Document:

THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE  UPON  EXERCISE OF THIS
WARRANT  HAVE  BEEN  ACQUIRED  FOR  INVESTMENT  PURPOSES  ONLY  AND  MAY  NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") SHALL HAVE BECOME  EFFECTIVE WITH RESPECT THERETO OR (ii)
RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL  REASONABLY  SATISFACTORY TO THE
COMPANY  TO THE  EFFECT  THAT  REGISTRATION  UNDER  THE ACT IS NOT  REQUIRED  IN
CONNECTION WITH SUCH PROPOSED  TRANSFER NOR IS SUCH TRANSFER IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED UPON ANY WARRANT
ISSUED IN EXCHANGE FOR THIS WARRANT OR ANY SHARES OF COMMON STOCK  ISSUABLE UPON
EXERCISE OF THIS WARRANT.

                                     FORM OF
                        WARRANT TO PURCHASE COMMON STOCK

                                       OF

                          GVI SECURITY SOLUTIONS, INC.

      This is to certify that, FOR VALUE RECEIVED,  _________________ or assigns
("Holder"), is entitled to purchase,  subject to the provisions of this Warrant,
from GVI SECURITY  SOLUTIONS,  INC.,  a Delaware  corporation  (the  "Company"),
__________ fully paid, validly issued and nonassessable  shares of common stock,
$.001 par value,  of the Company  ("Common  Stock") at a price of _________  per
share  at any  time  or from  time to time  during  the  five-year  period  (the
"Exercise Period")  commencing on __________ __, 200_ (the "Issuance Date"). The
number of  shares  of Common  Stock to be  received  upon the  exercise  of this
Warrant and the price to be paid for each share of Common  Stock may be adjusted
from  time to time  as  hereinafter  set  forth.  The  shares  of  Common  Stock
deliverable  upon  such  exercise,  and as  adjusted  from  time  to  time,  are
hereinafter  sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted  from time to time
is hereinafter sometimes referred to as the "Exercise Price."

      (a)   EXERCISE OF WARRANT; CANCELLATION OF WARRANT.

            (1) This Warrant may be exercised in whole or in part at any time or
from time to time during the Exercise Period; provided,  however, that if either
such day is a day on which  banking  institutions  in the  State of New York are
authorized by law to close,  then on the next  succeeding day which shall not be
such a day.

            (2) This  Warrant may be  exercised by  presentation  and  surrender
hereof to the Company at its  principal  office with the  Purchase  Form annexed
hereto duly executed and  accompanied  by payment of the Exercise  Price for the
number of Warrant Shares  specified in such form. As soon as  practicable  after
each such exercise of this Warrant,  but not later than seven (7) days following
the receipt of good and available  funds, the Company shall issue and deliver to
the Holder a certificate  or certificate  for the Warrant  Shares  issuable upon
such  exercise,  registered in the name of the Holder or its  designee.  If this

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Warrant should be exercised in part only,  the Company shall,  upon surrender of
this Warrant for cancellation,  execute and deliver a new Warrant evidencing the
rights of the Holder  thereof to  purchase  the  balance of the  Warrant  Shares
purchasable  thereunder.  Upon  receipt by the  Company  of this  Warrant at its
office in proper form for exercise,  the Holder shall be deemed to be the holder
of  record  of  the  shares  of  Common  Stock   issuable  upon  such  exercise,
notwithstanding  that the stock  transfer  books of the  Company  shall  then be
closed or that  certificates  representing such shares of Common Stock shall not
then be physically delivered to the Holder.

      (b)   RESERVATION  OF SHARES.  The Company  shall at all times reserve for
issuance  and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.

      (c)  FRACTIONAL   SHARES.  No  fractional  shares  or  scrip  representing
fractional  shares  shall be issued  upon the  exercise  of this  Warrant.  With
respect to any  fraction of a share  called for upon any  exercise  hereof,  the
Company  shall  pay to the  Holder  an  amount  in cash  equal to such  fraction
multiplied by the current market value of the shares of Common Stock, determined
as follows:

            (1)   If  the  Common  Stock  is  listed  on a  national  securities
exchange or admitted to unlisted  trading  privileges on such exchange or listed
for trading on the Nasdaq National Market, the current market value shall be the
last  reported  sale price of the Common Stock on such exchange or market on the
last  business  day prior to the date of exercise of this  Warrant or if no such
sale is made on such day,  the average of the  closing bid and asked  prices for
such day on such exchange or market; or

            (2)   If the Common  Stock is not so listed or  admitted to unlisted
trading  privileges,  but is traded on the Nasdaq SmallCap  Market,  the current
market  value shall be the average of the closing bid and asked  prices for such
day on such market and if the Common Stock is not so traded,  the current market
value shall be the mean of the last  reported bid and asked  prices  reported by
the NASD OTC Bulletin Board or the Pink Sheets, LLC, as applicable,  on the last
business day prior to the date of the exercise of this Warrant; or

            (3)   If the Common  Stock is not so listed or  admitted to unlisted
trading  privileges  and bid and asked prices are not so  reported,  the current
market value shall be an amount,  not less than book value thereof as at the end
of the most recent  fiscal year of the Company  ending  prior to the date of the
exercise  of  the  Warrant,  determined  in  such  reasonable  manner  as may be
prescribed by the Board of Directors of the Company.

