<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NCI BUILDING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0127701
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) No.)
</TABLE>
7301 FAIRVIEW
HOUSTON, TEXAS 77041
(713) 466-7788
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROBERT J. MEDLOCK
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
7301 FAIRVIEW
HOUSTON, TEXAS 77041
(713) 466-7788
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
RANDALL G. RAY, ESQ. STEVEN R. FINLEY, ESQ.
Gardere & Wynne, L.L.P. Gibson, Dunn & Crutcher LLP
1601 Elm Street, Suite 3000 200 Park Avenue
Dallas, Texas 75201-4761 New York, New York 10166-0193
(214) 999-4544 (212) 351-4000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(2)(3) REGISTRATION FEE
<S> <C> <C>
Common Stock, $0.01 par value per share(1)............................ $97,778,750 $28,845
</TABLE>
(1) This registration statement also pertains to preferred stock purchase rights
to purchase shares of Preferred Stock of the registrant. One right
automatically trades with each share of Common Stock of the registrant and
is represented by the certificate for such share. Until the occurrence of
certain events, the rights are not exercisable and will not be evidenced or
transferred apart from the Common Stock.
(2) In accordance with Rule 457(o) under the Securities Act of 1933, the number
of shares being registered and the proposed maximum offering price per share
are not included in this table.
(3) Estimated solely for the purpose of calculating the registration fee.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 6, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS________________________________________________________________, 1998
3,800,000 Shares
[NCI LOGO]
Common Stock
- -------------------------------------------------------------------------
Of the 3,800,000 shares of Common Stock (the "Common Stock") offered hereby (the
"Offering"), 3,500,000 shares are being offered by NCI Building Systems, Inc.
(the "Company") and 300,000 shares are being offered by the Selling
Stockholders. See "Principal and Selling Stockholders." The Company will not
receive any of the proceeds from the sale of shares of Common Stock by the
Selling Stockholders.
The Common Stock is listed on the Nasdaq National Market ("Nasdaq") under the
symbol "BLDG." On August 5, 1998, the last reported sale price of the Common
Stock on Nasdaq was $23.0625 per share. See "Price Range of Common Stock."
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON STOCK
OFFERED HEREBY, SEE "RISK FACTORS" BEGINNING ON PAGE 10.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Proceeds to Selling
Public Commissions(1) Company(2) Stockholders
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Per Share........................... $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
Total(3)............................ $ $ $ $
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE COMPANY AND CERTAIN OF THE SELLING STOCKHOLDERS HAVE AGREED TO INDEMNIFY
THE UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). SEE
"UNDERWRITING."
(2) BEFORE DEDUCTING ESTIMATED EXPENSES OF THE OFFERING OF $500,000, ALL OF
WHICH WILL BE PAID BY THE COMPANY.
(3) THE COMPANY AND CERTAIN OF THE SELLING STOCKHOLDERS HAVE GRANTED THE
UNDERWRITERS A 30-DAY OPTION TO PURCHASE UP TO 570,000 ADDITIONAL SHARES OF
COMMON STOCK ON THE SAME TERMS PER SHARE SOLELY TO COVER OVER-ALLOTMENTS, IF
ANY. IF SUCH OPTION IS EXERCISED IN FULL, THE TOTAL PRICE TO PUBLIC WILL BE
$ , THE TOTAL UNDERWRITING DISCOUNTS AND COMMISSIONS WILL BE
$ , THE TOTAL PROCEEDS TO COMPANY WILL BE $ AND THE TOTAL
PROCEEDS TO SELLING STOCKHOLDERS WILL BE $ . SEE "PRINCIPAL AND
SELLING STOCKHOLDERS" AND "UNDERWRITING."
The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of certificates therefor
will be made at the offices of Warburg Dillon Read LLC, New York, New York, on
or about , against payment therefor. The Underwriters include:
WARBURG DILLON READ LLC
J.C. BRADFORD & CO.
WHEAT FIRST UNION
DAIN RAUSCHER WESSELS A
DIVISION OF DAIN RAUSCHER INCORPORATED
<PAGE>
[Graphics]
Page 2 of the Prospectus includes photographs of the Company's products
and/or manufacturing processes, each with a brief, descriptive caption.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE COMMON STOCK
AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THIS OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY, AND
SHOULD BE READ IN CONJUNCTION WITH, THE CONSOLIDATED FINANCIAL STATEMENTS AND
NOTES THERETO AND MORE DETAILED INFORMATION INCLUDED ELSEWHERE IN THIS
PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) "NCI" MEANS NCI BUILDING
SYSTEMS, INC., ITS SUBSIDIARIES (INCLUDING LIMITED PARTNERSHIPS) AND
UNCONSOLIDATED AFFILIATES AND PREDECESSORS, BUT EXCLUDES MBCI (AS DEFINED
HEREIN), (II) "MBCI" MEANS, PRIOR TO NCI'S ACQUISITION OF MBCI (THE "MBCI
ACQUISITION"), METAL BUILDING COMPONENTS, INC., ITS SUBSIDIARIES AND
UNCONSOLIDATED AFFILIATES AND, AFTER THE MBCI ACQUISITION, THE ACQUIRED
OPERATIONS OF MBCI AND (III) THE "COMPANY" MEANS NCI AND MBCI. REFERENCES TO
NCI'S OR THE COMPANY'S "FISCAL YEAR" MEAN THE FISCAL YEAR OF NCI OR THE COMPANY
ENDED OCTOBER 31 OF THE YEAR SPECIFIED. UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS ASSUMES THE UNDERWRITERS' OVER-ALLOTMENT OPTION
IS NOT EXERCISED AND GIVES EFFECT TO THE TWO-FOR-ONE STOCK SPLIT OF THE COMMON
STOCK ON JULY 23, 1998.
THE COMPANY
The Company is one of North America's largest integrated manufacturers of
metal products for the building industry, with 38 manufacturing and distribution
facilities located in 18 states and Mexico. The Company sells metal components
as well as complete, pre-engineered metal building systems, offering one of the
most extensive metal product lines in the building industry with well-recognized
brand names. Management believes that the Company's leading market positions and
strong track record of growth and profitability have resulted from its focus on
improving manufacturing efficiency, controlling overhead costs, developing new
markets and successfully identifying and integrating strategic acquisitions. In
May 1998, NCI acquired MBCI, thereby doubling its sales, becoming the largest
domestic manufacturer of nonresidential metal components and significantly
improving its product mix. On a pro forma basis giving effect to the MBCI
Acquisition, the Company's sales and income from operations were $838.3 million
and $97.1 million, respectively, for the 12-month period ended April 30, 1998.
Management believes that metal products have gained and continue to gain a
greater share of the new construction and repair and retrofit markets due to
increasing acceptance and recognition of the benefits of metal products in
building applications. Metal components offer builders, designers, architects
and end-users several advantages, including low lifecycle costs, longevity,
attractive aesthetics and design flexibility. Similarly, metal building systems
offer a number of advantages over traditional construction alternatives,
including shorter construction time, more efficient material utilization, lower
construction costs, greater ease of expansion and lower maintenance costs.
METAL COMPONENTS. With a market share at least twice that of its largest
competitor, the Company is the largest domestic supplier of metal components to
the nonresidential building industry. The Company designs, manufactures, sells
and distributes one of the widest selections of metal roof and wall systems,
overhead doors, fascia, mansard and various trim accessories for commercial,
industrial, architectural, agricultural and residential construction and repair
and retrofit uses. The Company is also one of the largest independent providers
of hot roll and light gauge metal coil coating and painting services and
products. The Company coats and paints hot roll coil metal for use in its own
metal components manufacturing, as well as processing hot roll coil metal and
toll coating light gauge metal for use by third parties. The Company markets its
metal components products and coating and painting services nationwide primarily
through a direct sales force under several brand names, including "Metal
Building Components," "American Building Components," "DBCI," "MBCI," "Metal
Coaters of Georgia," "Metal-Prep," "DOUBLECOTE" and "Metal Coaters of
California." On a pro forma basis giving effect to the MBCI Acquisition, the
Company's sales of metal components and coating and painting services were
$561.7 million, or 67% of total sales, for the 12-month period ended April 30,
1998.
3
<PAGE>
PRE-ENGINEERED METAL BUILDING SYSTEMS. NCI is one of the largest domestic
suppliers of pre-engineered metal building systems. The Company designs,
manufactures and markets pre-engineered metal building systems, self-storage
building systems and metal home framing systems for commercial, industrial,
agricultural, governmental, community service and residential uses. The Company
markets these systems nationwide through authorized builder networks totaling
over 1,200 builders and a direct sales force under several brand names,
including "Metallic Buildings," "Mid-West Steel Buildings," "A & S Buildings,"
"All American Systems," "Steel Systems" and "Mesco." On a pro forma basis giving
effect to the MBCI Acquisition, the Company's sales of pre-engineered metal
building systems were $276.6 million, or 33% of total sales, for the 12-month
period ended April 30, 1998.
Prior to their combination, NCI and MBCI both demonstrated strong growth in
sales and income from operations. NCI achieved five-year compound annual growth
rates of 38.9% and 49.6%, respectively, in sales and income from operations.
MBCI achieved five-year compound annual growth rates of 15.3% and 16.2%,
respectively, in sales and income from operations.
THE MBCI ACQUISITION
On May 4, 1998, NCI acquired MBCI for a purchase price of $600 million.
Following the consummation of the MBCI Acquisition, management implemented an
integration plan to realize immediate and longer-term benefits. Management
estimates potential cost savings and synergies at $15 million annually. The main
objectives of the integration plan include:
- Realizing economies of scale, including purchasing efficiencies;
- Expanding internal metal coil coating and painting capacity and utilizing
internal capacity to produce products that were previously purchased from
third parties;
- Cross-selling broader product lines to a wider customer base;
- Expanding the geographic scope of operations throughout the United States;
- Rationalizing production capacity to maximize productivity and eliminate
redundant costs;
- Consolidating metal components management, sales and marketing; and
- Eliminating duplicate administrative costs.
COMPANY STRENGTHS
The Company believes that the combined NCI and MBCI operations will be able
to continue to grow sales, income from operations, net income and net income per
share by capitalizing on the following strengths:
LEADING MARKET POSITIONS AND SCALE OF OPERATIONS. The Company is the
largest manufacturer of metal components for the nonresidential building
industry and one of the largest suppliers of pre-engineered metal building
systems in the United States. In addition, the Company is one of the largest
independent providers of coated steel. As a result of its leading market
positions and scale of operations, the Company has expanded its geographic
scope to meet customers' product and delivery needs, realized production
efficiencies and improved its ability to attract builders and other
customers.
BALANCE BETWEEN NEW CONSTRUCTION AND REPAIR AND RETROFIT
END-MARKETS. Prior to the MBCI Acquisition, NCI's business was focused
primarily on pre-engineered metal building systems, demand for which is
driven primarily by new building construction. The Company currently derives
a majority of its sales and net income from metal components sales, which
are used in a number of repair and retrofit applications as well as new
construction. Management believes that the balance between these end markets
reduces the impact on the Company of slowdowns in new construction activity
and provides enhanced growth opportunities.
4
<PAGE>
LOW COST SUPPLIER. The Company strives to be the low-cost supplier to
its customers by maintaining low production and distribution costs. The
Company's large scale manufacturing capabilities provide purchasing
efficiencies and enhance productivity through the sharing of best practices
between metal components and pre-engineered metal building systems
operations. In addition, the Company's "hub and spoke" system of satellite
manufacturing facilities places the locations for the manufacture of
secondary structural framing and covering systems and final distribution
closer to the customer, thereby reducing transportation costs and delivery
times.
BROAD PRODUCT LINES AND DIVERSE CUSTOMER BASE. The addition of MBCI's
metal components operations, including metal coating and painting, to NCI's
pre-engineered metal building systems has enabled the Company to become one
of the largest integrated suppliers in the industry, offering a wider
variety of products and services. In addition, the Company has a broad and
diversified customer base with significant cross-selling opportunities.
NATIONWIDE COVERAGE. The MBCI Acquisition provides the Company with the
opportunity to expand substantially its manufacturing, selling and
distribution presence into new geographic markets. The Company's
pre-engineered metal building systems facilities in the South, Southwest and
West complement its metal components facilities nationwide. The addition of
MBCI's metal components locations in the Northeast and Northwest provide the
Company with access to new regional markets for the Company's pre-engineered
metal building systems.
EXPERIENCED MANAGEMENT TEAM. The Company's senior management team has
an average of over 20 years of industry experience and has significantly
increased its depth as a result of the MBCI Acquisition. The management
teams of NCI and MBCI share similar business philosophies and historically
have demonstrated an ability to grow sales and net income in times of
strong, as well as adverse, economic conditions. Management attributes this
ability to effectively marketing its products, strategically locating new
manufacturing facilities, controlling expenses, maintaining flexibility in
capital budgeting, reducing production and distribution costs and
successfully completing and integrating acquisitions. In addition, the two
management teams have successfully identified and completed nine
acquisitions in the last five years. The Company's senior management team
will own approximately % of the Common Stock after giving effect to the
Offering.
BUSINESS STRATEGY
The Company's management has developed business strategies to capitalize on
the Company's strengths. The Company's primary business strategies include the
following:
PURSUE STRATEGIC GROWTH OPPORTUNITIES. Throughout its history, the
Company has increased its sales and net income through a combination of
selective acquisitions and internal growth. Since 1993, the Company has
successfully acquired and integrated seven companies and is in the process
of integrating MBCI and a subsequently acquired metal coating and painting
operation. In order to expand its geographic coverage and increase
manufacturing capacity, the Company has also constructed nine new
manufacturing facilities in the last five years and has formed four joint
ventures to expand into new markets and to increase penetration of existing
markets.
LEVERAGE EXISTING DISTRIBUTION CHANNELS TO INCREASE SALES OF METAL
COMPONENTS. The Company seeks to penetrate further the metal components
market, primarily for metal roofing and wall systems. Currently, the Company
sells its products under well-recognized brand names through various
distribution channels to a broad range of end users. These channels include,
among others, (i) authorized builders, (ii) building materials
manufacturers, distributors and retailers, (iii) roofing systems installers,
(iv) contractors and end users and (v) builders of self-storage facilities.
The Company plans to increase sales and net income by utilizing its multiple
distribution channels to market its expanded range of metal components
products to existing and new customers.
5
<PAGE>
CONTINUE TO ENHANCE FLEXIBLE, COST-EFFECTIVE PRODUCTION FACILITIES AND
PROCESSES. The Company's commitment to providing its customers with quality
products on a timely basis at competitive prices remains a key element of
its business strategy. As a result, management is focused on continuous cost
reduction including realization of opportunities to (i) aggressively manage
the purchase of raw materials, (ii) further automate its manufacturing
operations to reduce process costs and improve product quality and (iii)
capitalize on the breadth of the Company's geographic coverage to provide
customers with rapid delivery.
INCREASE SALES OF PRE-ENGINEERED METAL BUILDING SYSTEMS IN NEW AND
EXISTING GEOGRAPHIC MARKETS. The addition of MBCI's metal components
locations nationwide provides the Company with an opportunity to expand
sales of the Company's pre-engineered metal building systems in existing
markets and provides access to new regional markets in the Northeast and
Northwest. By utilizing MBCI's nationwide metal components manufacturing
facilities as platforms for expansion, the Company is well positioned to
increase sales of pre-engineered metal building systems in markets that
previously had been difficult for NCI to serve on a cost-effective basis.
------------------------
NCI was incorporated in Texas in December 1984 and reincorporated in
Delaware in December 1991. The Company's principal executive offices are located
at 7301 Fairview, Houston, Texas 77041, and its telephone number at that address
is (713) 466-7788.
THE OFFERING
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stock offered by the Company.................................. 3,500,000 shares
Common Stock offered by the Selling Stockholders..................... 300,000 shares
------------
Total Common Stock offered....................................... 3,800,000 shares
------------
------------
Common Stock to be outstanding after the Offering.................... 21,534,482 shares(1)
Use of proceeds by the Company....................................... To repay a portion of the indebtedness of the
Company under its Senior Credit Facility (as
defined herein) incurred in connection with
the MBCI Acquisition. See "Use of Proceeds."
