Exhibit 10.4


    Exhibit
      10.4

     

    PLY
      GEM PRIME HOLDINGS, INC.

     

    2004
      STOCK OPTION PLAN

     

    (Effective
      as of February 12, 2004 and Amended 

    and
      Restated as of February 24, 2006)

    


    1.  Purpose

     

    The
      purpose of the Plan is to provide a means through which the Company and its
      Affiliates may attract able persons to enter and remain in the employ of the
      Company and Affiliates and to provide a means whereby employees, directors
      and
      consultants of the Company and its Affiliates can acquire and maintain Common
      Stock ownership, thereby strengthening their commitment to the welfare of the
      Company and Affiliates and promoting an identity of interest between
      stockholders and these employees.

     

    The
      Plan
      provides for granting Incentive Stock Options and Nonqualified Stock
      Options.

     

    2.  Definitions

     

    The
      following definitions shall be applicable throughout the Plan.

     

    (a)  “Affiliate”
      means (i) any entity that directly or indirectly is controlled by, controls,
      or
      is under common control with the Company and (ii) any entity in which the
      Company has a significant equity interest, in either case as determined by
      the
      Committee.

     

    (b)  “Award”
      means, individually or collectively, any Incentive Stock Option or Nonqualified
      Stock Option.

     

    (c)  “Board”
      means the Board of Directors of the Company.

     

    (d)  “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, nonsolicitation or willful breach of any confidentiality
      requirements set forth in the Stockholder’s Agreement whether or not such
      agreement or requirement is enforceable under applicable law.

     

    (e)  “Code”
      means the Internal Revenue Code of 1986, as amended. Reference in the Plan
      to
      any section of the Code shall be deemed to include any amendments or successor
      provisions to such section and any regulations under such section.

     

    (f)  “Committee”
      means the compensation committee of the Board established under the By-Laws
      of
      the Company, or if no such committee has yet been established, the Board. The
      Committee shall consist of at least two people as the Board may appoint to
      administer the Plan or, if no such committee has been appointed by the Board,
      the Board. On and after the time that the Company becomes subject to the
      Exchange Act, unless the Board is acting as the Committee or the Board
      specifically determines otherwise, each member of the Committee shall, at the
      time he takes any action with respect to an Award under the Plan, be an Eligible
      Director; provided that the mere fact that a Committee member shall fail to
      qualify as an Eligible Director shall not invalidate any Award granted by the
      Committee which Award is otherwise validly granted under the Plan.

     

    (g)  “Common
      Stock” means the common stock, par value $0.01 per share, of the
      Company.

     

    (h)  “Company”
      means, with respect to all periods prior to February 24, 2006, Ply Gem
      Investment Holdings, Inc., a Delaware corporation and, with respect to all
      periods on and after February 24, 2006, Ply Gem Prime Holdings, Inc., a Delaware
      corporation.

     

    (i)  “Date
      of
      Grant” means the date on which the granting of an Award is authorized, or such
      other date as may be specified in such authorization or, if there is no such
      date, the date indicated on the Stock Option Agreement.

     

    (j)  “Disability”
      means, 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..

     

    (k)  “Effective
      Date” means February 12, 2004.

     

    (l)  “Eligible
      Director” means a person who is (i) a “non-employee director” within the meaning
      of Rule 16b-3 under the Exchange Act, or a person meeting any similar
      requirement under any successor rule or regulation and (ii) an “outside
      director” within the meaning of Section 162(m) of the Code, and the Treasury
      Regulations promulgated thereunder; provided,
      however,
      that
      clause (ii) shall apply only on and after the 162(m) Effective Date and only
      with respect to grants of Awards with respect to which the Company’s tax
      deduction could be limited by Section 162(m) of the Code if such clause did
      not
      apply.

     

    (m)  “Eligible
      Person” means any (i) individual regularly employed by the Company or an
      Affiliate who satisfies all of the requirements of Section 6 hereof; (ii)
      director of the Company or an Affiliate; or (iii) consultant or advisor to
      the
      Company or an Affiliate who is entitled to participate in an “employee benefit
      plan” within the meaning of 17 CFR § 230.405 (which, as of the Effective Date,
      includes those who (A) are natural persons and (B) provide bona fide
      services
      to the Company other than in connection with the offer or sale of securities
      in
      a capital-raising transaction, and do not directly or indirectly promote or
      maintain a market for the Company’s securities).

