 193 193 Vinyl and glass scrap program 138 138 138 138 Freight software optimization 63 63 63 63 Regrinding optimization 50 50 50 50 Twin screw savings 31 31 31 31 Automate SDL 25 25 25 25 GEMROI commission 50 50 50 50 Compounding savings 550 550 550 550 Insurance program savings 165 165 165 165 ---------- ------ ------ ------ TOTAL COST SAVINGS AND SYNERGIES 1,699 1,699 1,699 1,699 ========== ====== ====== ======
EX-10.22 16 y95660a4exv10w22.txt AMENDED AND RESTATED PHANTOM STOCK PLAN Exhibit 10.22 PLY GEM INVESTMENT HOLDINGS, INC. AMENDED AND RESTATED PHANTOM STOCK PLAN Section 1. General (a) Purpose. The purpose of this Ply Gem Investment Holdings, Inc. Phantom Stock Plan (the "Plan") is to attract, motivate and retain certain key employees of Ply Gem Investment Holdings, Inc. (the "Company") and its Subsidiaries who are primarily responsible for the long-term performance of the Company and to align their interest with that of the stockholders of the Company. (b) Overview. The Plan is generally designed to provide non-qualified deferred compensation to Participants. Each Participant's interest in the Plan is recorded in and maintained under a bookkeeping Account and these Accounts are deemed invested in the Company's stock, but there is no stock actually issued to the Plan (which is generally why these accounts credits are called "Phantom"). When valuing a Participant's Account for payment purposes, the following rules generally apply: if the Company becomes publicly traded through an IPO, the stock market will dictate the value of the Account; if a Realization Event or a Tag-Along Event occurs, the amount paid to shareholders will dictate the value of the Account; and in the event that a Participant's employment with the Company terminates and if neither a Realization Event nor an IPO 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 the Company and the circumstances surrounding the termination of employment). Following an IPO, each Participant will generally be paid out five years after the IPO, subject to further deferral opportunities and the right of the Company to accelerate such payment, with earlier payment upon a Realization Event or a termination of employment. The value of each Account is generally paid in cash or stock, at the discretion of the Company. Section 2. Definitions. As used in this Plan, capitalized terms not defined in this Plan shall have the meaning attributed to such terms in the Stockholders Agreement and the following terms shall have the meanings set forth below: (a) Account. An unfunded bookkeeping account established to record a Participant's interest under this Plan, the terms and conditions of which are set forth in this Plan and in each Participant's Award Agreement. (b) Award. A grant of Phantom Incentive Units and/or a grant of Phantom Additional Units under this Plan. (c) Award Agreement. The written agreement evidencing an Award, which shall be executed or otherwise acknowledged in writing by a Participant. 2 (d) Board. The Board of Directors of the Company. (e) Cause. "Cause" means: (i) conviction of, or entry of a pleading of guilty or no contest by, a Participant with respect to a felony or any lesser crime of which fraud or dishonesty is a material element; (ii) a Participant's willful and continued failure to perform substantially his or her duties with the Company or any of its Subsidiaries, or a failure to follow the lawful direction of the Board or any chief executive officer of the Company or any of its Subsidiaries to whom such Participant reports after the Board of Directors or such chief executive officer delivers a written demand for substantial performance, specifically identifying the manner in which the Participant has not substantially performed his material duties and the Participant neglects to cure such a failure within 30 days; (iii) a Participant's theft, fraud or embezzlement of any property or assets of the Company or any of its Affiliates or Subsidiaries, or such Participant's dishonesty against the Company or any of its Affiliates or Subsidiaries which has resulted in material damage to the Company or any of its Affiliates or Subsidiaries or (iv) a Participant's breach of any noncompetition or nonsolicitation requirements set forth in the Stockholders Agreement or willful breach of any confidentiality requirements set forth in the Stockholders Agreement, in each case, whether or not such agreement or requirement is enforceable under applicable law. (f) Common Stock. Common stock, par value $0.01 per share, of the Company, and any other stock or units into which such common stock shall thereafter be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of stock or units or the like. (g) Company. Ply Gem Investment Holdings, Inc., a Delaware corporation. (h) Disability. With respect to any Participant, any event of disability under the disability insurance plan of the Company or any of its Affiliates or Subsidiaries covering such Participant, or if there shall be no such disability plan, then as set forth in any agreement between such Participant and the Company or any of its Affiliates or Subsidiaries, or if there shall be no such agreement, then the inability of the Participant to perform his or her duties as an employee of the Company or any of its Affiliates or Subsidiaries for at least one-hundred eighty (180) days during any consecutive 12-month period. (i) Effective Date. February 12, 2004. (j) IPO. The closing of the initial underwritten public offering of shares of Common Stock pursuant to an effective registration statement filed under the Securities Act. (k) Participant. Any current or future employee of the Company or any of its Subsidiaries who is eligible for, and is selected by the Board for, an Award under this Plan and who has executed an Award Agreement. (l) Phantom Additional Unit. A Phantom