Nasdaq symbol........................................................ BLDG
</TABLE>
- ------------------------
(1) Based upon shares outstanding as of July 31, 1998. Excludes (i) 1,887,994
shares issuable upon exercise of outstanding options, with a weighted
average exercise price of $12.71 per share, under the Company's Employee
Stock Option Plan as of July 31, 1998, and (ii) 100,250 shares issuable as
of July 31, 1998, pursuant to a convertible debenture held by a member of
the senior management team at a conversion price of $14.9625 per share.
RISK FACTORS
For a discussion of certain factors that should be considered in connection
with an investment in the Common Stock, see "Risk Factors."
6
<PAGE>
SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following table presents summary unaudited pro forma condensed combined
financial information of the Company for the fiscal year ended October 31, 1997,
the six months ended April 30, 1998, and the 12-month period ended April 30,
1998, and as of April 30, 1998. The unaudited pro forma condensed combined
statements of income give effect to the MBCI Acquisition as if it had occurred
on November 1, 1996. The unaudited pro forma condensed combined balance sheet
data give effect to the MBCI Acquisition as if it had occurred on April 30,
1998. The unaudited pro forma financial information is not necessarily
indicative of either the future results of operations or the results of
operations that would have occurred if the MBCI Acquisition had been completed
on the indicated dates. In the MBCI Acquisition, NCI acquired all of the capital
stock of Amatek Holdings, Inc., the former indirect parent company of MBCI
("Amatek"). The unaudited pro forma financial information reflects only the
results of operations and financial condition of Amatek for the periods and as
of the dates indicated. Because Amatek had a fiscal year ended December 31, the
unaudited pro forma financial information presented for the year ended October
31, 1997, the six months ended April 30, 1998, and the 12-month period ended
April 30, 1998, includes financial information of Amatek for the year ended
December 31, 1997, the six months ended March 31, 1998, and the 12-month period
ended March 31, 1998, respectively. See "The MBCI Acquisition." The summary
unaudited pro forma financial information should be read in conjunction with the
Unaudited Pro Forma Condensed Combined Financial Statements and notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," NCI's historical consolidated financial statements and notes
thereto and Amatek's historical consolidated financial statements and notes
thereto are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS TWELVE MONTHS
YEAR ENDED ENDED APRIL 30, ENDED APRIL 30,
OCTOBER 31, 1997 1998 1998
----------------- --------------- ---------------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales............................................................. $ 815.7 $ 391.1 $ 838.3
Cost of sales..................................................... 611.7 292.9 627.9
------ ------ ------
Gross profit...................................................... 204.0 98.2 210.4
Operating expenses................................................ 108.7 56.5 113.3
------ ------ ------
Income from operations............................................ 95.3 41.7 97.1
Interest expense.................................................. 44.4 22.2 44.4
Nonrecurring gain(1).............................................. 3.3 3.3 3.3
Other income...................................................... 2.7 1.5 3.4
------ ------ ------
Income before income taxes........................................ 56.9 24.3 59.4
Provision for income taxes........................................ 25.4 10.4 25.8
------ ------ ------
Net income........................................................ $ 31.5 $ 13.9 $ 33.6
------ ------ ------
------ ------ ------
Net income per share:
Basic........................................................... $ 1.80 $ 0.78 $ 1.90
------ ------ ------
------ ------ ------
Diluted......................................................... $ 1.71 $ 0.74 $ 1.80
------ ------ ------
------ ------ ------
Weighted average number of common shares:
Basic........................................................... 17.5 17.8 17.7
Diluted......................................................... 18.5 18.8 18.7
OTHER FINANCIAL DATA:
EBITDA(2)......................................................... $ 125.8 $ 59.6 $ 129.1
Capital expenditures.............................................. 38.5 14.5 34.7
</TABLE>
<TABLE>
<CAPTION>
AS OF
APRIL 30, 1998
---------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................................................... $ 106.9
Property, plant and equipment, net................................ 155.7
Total assets...................................................... 816.4
Total debt........................................................ 541.7
Shareholders' equity.............................................. 196.6
</TABLE>
- ------------------------------
(1) Nonrecurring gain reflects insurance recoveries for fire damage to MBCI's
Lubbock, Texas plant in 1997.
(2) EBITDA (net income before interest expense, taxes, depreciation and
amortization and minority interest) is not a measure of financial
performance under generally accepted accounting principles, but is presented
here to provide additional information about the Company's operations.
EBITDA should not be considered as an alternative to, or more meaningful
than, net income or cash flows as an indicator of the Company's operating
performance or as a better measure of liquidity. EBITDA presented above may
not be comparable to similarly titled measures of other companies. See NCI's
and Amatek's consolidated financial statements for information regarding
NCI's and MBCI's operating, investing and financing cash flow activities.
7
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
NCI
The summary historical consolidated financial information presented below
for each of the years in the three-year period ended October 31, 1997, and as of
October 31, 1997, is derived from the audited consolidated financial statements
of NCI. The summary consolidated financial information for the six months ended
April 30, 1997 and 1998, and as of April 30, 1998, is derived from the unaudited
consolidated financial statements of NCI. In the opinion of management, the
unaudited results of operations for the six months ended April 30, 1997 and
1998, include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such information. The unaudited
consolidated results of operations for the interim periods are not necessarily
indicative of the results that may be expected for the full fiscal year. The
following financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
NCI's historical consolidated financial statements and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales................................................................... $ 234.2 $ 332.9 $ 407.7 $ 174.5 $ 192.7
Cost of sales........................................................... 169.8 241.4 299.4 128.4 140.6
--------- --------- --------- --------- ---------
Gross profit............................................................ 64.4 91.5 108.3 46.1 52.1
Operating expenses...................................................... 38.1 53.1 66.0 30.4 34.1
--------- --------- --------- --------- ---------
Income from operations.................................................. 26.3 38.4 42.3 15.7 18.0
Interest expense........................................................ 0.1 0.1 0.2 0.1 0.1
Other income............................................................ 0.8 1.6 2.0 0.8 1.5
--------- --------- --------- --------- ---------
Income before income taxes.............................................. 27.0 39.9 44.1 16.4 19.4
Provision for income taxes.............................................. 10.0 15.1 16.2 6.1 7.0
--------- --------- --------- --------- ---------
Net income.............................................................. $ 17.0 $ 24.8 $ 27.9 $ 10.3 $ 12.4
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share:
Basic................................................................. $ 1.36 $ 1.60 $ 1.73 $ 0.65 $ 0.76
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Diluted............................................................... $ 1.26 $ 1.51 $ 1.64 $ 0.61 $ 0.72
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common shares:
Basic................................................................. 12.5 15.5 16.1 16.0 16.4
Diluted............................................................... 13.5 16.5 17.1 17.0 17.4
OTHER FINANCIAL DATA:
EBITDA(1)............................................................... $ 30.3 $ 45.8 $ 52.2 $ 20.3 $ 23.9
Capital expenditures.................................................... 5.8 10.3 11.3 4.0 4.0
</TABLE>
<TABLE>
<CAPTION>
AS OF
APRIL 30, 1998
---------------
<S> <C>
BALANCE SHEET DATA:
Working capital.................................................................................... $ 91.6
Property, plant and equipment, net................................................................. 51.8
Total assets....................................................................................... 196.9
Total debt......................................................................................... 1.7
Shareholders' equity............................................................................... 164.4
</TABLE>
- ------------------------------
(1) EBITDA (net income before interest expense, taxes, depreciation and
amortization and minority interest) is not a measure of financial
performance under generally accepted accounting principles, but is presented
here to provide additional information about NCI's operations. EBITDA should
not be considered as an alternative to, or more meaningful than, net income
or cash flows as an indicator of NCI's operating performance or as a better
measure of liquidity. EBITDA presented above may not be comparable to
similarly titled measures of other companies. See NCI's consolidated
financial statements for information regarding NCI's operating, investing
and financing cash flow activities.
8
<PAGE>
MBCI
The summary historical consolidated financial information presented below
for each of the three years in the period ended December 31, 1997, and as of
December 31, 1997, is derived from the audited consolidated financial statements
of Amatek. The summary consolidated financial information for the three months
ended March 31, 1997 and 1998, and as of March 31, 1998, is derived from the
unaudited financial statements of Amatek. In the opinion of management, the
unaudited results of operations for the three months ended March 31, 1997 and
1998, include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such information. The unaudited results of
operations for the interim periods are not necessarily indicative of the results
that may be expected for the full fiscal year. The following financial
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Results of Operations
of MBCI" and Amatek's historical consolidated financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31,
MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales................................................................... $ 315.7 $ 362.9 $ 408.0 $ 82.5 $ 86.9
Cost of sales........................................................... 234.0 271.3 312.4 63.9 67.8
--------- --------- --------- --------- ---------
Gross profit............................................................ 81.7 91.6 95.6 18.6 19.1
Operating expenses...................................................... 24.9 29.7 36.7 8.5 9.6
--------- --------- --------- --------- ---------
Income from operations.................................................. 56.8 61.9 58.9 10.1 9.5
Interest income, net.................................................... 1.4 1.9 2.0 0.3 0.3
Unusual/nonrecurring gain(1)............................................ 0.0 0.0 3.3 0.0 0.0
Other income (expense).................................................. (1.3) (0.3) 0.1 (0.2) (0.2)
--------- --------- --------- --------- ---------
Income before income taxes.............................................. 56.9 63.5 64.3 10.2 9.6
Provisions for income taxes............................................. 23.0 24.9 24.6 4.1 3.6
--------- --------- --------- --------- ---------
Net income.............................................................. $ 33.9 $ 38.6 $ 39.7 $ 6.1 $ 6.0
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
EBITDA(2)............................................................... $ 61.0 $ 69.0 $ 71.2 $ 11.8 $ 11.6
Capital expenditures.................................................... 12.5 21.1 27.2 5.8 1.6
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998
-----------------
<S> <C>
BALANCE SHEET DATA:
Working capital................................................................................... $ 78.5
Property, plant and equipment, net................................................................ 104.0
Total assets...................................................................................... 247.0
Total debt........................................................................................ 0.0
Shareholder's equity.............................................................................. 210.7
</TABLE>
- ------------------------------
(1) Unusual/nonrecurring gain reflects insurance recoveries for fire damage to
Lubbock, Texas plant in 1997.
(2) EBITDA (net income before interest expense, taxes, depreciation and
amortization and minority interest) is not a measure of financial
performance under generally accepted accounting principles, but is presented
here to provide additional information about MBCI's operations. EBITDA
should not be considered as an alternative to, or more meaningful than, net
income or cash flows as an indicator of MBCI's operating performance or as a
better measure of liquidity. EBITDA presented above may not be comparable to
similarly titled measures of other companies. See Amatek's consolidated
financial statements for information regarding MBCI's operating, investing
and financing cash flow activities.
9
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS
AND THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, PROSPECTIVE INVESTORS SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING SHARES OF THE COMMON STOCK OFFERED HEREBY.
THE MBCI ACQUISITION--SUCCESSFUL INTEGRATION
The MBCI Acquisition involves a number of risks that could materially
adversely affect the Company's operating results. The integration of MBCI with
NCI will require substantial management time and other resources and may pose
risks with respect to production, customer service and market share. There can
be no assurance that the Company will not experience difficulties with various
aspects of the business combination, including relationships with customers,
suppliers or employees, systems integration, the continued use of separate
operational or management information systems or internal controls. The Company
may also be subject to unanticipated product liability claims or environmental
liabilities. In addition, there can be no assurance that benefits from the MBCI
Acquisition will be realized or that the combination of NCI and MBCI will be
more successful than these companies would have been had they remained separate.
See "The MBCI Acquisition," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Business."
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and has substantial debt service
requirements. At April 30, 1998, on a pro forma as adjusted basis after giving
effect to the MBCI Acquisition and the Offering, the total debt of the Company
would have been approximately $465.5 million and 63% of the Company's total
capitalization. Subject to the restrictions under the Senior Credit Facility,
the Company may incur additional indebtedness from time to time to provide
working capital and for other general corporate purposes. The Company's leverage
and obligations could have important consequences for holders of the Common
Stock, including the following: (i) a substantial portion of the Company's cash
flow from operations must be dedicated to debt service and will not be available
for other purposes; (ii) the Company's ability to obtain additional debt
financing in the future for working capital, acquisitions, capital expenditures
or other purposes may be limited; (iii) certain of the Company's indebtedness
contains financial and other restrictive covenants which, if breached, could
result in an event of default under such indebtedness; and (iv) the Company's
level of indebtedness could limit its flexibility in planning for and reacting
to, and make it more vulnerable to, competitive pressures and changes in
industry and economic conditions generally. If the Company is unable to generate
sufficient cash flow to service its indebtedness and fund its capital or other
expenditures, it will be forced to adopt an alternative strategy that may
include reducing or delaying capital expenditures, selling assets, refinancing
of indebtedness or seeking additional equity or debt capital. There can be no
assurance that any of these strategies could be effected on satisfactory terms,
if at all. See "The MBCI Acquisition" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources."
INDUSTRY CYCLICALITY; GEOGRAPHIC CONCENTRATION
The nonresidential construction industry is highly sensitive to national and
regional economic conditions and from time to time has been adversely affected
in various geographic regions by unfavorable economic conditions, low
manufacturing capacity utilization, high vacancy rates, changes in tax laws
affecting the real estate industry, high interest rates and the unavailability
of financing. Sales of the Company's products may be adversely affected by
weakness in demand for its products within particular customer groups, including
builders of self-storage facilities, or a recession in the metal building
industry, the general construction industry or particular geographic regions.
The Company cannot predict the timing or severity of future economic or industry
downturns. Any economic downturn, particularly in states where much of the
Company's sales are concentrated, could have a material adverse effect on the
Company's
10
<PAGE>
results of operations and financial condition. The markets for metal components,
including overhead doors, self-storage buildings and metal home framing systems
are also highly sensitive to overall economic conditions, high interest rates
and the availability of financing.
RISKS ASSOCIATED WITH EXPANSION STRATEGY
The Company has grown and intends to continue to grow by, among other
things, establishing additional plants, further developing its authorized
builder networks and acquiring other manufacturers of complementary products.
There can be no assurance that the Company will be able to accomplish these
goals. Continued growth may strain the Company's physical and human resources,
as well as create a need to attract additional qualified management, which may
not be readily available. In addition, many builders already are authorized
builders for competitors of the Company. The Company's ability to expand its
market share depends on its ability to persuade a number of these builders to
market the Company's products in lieu of or in addition to those of its
competitors and to attract conventional contractors to the metal building and
metal home industries. Furthermore, there can be no assurance that the Company
will be able to identify or finance suitable acquisitions in the future.
Acquisitions may have an adverse effect upon the Company's results of operations
and financial condition while the operations of the acquired businesses are
being integrated into the Company's operations. Furthermore, the integration of
acquired businesses may result in unforeseen difficulties that require a
disproportionate amount of management's attention or other Company resources.
See "Business--Business Strategy."
AVAILABILITY AND PRICING OF RAW MATERIALS
The Company's principal raw material is steel. The Company does not have any
long-term contracts for the purchase of raw materials. On a combined basis for
their respective 1997 fiscal years, NCI and MBCI purchased an aggregate of
approximately 80% of their steel requirements from National Steel Corporation
and Bethlehem Steel Corporation. The Company has not traditionally maintained an
inventory of steel in excess of its current production requirements. There can
be no assurance that steel will remain available or that prices will remain
stable. The steel industry is highly cyclical in nature, and steel prices are
influenced by numerous factors beyond the control of the Company, including
general economic conditions, competition, labor costs, import duties and other
trade restrictions. Furthermore, a prolonged labor strike against one or more of
the Company's principal domestic suppliers could have a material adverse effect
on the Company's operations. If the available supply of steel declines or if one
or more of the Company's current sources is unable for any reason to meet the
Company's requirements, the Company could experience price increases, a
deterioration of service from its suppliers or interruptions or delays that may
cause the Company to fail to meet delivery schedules to its customers, any of
which could adversely affect the Company's results of operations and financial
condition. See "Business--Raw Materials."