     

    (n)  “Exchange
      Act” means the Securities Exchange Act of 1934, as amended.

     

    (o)  “Fair
      Market Value” on a given date means, except to the extent otherwise provided in
      a Stock Option Agreement, (i) if the Stock is listed on a national securities
      exchange, the mean between the highest and lowest sale prices reported as having
      occurred on the primary exchange with which the Stock is listed and traded
      on
      the date prior to such date, or, if there is no such sale on that date, then
      on
      the last preceding date on which such a sale was reported; (ii) if the Stock
      is
      not listed on any national securities exchange but is quoted in the National
      Market System of the National Association of Securities Dealers Automated
      Quotation System (“NASDAQ”) on a last sale basis, the average between the high
      bid price and low ask price reported on the date prior to such date, or, if
      there is no such sale on that date, then on the last preceding date on which
      a
      sale was reported; or (iii) if the Stock is not listed on a national securities
      exchange nor quoted in the NASDAQ on a last sale basis, the amount determined
      by
      the Committee to be the fair market value based upon a good faith attempt to
      value the Stock accurately.

     

    (p)  “Incentive
      Stock Option” means an Option granted by the Committee to a Participant under
      the Plan which is designated by the Committee as an incentive stock option
      as
      described in Section 422 of the Code.

     

    (q)  “Nonqualified
      Stock Option” means an Option granted by the Committee to a Participant under
      the Plan which is not designated by the Committee as an Incentive Stock Option
      and otherwise meets the requirements set forth herein.

     

    (r)  “162(m)
      Effective Date” means the first date on which Awards granted under the Plan do
      not qualify for an exemption from the deduction limitations of Section 162(m)
      of
      the Code on account of an exemption, or a transition or grandfather
      rule.

     

    (s)  “Option”
      means an award granted under Section 7.

     

    (t)  “Option
      Period” means the period described in Section 7(c).

     

    (u)  “Option
      Price” means the exercise price for an Option as described in Section
      7(a).

     

    (v)  “Participant”
      means an Eligible Person who has been selected by the Committee to participate
      in the Plan and to receive an Award pursuant to Section 6.

     

    (w)  “Plan”
      means this Ply Gem Prime Holdings, Inc. 2004 Stock Option Plan.

     

    (x)  “Securities
      Act” means the Securities Act of 1933, as amended.

     

    (y)  “Subsidiary”
      of a Person means any other Person (i) as to which such Person has the power
      to
      elect a majority of the board of directors (or other board, body or Person
      that
      serves the function of a board of directors) of such other Person or (ii) which
      is included as a subsidiary in the consolidated financial statements of such
      Person in accordance with United States generally accepted accounting principles
      as in effect from time to time. 

     

    (z)  “Stock”
      means the Common Stock or such other authorized shares of stock of the Company
      as the Committee may from time to time authorize for use under the
      Plan.

     

    (aa)  “Stock
      Option Agreement” means the agreement between the Company and a Participant who
      has been granted an Option pursuant to Section 7 which defines the rights and
      obligations of the parties as required in Section 7(d).

     

    3.  Effective
      Date, Duration and Shareholder Approval

     

    The
      Plan
      is effective as of the Effective Date. The validity and exercisability of any
      and all Awards granted pursuant to the Plan on and after the 162(m) Effective
      Date is contingent upon approval of the Plan by the shareholders of the Company
      in a manner intended to comply with the shareholder approval requirements of
      Section 162(m) of the Code. No Option shall be treated as an Incentive Stock
      Option unless the Plan has been approved by the shareholders of the Company
      in a
      manner intended to comply with the shareholder approval requirements of Section
      422(b)(i) of the Code; provided that any Option intended to be an Incentive
      Stock Option shall not fail to be effective solely on account of a failure
      to
      obtain such approval, but rather such Option shall be treated as a Nonqualified
      Stock Option unless and until such approval is obtained.