      (d)   EXCHANGE,  TRANSFER,  ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable,  without expense,  at the option of the Holder,  upon presentation
and  surrender  hereof to the  Company  or at the  office of its stock  transfer
agent,  if any, for other  warrants of  different  denominations  entitling  the
holder  thereof to purchase in the aggregate the same number of shares of Common
Stock  purchasable  hereunder.  Upon surrender of this Warrant to the Company at
its principal  office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new

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<PAGE>

Warrant in the name of the assignee  named in such  instrument of assignment and
this  Warrant  shall  promptly  be  cancelled.  This  Warrant  may be divided or
combined  with other  warrants  which carry the same  rights  upon  presentation
hereof at the  principal  office of the  Company  or at the  office of its stock
transfer agent, if any,  together with a written notice specifying the names and
denominations  in which new  Warrants  are to be issued and signed by the Holder
hereof.  The term "Warrant" as used herein includes any Warrants into which this
Warrant  may be divided or  exchanged.  Upon  receipt by the Company of evidence
satisfactory  to it of the  loss,  theft,  destruction  or  mutilation  of  this
Warrant,  and  (in  the  case of  loss,  theft  or  destruction)  of  reasonably
satisfactory  indemnification,  and  upon  surrender  and  cancellation  of this
Warrant,  if  mutilated,  the Company  will execute and deliver a new Warrant of
like  tenor  and  date.  Any such  new  Warrant  executed  and  delivered  shall
constitute  an  additional  contractual  obligation  on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

      (e)   RIGHTS OF THE HOLDER.  The Holder  shall not, by virtue  hereof,  be
entitled to any rights of a shareholder in the Company, either at law or equity,
and the rights of the Holder are limited to those  expressed  in the Warrant and
are not enforceable against the Company except to the extent set forth herein.

      (f)   [THIS  SECTION  ONLY IF NO  PLACEMENT  BY APRIL 1,  2005]  [DOWNWARD
ADJUSTMENT.  IN THE EVENT THE SUBORDINATED  SECURED PROMISSORY NOTE (THE "NOTE")
DATED AS OF  OCTOBER  29,  2004  ISSUED  TO THE  HOLDER IN  CONNECTION  WITH THE
ISSUANCE  OF THIS  WARRANT  IS NOT REPAID IN FULL,  PRIOR TO JULY 1,  2005,  THE
EXERCISE PRICE SHALL BE DECREASED (BUT NOT INCREASED),  IF APPLICABLE,  TO EQUAL
75% OF THE  AVERAGE  OF THE  CLOSING  BID PRICE OF THE  COMMON  STOCK FOR THE 10
TRADING DAYS IMMEDIATELY PRECEDING JULY 1, 2005, AS REPORTED BY THE NASDAQ STOCK
MARKET,  THE  NASD OTC  BULLETIN  BOARD,  THE PINK  SHEETS  LLC,  OR SUCH  OTHER
PRINCIPAL  MARKET  ON WHICH THE  COMMON  STOCK IS THEN  TRADED  OR  QUOTED  (THE
"APPLICABLE  MARKET"),  AND (II) IN THE  EVENT  THE NOTE IS NOT  REPAID IN FULL,
PRIOR TO  OCTOBER  1, 2005,  THE  EXERCISE  PRICE  SHALL BE  DECREASED  (BUT NOT
INCREASED),  IF  APPLICABLE,  TO EQUAL TO 75% OF THE  AVERAGE OF THE CLOSING BID
PRICE OF THE COMMON STOCK FOR THE 10 TRADING DAYS IMMEDIATELY  PRECEDING OCTOBER
1, 2005,  AS REPORTED BY THE  APPLICABLE  MARKET.  WHENEVER THE  EXERCISE  PRICE
PAYABLE UPON EXERCISE OF THIS WARRANT IS ADJUSTED PURSUANT TO THIS SECTION,  THE
NUMBER OF  WARRANT  SHARES  PURCHASABLE  UPON  EXERCISE  OF THIS  WARRANT  SHALL
SIMULTANEOUSLY BE ADJUSTED BY MULTIPLYING THE NUMBER OF WARRANT SHARES INITIALLY
ISSUABLE  UPON  EXERCISE OF THIS WARRANT BY THE EXERCISE  PRICE IN EFFECT ON THE
DATE HEREOF AND  DIVIDING  THE PRODUCT SO OBTAINED  BY THE  EXERCISE  PRICE,  AS
ADJUSTED.]