SEASONAL NATURE OF BUSINESS; POSSIBLE VOLATILITY OF STOCK PRICE
The metal components and metal building systems businesses, as well as the
construction industry in general, are seasonal in nature. Sales and shipments
normally are lower in the first calendar quarter of each year compared to the
other three quarters because of unfavorable weather conditions for construction
(particularly in the northern United States) and typical business planning
cycles affecting construction. This seasonality adversely affects the Company's
results of operations for the first two fiscal quarters. Prolonged severe winter
weather conditions can delay construction projects and otherwise adversely
affect the Company's business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Quarterly Results." As a result,
the market price for shares of the Common Stock may be subject to wide
fluctuations in response to variations in the Company's quarterly results,
changes in the metal components and building industry or the failure by the
Company to meet securities analysts' expectations.
11
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The future success of the Company depends to a significant degree on the
continued service of its key personnel and on its ability to attract, motivate
and retain qualified employees. The loss of the services of any of the Company's
key personnel could have a material adverse effect upon the Company's results of
operations and financial condition. See "Management."
COMPETITION
Competition in the metal components and metal buildings markets of the
building industry is intense and is based primarily on price, speed of
construction, quality of builder networks, the ability to provide added value in
the design and engineering of buildings and, among manufacturers of metal
components and metal building systems, service, quality and delivery times. The
Company competes with a number of other manufacturers of metal components and
metal building systems ranging from small local firms to large national firms.
In addition, the Company and other manufacturers of metal components and metal
building systems compete with alternative methods of building construction,
which may be perceived as more traditional, more aesthetically pleasing or
having other advantages. See "Business--Competition."
POSSIBLE IMPACT OF ENVIRONMENTAL REGULATION AND CLAIMS
The Company's operations are subject to a wide variety of federal, state and
local laws and regulations governing, among other things, emissions to air,
discharges to waters, the generation, handling, storage, transportation,
disposal of hazardous substances and other materials and health and safety
matters. Laws protecting the environment generally have become more stringent
than in the past and are expected to continue to do so. Environmental laws and
regulations typically impose "strict liability," which means that in some
situations the Company could be exposed to liability for cleanup costs and
"toxic tort" or other damages as a result of conduct of the Company that was
lawful at the time it occurred or conduct of, or conditions caused by, prior
operators or other third parties, regardless of fault on the part of the
Company. The Company believes it is in substantial compliance with all
environmental standards applicable to its operations. However, there can be no
assurance that cleanup costs, natural resource damages, criminal sanctions,
"toxic tort" or other damages arising as a result of environmental laws and
costs associated with complying with changes in environmental laws and
regulations will not be substantial and will not have a material adverse effect
on the Company's financial condition. There can be no assurance that more
stringent regulatory standards will not be established that might require
material capital expenditures to meet future environmental standards. From time
to time, claims have been made against the Company under environmental laws. See
"Business--Regulatory Matters."
YEAR 2000 ISSUE
The Company has implemented a year 2000 plan to attempt to ensure that the
Company's computer systems and applications will function properly with respect
to years beyond 1999. Computer programs that have time-sensitive software may
not recognize dates beginning in the year 2000, which could result in
miscalculations or system failures. The Company is implementing its plan to
attempt to ensure that its management information systems and computer software
are year 2000 compliant, but there can be no assurance that the plan will be
completed successfully or on a timely basis. Failure to ensure that the
Company's software is year 2000 compliant or to implement successfully new year
2000 compliant software applications on a timely basis could have a material
impact on the Company's results of operations and financial condition. The
ability of third parties with whom the Company transacts business to address
adequately their year 2000 issue is outside the Company's control, and the
Company is discussing with its vendors and customers the possibility of any
interface difficulties that may affect the Company. The failure of the Company
or of third parties with whom the Company transacts business to address
adequately, and in a timely manner, the year 2000 issue with respect to such
interfaces could also have a material adverse
12
<PAGE>
effect on the Company's results of operations and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Impact of the Year 2000 Issue."
ANTI-TAKEOVER PROVISIONS
The shares beneficially owned by the Company's executive officers, directors
and affiliates, combined with the ability of the Board of Directors to issue
shares of preferred stock without further vote or action by the stockholders and
certain provisions contained in the Company's Restated Certificate of
Incorporation and Amended and Restated By-laws, may have the effect of
discouraging persons from pursuing a non-negotiated takeover of the Company and
preventing certain changes of control. The Company has adopted a stockholder
rights plan pursuant to which one preferred stock purchase right automatically
trades with each share of Common Stock and upon the occurrence of certain events
entitles the registered holder to purchase the Company's Series A Junior
Participating Preferred Stock. The rights are generally exercisable following a
non-negotiated acquisition of, or public announcement of intent to commence an
offer for, 20% or more of the outstanding Common Stock and, therefore, may have
an anti-takeover effect. In addition, Section 203 of the Delaware General
Corporation Law, which is applicable to the Company, contains provisions that
restrict certain business combinations with interested stockholders, which may
have the effect of inhibiting a non-negotiated merger or other business
combination involving the Company.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market after this
offering could adversely affect prevailing market prices for shares of Common
Stock. Of the 21,534,482 shares that will be outstanding after this Offering,
approximately 20,134,482 shares, including all of the shares offered hereby,
generally will be eligible for immediate sale in the public market. The
Company's directors and senior management team and certain of the Company's
principal stockholders beneficially owning an aggregate of 3,328,334 shares of
Common Stock (excluding outstanding stock options) have agreed not to, directly
or indirectly, offer, sell, distribute or otherwise dispose of any shares of
Common Stock for a period of 90 days after the date of this Prospectus without
the prior written consent of Warburg Dillon Read LLC. See "Underwriting." In
addition, shares of Common Stock held by affiliates of the Company are subject
to the volume limitations and other restrictions of Rule 144 under the
Securities Act. After this offering, the Company anticipates it will also have
outstanding employee and director options to purchase an aggregate of 1,887,994
shares of Common Stock, which are covered by an effective registration statement
on Form S-8 and will also generally be freely tradeable upon issuance, except to
the extent held by affiliates or subject to the foregoing transfer restrictions.
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). All statements other than historical
or current facts, including, without limitation, statements about the business,
financial condition, business strategy, plans and objectives of management and
prospects of the Company, are forward-looking statements. When used in this
Prospectus the words "anticipates," "believes," "estimates," "expects,"
"intends," "plans" and "predicts," and similar statements that a result or event
"should" occur and similar expressions as they relate to the Company or its
management, are intended to identify forward-looking statements. Although the
Company believes that the expectations reflected in the forward-looking
statements are reasonable, these expectations and the related statements are not
guarantees of future performance and are subject to risks, uncertainties and
other factors that could cause the actual results to differ materially from
those projected. These risks, uncertainties and other factors include, but are
not limited to, the ability to integrate MBCI and other acquisitions, the
ability to service indebtedness and obtain additional capital, industry
cyclicality, fluctuations in customer demand
13
<PAGE>
and other patterns, the ability to make strategic activities accretive to net
income, raw material availability and pricing, seasonality and adverse weather
conditions, competitive activity and pricing pressure, changes in tax and other
governmental rules and regulations applicable to the Company, new technological
developments and general economic conditions affecting the construction
industry, as well as other risks detailed in this Prospectus and in filings of
the Company with the Commission. Certain of these risks and uncertainties are
beyond the ability of the Company to control and, in many cases, the Company
cannot predict the occurrence of these risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
stated. Important factors that could cause actual results to differ materially
from the Company's expectations are disclosed in "Risk Factors" and elsewhere in
this Prospectus. The Company expressly disclaims any obligation to release
publicly any updates or revisions to these forward-looking statements to reflect
any changes in its expectations.
14
<PAGE>
THE MBCI ACQUISITION
On May 4, 1998, NCI acquired all of the outstanding capital stock of Amatek
from BTR Australia Limited, an indirect wholly owned subsidiary of BTR plc, for
a purchase price of $600 million, including cash of $550 million. At the time of
the MBCI Acquisition, Amatek had no operations other than MBCI. In connection
with the MBCI Acquisition, NCI issued an aggregate of 1,400,000 unregistered
shares of Common Stock (with an approximate fair market value of $32.2 million)
at the closing to certain officers and employees of MBCI in exchange for their
future interests in MBCI's senior management incentive plan.
NCI financed the MBCI Acquisition by obtaining a new $600 million credit
facility (the "Senior Credit Facility") from a syndicate of lenders. The Senior
Credit Facility consists of a $200 million five-year revolving credit facility
(the "Five-Year Revolver"), a $200 million five-year term loan facility (the
"Term Loan") and a $200 million 364-day revolving credit facility (the "364-Day
Revolver"). Borrowings under the Senior Credit Facility may also be used for
working capital and other general corporate purposes.
The following table sets forth the estimated cash sources and uses of funds,
including transaction costs, for the MBCI Acquisition and the cost of the Common
Stock issued to MBCI officers and employees:
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
- ------------------------------------------------------ ------------------------------------------------------
(IN MILLIONS)
<S> <C>
</TABLE>
<TABLE>
<S> <C>
Cash................................ $ 27.8
Senior Credit Facility:
Term Loan......................... 200.0
Five-Year Revolver................ 140.0
364-Day Revolver.................. 200.0
Issuance of Common Stock(a)......... 32.2
---------
Total........................... $ 600.0
---------
---------
Cash purchase price................. $ 550.0
Estimated transaction costs......... 17.8
Issuance of Common Stock(a)......... 32.2
---------
Total........................... $ 600.0
---------
---------
</TABLE>
- ------------------------------
(a) Represents approximate fair market value of 1,400,000 unregistered shares of
Common Stock.
USE OF PROCEEDS
The net proceeds to the Company from the Offering (at an assumed public
offering price of $23.0625 per share, the last reported sale price on Nasdaq on
August 5, 1998), after deducting underwriting discounts and estimated expenses
of the Offering, are estimated to be approximately $76.2 million. The Company
will not receive any of the proceeds from the sale of shares of Common Stock by
the Selling Stockholders. See "Principal and Selling Stockholders." The Senior
Credit Facility requires the Company to use the net proceeds to repay a portion
of the outstanding borrowings under the 364-Day Revolver. The Company intends to
repay the principal balance of the 364-Day Revolver remaining after application
of the net proceeds of this Offering with cash from operations, to renew the
364-Day Revolver or to refinance the remaining balance at or prior to maturity.
The 364-Day Revolver is part of the Senior Credit Facility and matures on
May 3, 1999. The Company currently has outstanding $200.0 million under the
364-Day Revolver, which was borrowed to finance the MBCI Acquisition. If the
364-Day Revolver is not repaid by the Company or renewed by the lenders, the
Company has the option to convert it to a three-year term note on the same
terms, but in no case longer than the maturity of the Five-Year Revolver. The
364-Day Revolver currently bears interest at LIBOR plus 2.00%. With application
of the net proceeds to repay a portion of the 364-Day Revolver, the Company
anticipates the LIBOR margin, which is adjusted based upon the ratio of funded
debt to EBITDA (as defined in the Senior Credit Facility), will decrease to
1.375%. See "The MBCI Acquisition" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
15
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at
April 30, 1998, and (ii) pro forma as adjusted as of April 30, 1998, to give
effect to the MBCI Acquisition and reflect the sale of 3,500,000 shares of
Common Stock offered by the Company and the application of the estimated net
proceeds therefrom. This table should be read in conjunction with "Use of
Proceeds" and the consolidated financial statements of NCI and Amatek and the
notes thereto, which are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
APRIL 30, 1998
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
--------- -----------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Total debt, including current portion:
Senior Credit Facility:
Term Loan.............................................................................. -- $ 200.0
Five-Year Revolver..................................................................... -- 140.0
364-Day Revolver....................................................................... -- 123.8
Other debt............................................................................... $ 1.7 1.7
--------- -----------
Total debt, including current portion................................................ 1.7 465.5
--------- -----------
Stockholders' equity:
Preferred Stock, $1.00 par value; 1,000,000 shares authorized; no shares outstanding..... -- --
Common Stock, $0.01 par value; 25,000,000 shares authorized; 18,034,482 issued and
outstanding actual; 21,534,482 issued and outstanding pro forma as adjusted(1)......... 0.2 0.2
Additional paid-in capital............................................................... 55.1 163.5
Retained earnings........................................................................ 109.1 109.1
--------- -----------
Total shareholders' equity............................................................... 164.4 272.8
--------- -----------
Total capitalization..................................................................... $ 166.1 $ 738.3
--------- -----------
--------- -----------
</TABLE>
- ------------------------
(1) The actual and pro forma as adjusted number of shares issued and outstanding
excludes (i) 1,887,994 shares issuable upon exercise of outstanding options,
with a weighted average exercise price of $12.71 per share, under the
Company's Employee Stock Option Plan as of July 31, 1998, and (ii) 100,250
shares issuable as of July 31, 1998, pursuant to a convertible debenture
held by a member of the senior management team at a conversion price of
$14.9625 per share.
16
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on Nasdaq under the symbol "BLDG." The following
table sets forth, on a per share basis for the fiscal quarter ending on the date
indicated, after giving effect to the two-for-one stock split of the Common
Stock on July 23, 1998, the range of high and low closing sale prices for the
Common Stock as reported by Nasdaq.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 31, 1996
January 31................................................................................ $ 14.315 $ 10.500
April 30.................................................................................. 19.000 13.250
July 31................................................................................... 19.250 13.375
October 31................................................................................ 17.565 10.875
FISCAL YEAR ENDED OCTOBER 31, 1997
January 31................................................................................ 18.750 13.375
April 30.................................................................................. 19.125 14.750
July 31................................................................................... 18.940 12.750
October 31................................................................................ 19.875 16.750
FISCAL YEAR ENDED OCTOBER 31, 1998
January 31................................................................................ 19.782 16.875
April 30.................................................................................. 26.000 18.063
July 31................................................................................... 32.250 23.125
October 31 (through August 5, 1998)....................................................... 23.125 22.375
</TABLE>
On August 5, 1998, the closing price of the Common Stock as reported by
Nasdaq was $23.0625 per share. As of July 31, 1998, there were 195 holders of
record of the Common Stock. The Company believes there are approximately 6,000
beneficial holders of the Common Stock.
DIVIDEND POLICY
The Company has not paid cash dividends on its Common Stock since its
inception. The Board of Directors does not anticipate payment of any cash
dividends in the foreseeable future and intends to continue its present policy
of retaining earnings for reinvestment in the operations of the Company. The
Senior Credit Facility prohibits the payment of cash dividends.
17
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Financial Statements
(the "Pro Forma Financial Statements") are based on the historical consolidated
financial statements of NCI and of Amatek, and the notes thereto, included
elsewhere in this Prospectus.
The Unaudited Pro Forma Condensed Combined Balance Sheet gives effect to the
MBCI Acquisition as if it had occurred on April 30, 1998. The Unaudited Pro
Forma Condensed Consolidated Statements of Income for the year ended October 31,
1997, the six months ended April 30, 1998, and the 12-month period ended April
30, 1998, give effect to the MBCI Acquisition as if it had occurred on November
1, 1996. Because Amatek had a fiscal year ended December 31, the unaudited pro
forma financial information presented for the year ended October 31, 1997, the
six months ended April 30, 1998, and the 12-month period ended April 30, 1998,
includes financial information of Amatek for the year ended December 31, 1997,
the six months ended March 31, 1998 and the 12-month period ended March 31,
1998, respectively.
The unaudited pro forma adjustments are based upon available information and
upon certain assumptions and estimates that the Company believes are reasonable.