Additional Unit that is first credited to a Participant's Account in February, 2004, is a phantom stock unit representing one share of Common Stock and 0.45914 shares of the Preferred Stock issued in February, 2004. A Phantom Additional Unit that is first credited to a Participant's Account in August, 2004, is a phantom stock unit representing one share of Common Stock and 0.53803 shares of the Preferred Stock issued in August, 2004. As used herein, a "Common Phantom Additional Unit" shall mean the 3 portion of a Phantom Additional Unit representing one share of Common Stock and a "Preferred Phantom Additional Unit" shall mean the portion of a Phantom Additional Unit representing 0.45914 shares of the Preferred Stock issued in February, 2004, for Phantom Additional Units granted in February, 2004 and 0.53803 shares of the Preferred Stock issued in August, 2004, for Phantom Additional Units granted in August, 2004. (m) Phantom Incentive Unit. A Phantom Incentive Unit is a phantom stock unit representing a share of Common Stock that is credited to a Participant's Account. (n) Plan. This Ply Gem Investment Holdings, Inc. Amended and Restated Phantom Stock Plan, as may be amended from time to time. (o) Preferred Stock. Senior Preferred Stock, par value $0.01 per share, of the Company, and any other stock or units into which such preferred stock shall thereafter be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of stock or units or the like. (p) Realization Event. Any transaction in which Caxton-Iseman (Ply Gem), L.P. has the right to exercise "Drag-Along Rights" pursuant to Section 4.7 of the Stockholders Agreement. (q) Stockholders Agreement. That certain Stockholders Agreement, dated as of February 12, 2004 and as amended from time to time, by and among the Company, Caxton-Iseman (Ply Gem), L.P., the other investors executing the agreement and designated as "Other Investors" therein and the individuals executing the agreement and designated as "Management Stockholders" therein. (r) Tag-Along Event. Any occurrence of an event qualifying for "Tag Along" treatment under Section 4.5 of the Stockholders' Agreement. Section 3. Administration. (a) This Plan shall be administered by the Board. Subject to the provisions of this Plan and applicable law and subject to Participants' rights under outstanding Award Agreements, the Board shall have the power and sole discretion, in addition to other express powers and authorizations conferred on the Board by this Plan, to: (i) designate Participants; (ii) determine the Awards to a Participant; (iii) determine, in a manner consistent with the terms of this Plan and any Award Agreements entered into pursuant to this Plan, payments and how other matters are to be calculated in connection with Awards and Accounts; (iv) determine the terms and conditions of Awards; (v) determine whether, to what extent, and under what circumstances Awards and amounts payable pursuant to an Account shall be deferred at the election of the holder thereof or of the Board; (vii) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in this Plan and any instrument or agreement relating to this Plan, or Awards under this Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of this Plan; and (ix) make any other determination and take any other action that the Board deems necessary or desirable for the administration of this Plan. The decisions of the Board shall be final, conclusive, and binding upon all parties, including, without limitation, the Company, any Participant, any holder or beneficiary of any Account and any stockholder of the Company. 4 (b) No member of the Board shall be liable for any action or determination made in good faith with respect to this Plan, any Award or any Account. Section 4. Eligibility. Members of senior management and key employees of the Company and/or its Subsidiaries shall be eligible to be designated as a Participant in this Plan by the Board and to receive an Award credited to an Account. Section 5. Phantom Incentive Unit Awards and Phantom Additional Unit Awards. (a) General. The Board shall, in its sole discretion, designate employees of the Company or its Subsidiaries as Participants in this Plan and, in connection therewith, the Board shall determine the number of Phantom Incentive Units and/or Phantom Additional Units to be granted to each Participant so designated. An Account shall be established in the records of the Company to which the number of Phantom Incentive Units and/or Phantom Additional Units so granted shall be credited. As more fully set forth herein, a Participant shall share in any dividends or distributions paid by the Company to its stockholders, and a Participant's Account will be fully or partially distributed to him or her following the occurrence of a Realization Event. (b) Availability for Award; Dividends; Value. (i) Awards may be made in respect of up to 10% of the Common Stock outstanding as constituted as of the Effective Date (prior to dilution by the Phantom Incentive Units, Phantom Additional Units and any Contingent Rights) under the Plan. (ii) To the extent that dividends or distributions are declared and paid to holders of Common Stock, each Participant will receive the amount that would have been distributed to the Participant had the Phantom Incentive Units and/or Common Phantom Additional Units credited to the Participant's Account been issued and outstanding Common Stock and such dividend or distribution shall be paid at the same time and in the same manner as dividends or distributions are paid to holders of Common Stock. (iii) To the extent that dividends or distributions are declared and paid to holders of Preferred Stock, each Participant will receive the amount that would have been distributed to the Participant had the Preferred Phantom Additional Units credited to the Participant's