      (g)   ANTI-DILUTION  PROVISIONS.  The Exercise Price in effect at any time
and the number  and kind of  securities  purchasable  upon the  exercise  of the
Warrants shall be subject to adjustment  from time to time upon the happening of
certain events as follows:

            (1)   In case the Company shall  hereafter (i) declare a dividend or
            make a  distribution  on its  outstanding  shares of Common Stock in
            shares of Common Stock, (ii) subdivide or reclassify its outstanding
            shares of Common  Stock into a greater  number of  shares,  or (iii)
            combine or reclassify its outstanding shares of Common Stock into a

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<PAGE>

            smaller  number of shares,  the Exercise Price in effect at the time
            of the  record  date for such  dividend  or  distribution  or of the
            effective date of such subdivision,  combination or reclassification
            shall be  adjusted so that it shall  equal the price  determined  by
            multiplying  the Exercise  Price by a fraction,  the  denominator of
            which  shall be the  number of shares  of Common  Stock  outstanding
            after giving effect to such action, and the numerator of which shall
            be the  number of shares of  Common  Stock  outstanding  immediately
            prior to such action.  Such  adjustment  shall be made  successively
            whenever any event listed above shall occur.

            (2)   Whenever the  Exercise  Price  payable  upon  exercise of each
            Warrant is adjusted  pursuant to Subsection (1) above, the number of
            Warrant  Shares  purchasable  upon  exercise of this  Warrant  shall
            simultaneously  be  adjusted  by  multiplying  the number of Warrant
            Shares  initially  issuable  upon  exercise  of this  Warrant by the
            Exercise Price in effect on the date hereof and dividing the product
            so obtained by the Exercise Price, as adjusted.

            (3)   No adjustment in the Exercise  Price shall be required  unless
            such  adjustment  would  require an increase or decrease of at least
            two  cents  ($0.02)  in such  price;  provided,  however,  that  any
            adjustments  which by reason of this Subsection (3) are not required
            to be made shall be carried  forward  and taken into  account in any
            subsequent   adjustment   required   to  be  made   hereunder.   All
            calculations  under this  Section  (g) shall be made to the  nearest
            cent or to the nearest one-hundredth of a share, as the case may be.
            Anything in this  Section (g) to the contrary  notwithstanding,  the
            Company shall be entitled,  but shall not be required,  to make such
            changes in the Exercise Price, in addition to those required by this
            Section (g), as it shall determine,  in its sole  discretion,  to be
            advisable  in order that any dividend or  distribution  in shares of
            Common Stock, or any subdivision, reclassification or combination of
            Common Stock,  hereafter made by the Company shall not result in any
            Federal  income tax  liability  to the  holders  of Common  Stock or
            securities convertible into Common Stock (including Warrants).

            (4)   In the event  that at any time,  as a result of an  adjustment
            made  pursuant to Subsection  (1) above,  the Holder of this Warrant
            thereafter  shall  become  entitled  to  receive  any  shares of the
            Company,  other than  Common  Stock,  thereafter  the number of such
            other shares so  receivable  upon  exercise of this Warrant shall be
            subject to adjustment  from time to time in a manner and on terms as
            nearly  equivalent as practicable to the provisions  with respect to
            the Common  Stock  contained  in  Subsections  (1) to (4)  inclusive
            above.

            (5)   Irrespective  of any  adjustments in the Exercise Price or the
            number or kind of shares  purchasable upon exercise of this Warrant,
            Warrants  theretofore  or thereafter  issued may continue to express
            the same  price and  number  and kind of shares as are stated in the
            similar Warrants initially issuable pursuant to this Agreement.

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<PAGE>

      (h)   NOTICES  TO  WARRANT  HOLDERS.  So  long as this  Warrant  shall  be
outstanding,  (i) if the Company shall pay any dividend or make any distribution
upon the  Common  Stock or (ii) if the  Company  shall  offer to the  holders of
Common Stock for  subscription or purchase by them any share of any class or any
other   rights  or  (iii)  if  any  capital   reorganization   of  the  Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation,  sale, lease or transfer of all or
substantially  all  of  the  property  and  assets  of the  Company  to  another
corporation, or voluntary or involuntary dissolution,  liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified  mail to the Holder,  at least  fifteen days prior the
date  specified in (x) or (y) below,  as the case may be, a notice  containing a
brief  description  of the  proposed  action and stating the date on which (x) a
record is to be taken for the purpose of such dividend,  distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution,  liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other  securities
shall receive cash or other  property  deliverable  upon such  reclassification,
reorganization,  consolidation,  merger, conveyance, dissolution, liquidation or
winding up.