The MBCI Acquisition has been accounted for using the purchase method of
accounting. A final determination of required purchase accounting adjustments,
including the allocation of the purchase price to the assets acquired and
liabilities assumed based on their respective fair values, has not yet been
made. Accordingly, the purchase accounting adjustments reflected in the
unaudited pro forma information are preliminary and have been made solely for
purposes of developing such information. The Company's management believes,
however, that the unaudited pro forma adjustments and the underlying assumptions
and estimates reasonably present the significant effects of the transactions
reflected thereby and that any subsequent changes in the underlying assumptions
and estimates will not materially affect the Pro Forma Financial Statements.
The Pro Forma Financial Statements do not purport to represent what the
Company's financial position or results of operations actually would have been
had such transaction occurred on the dates indicated or to project the Company's
financial position or results of operation for any future date or period.
Furthermore, the Pro Forma Financial Statements do not reflect changes that may
occur as the result of post-acquisition activities and other matters.
18
<PAGE>
NCI BUILDING SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
APRIL 30, 1998
------------------------------------------------------------------------
PRO FORMA
NCI AHI AHI AHI ACQUISITION PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS ADJUSTED ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................ $ 37,972 $ 1,345 $ (1,345)(B) $ -- $ (27,800)(C) $ 10,172
Accounts receivable, net................. 35,954 49,636 49,636 85,590
Inventory, net........................... 40,725 48,536 48,536 89,261
Deferred income taxes.................... 3,462 1,186 1,186 4,648
Prepaid expenses......................... 1,233 3,419 3,419 4,652
---------- ---------- ----------- ---------- ----------- ----------
Total current assets..................... 119,346 104,122 (1,345) 102,777 (27,800) 194,323
Property, plant and equipment.............. 74,381 145,051 145,051 219,432
Accumulated depreciation................... (22,623) (41,088) (41,088) (63,711)
---------- ---------- ----------- ---------- ----------- ----------
51,758 103,963 -- 103,963 -- 155,721
Goodwill................................... 20,361 13,612 13,612 391,000(C) 424,973
Capitalized debt issue costs............... -- -- -- 10,822(K) 10,822
Investment in and advances to DOUBLECOTE... -- 19,415 19,415 19,415
Other assets............................... 5,237 5,871 5,871 11,108
---------- ---------- ----------- ---------- ----------- ----------
Total assets............................... $ 196,702 $ 246,983 $ (1,345) $ 245,638 $ 374,022 $ 816,362
---------- ---------- ----------- ---------- ----------- ----------
---------- ---------- ----------- ---------- ----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt........ $ 47 $ -- $ $ -- $ 22,500(E) $ 22,547
Accounts payable......................... 14,993 9,288 9,288 24,281
Accrued expenses......................... 13,658 11,526 11,526 11,204(C) 36,388
Accrued income taxes..................... (662) 4,854 4,854 4,192
---------- ---------- ----------- ---------- ----------- ----------
Total current liabilities................ 28,036 25,668 -- 25,668 33,704 87,408
Long-term debt, non-current portion........ 1,653 -- -- 517,500(E) 519,153
Deferred income taxes...................... 2,596 10,588 10,588 13,184
Shareholders' equity:
Common stock............................. 166 182,172 182,172 (182,158)(F) 180
Additional paid-in capital............... 55,179 4,380 4,380 27,806(F) 87,365
Retained earnings........................ 109,072 24,175 (1,345)(B) 22,830 (22,830)(F) 109,072
---------- ---------- ----------- ---------- ----------- ----------
Total shareholders' equity............... 164,417 210,727 (1,345) 209,382 (177,182) 196,617
---------- ---------- ----------- ---------- ----------- ----------
Total liabilities and shareholders'
equity................................... $ 196,702 $ 246,983 $ (1,345) $ 245,638 $ 374,022 $ 816,362
---------- ---------- ----------- ---------- ----------- ----------
---------- ---------- ----------- ---------- ----------- ----------
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
19
<PAGE>
NCI BUILDING SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED OCTOBER 31, 1997
--------------------------------------------------------
HISTORICAL PRO FORMA
---------------------- ACQUISITION PRO FORMA
NCI AHI ADJUSTMENTS COMBINED
---------- ---------- --------------- ---------------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue................................................ $ 407,751 $ 407,967 $ -- $ 815,718
Cost of sales.......................................... 299,407 312,329 -- 611,736(D)
---------- ---------- --------------- ---------------
Gross profit........................................... 108,344 95,638 -- 203,982
Operating expenses..................................... 66,055 36,637 9,775(G) 108,721(D)
(3,746)(G)
---------- ---------- --------------- ---------------
Income from operations................................. 42,289 59,001 (6,029) 95,261
Equity income in DOUBLECOTE............................ -- 83 -- 83
Nonrecurring gain...................................... -- 3,284 -- 3,284
Interest expense....................................... (163) -- (42,050)(H) (44,377)
(2,164)(H)
Other income........................................... 1,999 2,019 (1,390)(I) 2,628
---------- ---------- --------------- ---------------
Income (loss) before taxes............................. 44,125 64,387 (51,633) 56,879
Provision for income taxes............................. 16,238 24,647 (15,488)(J) 25,397
---------- ---------- --------------- ---------------
Net income............................................. $ 27,887 $ 39,740 $ (36,145) $ 31,482
---------- ---------- --------------- ---------------
---------- ---------- --------------- ---------------
Net income per share:
Basic................................................ $ 1.73 -- -- $ 1.80
---------- ---------------
---------- ---------------
Diluted.............................................. $ 1.64 -- -- $ 1.71
---------- ---------------
---------- ---------------
Weighted average number of common shares:
Basic................................................ 16,127 -- 1,400(F) 17,527
Diluted.............................................. 17,085 -- 1,400(F) 18,485
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
20
<PAGE>
NCI BUILDING SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL 30, 1998
--------------------------------------------------------
HISTORICAL PRO FORMA
---------------------- ACQUISITION PRO FORMA
NCI AHI ADJUSTMENTS COMBINED
---------- ---------- --------------- ---------------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue................................................ $ 192,672 $ 198,432 $ -- $ 391,104
Cost of sales.......................................... 140,621 152,286 -- 292,907(D)
---------- ---------- --------------- ---------------
Gross profit........................................... 52,051 46,146 -- 98,197
Operating expenses..................................... 34,030 19,458 4,888(G) 56,523(D)
(1,853)(G)
---------- ---------- --------------- ---------------
Income from Operations................................. 18,021 26,688 (3,035) 41,674
Equity income in DOUBLECOTE............................ -- 14 -- 14
Nonrecurring gain...................................... -- 3,284 -- 3,284
Interest expense....................................... (84) -- (21,025)(H) (22,191)
(1,082)(H)
Other income........................................... 1,492 761 (695)(I) 1,558
---------- ---------- --------------- ---------------
Income (loss) before taxes............................. 19,429 30,747 (25,837) 24,339
Provision for income taxes............................. 6,981 11,191 (7,751)(J) 10,421
---------- ---------- --------------- ---------------
Net income............................................. $ 12,448 $ 19,556 $ (18,086) $ 13,918
---------- ---------- --------------- ---------------
---------- ---------- --------------- ---------------
Net income per share:
Basic................................................ $ 0.76 -- -- $ 0.78
---------- ---------------
---------- ---------------
Diluted.............................................. $ 0.72 -- -- $ 0.74
---------- ---------------
---------- ---------------
Weighted average number of common shares:
Basic................................................ 16,390 -- 1,400(F) 17,790
Diluted.............................................. 17,386 -- 1,400(F) 18,786
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
21
<PAGE>
NCI BUILDING SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED APRIL 30, 1998
--------------------------------------------------------
HISTORICAL PRO FORMA
---------------------- ACQUISITION PRO FORMA
NCI AHI ADJUSTMENTS COMBINED
---------- ---------- --------------- ---------------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenue................................................ $ 425,911 $ 412,371 $ -- $ 838,282
Cost of sales.......................................... 311,620 316,277 -- 627,897(D)
---------- ---------- --------------- ---------------
Gross profit........................................... 114,291 96,094 -- 210,385
Operating expenses..................................... 69,722 37,692 9,775(G) 113,288(D)
(3,901)(G)
---------- ---------- --------------- ---------------
Income from operations................................. 44,569 58,402 (5,874) 97,097
Equity income in DOUBLECOTE............................ -- 92 -- 92
Nonrecurring gain...................................... -- 3,284 -- 3,284
Interest expense....................................... (170) -- (42,050)(H) (44,384)
(2,164)(H)
Other income........................................... 2,726 2,019 (1,390)(I) 3,355
---------- ---------- --------------- ---------------
Income (loss) before taxes............................. 47,125 63,797 (51,478) 59,444
Provision for income taxes............................. 17,124 24,185 (15,430)(J) 25,879
---------- ---------- --------------- ---------------
Net income............................................. $ 30,001 $ 39,612 $ (36,048) $ 33,565
---------- ---------- --------------- ---------------
---------- ---------- --------------- ---------------
Net income per share:
Basic................................................ $ 1.84 -- -- $ 1.90
---------- ---------------
---------- ---------------
Diluted.............................................. $ 1.74 -- -- $ 1.80
---------- ---------------
---------- ---------------
Weighted average number of common shares:
Basic................................................ 16,291 -- 1,400(F) 17,691
Diluted.............................................. 17,261 -- 1,400(F) 18,661
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.
22
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(A) BASIS OF PRESENTATION--The Unaudited Pro Forma Condensed Combined financial
statements are presented to give pro forma effect to the acquisition of
Amatek Holdings, Inc. and Subsidiaries (AHI).
The purchase method of accounting has been used in preparing the Unaudited
Pro Forma Condensed Combined Financial Statements of NCI Building Systems,
Inc. (the Company) with respect to the acquisition of AHI. The Unaudited Pro
Forma Condensed Combined Statements of Income for the six months ended April
30, 1998 and fiscal year ended October 31, 1997 combine the results of
operations for the Company's six months ended April 30, 1998 and fiscal year
ended October 31, 1997 with AHI's results for the six months ended March 31,
1998 and fiscal year ended December 31, 1997, respectively. The Unaudited
Pro Forma Condensed Combined Statement of Income for the 12 months ended
April 30, 1998 combines the results of operations for the Company's 12
months ended April 30, 1998 with AHI's results for the 12 months ended March
31, 1998. The Unaudited Pro Forma Condensed Combined Balance Sheet as of
April 30, 1998 combines the balance sheet of the Company as of April 30,
1998 with AHI's balance sheet as of March 31, 1998. The Unaudited Pro Forma
Condensed Combined Statements of Income give effect to the AHI acquisition
as if it had occurred on November 1, 1996. The Unaudited Pro Forma Condensed
Combined Balance Sheet gives effect to the AHI acquisition as if it had
occurred on April 30, 1998. Purchase accounting values have been assigned on
a preliminary basis and will be adjusted upon the completion of a valuation
study. Management does not expect such adjustments to be material.
Due to the different fiscal year ends of the Company and AHI as discussed
above, AHI's results of operations for the three months ended December 31,
1997 are included in both the Unaudited Pro Forma Condensed Combined
Statements of Income for the six months ended April 30, 1998 and fiscal year
ended October 31, 1997, and AHI's results of operations for the month ended
April 30, 1998 are excluded from the Unaudited Pro Forma Condensed Combined
Statements of Income for the six months ended April 30, 1998 and the 12
months ended April 30, 1998. AHI's revenues and net income for the three
months ended December 31, 1997 were $111.5 million and $13.6 million,
respectively, which includes a nonrecurring pre-tax gain of $3.3 million
from insurance recoveries related to a plant fire. AHI's revenues and net
loss for the month ended April 30, 1998 were $34.4 million and $6.3 million,
respectively, which net loss includes a nonrecurring pre-tax charge related
to the acquisition of $8.6 million for payments to certain AHI management
required due to change in control of AHI.
In June 1998, the Company's Board of Directors approved a two-for-one common
stock split effective for shareholders of record on July 8, 1998. Share and
per share amounts have been restated to reflect the stock split.
(B) The unaudited condensed balance sheet for AHI as of March 31, 1998 has been
adjusted to exclude cash not acquired as subject to the stock purchase
agreement.
(C) To reflect the purchase of AHI for consideration of $550.0 million in cash
plus 1,400,000 shares of Company common stock valued at $32.2 million issued
to AHI employees to replace the management
23
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS (CONTINUED)
incentive plan in place at AHI. In addition, there are estimated to be $17.8
million in transaction costs. Goodwill has been preliminarily calculated as
follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase Price:
Cash................................................ $ 550,000
Equity issued....................................... 32,200
Estimated transaction costs........................... 17,800
Less: Net assets acquired............................. 209,000
----------
Goodwill.............................................. $ 391,000
</TABLE>
(D) Anticipated synergies and cost savings resulting from internal rather than
third party coating of NCI products, plant consolidations, sales and
marketing consolidation, purchasing efficiencies and administrative cost
savings and efficiencies of approximately $15 million annually have not been
reflected in the above Unaudited Pro Forma Condensed Combined Financial
Statements.
(E) For purposes of the Unaudited Pro Forma Condensed Combined Balance Sheet,
the proceeds for the AHI acquisition were assumed to have been provided with
$27.8 million of available cash and additional borrowings as follows:
<TABLE>
<CAPTION>
<S> <C>
AHI net assets acquired,
plus excess of purchase price over net assets....... $ 600,000
Less:
Excess cash used to fund acquisition.................. 27,800
Equity issued......................................... 32,200
----------
$ 540,000
Current portion....................................... $ 22,500
Long-term portion..................................... $ 517,500
</TABLE>
(F) To record the elimination of the AHI stock acquired, offset by the impact on
shareholders' equity of the additional 1,400,000 shares of Company common
stock issued to certain officers and employees of AHI in exchange for their
interests in AHI's management incentive plan.
(G) To record additional amortization expense associated with the goodwill
generated from the AHI acquisition (assigned useful life of 40 years),
offset by elimination of a management incentive charge incurred by AHI on a
historical basis.
(H) To record additional interest expense and amortization of debt issuance
costs related to debt incurred in connection with the acquisition of AHI.
(I) To eliminate daily cash investment interest income for the portion of the
Company's excess cash utilized for the acquisition.
(J) To record the tax effect on the pro forma adjustments.
(K) To record cost related to the issuance of debt, as discussed in Note (E).