     

    The
      expiration date of the Plan, on and after which no Awards may be granted
      hereunder, shall be the tenth anniversary of the Effective Date; provided,
      however,
      that
      the administration of the Plan shall continue in effect until all matters
      relating to the payment of Awards previously granted have been
      settled.

     

    4.  Administration

     

    The
      Committee shall administer the Plan. The majority of the members of the
      Committee shall constitute a quorum. The acts of a majority of the members
      present at any meeting at which a quorum is present or acts approved in writing
      by a majority of the Committee shall be deemed the acts of the
      Committee.

     

    (a)  Subject
      to the provisions of the Plan and applicable law, the Committee shall have
      the
      power, in addition to other express powers and authorizations conferred on
      the
      Committee by the Plan, to: (i) designate Participants; (ii) determine the type
      or types of Awards to be granted to a Participant; (iii) determine the number
      of
      shares of Stock to be covered by, or with respect to which payments, rights,
      or
      other matters are to be calculated in connection with Awards; (iv) determine
      the
      terms and conditions of any Awards; (v) determine whether, to what extent,
      and
      under what circumstances Awards may be settled or exercised in cash, shares
      of
      Stock, other securities, other Options, or other property, or canceled,
      forfeited, or suspended and the method or methods by which Awards may be
      settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
      to what extent, and under what circumstances cash, shares of Stock, other
      securities, other Options, other property, and other amounts payable with
      respect to an Award shall be deferred either automatically or at the election
      of
      the holder thereof or of the Committee; (vii) interpret, administer reconcile
      any inconsistency, correct any default and/or supply any omission in the Plan
      and any instrument or agreement relating to, or Award granted under the 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 the Plan; and (ix) make any other determination and take any other action
      specified under the Plan or that the Committee deems necessary or desirable
      for
      the administration of the Plan.

     

    (b)  Unless
      otherwise expressly provided in the Plan, all designations, determinations,
      interpretations, and other decisions under or with respect to the Plan or any
      Award or any documents evidencing any and all Awards granted pursuant to the
      Plan shall be within the sole discretion of the Committee, may be made at any
      time and shall be final, conclusive and binding upon all parties, including,
      without limitation, the Company, any Affiliate, any Participant, any holder
      of
      any Award, and any shareholder.

     

    (c)  No
      member
      of the Committee shall be liable for any action or determination made in good
      faith with respect to the Plan or any Award hereunder.

     

    5.  Grant
      of Awards; Shares Subject to the Plan

     

    The
      Committee may, from time to time, grant Awards of Options to one or more
      Eligible Persons; provided,
      however,
      that:

     

    (a)  Subject
      to Section 9, the aggregate number of shares of Stock in respect of which Awards
      may be granted under the Plan is 184,065 shares;

     

    (b)  Such
      shares shall be deemed to have been issued in payment of Awards whether or
      not
      they are actually delivered. In the event any Award shall be surrendered,
      terminate, expire, or be forfeited, the number of shares of Stock no longer
      subject thereto shall thereupon be released and shall thereafter be available
      for new grants under the Plan;

     

    (c)  Stock
      delivered by the Company in settlement of Awards granted under the Plan may
      be
      authorized and unissued Stock or Stock held in the treasury of the Company
      or
      may be purchased on the open market or by private purchase; and

     

    (d)  On
      and
      after the 162(m) Effective Date, no person may be granted Options under the
      Plan
      during any calendar year with respect to more than 15,000 shares of Stock;
      provided that such number shall be adjusted pursuant to Section 9 only in a
      manner which will not cause the Options granted under the Plan to fail to
      qualify as “performance-based compensation” for purposes of Section 162(m) of
      the Code.

     

    6.  Eligibility

     

    Participation
      shall be limited to Eligible Persons who have entered into a Stock Option
      Agreement or who received written notification from the Committee, or from
      a
      person designated by the Committee, that they have been selected to participate
      in the Plan.