Account been issued and outstanding Preferred Stock and such dividend or distribution shall be paid at the same time and in same manner as dividends and distributions are paid to holders of Preferred Stock. (c) Deferral of Payment. Notwithstanding any other provision of this Plan, the Board may make good faith determinations respecting the time and/or medium of payment and/or impose conditions on payment of the value of a Participant's Account in order to reflect the time and medium of payment, or conditions on payment, applicable to holders of Common Stock and/or Preferred Stock, as applicable, in connection with a Realization Event, IPO or otherwise, in order to accomplish the intended purposes of this Plan. By way of example and without limiting the generality of the foregoing, the Board may impose appropriate restrictions on the payment of the value of a Participant's Account if the holders of Common Stock and/or Preferred Stock, as applicable, are subject to a clawback or are required to escrow payment for their Common Stock and/or Preferred Stock, as applicable. 5 (d) Termination of Account Following Payment. Following the payment of all or a portion of the Account attributable to the Phantom Incentive Units, any such Phantom Incentive Units shall thereafter be deemed cancelled. Following the payment of all or a portion of the Account attributable to Common Phantom Additional Units, any such Common Phantom Additional Units shall thereafter be deemed cancelled, although the Preferred Phantom Additional Units may still have value if such portion of the Account was not theretofore paid. Following the payment of all or a portion of the Account attributable to Preferred Phantom Additional Units, any such Preferred Phantom Additional Units shall thereafter be deemed cancelled, although the Common Phantom Additional Units may still have value if such portion of the Account was not theretofore paid. The payment of a dividend or distribution with respect to any Award shall not be considered a payment of any portion of a Participant's Account for purposes of this Section 5(d). Section 6. Payment of Accounts. (a) Realization Event. Except as provided in Section 8 (generally relating to terminations of employment before a Realization Event), upon the closure and funding of a Realization Event, each Account shall be credited with the same value per Phantom Incentive Unit and/or Common Phantom Additional Unit as the value received in the Realization Event by a holder of Common Stock for one share of Common Stock, and each Participant (or his or her estate, as applicable) will be paid the value of his or her Account, subject to the Board's discretion to defer the payment of the value of a Participant's Account to appropriately reflect the payment schedule, contingent payment, holdbacks or contingent obligations applicable to holders of Common Stock following the Realization Event, as follows: (i) as soon as practicable following a Realization Event that is a cash transaction, the value of each Account shall be paid in cash to the Participants. (ii) following a Realization Event that is an equity or other non-cash exchange for Common Stock, (A) the Board shall credit each Account attributable to any Phantom Incentive Unit and/or Common Phantom Additional Unit at such time and in such amounts of such medium (including notes, equity securities, or a combination of the foregoing) as payments are made available to holders of Common Stock pursuant to the Realization Event or, in the Board's sole discretion, in cash and (B) the value of the Accounts attributable to the Phantom Incentive Units and/or Common Phantom Additional Units shall be distributed as soon as practicable following such credit to the Account; provided that the Board may elect to continue to defer payment of the Account until not later than such time as the equity or other medium received in exchange for Common Stock may be converted into cash or is otherwise transferable and, in the event of such deferral, the Board shall determine whether payment shall be made either in cash or in the same medium of payment as holders of Common Stock received in the Realization Event, including notes, equity securities, or a combination of the foregoing. (b) Preferred Stock. Notwithstanding anything herein to the contrary, the value of the Accounts, if any, attributable to any Preferred Phantom Additional Unit shall be paid to a Participant upon a Realization Event only when and to the extent permitted in this Section 6(b). The Accounts attributable to each Preferred Phantom Additional Unit shall receive a credit at such times and in such amounts as payments are made to a holder of 0.45914 or 0.53803 shares of Preferred Stock in redemption thereof, as applicable, depending upon the date on which the Preferred Phantom Additional Unit was granted. The value of the Accounts attributable to 6 the Preferred Phantom Additional Units shall be paid to the Participants as soon as practicable following such credit to the Account and in the same medium (cash, equity, or any other medium) received by the holders of Preferred Stock. The Company has the right to pay the value of the Account in respect of Preferred Phantom Additional Units following a Participant's termination of employment for any reason and prior to any other event giving rise to the payout of Preferred Stock generally as described in Section 8(b)(ii)(D) below. (c) IPO. From and after the consummation by the Company of an IPO that occurs prior to a Realization Event, the following shall apply: (i) If the Company shall be required to pay out the value of any Account or shall exercise any right it may have to pay out the value of any Account or if any Participant shall have the right to receive any portion of an Account, the Company may pay the value of the Account in shares of Common Stock (in the case of Phantom Incentive Units or Common Phantom Additional Units) or Preferred Stock (in the case of Preferred Phantom Additional Units) or (in the case of either Phantom Incentive Units or Phantom Additional Units) in cash (determined by using, in the case of Phantom Incentive Units or Common Phantom Additional Units, the market price of the Common Stock, and in the case of Preferred Phantom Additional Units, the Liquidation Value of the Company's Preferred Stock and the accrued but unpaid dividends thereon, in each case on the date immediately prior to the payment) or a combination of the foregoing ("Post-IPO Payout"). (ii) Except as provided in Section 8 (generally relating to termination of employment prior to a Realization Event) and except upon the earlier occurrence of a Realization Event, and subject to the Company's right after the IPO to pay the value of the Account at such earlier time as it shall determine, on the fifth anniversary of the IPO the Account will be paid to the Participant, who will receive the Post-IPO Payout unless the Participant (or the Participant's estate, as applicable) elected in writing no later than the fourth anniversary of the IPO to defer the Post-IPO Payout for an additional 36 months from the fifth anniversary of the IPO. Each Participant who remains employed with the Company and who chooses to defer the payment of his or her Post-IPO Payout (including, for this purpose, any Participant or Participant's estate who otherwise deferred payment of his or her Account) no later than the fourth anniversary of the IPO may continue to defer the payment of the Post-IPO Payout for additional 36 month intervals, provided that the election to defer is made no later than one year prior to the date on which the Post-IPO Payout would otherwise be paid. (d) Tag-Along Event. In connection with a Tag-Along Event, the Company shall, in its discretion (A) immediately prior to the Tag-Along Event distribute to each Participant, a number of shares of such class or classes of the Company's Capital Stock such that the number of shares so distributed plus the number of shares which the holder would be entitled to sell under Section 4.5 of the Stockholders Agreement without regard to the Phantom Incentive Units or Phantom Additional Units held by such Participant (assuming that the source for the shares to be sold constituted shares of Capital Stock, and shares distributed with respect to Phantom Incentive Units and shares distributed with respect to Phantom Additional Units in proportion to the number of shares or such units held) equals the total number of shares of Capital Stock the holder is entitled to sell (the "Pro Rata Portion") or (B) immediately following the Tag-Along Event, credit each Participant's Account with the value the Participant would have received from the shares that would be distributed pursuant to clause (A) had such shares been distributed and sold in the Tag-Along Event, and either pay such portion of the Account as 7 soon as practicable following the Tag-Along Event or continue to defer the payment of the Account until the Account is otherwise payable in accordance with this Plan. For purposes of the foregoing clause (B), the credit in respect of the Account and any payment of the Account shall only be in respect of the Phantom Incentive Units and/or the Phantom Additional Units, as applicable, to which the Pro Rata Portion applies. For purposes of this Section 6(d), the Pro Rata Portion, to the extent it is attributable to Phantom Incentive Units, shall apply "pro rata" to the total number of Protected and Unprotected Phantom Incentive Units credited to a Participant's Account. Section 7. Compliance with Debt Instruments and Legal Requirements. (a) Legal Requirements. The grant of Phantom Incentive Units and Phantom Additional Units, payment of the value of a Participant's Account (including a partial distribution of a Participant's Account, if applicable), and the other obligations of the Company under this Plan shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. (b) Debt Instruments. Notwithstanding the requirements of Section 6 hereof regarding the payment of the value of the Accounts, the Company shall not be obligated to pay the value of any portion of any Account (A) at any time there exists and is continuing a default or an event of default on the part of the Company or under any guarantee or other agreement under which the Company or one of its Subsidiaries has borrowed money or (B) if such payment would constitute a breach of, or result in a default or an event of default on the part of the Company or any of its Subsidiaries, under any such guarantee or agreement. In the event that payment of any portion of any Account is deferred pursuant to this Section 7(b), the Company shall pay the value of such portion as soon as possible following the date on which such payment would not result in any such breach or default, with interest at the federal short-term interest rate on the first day of the month the Participant (or his or her estate) has the right to receive payment of the value of his or her Account pursuant to Section 6, to be recalculated on the first day of each month thereafter until all such payments due under the Account are made. (c) Postponement. The Board, in its sole discretion, may postpone the issuance or delivery of any securities under a Participant's Account as the Company may consider appropriate and may require a Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of any such securities in compliance with applicable laws, rules and regulations. Section 8. Termination of Employment. (a) Protection of Account Values. Unless otherwise provided in an Award Agreement, Accounts shall become "Protected" as follows: (i) subject to continued employment with the Company or one of its Subsidiaries, Participants shall initially be "Unprotected" but shall become Protected in the value of the Phantom Incentive Unit portion of their Accounts, as follows: 20% on the first anniversary of the date of the applicable Award Agreement, if still employed. 