24
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
NCI
The selected historical consolidated financial information presented below
for, and as of the end of, each of the years in the five-year period ended
October 31, 1997, is derived from NCI's audited consolidated financial
statements. The selected historical consolidated financial information for, and
as of the end of, the six months ended April 30, 1997 and 1998, is derived from
the unaudited consolidated financial statements of NCI. In the opinion of
management, the unaudited results of operations for, and as of the end of, the
six months ended April 30, 1997 and 1998, include all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of such
information. The unaudited consolidated results of operations for the interim
periods are not necessarily indicative of the results that may be expected for
the full fiscal year. The selected historical financial information is not
necessarily indicative of the future results of operations. The following
financial information should be read in conjunction with and is qualified by
reference to "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the NCI's consolidated historical financial
statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
----------------------------------------------------- ---------
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales............................................................ $ 134.5 $ 167.8 $ 234.2 $ 332.9 $ 407.7 $ 174.5
Cost of sales.................................................... 99.8 124.1 169.8 241.4 299.4 128.4
--------- --------- --------- --------- --------- ---------
Gross profit..................................................... 34.7 43.6 64.4 91.5 108.3 46.1
Operating expenses............................................... 25.1 28.2 38.1 53.1 66.0 30.4
--------- --------- --------- --------- --------- ---------
Income from operations........................................... 9.6 15.4 26.3 38.4 42.3 15.7
Interest expense................................................. 0.2 0.1 0.1 0.1 0.2 0.1
Other income..................................................... 0.4 0.7 0.8 1.6 2.0 0.8
--------- --------- --------- --------- --------- ---------
Income before income taxes....................................... 9.8 16.0 27.0 39.9 44.1 16.4
Provision for income taxes....................................... 3.5 5.7 10.0 15.1 16.2 6.1
--------- --------- --------- --------- --------- ---------
Net income....................................................... $ 6.3 $ 10.3 $ 17.0 $ 24.8 $ 27.9 $ 10.3
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net income per share:
Basic.......................................................... $ 0.52 $ 0.82 $ 1.36 $ 1.60 $ 1.73 $ 0.65
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Diluted........................................................ $ 0.48 $ 0.77 $ 1.26 $ 1.51 $ 1.64 $ 0.61
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Weighted average number of common shares:
Basic.......................................................... 12.2 12.4 12.5 15.5 16.1 16.0
Diluted........................................................ 13.2 13.4 13.5 16.5 17.1 17.0
OTHER FINANCIAL DATA:
EBITDA(1)........................................................ $ 11.6 $ 18.3 $ 30.3 $ 45.8 $ 52.2 $ 20.3
Capital expenditures............................................. 8.2 5.9 5.8 10.3 11.3 4.0
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.................................................. $ 15.5 $ 16.9 $ 31.7 $ 52.0 $ 76.7 $ 60.9
Property, plant and equipment, net............................... 16.1 22.2 25.6 42.8 51.2 47.1
Total assets..................................................... 46.7 63.4 83.1 158.3 196.3 165.5
Total debt....................................................... 2.2 0.4 0.4 1.8 1.7 1.7
Shareholders' equity............................................. 28.7 39.7 57.7 116.2 147.8 129.1
<CAPTION>
1998
---------
<S> <C>
STATEMENT OF INCOME DATA:
Sales............................................................ $ 192.7
Cost of sales.................................................... 140.6
---------
Gross profit..................................................... 52.1
Operating expenses............................................... 34.1
---------
Income from operations........................................... 18.0
Interest expense................................................. 0.1
Other income..................................................... 1.5
---------
Income before income taxes....................................... 19.4
Provision for income taxes....................................... 7.0
---------
Net income....................................................... $ 12.4
---------
---------
Net income per share:
Basic.......................................................... $ 0.76
---------
---------
Diluted........................................................ $ 0.72
---------
---------
Weighted average number of common shares:
Basic.......................................................... 16.4
Diluted........................................................ 17.4
OTHER FINANCIAL DATA:
EBITDA(1)........................................................ $ 23.9
Capital expenditures............................................. 4.0
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.................................................. $ 91.6
Property, plant and equipment, net............................... 51.8
Total assets..................................................... 196.9
Total debt....................................................... 1.7
Shareholders' equity............................................. 164.4
</TABLE>
- ------------------------
(1) EBITDA (net income before interest expense, taxes, depreciation and
amortization and minority interest) is not a measure of financial
performance under generally accepted accounting principles, but is presented
here to provide additional information about NCI's operations. EBITDA should
not be considered as an alternative to, or more meaningful than, net income
or cash flows as an indicator of NCI's operating performance or as a better
measure of liquidity. EBITDA presented above may not be comparable to
similarly titled measures of other companies. See NCI's consolidated
financial statements for information regarding NCI's operating, investing
and financing cash flow activities.
25
<PAGE>
MBCI
The selected historical consolidated financial information presented below
for, and as of the end of, each of the three years in the period ended December
31, 1997, is derived from the audited consolidated financial statements of
Amatek. The selected historical consolidated financial information for, and as
of the end of, (i) the two years ended December 31, 1994, and (ii) the three
months ended March 31, 1997 and 1998, is derived from the unaudited consolidated
financial statements of Amatek. In the opinion of management, the unaudited
results of operations for the three months ended March 31, 1997 and 1998,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of such information. The unaudited results of
operations for the interim periods are not necessarily indicative of the results
that may be expected for the full fiscal year. The selected historical financial
information is not necessarily indicative of the future results of operations.
The following financial information should be read in conjunction with and is
qualified by reference to "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Results of Operations of MBCI" and Amatek's
historical consolidated financial statements and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- ---------
1993 1994 1995 1996 1997 1997
--------- --------- --------- --------- --------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales.................................................... $ 226.5 $ 279.8 $ 315.7 $ 362.9 $ 408.0 $ 82.5
Cost of sales............................................ 170.8 209.4 234.0 271.3 312.4 63.9
--------- --------- --------- --------- --------- ---------
Gross profit............................................. 55.7 70.4 81.7 91.6 95.6 18.6
Operating expenses....................................... 20.7 24.8 24.9 29.7 36.7 8.5
--------- --------- --------- --------- --------- ---------
Income from operations................................... 35.0 45.6 56.8 61.9 58.9 10.1
Interest income, net..................................... 0.1 0.7 1.4 1.9 2.0 0.3
Unusual/nonrecurring gain(1)............................. 0.0 0.0 0.0 0.0 3.3 0.0
Other income (expense)................................... 0.0 0.0 (1.3) (0.3) 0.1 (0.2)
--------- --------- --------- --------- --------- ---------
Income before income taxes............................... 35.1 46.3 56.9 63.5 64.3 10.2
Provisions (benefit) for income taxes.................... 14.5 20.5 23.0 24.9 24.6 4.1
--------- --------- --------- --------- --------- ---------
Net income............................................... $ 20.6 $ 25.8 $ 33.9 $ 38.6 $ 39.7 $ 6.1
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
OTHER FINANCIAL DATA:
EBITDA(2)................................................ $ 38.3 $ 49.5 $ 61.0 $ 69.0 $ 71.2 $ 11.8
Capital expenditures..................................... 5.2 13.1 12.5 21.1 27.2 5.8
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................................... $ 20.4 $ 27.0 $ 28.2 $ 35.0 $ 72.3 $ 52.0
Property, plant and equipment, net....................... 44.9 54.7 63.2 84.7 104.1 89.0
Total assets............................................. 96.6 137.8 220.0 220.5 249.8 210.7
Total debt............................................... 0.0 0.0 0.0 0.0 0.0 0.0
Stockholder's equity..................................... 66.8 92.6 126.5 165.0 204.8 171.1
<CAPTION>
1998
---------
<S> <C>
STATEMENT OF INCOME DATA:
Sales.................................................... $ 86.9
Cost of sales............................................ 67.8
---------
Gross profit............................................. 19.1
Operating expenses....................................... 9.6
---------
Income from operations................................... 9.5
Interest income, net..................................... 0.3
Unusual/nonrecurring gain(1)............................. 0.0
Other income (expense)................................... (0.2)
---------
Income before income taxes............................... 9.6
Provisions (benefit) for income taxes.................... 3.6
---------
Net income............................................... $ 6.0
---------
---------
OTHER FINANCIAL DATA:
EBITDA(2)................................................ $ 11.6
Capital expenditures..................................... 1.6
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................................... $ 78.5
Property, plant and equipment, net....................... 104.0
Total assets............................................. 247.0
Total debt............................................... 0.0
Stockholder's equity..................................... 210.7
</TABLE>
- ------------------------------
(1) Unusual/nonrecurring gain reflects insurance recoveries for fire damage to
Lubbock, Texas plant in 1997.
(2) EBITDA (net income before interest expense, taxes, depreciation and
amortization and minority interest) is not a measure of financial
performance under generally accepted accounting principles, but is presented
here to provide additional information about MBCI's operations. EBITDA
should not be considered as an alternative to, or more meaningful than, net
income or cash flows as an indicator of MBCI's operating performance or as a
better measure of liquidity. EBITDA presented above may not be comparable to
similarly titled measures of other companies. See Amatek's consolidated
financial statements for information regarding MBCI's operating, investing
and financing cash flow activities.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION WITH
NCI'S AND AMATEK'S CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
INCLUDED ELSEWHERE IN THIS PROSPECTUS.
RESULTS OF OPERATIONS OF NCI
Prior to the MBCI Acquisition, NCI designed, manufactured and marketed
pre-engineered metal building systems, self-storage buildings, overhead doors,
metal home framing systems and various metal components for metal buildings for
commercial, industrial, agricultural, governmental, community service and
residential uses. NCI marketed these products nationwide both through authorized
builder networks totaling over 1,200 builders and a direct sales force under
several brand names, including "Metallic Buildings," "Mid-West Steel Buildings,"
"A & S Buildings," "NCI Building Components," "All American Systems," "Steel
Systems," "DBCI" and "Mesco."
The following table presents, as a percentage of sales, certain selected
consolidated financial data of NCI for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED OCTOBER ENDED
31, APRIL 30,
------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Sales....................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................... 72.5 72.5 73.4 73.6 73.0
----- ----- ----- ----- -----
Gross profit................................................ 27.5 27.5 26.6 26.4 27.0
Operating expenses.......................................... 16.3 16.0 16.3 17.4 17.7
----- ----- ----- ----- -----
Income from operations...................................... 11.2 11.5 10.3 9.0 9.4
Interest expense............................................ 0.0 0.0 0.0 0.0 0.0
Other income................................................ 0.4 0.5 0.5 0.4 0.7
----- ----- ----- ----- -----
Income before income taxes.................................. 11.6 12.0 10.8 9.4 10.1
Provision for income taxes.................................. 4.3 4.5 4.0 3.5 3.6
----- ----- ----- ----- -----
Net income.................................................. 7.3% 7.5% 6.8% 5.9% 6.5%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
SIX MONTHS ENDED APRIL 30, 1998 COMPARED TO SIX MONTHS ENDED APRIL 30, 1997
Sales for the six months ended April 30, 1998 increased by $18.2 million, or
10%. This increase was due primarily to increased market penetration in both the
metal building systems and components markets.
Gross profit for the six months ended April 30, 1998 increased by $5.9
million, or 13%, compared to the same period a year ago. Gross margin increased
from 26.4% in the first six months of fiscal 1997 to 27.0% in the first six
months of fiscal 1998. This increase was slightly higher than the 10% increase
in sales due the improvement in gross margins resulting from better utilization
and control of manufacturing costs, improved gross margins in the components
business and stable raw material costs in the current year.
Operating expenses, which include selling, engineering, general and
administrative costs, increased by $3.7 million, or 12%, for the six months
ended April 30, 1998, compared to the same period last year. As a percentage of
sales, operating expenses were 17.7% compared to 17.4% a year ago. This increase
was primarily due to adverse weather in the first and second quarters which
delayed the shipment of customer orders.
27
<PAGE>
FISCAL 1997 COMPARED TO FISCAL 1996
Sales in fiscal 1997 increased by $74.9 million, or 22%, compared to fiscal
1996. The acquisition of the facilities of Carlisle Engineered Metals ("ECI") in
February 1997 and the inclusion of Mesco Metal Buildings Division ("Mesco") for
the whole fiscal year 1997 accounted for approximately $23 million of this
increase. The remaining increase of approximately $50 million, or 15%, resulted
from growth of sales in NCI's door division due to geographic expansion,
building systems sales growth due to increased builder recruitment and a full
year's operation of NCI's Atwater plant and growth in NCI's components division.
Gross profit increased by $16.8 million, or 18%, compared to fiscal 1996.
Gross profit dollars increased at a slower rate than sales due to price
competition earlier in the year, bad weather in the first half of 1997, which
impacted plant efficiencies, and slightly higher raw material costs. In
addition, growth in the component and door sales, which have lower gross margins
than building systems, impacted gross profit. As a result, the gross margin
percentage in 1997 declined from 27.5% to 26.6%.
Operating expenses increased by $13.0 million, or 24%, compared to fiscal
1996. These expenses increased at a slightly higher rate than sales due to the
additional expenses resulting from the acquisition of ECI, additional sales
expense to support the marketing of steel frame housing and continued geographic
expansion of NCI's sales and marketing effort.
Interest expense increased $5,000 in fiscal 1997 as a result of the $1.5
million debenture issued in April 1996 being outstanding all of 1997. Other
income, which consists primarily of interest income, increased by $413,000 in
fiscal 1997. This increase was the result of a higher level of cash invested
during the year.
Provision for income taxes increased by 8% in fiscal 1997 and decreased as a
percent of sales from 4.5% in fiscal 1996 to 4.0% in fiscal 1997. During the
year, NCI changed the corporate structure of certain operating units which
reduced the amount of state income paid by these units.
FISCAL 1996 COMPARED TO FISCAL 1995
Sales in fiscal 1996 increased by $98.7 million, or 42%, compared to fiscal
1995. The acquisitions of Doors and Buildings Components, Inc. ("DBCI") in
November 1995 and Mesco from Anderson Industries, Inc. in April 1996 accounted
for $58.7 million of this increase. Excluding the fiscal 1996 sales of these two
acquisitions, sales increased in fiscal 1996 by 17% compared to the prior year.
This growth resulted from increased market penetration by NCI in the metal
building market, expansion into the western United States with the opening of a
new plant in California and growth of NCI's components division.
Gross profit increased in fiscal 1996 by $27.1 million, or 42%, compared to
fiscal 1995. This increase was in line with the increase in sales experienced
for the year. Gross margin of 27.5% was the same as the margin achieved in
fiscal 1995. Slight increases in raw material costs during the year were offset
by spreading fixed manufacturing costs over a higher sales base.
Operating expenses increased $15.0 million, or 39%, compared to fiscal 1995.
Selling, general and administrative expenses increased slightly faster than
sales due to the establishment of a west coast sales function to support the new
plant location and additional expenses resulting from the two acquisitions made
in fiscal 1996. Engineering expenses as a component of operating expenses
increased at a slower rate than sales due to increased sales of products which
require less engineering effort such as DBCI products and components.
Interest expense increased by $52,000 as a result of the issuance of a $1.5
million subordinated debenture in connection with the acquisition of Mesco.
Other income, which consists primarily of interest income, increased by $764,000
in fiscal 1996 compared to fiscal 1995. This increase resulted primarily from
the higher level of cash invested during the year and slightly higher average
rates of return on invested cash.
28
<PAGE>
Provision for income taxes increased by 50.4% in fiscal 1996 and increased
as a percent of sales from 4.3% to 4.5%. This increase was due to the increase
in state income taxes in fiscal 1996 compared to the prior year.
RESULTS OF OPERATIONS OF MBCI
Prior to the MBCI Acquisition, MBCI designed, manufactured, sold and
distributed metal components for the building industry, including one of the
widest selections of roofs, walls, fascia, mansard and various trim accessories
for commercial, industrial, agricultural and residential construction uses. In
addition, MBCI processed its own hot roll coil metal for use in metal components
manufacturing, as well as processing hot roll coil and toll coating light gauge
metal for use by other parties in the manufacture of metal components and
numerous other products, including heating and air conditioning systems, water
heaters, lighting fixtures and office furniture. MBCI marketed its products
nationwide through a direct sales force under several brand names, including
"Metal Building Components," "American Building Components," "Metal Coaters of
Georgia," "Metal-Prep" and "DOUBLECOTE."
The following table presents, as a percentage of sales, certain selected
consolidated financial data of MBCI for the periods indicated:
<TABLE>
<CAPTION>
THREE
MONTHS
YEAR ENDED DECEMBER ENDED
31, MARCH 31,
------------------- ------------
1995 1996 1997 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Sales....................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................... 74.1 74.8 76.6 77.4 78.1
----- ----- ----- ----- -----
Gross profit................................................ 25.9 25.2 23.4 22.6 21.9
Operating expenses.......................................... 7.9 8.2 9.0 10.4 11.0
----- ----- ----- ----- -----
Income from operations...................................... 18.0 17.1 14.5 12.2 10.9
Interest income, net........................................ 0.4 0.5 0.5 0.3 0.3
Unusual/nonrecurring gain................................... 0.0 0.0 0.8 0.0 0.0
Other income (expense)...................................... (0.4) (0.1) 0.0 (0.2) (0.2)
----- ----- ----- ----- -----
Income before income taxes.................................. 18.0 17.5 15.8 12.3 11.0
Provision for income taxes.................................. 7.2 6.9 6.0 5.0 4.2
----- ----- ----- ----- -----
Net income.................................................. 10.7% 10.6% 9.7% 7.4% 6.8%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Sales for the three months ended March 31, 1998 increased by $4.4 million,
or 5%, from the same period in 1997. The additional revenues were attributable
to increased metal building components and hot roll coil sales. Light gauge
steel painting revenues declined 14% as major customers attempted to reduce
inventories.