      (i)   RECLASSIFICATION,   REORGANIZATION   OR  MERGER.   In  case  of  any
reclassification,  capital  reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another  corporation (other than a merger with a subsidiary
in which  merger the Company is the  continuing  corporation  and which does not
result  in any  reclassification,  capital  reorganization  or other  change  of
outstanding  shares of Common Stock of the class  issuable upon exercise of this
Warrant) or in case of any sale,  lease or conveyance to another  corporation of
the property of the Company as an entirety,  the Company  shall,  as a condition
precedent to such transaction, cause effective provisions to be made so that the
Holder shall have the right  thereafter by  exercising  this Warrant at any time
prior to the  expiration  of the  Warrant,  to  purchase  the kind and amount of
shares  of  stock  and  other  securities  and  property  receivable  upon  such
reclassification,   capital  reorganization  and  other  change,  consolidation,
merger,  sale or  conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant  immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include  provision for adjustments which shall be as nearly
equivalent  as may  be  practicable  to the  adjustments  provided  for in  this
Warrant.  The foregoing  provisions of this Section (i) shall similarly apply to
successive  reclassifications,  capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In
the  event  that  in  connection  with  any  such  capital   reorganization   or
reclassification,  consolidation,  merger, sale or conveyance, additional shares
of Common  Stock  shall be  issued  in  exchange,  conversion,  substitution  or
payment,  in whole or in part,  for a security of the Company  other than Common
Stock,  any such issue shall be treated as an issue of Common  Stock  covered by
the provisions of Subsection (1) of Section (g) hereof.

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<PAGE>

                                          GVI SECURITY SOLUTIONS, INC.

                                          By:___________________________________
                                             Name:  Nazzareno E. Paciotti
                                             Title: Chief Executive Officer and
                                                    Chief Financial Officer

Dated: __________ __, 200_

                                       6
<PAGE>

KRONISHLIEB 561151v6
                                  PURCHASE FORM

                                                  Dated:________________________

      The undersigned  hereby  irrevocably elects to exercise the within Warrant
to the extent of  purchasing  ________  shares of Common  Stock and hereby makes
payment of _________ in payment of the actual exercise price thereof.

                     INSTRUCTIONS FOR REGISTRATION OF STOCK

Name:_____________________________________
(Please typewrite or print in block letters)

Address:__________________________________

Signature:________________________________

                                 ASSIGNMENT FORM

      FOR VALUE RECEIVED,  _____________________________  hereby sells,  assigns
and transfers unto

Name:_____________________________________
(Please typewrite or print in block letters)

Address:__________________________________

the right to purchase Common Stock  represented by this Warrant to the extent of
shares  as to which  such  right is  exercisable  and  does  hereby  irrevocably
constitute  and  appoint  Attorney,  to  transfer  the same on the  books of the
Company with full power of substitution in the premises.

Date:_____________________________________

Signature:________________________________Exhibit 4.5

WMS INDUSTRIES INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

Effective December 1, 2003

ARTICLE I  

 

INTRODUCTION

 

1.1  Name and Purpose. WMS Industries Inc. (the “Company”) hereby establishes the WMS Industries Inc. Nonqualified Deferred Compensation Plan, as set forth herein (the “Plan”), for the benefit of Eligible Individuals. The purpose of the Plan is to provide Eligible Individuals with the opportunity to defer compensation on a pre-tax basis and to receive Company contributions. The Plan is not intended to be “qualified” under section 401(a) of the Code; rather, the Plan is intended to be a deferred compensation plan for non-employee directors and a select group of
management and highly compensated employees, as described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Company intends that the Plan (and any grantor trust described in Article VI) shall be treated as unfunded for tax purposes and for purposes of Title I of ERISA. An Employer’s obligations hereunder, if any, to a Participant (or to a Participant’s Beneficiary) shall be unsecured and shall be a mere promise by the Company to make payments hereunder in the future. A Participant (or the Participant’s Beneficiary) shall be treated as a general, unsecured creditor of the Company. 

 

1.2  Effective Date and Plan Year. The Effective Date of the Plan is December 1, 2003. The Plan will be administered on the basis of a Plan Year. The first Plan Year begins on December 1, 2003 and ends on December 31, 2003. All subsequent Plan Years will be the 12-month period beginning on each January 1 and ending on each December 31. 

 

ARTICLE II

 

DEFINITIONS

 

2.1  “Accounting Date” means each date that the New York Stock Exchange is open for business.

 

2.2  “Beneficiary” means any person, entity, or any combination thereof the Participant names in a Participation Agreement as his or her beneficiary to receive benefits under this Plan in the event of the Participant’s death, or in the absence of any such designation, the Participant’s estate. A Participant may amend his or her Participation Agreement to name a new Beneficiary at
any time.

 

2.3  “Board” means the Board of Directors of the Company.

 

2.4  “Cause” means that the Participant has engaged in an act of willful misconduct, gross negligence, fraud or moral turpitude, as determined by the Company in its sole discretion.

 

2.5  “Change in Control” means the occurrence of any of the following events: (i) during any period of two consecutive years, individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or nomination for election by the Company’s stockholders, of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were directors at the beginning of such period; (ii) the shareholders of the Company approve any liquidation of the Company or any sale or disposition of 50% or more of the assets of the Company; or (iii) the shareholders of the Company approve any merger or consolidation to which the Company is a party (other than a merger with a wholly-owned subsidiary of the Company) as a result of which the persons who were shareholders of the Company immediately prior to the effective date of the merger or consolidation shall have beneficial ownership of less than 50% of the combined voting power for election of directors of the surviving corporation following the effective date of such merger or consolidation.

 

	 
	 	 	 
	

	 

2.6  “Code” means the Internal Revenue Code of 1986, as amended.

 

2.7  “Committee” means the Committee appointed by the Board to administer the Plan pursuant to Article VIII.