8 40% on the second anniversary of the date of the applicable Award Agreement, if still employed. 60% on the third anniversary of the date of the applicable Award Agreement, if still employed. 80% on the fourth anniversary of the date of the applicable Award Agreement, if still employed. 100% on the fifth anniversary of the date of the applicable Award Agreement, if still employed. (ii) upon the occurrence of the earlier of a Realization Event or an IPO, a Participant who is then employed with the Company or one of its Subsidiaries shall become fully Protected in the Phantom Incentive Unit portion of his or her Account; and (iii) the Phantom Additional Unit portion of each Participant's Account, as applicable, is fully Protected as of the date of grant of such Phantom Additional Units. (b) Payment Upon Termination of Employment. (i) Unless otherwise provided in an Award Agreement and notwithstanding any of the foregoing to the contrary, if a Participant's employment with the Company or its Subsidiaries terminates for any reason, and neither a Realization Event nor an IPO has occurred as of such termination of employment, the Participant's Account will be credited with the "Cash-Out Amount," as provided below immediately prior to the payment of the Account, and such Account shall be paid to such Participant within 90 days following the termination of such Participant's employment with the Company (or up to one year following the date of termination as may be determined by the Chief Executive Officer of the Company), as the Board may, in its discretion, determine; provided that, in the case of death or Disability, payment of the Account will be governed by Section 8(b)(ii)(C) and will be paid to the Participant's estate, as applicable. (ii) The "Cash-Out Amount" is determined as follows: (A) Cause Termination. In the event that a Participant's employment with the Company or its Subsidiaries is terminated by the Company for Cause and neither a Realization Event nor an IPO has occurred prior to such termination of employment, then the Cash-Out Amount is equal to, with respect to each Phantom Incentive Unit, (x) the initial value of the Phantom Incentive Unit on the date of grant as set forth in the Award Agreement, plus or minus (y) any change in Adjusted Retained Earnings per share from the date of grant through the end of the most recent fiscal quarter preceding the date of termination of employment; (B) Other Discharges; Quits. In the event that a Participant's employment with the Company or its Subsidiaries terminates for any reason other than (i) by the Company for Cause or (ii) due to the Participant's death or Disability, and neither a Realization 9 Event nor an IPO has occurred prior to such termination of employment, then the Cash-Out Amount is equal to the sum of: (x) with respect to each Protected Phantom Incentive Unit and each Common Phantom Additional Unit, an amount equal to the quotient obtained by dividing (I) the excess of (i) the product of 6.7 times Consolidated EBITDA during the Measurement Period over (ii) the Consolidated Indebtedness as of the date of termination, by (II) the number of shares of Common Stock then issued and outstanding and all shares of Common Stock issuable upon the exercise of any then outstanding Contingent Right, whether or not such Contingent Right is at the time exercisable on the date of termination of employment; plus (y) with respect to each Phantom Incentive Unit that is Unprotected, an amount equal to (I) the initial value of the Phantom Incentive Unit on the date of grant as set forth in the Award Agreement, plus or minus (II) any change in Adjusted Retained Earnings per share from the date of grant through the end of the most recent fiscal quarter preceding the date of termination of employment; (C) Death or Disability. In the event that a Participant's employment with the Company or its Subsidiaries terminates due to the Participant's death or Disability and neither a Realization Event nor an IPO has occurred prior to such termination of employment, then the Cash-Out Amount is the amount described in Section 8(b)(ii)(B) (above) with respect to each Phantom Incentive Unit and the Account will be paid to the Participant (or the Participant's estate, as applicable) one year following the termination of Participant's employment or, in the Board's discretion, at any time prior to one year following the termination of employment; provided that, unless the Board shall otherwise determine, the Participant or the Participant's estate, as applicable, may elect within 180 days following such termination of employment to defer the payment of the Account until such time as payment is otherwise required or made in accordance with the Plan. (D) Phantom Additional Units. If a Participant's employment with the Company or its Subsidiaries terminates for any reason prior to a Realization Event or an IPO, then (x) with respect to each Common Phantom Additional Unit, the Cash-Out Amount is the amount described in Section 8(b)(ii)(B)(x) above and (y) with respect to each Preferred Phantom Additional Unit granted in February, 2004, the Cash-Out Amount is 0.45914 times the sum of (I) the "Liquidation Value" plus (II) the "Maximum Dividend" (each as defined in the Company's Certificate of Incorporation) and with respect to each Preferred Phantom Additional Unit granted in August, 2004, the Cash-Out Amount is 0.53803 times the sum of (I) the Liquidation Value plus (II) the Maximum Dividend. (iii) Notwithstanding the foregoing, with respect to Phantom Incentive Units valued at the Cash-Out Amount as described in