     

    7.  Terms
      of Options

     

    The
      Committee is authorized to grant one or more Incentive Stock Options or
      Nonqualified Stock Options to any Eligible Person; provided,
      however,
      that no
      Incentive Stock Options shall be granted to any Eligible Person who is not
      an
      employee of the Company or a “parent” or “subsidiary” of the Company, as such
      terms are used in Section 422(a)(2) of the Code. Each Option so granted shall
      be
      subject to the following conditions, or to such other conditions as may be
      reflected in the applicable Stock Option Agreement. In all events, the
      provisions in the applicable Stock Option Agreement shall control the terms
      of
      the Option issued pursuant thereto. If there shall be a conflict between the
      provisions of the Plan and such Stock Option Agreement, the provisions of the
      Plan shall control.

     

    (a)  Option
      Price. The
      Option Price per share of Stock for each Option shall be set by the Committee
      at
      the time of grant but shall not be less than (i) in the case of an
      Incentive Stock Option, and subject to Section 7(e), the Fair Market Value
      of a share of Stock at the Date of Grant, and (ii) in the case of a
      Nonqualified Stock Option, the par value of a share of Stock; provided,
      however,
      that
      all Options granted on and after the 162(m) Effective Date which are intended
      to
      qualify as “performance-based compensation” under Section 162(m) of the
      Code shall have an Option Price per share of Stock no less than the Fair Market
      Value of a share of Stock on the Date of Grant.

     

    (b)  Manner
      of Exercise and Form of Payment. No
      shares
      of Stock shall be delivered pursuant to any exercise of an Option until payment
      in full of the aggregate exercise price therefor is received by the Company.
      Options which have become exercisable may be exercised by delivery of written
      notice of exercise to the Committee accompanied by payment of the Option Price.
      The Option Price shall be payable in cash and/or shares of Stock valued at
      the
      Fair Market Value at the time the Option is exercised (including by means of
      attestation of ownership of a sufficient number of shares of Stock in lieu
      of
      actual delivery of such shares to the Company); provided,
      however,
      that
      such shares are not subject to any pledge or other security interest and have
      either been held by the Participant for six months, previously acquired by
      the
      Participant on the open market or meet such other requirements as the Committee
      may determine necessary in order to avoid an accounting earnings charge in
      respect of the Option) or, in the discretion of the Committee, either (i) in
      other property having a fair market value on the date of exercise equal to
      the
      Option Price, (ii) if there shall be a public market for the Stock, by
      delivering to the Committee a copy of irrevocable instructions to a stockbroker
      to deliver promptly to the Company an amount of loan proceeds, or proceeds
      of
      the sale of the Stock subject to the Option, sufficient to pay the Option Price
      or (iii) by such other method as the Committee may allow. Notwithstanding the
      foregoing, in no event shall a Participant be permitted to exercise an Option
      in
      the manner described in clause (ii) of the preceding sentence if the Committee
      determines that exercising an Option in such manner would violate the
      Sarbanes-Oxley Act of 2002.

     

    (c)  Vesting,
      Option Period and Expiration. Options
      shall vest and become exercisable in such manner and on such date or dates
      determined by the Committee and shall expire after such period, not to exceed
      ten years, as may be determined by the Committee (the “Option Period”);
provided,
      however,
      that
      notwithstanding any vesting dates set by the Committee, the Committee may in
      its
      sole discretion accelerate the exercisability of any Option, which acceleration
      shall not affect the terms and conditions of any such Option other than with
      respect to exercisability. If an Option is exercisable in installments, such
      installments or portions thereof which become exercisable shall remain
      exercisable until the Option expires. Unless otherwise stated in the applicable
      Stock Option Agreement, the Option shall expire earlier than the end of the
      Option Period in the following circumstances:

     

    (i)  If
      prior
      to the end of the Option Period, the Participant’s employment with the Company
      terminates due to a termination by the Company or any Affiliate without Cause
      or
      due to the Participant’s death or Disability, the Option shall expire on the
      earlier of the last day of the Option Period or the date that is three months
      after the date of such termination. In such event, the Option shall remain
      exercisable by the Participant until its expiration, only to the extent the
      Option was vested and exercisable at the time of such termination.

     

    (ii)  If
      the
      Participant ceases employment or service with the Company and Affiliates for
      reasons other than the terminations described in clause (i) above, the Option
      shall expire immediately upon such cessation of employment or
      service.