Gross profit increased by $500,000, or 2.5%, in the first quarter of 1998,
but fell as a percentage of sales from 22.6% for the same period in 1997 to
21.9%, due to the change in product mix as higher margin steel painting
decreased as a percentage of total sales.
Operating expenses increased $1.1 million, or 12%, for the first three
months of 1998 due to costs of opening new plants in the western United States
in 1997. These expenses were not offset by related sales, since the new plants
did not make a significant revenue contribution due to both the seasonality of
the business and limited operations in the period.
Other income decreased slightly in the first three months of 1998 due to
losses in MBCI's DOUBLECOTE joint venture offset by interest income on advances
to DOUBLECOTE.
29
<PAGE>
1997 COMPARED TO 1996
Sales in 1997 increased by $45.1 million, or 12%, as MBCI furthered its
expansion into the western United States metal components market during the
year, opening plants in Boise, Idaho, Salt Lake City, Utah, and Phoenix,
Arizona. MBCI also expanded its architectural panel capacity in the Memphis,
Tennessee plant. Total metal components sales rose by $33.5 million, or 11%. The
largest increases came in commercial/industrial and agricultural products. Metal
coating and painting sales increased by $11.5 million, or 19%, as MBCI increased
its efforts to expand prepainted packaged coil sales. MBCI did not realize
significant revenues from the new metal components plants during the year as
markets were being developed.
Gross profit increased by $4.1 million, or 4%, in 1997 compared to 1996. The
gross margin percentage declined from 25.2% in 1996 to 23.4% in 1997, primarily
because of competitive pressures in the metal components sector. The strength of
the construction market encouraged competition to add capacity and attempt to
expand market share with pricing. Metal coating and painting gross margins also
declined due to a change in product mix. Prepainted coil package sales, which
have lower gross margins than toll coil coating, increased as a percentage of
total metal coating and painting sales.
Operating expenses increased by $7.0 million, or 24%, in 1997 compared to
1996 due primarily to plant additions in Utah, Idaho and Arizona. This expansion
into the western U.S. market required additional sales and management personnel
and related administrative costs.
In February 1997, the Lubbock, Texas metal components plant sustained major
fire damage. The facility was rebuilt and resumed operations in July 1997.
Insurance recoveries over cost basis resulted in a nonrecurring gain of $3.3
million. Other income increased by $387,000 in 1997 based on positive results in
MBCI's DOUBLECOTE joint venture.
1996 COMPARED TO 1995
MBCI's sales in 1996 increased by $47.1 million, or 15%, compared to 1995
with new facilities driving growth. Metal building construction did not
experience the dynamic growth that occurred in 1995, but shipments remained
strong. MBCI added a metal components plant in Adel, Georgia to service the
growing southeast market, primarily commercial/industrial. MBCI's Atlanta
facility, which had served the region before the addition of the Adel plant,
continued to run at near capacity due to strong demand. In April 1996, MBCI
purchased the operating assets of Steelco Metal Products ("Steelco"), a division
of Alta Industries, Ltd. for approximately $22 million. This acquisition was the
first step in expansion into the western U.S. market and provided a solid base
for future growth. MBCI took advantage of Steelco's strong reputation and loyal
customer base while improving efficiency through MBCI's aggressive, centralized
management style. The Steelco acquisition added $21.7 million in sales of metal
components in 1996. Metal coating and painting sales were at approximately the
same level as 1995 with seasonal capacity limiting growth.
Gross profit increased by $9.9 million, or 12%, in 1996 compared to 1995.
Although competitive pricing in the metal components industry began to increase
in the last half of 1996, MBCI maintained a gross margin percentage in excess of
25%.
Operating expenses increased by $4.8 million, or 19%, in 1996 compared to
1995, with a majority of the increase being attributable to the new plant and
the Steelco acquisition. As a percentage of sales, operating expenses increased
from 7.9% in 1995 to 8.2% in 1996.
Other expense, which consisted of MBCI's equity in the losses of its
DOUBLECOTE joint venture, decreased by $1.0 million in 1996. This decrease was
the result of improved results of operations at DOUBLECOTE.
30
<PAGE>
QUARTERLY RESULTS
The metal components and metal building systems businesses, as well as the
construction industry in general, are seasonal in nature. Sales and shipments
normally are lower in the first calendar quarter of each year compared to the
other three quarters because of unfavorable weather conditions for construction
(particularly in the northern United States) and typical business planning
cycles affecting construction. This seasonality adversely affects the Company's
results of operations for the first two fiscal quarters.
The following table sets forth selected unaudited quarterly financial
information for NCI for the 1996 and 1997 fiscal years and the first two
quarters of fiscal 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------------------
FISCAL 1996 FISCAL 1997 FISCAL 1998
------------------------------------- ------------------------------------- ------------------
JAN. 31 APR. 30 JUL. 31 OCT. 31 JAN. 31 APR. 30 JUL. 31 OCT. 31 JAN. 31 APR. 30
------- ------- ------- ------- ------- ------- ------- ------- ------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales......................... $67.4 $72.1 $92.0 $101.4 $82.9 $91.7 $112.5 $120.8 $97.3 $95.3
Gross profit.................. 17.4 19.5 25.9 29.1 22.4 23.7 29.8 32.5 25.4 26.6
Income before income taxes.... 6.5 8.1 11.5 13.8 8.3 8.2 12.7 15.0 9.4 10.0
Net income.................... 4.0 5.1 7.2 8.6 5.2 5.2 8.0 9.6 6.1 6.4
Net income per share--
diluted..................... 0.27 0.30 0.43 0.52 0.31 0.31 0.47 0.56 0.35 0.37
</TABLE>
The following table sets forth selected unaudited quarterly financial
information for MBCI for 1996, 1997 and the first quarter of 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
1996 1997 1998
------------------------------------- ------------------------------------- -------
MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31
------- ------- ------- ------- ------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales................................. $69.1 $92.3 $102.3 $99.2 $82.5 $103.6 $110.4 $111.5 $86.9
Gross profit.......................... 17.6 23.5 25.7 24.7 18.6 24.8 25.2 27.1 19.1
Income before income taxes............ 12.0 17.3 17.5 16.6 10.2 16.2 16.9 21.1 9.6
Net income............................ 7.4 10.9 10.4 9.8 6.1 10.0 10.1 13.5 5.9
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
NCI had cash and cash equivalents of $38.0 million at April 30, 1998,
compared to $17.2 million at April 30, 1997. Working capital was $91.6 million
and $60.9 million at April 30, 1998 and 1997, respectively.
MBCI had cash and cash equivalents of $1.3 million at March 31, 1998,
compared to $4.6 million at March 31, 1997. Working capital was $78.5 million
and $51.9 million at March 31, 1998 and 1997, respectively.
CASH FLOW
NCI has historically funded its operations with cash flow from operations,
bank borrowing and the sale of Common Stock. Internal cash generation has been
aided, in the opinion of management, by a compensation program under which
bonuses are earned based on achieving specified return on assets goals. This
program encourages management of the balance sheet as well as the income
statement.
NCI's net cash flow from operations increased to $24.5 million in fiscal
1997 from $28.6 million in fiscal 1996. MBCI's net cash flow from operations
decreased to $11.6 million in 1997 from $44.2 million in 1996. The decrease is
primarily the result of an $11.1 million increase in inventories, a $2.9 million
increase in trade receivables and a $12.3 million decrease in accounts payable
and accrued liabilities.
Based on the current capitalization of the Company, it is expected future
cash flow from operations and availability of alternative sources of financing
should be sufficient to provide adequate liquidity in
31
<PAGE>
future periods. Liquidity in future periods will be dependent on internally
generated cash flows, the ability to obtain adequate financing for capital
expenditures and the amount of increased working capital necessary to support
expected growth. There can be no assurance that liquidity would not be impacted
by a severe decline in general economic conditions and higher interest rates
which would affect the Company's ability to obtain external financing.
LONG-TERM DEBT
At April 30, 1998, NCI's total debt, including current portion, was $1.7
million, representing a convertible debenture issued in connection with the
Mesco acquisition and an industrial revenue bond. NCI had no borrowing
outstanding under its prior revolving credit facilities and had not borrowed
during the first six months of the fiscal year.
On May 4, 1998, the Company acquired all of the outstanding capital stock of
Amatek from BTR Australia Limited, a wholly owned subsidiary of BTR plc, for a
purchase price of $600 million, including cash of $550 million. The Company
financed the MBCI Acquisition by obtaining a new $600 million Senior Credit
Facility from a syndicate of lenders. See "The MBCI Acquisition."
In March 1998, the Company entered into the Senior Credit Facility with the
lenders for the establishment of a $600 million credit facility. The Senior
Credit Facility consists of (i) the Five-Year Revolver, a five-year revolving
credit facility of up to $200 million, of which up to $20.0 million may be
utilized in the form of commercial and standby letters of credit, (ii) the Term
Loan, a five-year term loan facility in the principal amount of up to $200
million, and (iii) the 364-Day Revolver, a 364-day revolving credit facility of
up to $200 million. In addition to funding the MBCI Acquisition, borrowings
under the Senior Credit Facility may be used for working capital and other
general corporate purposes. The initial funding of $140.0 million under the
Five-Year Revolver, $200.0 million under the Term Loan and $200.0 million under
the 364-Day Revolver occurred on May 4, 1998, the date on which the MBCI
Acquisition was consummated (the "Acquisition Date"). Loans and letters of
credit under the Five-Year Revolver will be available, and amounts repaid under
the Five-Year Revolver may be reborrowed, at any time until July 1, 2003,
subject to the fulfillment of certain conditions precedent, including the
absence of default under the Senior Credit Facility. The Term Loan was fully
drawn down as of the Acquisition Date, and amounts repaid under the Term Loan
may not be reborrowed. The Company's obligations under the Senior Credit
Facility are secured by the pledge of all capital stock, partnership interests
and other equity interests of the Company and its subsidiaries. All obligations
under the Senior Credit Facility are also guaranteed by each of the Company's
corporate subsidiaries and operating limited partnerships. The Senior Credit
Facility contains customary financial and restrictive covenants with amounts and
ratios negotiated between the Company and the lenders.
The Senior Credit Facility provides for loans bearing interest, at the
Company's option, as follows: (i) Base Rate loans, Base Rate plus a margin that
ranges from 0% to 0.50%; and (ii) LIBOR loans, Adjusted LIBOR plus a margin that
ranges from 0.75% to 2.00%. "Base Rate" is the higher of NationsBank's prime
rate or the overnight Federal funds rate plus 0.5%, and "Adjusted LIBOR" is the
applicable London interbank offered rate adjusted for reserves, if any. In each
case, the margin is adjusted based on the Company's most recently determined
ratio of funded debt to EBITDA (as defined in the Senior Credit Facility). The
Senior Credit Facility currently bears interest at LIBOR plus 2.00%. With the
application of the net proceeds of the Offering to repay a portion of the
364-Day Revolver, the Company anticipates the LIBOR margin will decrease to
1.375% as a result of the matrix pricing. The Company currently has an interest
rate swap agreement in place, which limits the Company's variable interest rate
exposure on the Term Loan. The agreement applies to the full principal amount of
the Term Loan and caps interest on LIBOR loans at 5.89% plus the applicable
LIBOR margin.
Loans under the Five-Year Revolver mature on July 1, 2003. Loans under the
Term Loan are payable in successive quarterly installments beginning on October
31, 1998, in quarterly payment amounts
32
<PAGE>
beginning with $7.5 million and gradually increasing to $12.5 million on the
maturity date. The 364-Day Revolver is part of the Senior Credit Facility and
matures on May 3, 1999. If the 364-Day Revolver is not repaid by the Company or
renewed by the Lenders, the Company has the option to convert it to a three-year
term note. Borrowings may be prepaid and voluntary reductions of the unutilized
portion of the Five-Year Revolver may be made at any time, in certain agreed
upon minimum amounts, without premium or penalty but subject to LIBOR breakage
costs. The Company is required to make mandatory prepayments on the Senior
Credit Facility upon the occurrence of certain events, including the sale of
assets and the issuance and sale of equity securities, in each case subject to
certain exceptions.
As of July 31, 1998, the Company had $499.0 million outstanding under the
Senior Credit Facility. The Senior Credit Facility requires the Company to use
the estimated net proceeds of the offering to repay $76.2 million of the
outstanding principal balance of the 364-Day Revolver. See "Use of Proceeds."
CAPITAL EXPENDITURES
During fiscal 1997, NCI invested $11.3 million in capital additions,
including a new plant built in Monterrey, Mexico at a cost of approximately $2.0
million and expansion of its plant in Ennis, Texas for approximately $1.0
million. The remainder was spent primarily at other plant locations to increase
production capacity. All of these expenditures were paid from internally
generated cash.
During 1997, MBCI had capital expenditures of $27.2 million, including the
construction of new plants ($5.0 million), the purchase of real property in
Phoenix, Arizona ($5.3 million), the rebuilding of the Lubbock, Texas plant
destroyed by fire ($4.8 million) and the expansion of the Memphis, Tennessee
plant ($2.0 million).
On May 21, 1998, the Company purchased the plant and equipment of California
Finished Metals, Inc. for $15.0 million in order to expand its metal coating and
painting operations to the western U.S. The Company anticipates that capital
expenditures for the remainder of 1998 will be $14.0 million, including $1.0
million in anticipated capital expenditures to update the new California
facility. The Company anticipates that these capital expenditures will be
financed primarily through internally generated funds.
Acquisitions of additional assets and businesses are expected to continue to
be an important part of the Company's strategy for growth. The Company would,
under certain circumstances, need to obtain additional debt and/or equity
financing to fund such acquisitions.
INFLATION
Inflation has not significantly affected the Company's financial position or
operations. Metal building systems sales are affected more by the availability
of funds for financing construction than by the rate of interest charged by the
lender. No assurance can be given that inflation or the prime rate of interest
will not fluctuate significantly, either or both of which could have an adverse
effect on the Company's operations.
ACCOUNTING STANDARDS
During the first quarter of fiscal 1998, NCI adopted Financial Accounting
Standards Board ("FASB") Statement No. 128, Earnings Per Share, which is
effective for financial statements issued for periods ending after December 15,
1997. Prior period net income per share amounts have been restated to conform
with Statement No. 128.
FASB Statement No. 130, Comprehensive Income, is effective for financial
statements for fiscal years beginning after December 15, 1997. The Company is
not required to adopt Statement No. 130 until its 1999 fiscal year, although the
Company may adopt it before that time. The adoption of Statement No. 130 would
not have a significant impact on the Company's financial statements.
33
<PAGE>
In June 1997, the FASB issued Statement No. 131, Disclosure about Segments
of an Enterprise and Related Information, which is effective for the Company's
fiscal year ending October 31, 1999. The Company is evaluating the segments that
will be reported under Statement No. 131.
IMPACT OF THE YEAR 2000 ISSUE
The year 2000 issue is the result of computer programs having been written
using two digits rather than four to define the applicable year. Any computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the year 2000 issue and is
implementing its plan to attempt to ensure that its management information
systems and computer software are year 2000 compliant. Management believes that
with modifications to existing software and converting to new software, the year
2000 issue will not pose significant operational problems for the Company's
computer systems. The Company expects to complete any necessary systems
modifications and conversions by the end of 1998. Although the ability of third
parties with whom the Company transacts business to address adequately their
year 2000 issue is outside the Company's control, the Company is discussing with
its vendors and customers the possibility of any interface difficulties that may
affect the Company.
The Company's year 2000 plan is part of the Company's overall upgrade of its
management information systems, which is currently in progress. Management
expects the upgrade to be completed with respect to a substantial majority of
the Company's operations by the end of 1998 and that the upgrade for the
remaining operating divisions will be completed in the first six months of 1999.
The Company currently believes that the year 2000 issue will not have a
material adverse impact on the operations of the Company and that costs to
become year 2000 compliant will not have a material adverse effect on the
Company's future results of operations or financial condition.