Section 8(b)(ii)(B) above, (A) if during the Measurement Period the Company or any of its Subsidiaries shall have purchased or otherwise acquired, without the approval of the Chief Executive Officer of the Company (in a single transaction or in a series of transactions), a business which is outside of the building products 10 industry, all calculations required under this Section 8(b) shall be made on a pro forma basis to eliminate the effect of such acquisition and any financing undertaking in connection therewith and (B) in the event that a sale of the Company is consummated within nine months following the payment of a Participant's Account, and if the per share purchase price (or the amount available for distribution, in the event of a sale of all or substantially all of the Company's assets) (such price or amount, the "Actual Amount") is higher than the Cash-Out Amount used to value such Phantom Incentive Units, whether or not Protected, then the Participant will receive, at the same time stockholders of the Company receive payment in connection with such sale, an additional payment from the Company equal to the excess of (x) the number of Phantom Incentive Units multiplied by the Actual Amount over (y) the aggregate Cash-Out Amount for such Phantom Incentive Units. (iv) If a Participant's employment with the Company or its Subsidiaries terminates for any reason and at any time following the occurrence of an IPO, even if such employment terminated prior to a Realization Event, in lieu of the amounts described in Section 8(b)(i) through (iii), the Participant will be entitled to the Post-IPO Payout (as described in Section 6(c)(i) above) in respect of the Phantom Incentive Units and the Phantom Additional Units credited to such Participant's Account, which Account shall be paid to such Participant in accordance with Section 6(c). (v) All calculations under Section 6 and this Section 8 of the value of shares based upon the number of outstanding shares of Common Stock and/or Preferred Stock shall be determined assuming that each Phantom Incentive Unit and each Common Phantom Additional Unit is an outstanding share of Common Stock, each Preferred Phantom Additional Unit granted in February, 2004, is 0.45914 outstanding shares of Preferred Stock and each Preferred Phantom Additional Unit granted in August, 2004, is 0.53803 outstanding shares of Preferred Stock. Section 9. Dilution Adjustments. (a) Certain Events. In the event of a reclassification, recapitalization, stock split, stock dividend, combination of units, or other similar or extraordinary event, the number and kind of Phantom Incentive Units and Phantom Additional Units, in the aggregate, reserved for issuance or with respect to which Awards may be made under this Plan shall be adjusted to reflect such event in the same manner in which Common Stock and Preferred Stock are adjusted to reflect such event, and the Board shall make such adjustments as it deems appropriate and equitable in the number, kind and price of Phantom Incentive Units and Phantom Additional Units credited to outstanding Accounts, and in any other matters which relate to Awards or Accounts and which are affected by the events referred to above. (b) Other Adjustments. The Board is authorized to make adjustments in the terms and conditions of, and the criteria included in, Accounts in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 9(a)) affecting the Company, or the financial statements of the Company or any subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. 11 Section 10. Amendment and Termination. (a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate this Plan or any portion thereof at any time; provided, however, that any such amendment, alteration, suspension, discontinuance, or termination that would materially adversely affect the rights of any Participant with respect to any outstanding Account held pursuant to this Plan shall not, to that extent, be effective without the written consent of the affected Participant. (b) Amendments to Awards. The Board may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Account, prospectively or retroactively; provided, however, that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination not expressly contemplated by this Plan that would materially adversely affect the rights of any Participant or other holder of an Account shall not to that extent be effective without the written consent of the affected Participant or holder. Section 11. General Provisions. (a) Nontransferability. Neither an Account, nor any Phantom Incentive Unit and/or Phantom Additional Units recorded thereunder, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company. (b) No Rights to Awards. No Person shall have any claim to be granted any Phantom Incentive Unit or Phantom Additional Unit, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Accounts. The terms and conditions of Phantom Incentive Units and Phantom Additional Units, Accounts and the Board's determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not Participants are similarly situated). (c) Government and Other Regulations. The obligation of the Company to settle Awards in Common Stock, Preferred Stock or otherwise shall be subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell and shall be prohibited from offering to sell or selling any shares of Common Stock or Preferred Stock pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the shares of Common Stock or Preferred Stock to be offered or sold under the Plan until an IPO. Upon an IPO, the Company shall undertake to register shares of Common Stock and/or Preferred Stock pursuant to the Securities Act on a Form S-8 with the Securities and Exchange Commission for issuance under this Plan, such that in the event the Company makes a distribution of the Accounts in shares of Common Stock