     

    (d)  Stock
      Option Agreement - Other Terms and Conditions. Each
      Option granted under the Plan shall be evidenced by a Stock Option Agreement,
      which shall contain such provisions as may be determined by the Committee and,
      except as may be specifically stated otherwise in such Stock Option Agreement,
      which shall be subject to the following terms and conditions:

     

    (i)  Each
      Option or portion thereof that is exercisable shall be exercisable for the
      full
      amount or for any part thereof.

     

    (ii)  Each
      share of Stock purchased through the exercise of an Option shall be paid for
      in
      full at the time of the exercise. Each Option shall cease to be exercisable,
      as
      to any share of Stock, when the Participant purchases the share or when the
      Option expires.

     

    (iii)  Subject
      to Section 8(h), Options shall not be transferable by the Participant except
      by
      will or the laws of descent and distribution and shall be exercisable during
      the
      Participant’s lifetime only by him.

     

    (iv)  Each
      Option shall vest and become exercisable by the Participant in accordance with
      the vesting schedule established by the Committee and set forth in the Stock
      Option Agreement evidencing such Option.

     

    (v)  Unless
      otherwise provided in a Stock Option Agreement, prior to the effectiveness
      of
      any Participant’s exercise of an Option, such Participant must enter into the
      Stockholders Agreement, dated as of February 12, 2004, by and among the Company,
      Caxton-Iseman (Ply Gem), L.P. and the other investors and individuals executing
      such Stockholders Agreement, as in effect from time to time.

     

    (vi)  Each
      Stock Option Agreement may contain a provision that, upon demand by the
      Committee for such a representation, the Participant shall deliver to the
      Committee at the time of any exercise of an Option a written representation
      that
      the shares to be acquired upon such exercise are to be acquired for investment
      and not for resale or with a view to the distribution thereof, and any other
      representations deemed necessary by the Committee to ensure compliance with
      all
      applicable federal and state securities laws. Upon such demand, delivery of
      such
      representation prior to the delivery of any shares issued upon exercise of
      an
      Option shall be a condition precedent to the right of the Participant or such
      other person to purchase any shares. In the event certificates for Stock are
      delivered under the Plan with respect to which such investment representation
      has been obtained, the Committee may cause a legend or legends to be placed
      on
      such certificates to make appropriate reference to such representation and
      to
      restrict transfer in the absence of compliance with applicable federal or state
      securities laws.

     

    (vii)  Each
      Incentive Stock Option Agreement shall contain a provision requiring the
      Participant to notify the Company in writing immediately after the Participant
      makes a disqualifying disposition of any Stock acquired pursuant to the exercise
      of such Incentive Stock Option. A disqualifying disposition is any disposition
      (including any sale) of such Stock before the later of (a) two years after
      the
      Date of Grant of the Incentive Stock Option or (b) one year after the date
      the
      Participant acquired the Stock by exercising the Incentive Stock
      Option.

     

    (e)  Incentive
      Stock Option Grants to 10% Stockholders.
      Notwithstanding anything to the contrary in this Section 7, if an Incentive
      Stock Option is granted to a Participant who owns stock representing more than
      ten percent of the voting power of all classes of stock of the Company, the
      Option Period shall not exceed five years from the Date of Grant of such Option
      and the Option Price shall be at least 110 percent of the Fair Market Value
      (on
      the Date of Grant) of the Stock subject to the Option.

     

    (f)  $100,000
      Per Year Limitation for Incentive Stock Options.
      To the
      extent the aggregate Fair Market Value (determined as of the Date of Grant)
      of
      Stock for which Incentive Stock Options are exercisable for the first time
      by
      any Participant during any calendar year (under all plans of the Company)
      exceeds $100,000, such excess Incentive Stock Options shall be treated as
      Nonqualified Stock Options.

     

    (g)  Voluntary
      Surrender. The
      Committee may permit the voluntary surrender of all or any portion of any
      Nonqualified Stock Option, if any, granted under the Plan to be conditioned
      upon
      the granting to the Participant of a new Option for the same or a different
      number of shares as the Option surrendered or require such voluntary surrender
      as a condition precedent to a grant of a new Option to such Participant. Such
      new Option shall be exercisable at an Option Price, during an Option Period,
      and
      in accordance with any other terms or conditions specified by the Committee
      at
      the time the new Option is granted, all determined in accordance with the
      provisions of the Plan without regard to the Option Price, Option Period, or
      any
      other terms and conditions of the Nonqualified Stock Option
      surrendered.