34
<PAGE>
INDUSTRY OVERVIEW
The building industry encompasses a broad range of metal products,
principally composed of steel, sold through a variety of distribution channels
for use in diverse applications. These metal products include metal components
and complete metal building systems.
METAL COMPONENTS
Manufacturers of metal components for the building industry supply
pre-formed components, including roof and wall panels, doors, partitions,
related trim, accessories and other metal components used in metal building
systems and other repair, retrofit and new construction applications for
commercial, industrial, agricultural and residential uses. Metal components are
used in a wide variety of construction applications, including purlins and
girts, roofing, walls, doors, trim and other parts of traditional commercial,
industrial, agricultural and residential buildings as well as in architectural
applications and complete metal building systems. Management estimates the metal
components market (including roofing applications) to be a multi-billion dollar
market, although market data is limited. Metal components are used to a greater
extent in repair and retrofit applications than in new construction of metal
building systems and, therefore, management believes that the metal components
business exhibits less cyclicality than the metal building systems business.
Management believes that metal products have gained and continue to gain a
greater share of new construction and repair and retrofit markets due to
increasing acceptance and recognition of the benefits of metal products in
building applications.
Metal roofing accounts for a significant portion of the overall metal
components market, but a relatively small percentage (approximately 5%) of the
large commercial roofing market estimated at over $20 billion annually. As a
result, management believes that significant opportunities exist for metal
roofing, with its advantages over conventional roofing materials, to increase
its overall share of this market. Metal roofing systems have several advantages
over conventional roofing systems, including the following:
- LOWER LIFECYCLE COST. The total cost over the life of metal roofing
systems is lower than that of conventional roofing systems for both new
construction and retrofit roofing. For new construction, the cost of
installing metal roofing is greater than the cost of conventional roofing.
Yet, the longer life and lower maintenance costs of metal roofing make the
cost more attractive. For retrofit roofing, although installation costs
are 60-70% higher for metal roofing due to the need for a sloping support
system, the lower ongoing costs more than offset the initial expenditure.
- INCREASED LONGEVITY. Metal roofing systems generally last for 20 years
without requiring major maintenance or replacement, compared to five to
ten years for conventional roofs. The cost of leaks and roof failures
associated with conventional roofing can be very high, including damage to
building interiors and disruption of the functional usefulness of the
building. Metal roofing prolongs the intervals between costly and
time-consuming repair work.
- ATTRACTIVE AESTHETICS AND DESIGN FLEXIBILITY. Metal roofing systems allow
architects and builders to integrate colors and geometric design into the
roofing of new and existing buildings, providing an increasingly
fashionable means of enhancing a building's aesthetics. Conventional
roofing material is generally tar paper or a gravel surface, and building
designers tend to conceal roofs made with such materials.
METAL BUILDING SYSTEMS
Metal building systems consist of pre-engineered structural beams and panels
that are welded and roll formed in a factory and shipped to a construction site
complete and ready for assembly. Metal building systems manufacturers design an
integrated system that meets applicable building code requirements. These
systems consist of primary structural framing, secondary structural members
(i.e., purlins and girts) and covering for roofs and walls. Over the last
fifteen years, metal building systems have significantly
35
<PAGE>
increased penetration of the market for non-residential low rise structures and
are being used in a broad variety of other applications. According to the Metal
Building Manufacturers Association ("MBMA"), reported sales of metal building
systems have increased from approximately $1.5 billion in 1993 to $2.5 billion
in 1997. The Company believes this increase has resulted primarily from (i) the
significant cost advantages offered by these systems, (ii) increased
architectural acceptance of metal building systems for construction of
commercial and industrial building projects, (iii) advances in design
versatility and production processes and (iv) a strong general economic
environment. The Company believes the cost of a metal building system generally
represents approximately 15-20% of the total cost of constructing a building,
which includes land cost, labor, plumbing, electrical, heating and air
conditioning systems installation and interior finish. Technological advances in
products and materials, as well as significant improvements in engineering and
design techniques, have led to the development of structural systems that are
compatible with more traditional construction materials. Architects and
designers now often combine a metal building system with masonry, glass and wood
exterior facades in order to meet the aesthetic requirements of customers while
preserving the inherent characteristics of metal building systems. As a result,
the uses for metal building systems now include office buildings, showrooms,
retail stores, banks, schools, warehouses, factories and distribution centers,
government and community centers for which aesthetics and architectural features
are important considerations of the end users.
In its marketing efforts, the Company and other major manufacturers
generally emphasize the following characteristics of metal building systems to
distinguish them from other methods of construction:
- SHORTER CONSTRUCTION TIME. In many instances, it takes less time to
construct a metal building than other building types. In addition, since
most of the work is done in the factory, the likelihood of weather
interruptions is reduced.
- MORE EFFICIENT MATERIAL UTILIZATION. The larger metal building systems
manufacturers use computer-aided analysis and design to fabricate
structural members with high strength-to-weight ratios, minimizing raw
materials costs.
- LOWER CONSTRUCTION COSTS. The in-plant manufacture of metal building
systems, coupled with automation, allows the substitution of less
expensive factory labor for much of the skilled on-site construction labor
otherwise required for traditional building methods.
- GREATER EASE OF EXPANSION. Metal building systems can be modified quickly
and economically before, during or after the building is completed to
accommodate all types of expansion. Typically, a building system can be
expanded by removing the end or side walls, erecting new framework and
adding matching wall and roof panels.
- LOWER MAINTENANCE COSTS. Unlike wood, metal will not deteriorate because
of cracking, rot or insect damage. Furthermore, factory-applied roof and
siding panel coatings resist cracking, peeling, chipping, chalking and
fading.
CONSOLIDATION
Over the last several years, there has been consolidation in the metal
components and metal building systems industry, which includes a large number of
small local and regional firms. Management believes that this industry will
continue to consolidate, driven by the needs of manufacturers to increase
manufacturing capacity, achieve greater process integration and add geographic
diversity in order to meet customers' product and delivery needs, improve
production efficiency and manage costs.
36
<PAGE>
BUSINESS
GENERAL
The Company is one of North America's largest integrated manufacturers of
metal products for the building industry, with 38 manufacturing and distribution
facilities located in 18 states and Mexico. The Company sells metal components
as well as complete, pre-engineered metal building systems, offering one of the
most extensive metal product lines in the building industry with well-recognized
brand names. Management believes that the Company's leading market positions and
strong track record of growth and profitability have resulted from its focus on
improving manufacturing efficiency, controlling overhead costs, developing new
markets and successfully identifying and integrating strategic acquisitions. In
May 1998, NCI acquired MBCI, thereby doubling its sales, becoming the largest
domestic manufacturer of nonresidential metal components and significantly
improving its product mix. On a pro forma basis giving effect to the MBCI
Acquisition, the Company's sales and income from operations were $838.3 million
and $97.1 million, respectively, for the 12-month period ended April 30, 1998.
METAL COMPONENTS. With a market share at least twice that of its largest
competitor, the Company is the largest domestic supplier of metal components to
the nonresidential building industry. The Company designs, manufactures, sells
and distributes one of the widest selections of metal roof and wall systems,
overhead doors, fascia, mansard and various trim accessories for commercial,
industrial, architectural, agricultural and residential construction and repair
and retrofit uses. The Company is also one of the largest independent providers
of hot roll and light gauge metal coil coating and painting services and
products. The Company coats and paints hot roll coil metal for use in its own
metal components manufacturing, as well as processing hot roll coil metal and
toll coating light gauge metal for use by third parties. The Company markets its
metal components products and coating and painting services nationwide primarily
through a direct sales force under several brand names, including "Metal
Building Components," "American Building Components," "DBCI," "MBCI," "Metal
Coaters of Georgia," "Metal-Prep," "DOUBLECOTE" and "Metal Coaters of
California." On a pro forma basis giving effect to the MBCI Acquisition, the
Company's sales of metal components and coating and painting services were
$561.7 million, or 67% of total sales, for the 12-month period ended April 30,
1998.
PRE-ENGINEERED METAL BUILDING SYSTEMS. NCI is one of the largest domestic
suppliers of pre-engineered metal building systems. The Company designs,
manufactures and markets pre-engineered metal building systems, self-storage
building systems and metal home framing systems for commercial, industrial,
agricultural, governmental, community service and residential uses. The Company
markets these systems nationwide through authorized builder networks totaling
over 1,200 builders and a direct sales force under several brand names,
including "Metallic Buildings," "Mid-West Steel Buildings," "A & S Buildings,"
"All American Systems," "Steel Systems" and "Mesco." On a pro forma basis giving
effect to the MBCI Acquisition, the Company's sales of pre-engineered metal
building systems were $276.6 million, or 33% of total sales, for the 12-month
period ended April 30, 1998.
Prior to their combination, NCI and MBCI both demonstrated strong growth in
sales and income from operations. NCI has achieved five-year compound annual
growth rates of 38.9% and 49.6%, respectively, in sales and income from
operations. MBCI has achieved five-year compound annual growth rates of 15.3%
and 16.2%, respectively, in sales and income from operations.
COMPANY STRENGTHS
The Company believes that the combined NCI and MBCI operations will be able
to continue to grow sales income from operations, net income and net income per
share by capitalizing on the following strengths:
LEADING MARKET POSITIONS AND SCALE OF OPERATIONS. The Company is the
largest manufacturer of metal components for the nonresidential building
industry and one of the largest suppliers of pre-
37
<PAGE>
engineered metal building systems in the United States. In addition, the
Company is one of the largest independent providers of coated steel. As a
result of its leading market positions and scale of operations, the Company
has expanded its geographic scope to meet customer product and delivery
needs, realized production efficiencies and improved its ability to attract
builders and other customers.
BALANCE BETWEEN NEW CONSTRUCTION AND REPAIR AND RETROFIT
END-MARKETS. Prior to the MBCI Acquisition, NCI's business was focused
primarily on pre-engineered metal building systems, demand for which is
driven primarily by new building construction. The Company currently derives
a majority of its sales and net income from metal components sales, which
are used in a number of repair and retrofit applications as well as new
construction. Management believes that the balance between these end markets
reduces the impact on the Company of slowdowns in new construction activity
and provides enhanced growth opportunities.
LOW COST SUPPLIER. The Company strives to be the low-cost supplier to
its customers by maintaining low production and distribution costs. The
Company's large scale manufacturing capabilities provide purchasing
efficiencies and enhance productivity through the sharing of best practices
between metal components and pre-engineered metal building systems
operations. In addition, the Company's "hub and spoke" system of satellite
manufacturing facilities places the locations for the manufacture of
secondary structural framing and covering systems and final distribution
closer to the customer, thereby reducing transportation costs and delivery
times. The MBCI Acquisition also provided the Company with in-house coil
painting and coating operations, a significant cost element in metal
components manufacturing. The Company is shifting its coating needs from
third-party providers to its own production, thereby increasing coating
utilization and recapturing margin paid to third parties.
BROAD PRODUCT LINES AND DIVERSE CUSTOMER BASE. The addition of MBCI's
metal components operations, including metal coating and painting, to NCI's
pre-engineered metal building systems has enabled the Company to become one
of the largest integrated suppliers in the industry, offering a wider
variety of products and services. In addition, the Company has a broad and
diversified customer base with significant cross-selling opportunities. The
Company's integrated and expanded product lines provide the Company with
significant new marketing opportunities to increase sales to existing
customers and obtain new customers by offering single-source metal building
solutions to all of its customer base.
NATIONWIDE COVERAGE. The MBCI Acquisition provides the Company with the
opportunity to expand substantially its manufacturing, selling and
distribution presence into new geographic markets. The Company's
pre-engineered metal building systems facilities in the South, Southwest and
West complement its metal components facilities nationwide. The addition of
MBCI's metal components locations in the Northeast and Northwest provide the
Company with access to new regional markets for the Company's pre-engineered
metal building systems. Management believes that the Company's geographic
diversity will limit the impact from an economic downturn in any particular
region.
EXPERIENCED MANAGEMENT TEAM. The Company's senior management team has
an average of over 20 years of industry experience and has significantly
increased its depth as a result of the MBCI Acquisition. The management
teams of NCI and MBCI share similar business philosophies and historically
have demonstrated an ability to grow sales and net income in times of
strong, as well as adverse, economic conditions. Management attributes this
ability to effectively marketing its products, strategically locating new
manufacturing facilities, controlling expenses, maintaining flexibility in
capital budgeting, reducing production and distribution costs and
successfully completing and integrating acquisitions. In addition, the two
management teams have successfully identified and completed nine
acquisitions in the last five years. The Company's senior management team
will own approximately % of the Common Stock after giving effect to the
Offering.
38
<PAGE>
BUSINESS STRATEGY
The Company's management has developed business strategies to capitalize on
the Company's strengths. The Company's primary business strategies include the
following:
PURSUE STRATEGIC GROWTH OPPORTUNITIES. Throughout its history, the
Company has increased its sales and net income through a combination of
selective acquisitions and internal growth. Since 1993, the Company has
successfully acquired and integrated seven companies and is in the process
of integrating MBCI and a subsequently acquired metal coating and painting
operation. Management's disciplined acquisition strategy is focused on the
identification of suppliers of metal products and services that can be
relatively quickly assimilated into the Company's operations and that offer
opportunities to expand the Company's product line, further vertically
integrate its operations or broaden its geographic reach. In order to expand
its geographic coverage and increase manufacturing capacity, the Company has
also constructed nine new manufacturing facilities in the last five years
and has formed four joint ventures to expand into new markets and to
increase market penetration of existing markets.
LEVERAGE EXISTING DISTRIBUTION CHANNELS TO INCREASE SALES OF METAL
COMPONENTS. The Company seeks to penetrate further the metal components
market, primarily for metal roofing and wall systems. Currently, the Company
sells its products under well-recognized brand names through various
distribution channels to a broad range of end users. These channels include,
among others, (i) authorized builders, (ii) building materials
manufacturers, distributors and retailers, (iii) roofing systems installers,
(iv) contractors and end users and (v) builders of self-storage facilities.
The Company plans to increase sales and net income by utilizing its multiple
distribution channels to market its expanded range of metal components
products to existing and new customers.
CONTINUE TO ENHANCE FLEXIBLE, COST-EFFECTIVE PRODUCTION FACILITIES AND
PROCESSES. The Company's commitment to providing its customers with quality
products on a timely basis at competitive prices remains a key element of
its business strategy. As a result, management is focused on continuous cost
reduction including realization of opportunities to (i) aggressively manage
the purchase of raw materials, (ii) further automate its manufacturing
operations to reduce process costs and improve product quality and (iii)
capitalize on the breadth of the Company's geographic coverage to provide
customers with rapid delivery.
INCREASE SALES OF PRE-ENGINEERED METAL BUILDING SYSTEMS IN NEW AND
EXISTING GEOGRAPHIC MARKETS. The addition of MBCI's metal components
locations nationwide provides the Company with an opportunity to expand
sales of the Company's pre-engineered metal building systems in existing
markets and provides access to new regional markets in the Northeast and
Northwest. By utilizing MBCI's nationwide metal components manufacturing
facilities as platforms for expansion, the Company is well positioned to
increase sales of pre-engineered metal building systems in markets that
previously had been difficult for NCI to serve on a cost-effective basis.