 

2.8  “Company” means WMS Industries Inc., a Delaware corporation, and its successors. 

 

2.9  “Company Contributions” means the matching and/or profit sharing contributions made by the Company on behalf of a Participant pursuant to Article V.

 

2.10  “Compensation” means the total cash compensation paid to a Participant for services rendered to an Employer as an employee (as reported on Form W-2) or as a Director (as reported on Form 1099) for a
Plan Year, with any exclusions or inclusions that the Committee may determine in its discretion.

 

2.11  “Deferral Account” means the account maintained by the Committee to record a Participants’ accrued benefit under the Plan.

 

2.12  “Director” means a non-employee member of the Company’s Board.

 

2.13  “Disability” means that a Participant has been determined to be “disabled” under the Company’s long-term disability plan maintained for employees generally; provided, however, that if there is no such plan at the time, the Participant shall be considered “disabled” if he or she is entitled to collect disability benefits from the Social Security
Administration.

 

2.14  “Earnings” means the amount of earnings or losses credited or debited to each Participant’s Deferral Account pursuant to Section 4.3 of the Plan. 

 

2.15  “Effective Date” means December 1, 2003.

 

2.16  “Eligible Individual” means an Employee or a Director who has been selected to participate in the Plan in accordance with Section 3.1. 

 

2.17  “Employee” means a management or highly compensated employee of an Employer who is scheduled to receive Compensation of at least $200,000 during a Plan Year (assuming targeted bonuses are earned).

 

2.18  “Employer” means the Company and any subsidiary or affiliate of that Company that, with the consent of the Company, adopts the Plan for the benefit of its Eligible Employees.

 

2.19  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

	 
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2.20  “Participant” means an Eligible Individual who has executed a Participation Agreement. 

 

2.21  “Participation Agreement” means the agreement executed by an Eligible Individual that includes provisions for the Eligible Individual’s election to defer, the Eligible Individual’s Beneficiary designation, and the Eligible Individual’s investment designation.

 

2.22  “Plan Year” means the calendar year. 

 

2.23  “Qualified Plan” means the WMS Industries Inc. 401(k) Retirement Savings Plan for Non-Union Employees, or its successor. 

 

ARTICLE III

ELIGIBILITY AND PARTICIPATION 

 

3.1  Eligibility. Before the beginning of each Plan Year, the Committee will designate the Directors and Employees who are eligible to participate in the Plan during such Plan Year. An Eligible Individual’s eligibility to make a deferral to the Plan in any given Plan Year does not guarantee that individual the right to make a deferral in any subsequent Plan Year. 

 

3.2  Participation and Cessation of Participation. An Eligible Individual for any Plan Year may make a deferral election on a timely basis as described in Section 4.1, and if the Eligible Individual makes such a deferral election, he or she shall become a Participant and shall remain a Participant until he or she has received a distribution of his or her entire Deferral Account. A Participant in the Plan who separates from service with the Company and all of its subsidiaries and affiliates for any reason will cease to be eligible to defer Compensation under this Plan and will become entitled to
distributions in accordance with Article VII. 

 

ARTICLE IV

ENROLLMENT AND DEFERRAL ELECTIONS 

 

4.1  Participant Elections to Defer. Each Eligible Individual who intends to make an election to defer shall indicate on a Participation Agreement that portion of his or her Compensation (if any) that shall be deferred hereunder, in accordance with the following: 

 

(a)  Limits Established By Committee: All deferrals under the Plan shall be subject to limits established from time to time by the Committee in its discretion, including (but not limited to): (i) limitations on the amounts permitted to be deferred; (ii) limitations on the sources and timing and form of deferrals for all or particular Participants; and (iii) other terms and conditions regarding deferrals under the Plan. Any such limits may be set forth in election forms, instructions or other policies established by the Committee, which may be, but need not be, set forth in writing. 

 

(b)  Timing of Elections. No later than December 1 of the preceding Plan Year, an Eligible Individual may make an election to defer a portion of his or her Compensation that otherwise would be payable in the following Plan Year; provided, however, that a deferral election made in the 2003 Plan Year applicable to Compensation payable in the 2004 Plan Year may be made by December 15, 2003. In the event a Director or Employee first becomes an Eligible Individual after the first day of a Plan Year, such Eligible Individual may make an election within thirty (30) days after the date on which he or she
first became an Eligible Individual in order to defer Compensation for such Plan Year. An Eligible Individual may make an election to defer by completing a Participation Agreement and filing it with the Committee. An election to defer shall remain in effect only for the Plan Year specified in the Participation Agreement. Once filed, the Participation Agreement is irrevocable, subject only to the one-time redeferral provision of Section 7.2. An election to defer shall only be effective with respect to Compensation earned after the date the Participation Agreement is filed with the Committee.

 

	 
	 	 3	 
	

	 

(c)  Period of Deferral. Each election to defer made by an Eligible Individual shall include an election of the date on which the amount of such deferral (together with Earnings thereon) will be distributed. Such date shall be no earlier than January 1 of the third Plan Year following the Plan Year to which the election to defer relates.