     

    8.  General

     

    (a)  Additional
      Provisions of an Award. Awards
      granted to a Participant under the Plan also may be subject to such other
      provisions (whether or not applicable to Awards granted to any other
      Participant) as the Committee determines appropriate including, without
      limitation, provisions to assist the Participant in financing the purchase
      of
      Stock upon the exercise of Options (provided, that the Committee determines
      that
      providing such financing does not violate the Sarbanes-Oxley Act of 2002),
      provisions for the forfeiture of or restrictions on resale or other disposition
      of shares of Stock acquired under any Award, provisions giving the Company
      the
      right to repurchase shares of Stock acquired under any Award in the event the
      Participant elects to dispose of such shares or terminate employment, provisions
      allowing the Participant to elect to defer the receipt of payment in respect
      of
      Awards for a specified period or until a specified event and provisions to
      comply with federal and state securities laws and federal and state tax
      withholding requirements. Any such provisions shall be reflected in the Stock
      Option Agreement.

     

    (b)  Privileges
      of Stock Ownership. Except
      as
      otherwise specifically provided in the Plan, no person shall be entitled to
      the
      privileges of ownership in respect of shares of Stock which are subject to
      Awards hereunder until such shares have been issued to that person.

     

    (c)  Government
      and Other Regulations. The
      obligation of the Company to make payment of Awards in 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 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 Stock to be offered or sold under the Plan. If the
      shares of Stock offered for sale or sold under the Plan are offered or sold
      pursuant to an exemption from registration under the Securities Act, the Company
      may restrict the transfer of such shares and may legend the Stock certificates
      representing such shares in such manner as it deems advisable to ensure the
      availability of any such exemption.

     

    (d)  Tax
      Withholding.

     

    (i)  A
      Participant may be required to pay to the Company or any Affiliate and the
      Company or any Affiliate shall have the right and is hereby authorized to
      withhold from any shares of Stock or other property deliverable under any Award
      or from any compensation or other amounts owing to a Participant the amount
      (in
      cash, Stock or other property) of any required tax withholding and payroll
      taxes
      in respect of an Award, its exercise, or any payment or transfer under an Award
      or under the 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.

     

    (ii)  Without
      limiting the generality of clause (i) above, if so provided in Stock Option
      Agreement, a Participant may satisfy, in whole or in part, the foregoing
      withholding liability (but no more than the minimum required withholding
      liability) by delivery of shares of Stock owned by the Participant with a Fair
      Market Value equal to such withholding liability (provided that such shares
      are
      not subject to any pledge or other security interest and have either been held
      by the Participant for six months, previously acquired by the Participant on
      the
      open market or meet such other requirements as the Committee may determine
      necessary in order to avoid an accounting earnings charge), or by having the
      Company withhold from the number of shares of Stock otherwise issuable pursuant
      to the exercise or settlement of the Award a number of shares with a Fair Market
      Value equal to such withholding liability.

     

    (e)  Claim
      to Awards and Employment Rights. No
      employee of the Company or an Affiliate, or other person, shall have any claim
      or right to be granted an Award under the Plan or, having been selected for
      the
      grant of an Award, to be selected for a grant of any other Award. Neither the
      Plan nor any action taken hereunder shall be construed as giving any Participant
      any right to be retained in the employ or service of the Company or an
      Affiliate.

     

    (f)  No
      Liability of Committee Members. No
      member
      of the Committee shall be personally liable by reason of any contract or other
      instrument executed by such member or on his behalf in his capacity as a member
      of the Committee nor for any mistake of judgment made in good faith, and the
      Company shall indemnify and hold harmless each member of the Committee and
      each
      other employee, officer or director of the Company to whom any duty or power
      relating to the administration or interpretation of the Plan may be allocated
      or
      delegated, against any cost or expense (including counsel fees) or liability
      (including any sum paid in settlement of a claim) arising out of any act or
      omission to act in connection with the Plan unless arising out of such person’s
      own fraud or willful bad faith; provided,
      however,
      that
      approval of the Board shall be required for the payment of any amount in
      settlement of a claim against any such person. The foregoing right of
      indemnification shall not be exclusive of any other rights of indemnification
      to
      which such persons may be entitled under the Company’s Articles of Incorporation
      or By-Laws, as a matter of law, or otherwise, or any power that the Company
      may
      have to indemnify them or hold them harmless.