or Preferred Stock at any time following an IPO, there will be a sufficient number of shares registered under this Plan. 12 (d) Tax Withholding. A Participant may be required to pay to the Company, at its request, and the Company shall have the right and is hereby authorized to withhold from any payment due or transfer made under any Account or otherwise under this Plan or from any compensation or other amount owing to or in respect of a Participant, the amount (in cash, securities, or other property) of any applicable withholding taxes in respect of an Account, its distribution or settlement in cash or in kind, or any payment or transfer under an Account or under this Plan, and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. (e) Other Compensation Arrangements. (i) Nothing contained in this Plan shall prevent the Company or any Subsidiary or other Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, securities and other types of awards, and such arrangements may be either generally applicable or applicable only in specific cases. (ii) Neither the grant of Phantom Incentive Units or Phantom Additional Units hereunder nor the payment of any amounts in respect of any Account shall be taken into account in determining a Participant's right to receive any additional benefits or compensation under any other plan or arrangement. (f) No Right to Service or Employment. The grant of Phantom Incentive Units or Phantom Additional Units shall not be construed as giving a Participant the right to be retained in the employ or service of the Company or any Subsidiary. Further, the Company or its Subsidiaries may at any time terminate a Participant from any employment or other service relationship or discontinue, free from any liability or any claim under this Plan, unless otherwise expressly provided in this Plan or in the Participant's Award Agreement. (g) Awards as an Unsecured Promise. (i) The Phantom Incentive Units and Phantom Additional Units granted under this Plan do not constitute an equity interest in the Company or its Subsidiaries. A Participant shall not share in the voting rights of the Company or its Subsidiaries as a result of an Award. (ii) The Company shall not be required to and shall not segregate any funds representing awards of Phantom Incentive Units or Phantom Additional Units granted hereunder, and nothing in this Plan or any Award Agreement shall be construed as providing for such segregation. (iii) Nothing in this Plan or any Award Agreement, and no action taken pursuant to their respective terms, shall create or be construed to create a trust or escrow account of any kind, or a fiduciary relationship between the Company or its Subsidiaries, on the one hand, and any Participant, or any other Person, on the other hand. (iv) The Participants and their beneficiaries and any other Persons entitled to payment in respect of an Account shall rely solely on the unsecured promise of the Company to make the payments required under the terms of any Account, but shall have the 13 right to enforce such a claim in the same manner as any unsecured general creditor of the Company. The Participants shall not have any preferred claim on, or any beneficial ownership in, any assets of the Company. Any rights created under this Plan or any Award Agreement shall be mere unsecured contractual rights of the Participants against the Company. (h) Termination with Subsidiaries. For purposes of this Plan, a Participant's employment will be deemed terminated when he or she is no longer employed by the Company or any of its Subsidiaries. (i) Conflicts. In the event of a conflict between the terms of this Plan and any Award Agreement, the terms of this Plan shall prevail. (j) Governing Law. Unless otherwise provided in the applicable Award Agreement, the validity, construction, and effect of this Plan and any rules and regulations relating to this Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within such state without regard to the choice of law principles thereof. (k) Headings. Headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof. EX-23.1 17 y95660a4exv23w1.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. 4 to the Registration Statement (Form S-4 No. 333-114041) 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 Boston, Massachusetts September 7, 2004 EX-23.2 18 y95660a4exv23w2.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. 4 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 September 7, 2004 EX-23.3 19 y95660a4exv23w3.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. 4 to the Registration Statement on S-4 and related Prospectus of Ply Gem Industries, Inc. for the registration of $225,000,000 of 9% Senior Subordinated Notes due 2012. /s/ Ernst & Young LLP Greensboro, NC September 7, 2004 GRAPHIC 21 y95660a4y9566001.gif GRAPHIC begin 644 y95660a4y9566001.gif M1TE&.#EA*P+D`??_````````,P``9@``F0``S```_P`S```S,P`S9@`SF0`S MS``S_P!F``!F,P!F9@!FF0!FS`!F_P"9``"9,P"99@"9F0"9S`"9_P#,``#, M,P#,9@#,F0#,S`#,_P#_``#_,P#_9@#_F0#_S`#__S,``#,`,S,`9C,`F3,` MS#,`_S,S`#,S,S,S9C,SF3,SS#,S_S-F`#-F,S-F9C-FF3-FS#-F_S.9`#.9 M,S.99C.9F3.9S#.9_S/,`#/,,S/,9C/,F3/,S#/,_S/_`#/_,S/_9C/_F3/_ MS#/__V8``&8`,V8`9F8`F68`S&8`_V8S`&8S,V8S9F8SF68SS&8S_V9F`&9F M,V9F9F9FF69FS&9F_V:9`&:9,V:99F:9F6:9S&:9_V;,`&;,,V;,9F;,F6;, MS&;,_V;_`&;_,V;_9F;_F6;_S&;__YD``)D`,YD`9ID`F9D`S)D`_YDS`)DS M,YDS9IDSF9DSS)DS_YEF`)EF,YEF9IEFF9EFS)EF_YF9`)F9,YF99IF9F9F9 MS)F9_YG,`)G,,YG,9IG,F9G,S)G,_YG_`)G_,YG_9IG_F9G_S)G__\P``,P` M,\P`9LP`FO;)U3UMZ][MV2/OE*Q_"Q_^=R_QD\:/*U\>5BWSVXZ?2Y]N-"-L MZA"=8]_.W>6*Z]T?KO\.3[Z\Q(SFD8-/SYY[\O84W\//O![C_+;U[RM$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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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			310,500
	Municipal loan agreements(3)			15,464			15,464
	Senior subordinated notes			225,000			360,338	(4)