 

4.2  Deferral Account. The Committee shall maintain a Deferral Account for each Participant. A Participant’s Deferral Account shall include a subaccount for each deferral made under the Plan and any Company Contributions made to the Participant under Article V of the Plan. Each such subaccount shall reflect: (i) any amount deferred or contributed during a Plan Year, (ii) any amounts distributed during a Plan Year, and (iii) the total Earnings on the Deferral Account described in Section 4.3 for a Plan
Year. Deferred Compensation shall be credited to Participant’s subaccounts as soon as practicable following the date the Compensation would otherwise have been paid to the Participant but for his or her deferral election. A Participant’s Deferral Account shall be nonforfeitable at all times (except as otherwise provided in Section 5.3).

 

4.3  Investment of Deferral Account. A Participant may direct the deemed investment of his or her Deferral Account among investment alternatives determined by the Committee from time to time (collectively, the “Measurement Funds”). Investment elections may be changed by the Participant (but only among such Measurement Funds) on such date and in such manner as determined by the Committee in its sole discretion. A Participant’s Deferral Account shall be credited or debited daily based on the
performance of each Measurement Fund selected by the Participant, as though (i) the Participant’s Compensation deferrals were invested in the Measurement Fund(s) as of the date that they are credited to the Participant’s Deferral Account; and (ii) any distributions made to the Participant that decrease the Participant’s Deferral Account balance ceased being invested in the Measurement Fund(s) on the date the distribution is made. Thereafter, the Measurement Funds that the Participant elects will be revalued daily based on the value of such funds on that date, and the percentages in which the Participant is invested in each of the Measurement Funds. If the Participant has provided no or insufficient investment directions for any part of his or her Deferral Account, that portion of the Deferral Account shall be invested as determined by the Committee.

 

Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Fund(s) are to be used for measurement purposes only, and the allocation of Participant’s Deferral Account to such Measurement Fund(s), and the calculation of amounts to be credited or debited to a Participant’s Deferral Account, shall not be considered or construed in any manner as an actual investment of the Participant’s Deferral Account in any such Measurement Fund(s).

4.4  Adjustment of Participants’ Deferral Account. As of the close of each Accounting Date, the Committee shall:

 

(a)  First, charge to the proper Deferral Accounts all payments or distributions made since the last preceding Accounting Date.

 

	 
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(b)  Next, credit each Participant’s Deferral Account with amounts deferred on behalf of the Participant made since the last preceding Accounting Date; 

 

(c)  Next, credit each Participant’s Deferral Account with any Company Contributions made on behalf of the Participant pursuant to Section 5.1 since the last preceding Accounting Date;

 

(d)  Next, adjust each Participant’s Deferral Account for applicable Earnings since the last preceding Accounting Date.

 

4.5  Additional Limitation on Deferral Elections. Notwithstanding anything in this Plan to the contrary, the Committee may limit a Participant’s deferral election if, as a result of any election, a Participant’s Compensation from the Companies would be insufficient to allow the Participant to make all 401(k) deferrals permitted under the Qualified Plan or 
to cover taxes and withholding applicable to the Participant. 

 

ARTICLE V

COMPANY CONTRIBUTIONS

 

5.1  Company Contributions. To the extent a Participant makes an election to defer Compensation, the Company may make a matching contribution to such Participant in such amount and at such time as determined by the Committee. Additionally, the Company may provide a discretionary profit sharing contribution at any time during the Plan Year, to be allocated as determined by the Committee. All contributions made under this Section 5.1 shall be invested in accordance with Section 4.3 of the Plan. 

 

5.2  Accounting for Company Contributions. Company Contributions on behalf of a Participant will be recorded in a separate subaccount maintained in the Participant’s Deferral Account as of the same date that the underlying deferral is credited to the Participant’s Deferral Account or, in the case of a profit sharing contribution, as of the end of the next payroll period. Such subaccount will be deemed to be invested in accordance with the Participant’s Participation Agreement and will be
adjusted from time to time in the same manner as described in Section 4.4.

 

5.3  Vesting of Company Contributions. Company Contributions attributable to any Plan Year are nonforfeitable at all times; provided, however, if a Participant is terminated for Cause, his or her subaccount attributable to Company Contributions shall be forfeitable at the election of the Committee. 

 

ARTICLE VI

FUNDING

 

6.1  Participants’ Rights Unsecured.  The Plan shall at all times be entirely unfunded and, except as provided in the following paragraph, no provision of this Plan shall at any time be made with respect to segregating any assets of the Company or any other Employer for payment of any benefits hereunder. Participants and Beneficiaries shall at all times have the status of general unsecured creditors of the Employers, and neither Participants nor Beneficiaries shall have any rights in or against any specific assets of the Employers. The Plan constitutes a mere promise by the Employers to make benefit payments in the future.