     

    (g)  Governing
      Law. The
      Plan
      shall be governed by and construed in accordance with the internal laws of
      the
      State of Delaware without regard to the principles of conflicts of law thereof,
      or principles of conflicts of laws of any other jurisdiction which could cause
      the application of the laws of any jurisdiction other than the State of
      Delaware.

     

    (h)  Funding.
      No
      provision of the Plan shall require the Company, for the purpose of satisfying
      any obligations under the Plan, to purchase assets or place any assets in a
      trust or other entity or otherwise to segregate any assets, nor shall the
      Company maintain separate bank accounts, books, records or other evidence of
      the
      existence of a segregated or separately maintained or administered fund for
      such
      purposes. Participants shall have no rights under the Plan other than as
      unsecured general creditors of the Company, except that insofar as they may
      have
      become entitled to payment of additional compensation by performance of
      services, they shall have the same rights as other employees under general
      law.

     

    (i)  Nontransferability.
      Each
      Award shall be exercisable only by the Participant during the Participant’s
      lifetime, or, if permissible under applicable law, by the Participant’s legal
      guardian or representative. No Award may be assigned, alienated, pledged,
      attached, sold or otherwise transferred or encumbered by a Participant otherwise
      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 or an Affiliate.

     

    (j)  Reliance
      on Reports. Each
      member of the Committee and each member of the Board shall be fully justified
      in
      relying, acting or failing to act, and shall not be liable for having so relied,
      acted or failed to act in good faith, upon any report made by the independent
      public accountant of the Company and Affiliates and upon any other information
      furnished in connection with the Plan by any person or persons other than
      himself.

     

    (k)  Relationship
      to Other Benefits. No
      payment under the Plan shall be taken into account in determining any benefits
      under any pension, retirement, profit sharing, group insurance or other benefit
      plan of the Company or any Affiliate except as otherwise specifically provided
      in such other plan.

     

    (l)  Expenses.
      The
      expenses of administering the Plan shall be borne by the Company and
      Affiliates.

     

    (m)  Pronouns.
      Masculine
      pronouns and other words of masculine gender shall refer to both men and
      women.

     

    (n)  Titles
      and Headings. The
      titles and headings of the sections in the Plan are for convenience of reference
      only, and in the event of any conflict, the text of the Plan, rather than such
      titles or headings shall control.

     

    (o)  Termination
      of Employment. For
      all
      purposes herein, a person who transfers from employment or service with the
      Company to employment or service with an Affiliate or vice versa shall not
      be
      deemed to have terminated employment or service with the Company or an
      Affiliate.

     

    (p)  Severability.
      If any
      provision of the Plan or any Stock Option Agreement is or becomes or is deemed
      to be invalid, illegal, or unenforceable in any jurisdiction or as to any person
      or Award, or would disqualify the Plan or any Award under any law deemed
      applicable by the Committee, such provision shall be construed or deemed amended
      to conform to the applicable laws, or if it cannot be construed or deemed
      amended without, in the determination of the Committee, materially altering
      the
      intent of the Plan or the Award, such provision shall be stricken as to such
      jurisdiction, person or Award and the remainder of the Plan and any such Award
      shall remain in full force and effect.

     

    


     

    


     

    9.  Changes
      in Capital Structure

     