		Total debt		448,964			701,302

Stockholders’ equity:
Common stock				—			—
Additional paid-in capital				141,000			175,300	(5)
Retained earnings				9,201			9,201
Accumulated other comprehensive loss				(116	)		(116	)

		Total stockholders’ equity		150,085			184,385

		Total capitalization	$	599,049		$	885,687


											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		$	(12,177	)(1)	$	100
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			(12,177	)		175,128
Property and equipment, net			113,903			45,499			(42,603	)(2)		116,799
Other assets:
Goodwill			391,707			64,919			132,411	(3)		588,037
Intangible assets, less accumulated amortization			52,843			106,014			—			158,857
Other			39,387			3,607			7,413	(4)		50,407

	Total other assets		483,937			174,540			139,824			798,301

	Total assets	$	739,864		$	265,320		$	85,044		$	1,090,228

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			175,238	(6)		698,542

	Total liabilities		589,779			146,226			169,838			905,843
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		$	85,044		$	1,090,228


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		24
Forward-Looking Statements		33
The Transactions		34
Use of Proceeds		38
Capitalization		39
Unaudited Pro Forma Financial Information		40
Selected Historical Financial Information		55
Management’s Discussion and Analysis of Financial Condition and Results of Operations		58
Industry Overview and Trends		75
Business		77
Management		87
Security Ownership of Certain Beneficial Owners and Management		95
Certain Relationships and Related Transactions		97
Description of Other Indebtedness		100
The Exchange Offer		104
Description of the Notes		112
U.S. Federal Income Tax Considerations		158
Plan of Distribution		163
Legal Matters		164
Experts		164
Where You Can Find More Information		164
Index to Financial Statements		F-1
CERTIFICATE OF INCORPORATION
BYLAWS
CERTIFICATE OF INCORPORATION
BYLAWS
CERTIFICATE OF INCORPORATION
BYLAWS
CERTIFICATE OF INCORPORATION
BYLAWS
CERTIFICATE OF INCORPORATION
BYLAWS
FIRST SUPPLEMENTAL INDENTURE
OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
OPINION OF LATHROP & GAGE L.C.
SECOND AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED PHANTOM STOCK PLAN
CONSENT OF ERNST & YOUNG LLP
CONSENT OF ERNST & YOUNG LLP
CONSENT OF ERNST & YOUNG LLP


	•	the Ply Gem Acquisition;

	•	the Ply Gem Equity Contribution;

	•	the Ply Gem Bank Financing; and

	•	the offering of the initial notes.


(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):


									Post-Nortek
									Recapital-
	Pre-Nortek Recapitalization								ization

											Pre-Nortek
	Fiscal Year Ended										Recapital-
	December 31,					Jan. 1, 2003			Jan. 10, 2003		ization Jan. 1,
						to Jan. 9,			to Dec. 31,		2003 to Jan. 9,
(Dollars in	2001			2002		2003			2003		2003
thousands)
Net earnings (loss)	$	(15,000	)	$	19,200	$	(900	)	$	11,000	$	(900	)
Interest expense, net		26,195			33,508		974			32,921		974
Provision (benefit) for income taxes		6,200			8,100		(500	)		7,200		(500	)
Depreciation and amortization expense		21,044			14,071		327			14,702		327

Ply Gem EBITDA	$	38,439		$	74,879	$	(99	)	$	65,823	$	99


(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.


	(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 Adjusted 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.


(6)	Net cash provided by (used in) operating activities, provided by (used in) investing activities and provided by (used in) financing activities for the pro forma six months ended July 3, 2004 and the full year ended December 31, 2003 were calculated based on the sum of such amounts for their respective combined periods.

(7)	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, 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.

(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)	Adjusted 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 Adjusted EBITDA differently and, as a result, our measure of Adjusted MW EBITDA may not be directly comparable to Adjusted EBITDA of other companies. Adjusted 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 Adjusted 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. Adjusted MW EBITDA excludes certain items which we believe are not indicative of our core operating results. Although we use Adjusted MW EBITDA as a financial measure to assess the performance of our business, the use of Adjusted MW EBITDA is limited. Adjusted 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 Adjusted MW EBITDA excludes these costs necessary to the operation of our business, it has material limitations. We therefore utilize Adjusted MW EBITDA as a useful alternative to net earnings as an indicator of our operating performance, however, Adjusted 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


	(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.*


	*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.*


	*We are controlled by our principal equity holder, which has the power to take unilateral action and whose interests in our business could conflict with yours.*


	*Your right to receive payments on the exchange notes is subordinated to our senior debt.*