 

	 
	 	 5	 
	

	 

The Company may establish a reserve of assets to provide funds for the payment of benefits under the Plan. Such reserve may be through a trust account and such reserve shall, at all times, be subject to the claims of general creditors of the Employers and shall otherwise be on such terms and conditions as shall prevent taxation to Participants and Beneficiaries of any amounts held in the reserve or credited to an account prior to the time payments are made. No Participant or Beneficiary shall have any ownership rights in or to any reserve.

ARTICLE VII

TIMING AND FORM OF BENEFIT PAYMENTS

 

7.1  Timing of Distribution. The vested portions of a Participant’s Deferral Account shall be distributed as soon as practicable after the earlier of: 

 

(a)  The deferred distribution date indicated on the Participant’s Participation Agreement in accordance with subsection 4.1(c); 

 

(b)  The date that the Participant terminates employment with the Company; and 

 

(c)  The date the Company terminates the Plan. 

 

7.2  One-time Redeferral Election. No later than one year before a distribution under subsection 7.1(a) is scheduled to occur, a Participant may make a one-time election to defer any portion of such distribution for a period of not less than two years.  

 

7.3  Form of Distribution. Distributions from the Plan will be made in a lump sum or in a series of periodic annual installments over a period not to exceed 10 years, as elected by the Participant at the time he or she files the Participation Agreement for that Plan Year. 

 

7.4  Beneficiaries. A Participant may designate his or her primary Beneficiary or Beneficiaries to receive the amounts as provided herein after his or her death in accordance with the Beneficiary Designation provisions of the Participation Agreement. A Participant also may designate his or her contingent Beneficiary or Beneficiaries to receive amounts as provided herein if all primary Beneficiaries predecease the Participant or have ceased to exist on the date of the Participant’s death. Any
Beneficiary designation shall apply to the Participant’s entire Account Balance and shall revoke all prior designations. In the absence of such a Beneficiary designation, the Company shall pay any such amount to the Participant’s estate.

 

7.5  Unforeseeable Emergency Withdrawals. Notwithstanding any provision of the Plan to the contrary, any portion of a Participant’s Deferral Account not yet distributable under subsection 7.1(a) may be distributed to the Participant upon his or her request if the Participant incurs an unforeseeable emergency. An unforeseeable emergency is a severe financial hardship resulting from a sudden and unexpected illness or accident of the Participant or his or her spouse or dependent (as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, as determined by the Committee in its sole discretion. The amounts distributed pursuant to an unforeseeable emergency may not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which the hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). Withdrawals made pursuant to this paragraph shall be paid as soon as practicable following approval by the Committee.

 

	 
	 	 6	 
	

	 

ARTICLE VIII

ADMINISTRATION

 

8.1  Committee. The Plan shall be administered by the Committee, which shall be a committee of one or more persons appointed by the Board from time to time. As of the effective date, the Committee shall be the Compensation Committee of the Board. 

 

8.2  Committee’s Rights, Duties and Powers. The Committee shall have all the powers necessary and appropriate to discharge its duties under the Plan, which powers shall be exercised in the sole and absolute discretion of the Committee, including, but not limited to, the following:

 

(a)  To construe and interpret the provisions of the Plan and to make factual determinations thereunder, including the power to determine the rights or eligibility under the Plan and amounts of benefits (if any) under the Plan, and to remedy ambiguities, inconsistencies or omissions, and such determinations by the Committee shall be binding on all parties.

 

(b)  To adopt such rules of procedure and regulations as in its opinion may be necessary for the proper and efficient administration of the Plan and as are consistent with the Plan and trust agreement, if any.

 

(c)  To direct the payment of distributions in accordance with the provisions of the Plan.

 

(d)  To employ agents, attorneys, accountants, actuaries or other persons (who also may be employed by the Company) and to delegate to them such powers, rights and duties as the Committee may consider necessary or advisable to carry out administration of the Plan. 

 

(e)  To appoint an investment manager to manage (with power to acquire and dispose of) the assets of the Company that may be used to satisfy benefit obligations under the Plan, and to delegate to any such investment manager all of the powers, authorities and discretions granted to the Committee hereunder or to the trustee of any under Trust established to pay benefits under the Plan.

 

8.3  Interested Committee Member. If a member of the Committee is also a Participant in the Plan, the Committee member may not decide or determine any matter or question concerning his or her participation in the Plan, unless such decision or determination could be made by the Committee member under the Plan if the Committee member were not serving within the Committee.

 

8.4  Expenses.  All costs, charges and expenses reasonably incurred by the Committee will be paid by the Company. No compensation will be paid to a member of the Committee as such.

 

8.5  Claims. Claims for benefits under the Plan shall be made in writing to the Committee or its duly authorized delegate. If the Committee or such delegate wholly or partially denies a claim for benefits, the Committee or, if applicable, its delegate shall, within a reasonable period of time, but no later than ninety (90) days after receipt of the claim, notify the claimant in writing or electronically of the adverse benefit determination. Notice of an adverse benefit determination shall be written in a manner calculated to be understood by the claimant and shall contain:

 

	 
	 	 7	 
	

	 

(a)  the specific reason or reasons for the adverse benefit determination, 

 

(b)  a specific reference to the pertinent Plan provisions upon which the adverse benefit determination is based, 

 

(c)  a description of any additional material or information necessary for the claimant to perfect the claim, together with an explanation of why such material or information is necessary, and 

 

(d)  an explanation of the Plan’s review procedure and the time limits applicable to such procedure including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination. 