    Awards
      granted under the Plan and any agreements evidencing such awards, the maximum
      number of shares of Stock subject to all Options stated in Section 5(a) and
      the
      maximum number of shares of Stock with respect to which any one person may
      be
      granted Options during any period stated in Section 5(d) shall be subject to
      adjustment or substitution, as determined by the Committee in its sole
      discretion, as to the number, price or kind of a share of Stock or other
      consideration subject to such Awards or as otherwise determined by the Committee
      to be equitable (i) in the event of changes in the outstanding Stock or in
      the
      capital structure of the Company by reason of stock or extraordinary cash
      dividends, stock splits, reverse stock splits, recapitalization,
      reorganizations, mergers, consolidations, combinations, exchanges, or other
      relevant changes in capitalization occurring after the Date of Grant of any
      such
      Award or (ii) in the event of any change in applicable laws or any change in
      circumstances which results in or would result in any substantial dilution
      or
      enlargement of the rights granted to, or available for, Participants, or which
      otherwise warrants equitable adjustment because it interferes with the intended
      operation of the Plan. Any adjustment in Incentive Stock Options under this
      Section 9 shall be made only to the extent not constituting a “modification”
within the meaning of Section 424(h)(3) of the Code, and any adjustments under
      this Section 9 shall be made in a manner which does not adversely affect the
      exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further,
      with respect to Awards granted on and after the 162(m) Effective Date which
      are
      intended to qualify as “performance-based compensation” under
      Section 162(m) of the Code, such adjustments or substitutions shall be made
      only to the extent that the Committee determines that such adjustments or
      substitutions may be made without causing Awards granted under the Plan to
      fail
      to qualify as such “performance-based compensation.” The Company shall give each
      Participant notice of an adjustment hereunder and, upon notice, such adjustment
      shall be conclusive and binding for all purposes.

     

    Notwithstanding
      the above, in the event of any of the following:

     

    A.  The
      Company is merged or consolidated with another corporation or entity and, in
      connection therewith, consideration is received by shareholders of the Company
      in a form other than stock or other equity interests of the surviving
      entity;

     

    B.  All
      or
      substantially all of the stock or assets of the Company are acquired by another
      person;

     

    C.  The
      reorganization or liquidation of the Company; or

     

    D.  The
      Company shall enter into a written agreement to undergo an event described
      in
      clauses A, B or C above,

     

    then
      the
      Committee may, in its sole discretion and upon at least 10 days advance notice
      to the affected persons, cancel any outstanding Awards and cause the holders
      thereof to be paid, in cash or stock, or any combination thereof, the value
      of
      such Awards which are then exercisable based upon the price per share of Stock
      received or to be received by other shareholders of the Company in the event.
      The terms of this Section 9 may be varied by the Committee in any particular
      Stock Option Agreement.

     

    10.  Nonexclusivity
      of the Plan

     

    Neither
      the adoption of this Plan by the Board nor the submission of this Plan to the
      stockholders of the Company for approval shall be construed as creating any
      limitations on the power of the Board to adopt such other incentive arrangements
      as it may deem desirable, including, without limitation, the granting of stock
      options otherwise than under this Plan, and such arrangements may be either
      applicable generally or only in specific cases.

     

    11.  Amendments
      and Termination

     

    (a)  Amendment
      and Termination of the Plan.
      The
      Board may amend, alter, suspend, discontinue, or terminate the Plan or any
      portion thereof at any time; provided
      that no
      such amendment, alteration, suspension, discontinuation or termination shall
      be
      made without shareholder approval if such approval is necessary to comply with
      any tax or regulatory requirement applicable to the Plan (including as necessary
      to prevent Awards granted under the Plan on and after the 162(m) Effective
      Date
      from failing to qualify as “performance-based compensation” for purposes of
      Section 162(m) of the Code); and provided further
      that any
      such amendment, alteration, suspension, discontinuance or termination that
      would
      impair the rights of any Participant or any holder of any Award theretofore
      granted shall not to that extent be effective without the consent of the
      affected Participant or holder.

     

    (b)  Amendment
      of Stock
      Option Agreements.
      The
      Committee may, to the extent consistent with the terms of any Stock Option
      Agreement, waive any conditions or rights under, amend any terms of, or alter,
      suspend, discontinue, cancel or terminate, any Award theretofore granted,
      prospectively or retroactively; provided that any such waiver, amendment,
      alteration, suspension, discontinuance, cancellation or termination that would
      impair the rights of any Participant in respect of any Award theretofore granted
      shall not to that extent be effective without the consent of the affected
      Participant.

     

    *
      *
      *

     

    As
      adopted by the Board of Directors of

    Ply
      Gem
      Prime Holdings, Inc. as of February 24, 2006.