 

If the Committee or its delegate determines that an extension of time is necessary for processing the claim, the Committee or its delegate shall notify the claimant in writing of such extension, the special circumstances requiring the extension and the date by which the Committee expects to render the benefit determination. In no event shall the extension exceed a period of ninety (90) days from the end of the initial ninety (90) day period. If notice of the denial of a claim is not furnished in accordance with this paragraph (a) within ninety (90) days after the Committee or its duly authorized delegate receives it (or within one hundred and eighty (180) days after such receipt if the Committee or its delegate determines an extension is necessary), the claim shall be deemed denied and the claimant shall be
permitted to proceed to the review stage described in paragraph (b) below.

Within sixty (60) days after the claimant receives the written or electronic notice of an adverse benefit determination, or the date the claim is deemed denied pursuant to paragraph (a) above, or such later time as shall be deemed reasonable in the sole discretion of the Committee taking into account the nature of the benefit subject to the claim and other attendant circumstances, the claimant may file a written request with the Committee that it conduct a full and fair review of the adverse benefit determination, including the holding of a hearing, if deemed necessary by the Committee. In connection with the claimant’s appeal of the adverse benefit determination, the claimant may review pertinent documents and may submit issues and comments in writing. The
Committee shall render a decision on the appeal promptly, but not later than sixty (60) days after the receipt of the claimant’s request for review, unless special circumstances (such as the need to hold a hearing, if necessary) require an extension of time for processing, in which case the sixty (60) day period may be extended to one hundred and twenty (120) days. The Committee shall notify the claimant in writing of any such extension, the special circumstances requiring the extension, and the date by which the Committee expects to render the determination on review. The claimant shall be notified of the Committee’s decision in writing or electronically. In the case of an adverse determination, such notice shall:

(a)  include specific reasons for the adverse determination, 

 

(b)  be written in a manner calculated to be understood by the claimant, 

 

(c)  contain specific references to the pertinent Plan provisions upon which the benefit determination is based, 

 

	 
	 	 8	 
	

	 

(d)  contain a statement that the claimant is entitled to receive upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits, and 

 

(e)  contain a statement of the claimant’s right to bring an action under section 502(a) of ERISA.

 

8.6  Reports. The Committee shall provide the Participant with a statement reflecting the amount of the Participant’s Deferral Account at least quarterly.

 

8.7  No Liability. No employee, agent, officer, trustee, member, volunteer or director of the Company shall, in any event, be liable to any person for any action taken or omitted to be taken in connection with the interpretation, construction or administration of this Plan, so long as such action or omission to act be made in good faith.

 

ARTICLE IX

AMENDMENT AND TERMINATION

 

The Company, by action of its Board, may amend, alter, modify or terminate this Plan at any time, provided that no such amendment, alteration, modification or termination shall reduce the balance in any Participant’s Deferral Account in whole or in part.

ARTICLE X

MISCELLANEOUS

 

10.1  Non-Assignability of Benefits. Neither any Participant nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder. Such amounts shall not be subject to seizure by any creditor of a Participant or any Beneficiary hereunder, by a proceeding at law or in equity, nor transferable by operation of law in the event of the bankruptcy or insolvency of any Participant or any Beneficiary hereunder. Any such attempted assignment or transfer shall be void and shall terminate the
Participant’s participation in this Plan, and the Company then may pay the benefits hereunder as if the Participant had terminated employment.

 

10.2  Impact on Other Benefits. Except as otherwise required by the Code or any other applicable law, this Plan and the benefits provided herein are in addition to all other benefits which may be provided by the Company to the Participants from time to time, and shall not reduce, replace or otherwise cause any reduction, in any manner, with regard to any of such other benefits.

 

10.3  Notices. Any notice, consent or demand required or permitted to be given under the provisions of this Plan by the Company or any Participant or Beneficiary shall be in writing, and shall be signed by the person or entity giving or making the same. If such notice, consent or demand is mailed, it shall be sent by United States certified mail, postage prepaid, addressed to the principal office of the Company, or if to a Participant or Beneficiary to such individual or entity’s last known address as
shown on the records of the Company. The date of such mailing shall be deemed the date of notice, consent or demand.

 

	 
	 	 9	 
	

	 

10.4  Tax Withholding. The Company shall have the right to deduct from all deferrals and payments made under this Plan any federal, state or local taxes required by law to be withheld with respect to such deferrals and payments. 

 

10.5  Governing Law. This Plan shall be governed by and construed in accordance with the internal laws of the State of Illinois. 

 

IN WITNESS WHEREOF, the Company has executed and adopted this Plan as

of the Effective Date. 

 

	 	 	 
	 	WMS INDUSTRIES INC.
	 
 	 
 	 
 
		By:  	/s/ Brian R. Gamache
	 	

	 	President and Chief Executive Officer

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