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<PAGE>
ACQUISITIONS AND JOINT VENTURES
ACQUISITIONS. The following table describes NCI's and MBCI's combined
acquisition activity since 1993:
<TABLE>
<CAPTION>
PURCHASE
PRICE
SELLER DATE ACQUIRED (IN MILLIONS) BUSINESS ACQUIRED LOCATIONS
- ------------------------------------- ------------- --------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
Ellis Building Components, Inc. Oct. 1994 $ 4.9 Metal building systems Tallapoosa, GA
and metal components
Royal Metal Buildings, Inc. Mar. 1995 0.9 Metal building systems Hobbs, NM
and metal components
Doors & Building Components, Inc. Nov. 1995 14.7 Doors and interior metal Douglasville, GA;
components Chandler, AZ
Carlisle Engineered Metals, Inc. Mar. 1996 2.8 Metal components (West Lodi, CA
coast division)
Anderson Industries, Inc. Apr. 1996 22.3 Metal building systems, Southlake, TX;
metal components, metal Chester, SC
roofs and components
(Mesco division)
Alta Industries Apr. 1996 19.0 Metal components Salt Lake City, UT;
(Steelco division) Boise, ID
Carlisle Engineered Metals, Inc. Feb. 1997 6.2 Insulated panels and Stratford, TX;
metal components Jemison, AL
(division)
BTR plc May 1998 600.0 Metal components and Houston, TX
metal coating and headquarters and 21
painting (MBCI) other facilities in
U.S.
Chicago Metallic Corporation May 1998 15.0 Metal coating and Rancho Cucamonga, CA
painting (California
Finished Metals)
</TABLE>
JOINT VENTURES. The Company has also formed the following joint ventures:
<TABLE>
<CAPTION>
OPERATIONS PERCENTAGE
JOINT VENTURE BEGUN OWNERSHIP BUSINESS LOCATION
- ------------------------------------- ------------- --------------- ------------------------ ----------------------
<S> <C> <C> <C> <C>
DOUBLECOTE, L.L.C. Apr. 1995 50% Metal coating and Jackson, MS
painting
Metallic de Mexico, S.A. de C.V. Nov. 1995 50% Drafting and marketing Monterrey, Mexico
Building Systems de Mexico, S.A. de July 1997 51% Primary structures for Monterrey, Mexico
C.V. metal building systems
Midwest Metal Coating, L.L.C. (1) 50% Metal coating and Granite City, IL
painting
</TABLE>
- ------------------------------
(1) Expected to commence operations in the first quarter of 1999.
40
<PAGE>
PRODUCTS AND MARKETS
The Company's product lines consist of metal components for the building
industry and pre-engineered metal building systems. On an actual and pro forma
basis, giving effect to the MBCI Acquisition, NCI's and the Company's sales,
respectively, for the periods indicated attributable to these product lines were
approximately as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------------
PRO FORMA
1995 1996 1997 1997
---------------------- ---------------------- ---------------------- ----------------------
(IN MILLIONS)
Metal components............... $ 60.3 25.8% $ 119.9 36.0% $ 161.2 39.5% $ 569.1 69.8%
Metal building systems......... 173.9 74.2 213.0 64.0 246.6 60.5 246.6 30.2
--------- ----- --------- ----- --------- ----- --------- -----
Total sales................ $ 234.2 100.0% $ 332.9 100.0% $ 407.8 100.0% $ 815.7 100.0%
--------- ----- --------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- ----- --------- -----
</TABLE>
METAL COMPONENTS. The Company's metal components consist of individual
components, including secondary structural framing, covering systems and
associated metal trims, that are sold directly to contractors or end users for
use in the building industry, including the construction of metal buildings. The
Company also stocks and markets metal component parts for use in the maintenance
and repair of existing buildings. Specific component products consist of end and
side wall panels, roof panels, purlins, girts, partitions, header panels and
related trim and screws. The Company believes it offers the widest selection of
metal components in the building industry.
Purlins and girts, which are medium gauge, roll formed steel components, are
supplied to builders for secondary structural framing. The Company custom
produces purlins and girts for its customers and offers the widest selection of
sizes and profiles of purlins and girts in the United States. Covering systems,
consisting of wall and roof panels, protect the rest of the structure and the
contents of the building from the weather, while also contributing to the
structural integrity of the building.
The Company's metal roofing products are attractive and durable. The Company
uses standing seam roof technology to replace traditional built-up and
single-ply roofs as well as to provide a distinctive look to new construction.
The Company manufactures and designs metal roofing systems for sales to regional
metal building manufacturers, general contractors and subcontractors. The
Company believes it has the broadest line of standing seam roofing products in
the building industry. The Company has also developed and patented a retrofit
metal panel, Retro-R-Registered Trademark-, that is used to replace wall and
roof panels of metal buildings. Retro-R-Registered Trademark- can be installed
over the top of existing metal panels to remodel or preserve a standing
structure. Although metal roofing is somewhat more expensive than traditional
roofing in upfront costs, its durability and low maintenance costs make metal
roofing a lower cost roofing product after the first 10 years.
The Company manufactures overhead doors and interior and exterior doors for
use in metal and other buildings. The Company is one of the largest suppliers in
the U.S. of roll-up doors to builders of self-storage facilities.
The Company provides its own metal coating and painting products and
services for use in component manufacturing. As a toll coater of hot roll steel
coils, the Company also provides pre-painted hot roll coils to manufacturers of
metal building systems and metal components. Either a customer provides coils
through its own supply channels, which are processed by the Company, or the
Company purchases hot roll coils and processes them for sale as a packaged
product. The Company also pre-paints light gauge steel coils for steel mills,
which supply the painted coils to various industrial users, including metal
building systems and metal components manufacturers and manufacturers of
lighting fixtures.
The Company's metal coating and painting operations apply a variety of paint
systems to metal coils. The process generally includes cleaning and painting the
coil and slitting it to customer specifications. The
41
<PAGE>
Company believes that pre-painted metal coils are a better quality product,
environmentally cleaner and more cost-effective than painted metal products
prepared in other manufacturers' in-house painting operations. Painted metal
coils also offer manufacturers the opportunity to produce a broader and more
aesthetically pleasing range of products.
PRE-ENGINEERED METAL BUILDING SYSTEMS. Pre-engineered metal building
systems consist of pre-engineered structural beams and panels that are welded
and roll formed in a factory and shipped to a construction site complete and
ready for assembly. The Company designs an integrated metal building system that
meets customer specifications and allows easy on-site assembly by the builder or
independent contractor. Pre-engineered metal building systems typically consist
of three systems:
- PRIMARY STRUCTURAL FRAMING. Primary structural framing, fabricated from
heavy-gauge steel, supports the secondary structural framing, roof, walls
and all externally applied loads. Through the primary framing, the force
of all applied loads is structurally transferred to the foundation.
- SECONDARY STRUCTURAL FRAMING. Secondary structural framing consists of
medium-gauge, roll-formed steel components called purlins and girts.
Purlins are attached to the primary frame to support the roof. Girts are
attached to the primary frame to support the walls. The secondary
structural framing is designed to strengthen the primary structural
framing and efficiently transfer applied loads from the roof and walls to
the primary structural framing.
- COVERING SYSTEMS. Covering systems consist of roof and wall panels. These
panels not only lock out the weather but also contribute to the structural
integrity of the overall building system. Roof and siding panels are
fabricated from light-gauge, roll-formed steel. Accessory components
complete the pre-engineered metal building system. These components
include doors, windows, gutters and interior partitions.
[ART]
--Simplified Structure with Basic Subsystems Shown
42
<PAGE>
SALES, MARKETING AND CUSTOMERS
METAL COMPONENTS. The Company sells metal components directly to regional
manufacturers, contractors, subcontractors, distributors, lumberyards,
cooperative buying groups and other customers under the brand names "Metal
Building Components," "American Building Components" and "NCI Building
Components." Roll-up doors, interior and exterior doors, interior partitions and
walls, header panels and trim are sold directly to contractors and other
customers under the brand names "Doors & Building Components" or "DBCI." These
components also are produced for integration into self storage and pre-
engineered metal building systems sold by of the Company.
The Company markets its components products within four product lines: (i)
commercial/industrial; (ii) architectural; (iii) wood frame builders; and (iv)
residential. Customers include regional metal building systems manufacturers,
general contractors, subcontractors, roofing installers, architects and
end-users. Commercial and industrial businesses are heavy users of metal
components and metal buildings systems. Standing seam roof and architectural
customers are growing in importance. As metal buildings become a more acceptable
building alternative and aesthetics become an increasingly important
consideration for end users of metal buildings, the Company believes that
architects are participating in metal building design and purchase decisions to
a greater extent. Wood frame builders also purchase the Company's metal
components through distributors, lumberyards, cooperative buying groups and
chain stores for various uses, including agricultural buildings. Residential
customers are generally contractors building upscale homes that require an
architect-specified product.
The Company's metal components sales operations are organized into four
geographic regions. Each region is headed by a general sales manager supported
by individual plant sales managers. Each local sales office is located adjacent
to a manufacturing plant and is staffed by a direct sales force responsible for
contacting customers and architects and a sales coordinator who supervises the
sales process from the time the order is received until it is shipped and
invoiced. The regional and local focus of the Company's customers requires
extensive knowledge of local business conditions.
The Company provides its customers with product catalogs tailored to its
product lines, which include product specifications and suggested list prices.
Certain of the Company's catalogs are available on-line through the Internet,
which enables architects and other customers to download drawings for use in
developing project specifications. Customers place orders via telephone or
facsimile to a sales coordinator at the regional office who enters it onto a
standard order form. The form is then sent via computer to the plant and
downloaded automatically to the production machines.
The Company has a small number of national accounts for its coating and
painting products and services and relies on a single sales manager. The Company
also has a metal coating joint venture, which has an independent sales force.
PRE-ENGINEERED METAL BUILDING SYSTEMS. The Company sells pre-engineered
metal building systems to builders nationwide under the brand names "Metallic
Buildings," "A&S Buildings" and "Mesco," respectively. The Company markets
pre-engineered metal building systems through an in-house sales force to
authorized builder networks of over 1,200 builders. The Company markets
pre-engineered metal building systems under the brand name "Mid-West Steel
Buildings" directly to contractors in Texas and surrounding states using an
in-house sales force. The Company also sells pre-engineered metal building
systems under the name "All American Systems" and various private labels.
The Company's authorized builder networks consist of independent general
contractors which market the Company's Metallic Buildings, A&S Buildings and
Mesco products to end users. Most of the Company's sales of pre-engineered metal
building systems outside of Texas and surrounding states are through its
authorized builder networks. The Company relies upon maintaining a satisfactory
business relationship for the continued receipt of job orders from its
authorized builders and does not consider the builder agreements to be material
to its business. During fiscal 1997, the Company's largest customer for
pre-engineered metal building systems accounted for less than 2% of the
Company's total sales.
43
<PAGE>
The Company enters into an agreement with an authorized builder, which
generally grants the builder the non-exclusive right to market the Company's
products in a specified territory and which is cancelable by either party on 60
days notice. The agreements do not prohibit the builder from marketing metal
building systems of other manufacturers. The Company establishes an annual sales
goal for each builder and provides to the builder sales and pricing information,
design and engineering manuals, drawings and assistance, application programs
for estimating and quoting jobs and advertising and promotional literature. The
Company also defrays a portion of the builder's advertising costs and provides
volume purchasing and other pricing incentives to encourage them to deal
exclusively or principally with the Company. The builder is required to maintain
a place of business in its designated territory, provide a sales organization,
conduct periodic advertising programs and perform construction, warranty and
other services for customers and potential customers. An authorized builder
usually is hired by an end user to erect a metal building system on the
customer's site and provide general contracting and other services ancillary to
the completion of the project. The Company sells its products to the builder,
which generally includes the price of the building as a part of its overall
construction contract with its customer.
MANUFACTURE AND DESIGN
METAL COMPONENTS. The Company operates 37 facilities used for manufacturing
of metal components for the building industry, including its metal coating and
painting operations. The Company believes this broad geographic penetration
gives it an advantage over its components competitors because major elements of
a customer's decision are the speed and cost of delivery from the manufacturing
facility to the product's ultimate destination. With the exception of the
Company's architectural and standing seam products, the Company is not involved
in the design process for the components it manufactures. The Company also owns
a fleet of trucks to deliver its products to its customers in a more timely
manner than most of its competitors.
The Company's doors, interior partitions and other related panels and trim
products are manufactured at dedicated plants in Georgia, Texas and Arizona. The
products are roll-formed or fabricated at each plant using roll-formers and
other metal working equipment. Orders are processed at the Georgia plant and
sent to the appropriate plant, which is generally determined in a manner to
obtain the lowest shipping cost.
METAL COATING AND PAINTING. The Company operates two metal coating and
painting facilities from which it primarily services its own needs and the needs
of other metal components manufacturers through the processing of hot rolled
steel coils. Metal coating and painting processes involve applying various types
of chemical treatments and paint systems to flat rolled continuous coils of
metal, including steel and aluminum, giving the coils a baked-on finish that
both protects the metal and makes it more attractive. Initially, various metal
substrates in coil form are flattened, cleaned and pretreated. The metal is then
coated, oven cured, cooled, recoiled and packaged for shipment. Slitting and
embossing services can also be performed on the coated metal prior to shipping
pursuant to customer specifications. Hot roll steel coils typically are used in
the production of secondary structural framing of metal buildings and other
structure applications. Painted light gauge steel coils are used in the
manufacture of products for building exteriors, metal doors, lighting fixtures
and appliances. The Company's metal coating operation is one of only two metal
coaters in the United States to receive the Supplier Excellence Award from
Bethlehem Steel Corporation.
The Company is a joint venture partner in two metal coating operations. The
Company owns 50% of an existing metal coating joint venture with a processing
plant in Jackson, Mississippi. The Company also owns 50% of a new joint venture,
which has acquired land in Granite City, Illinois and is building a hot rolled
coil coating facility that is expected to commence operations in the first
quarter of 1999. The new facility will be used to slit and coat hot rolled coils
of medium gauge steel for use in manufacturing purlins and girts. The Company
has agreed to purchase a substantial portion of its production requirements for
that product from the new joint venture.
44
<PAGE>
PRE-ENGINEERED METAL BUILDING SYSTEMS. After the Company receives an order,
the Company's engineers design the metal building system to meet the customer's
requirements and to satisfy applicable building codes and zoning requirements.
In order to expedite this process, the Company uses computer-aided design and
engineering systems to generate engineering and erection drawings and a bill of
materials for the manufacture of the pre-engineered metal building system. The
Company employs approximately 185 engineers and draftsmen in this area.
Once the specifications and designs of the customer's project have been
finalized, the manufacturing process of frames and other building systems begins
at one of the Company's six manufacturing facilities in Texas, Georgia, South
Carolina or Tennessee or its joint venture facility in Mexico. The fabrication
of the primary structural framing consists of a process in which pieces of rigid
steel plates are punched and sheared and then routed through an automatic
welding machine and sent through further fitting and welding processes. The
secondary structural framing and the covering subsystem are roll-formed steel
products that are manufactured at the Company's full manufacturing facilities as
well as its regional satellite plants. In roll forming, pre-finished coils of
steel are unwound and passed through a series of progressive forming rolls which
form the steel into various profiles of medium-gauge structural shapes and
light-gauge sheets and panels.
Once manufactured, structural framing members and covering systems are
shipped to the job site for assembly. The Company generally is not responsible
for any on-site construction. The time elapsed between the Company's receipt of
an order and shipment of a completed building system has typically ranged from
four to eight weeks, although delivery can extend somewhat longer if engineering
and drafting requirements are extensive.
The Company owns 51% of a joint venture, which began operation of a framing
facility in Monterrey, Mexico in July 1997. The Company purchases substantially
all of the framing systems produced by the Mexico joint venture.
RAW MATERIALS
The principal raw material used in the manufacture of the Company's
pre-engineered metal building systems and component products is steel.
Components are fabricated from common steel products produced by mills including
bars, plates, sheets and galvanized sheets. On a combined basis for their
respective 1997 fiscal years, NCI and MBCI purchased an aggregate of
approximately 80% of their steel requirements from National Steel Corporation
and Bethlehem Steel Corporation. No other steel supplier accounted for more than
10% of the combined steel purchases for the same period. The Company believes
concentration of its steel purchases among a small group of suppliers that have
mills and warehouse facilities in close proximity to the Company's facilities
enables it, as a large customer of those suppliers, to obtain better service and
delivery. These suppliers generally maintain an inventory of the types of
materials required by the Company, enabling the Company to utilize a form of
"just-in-time" inventory management with regard to raw materials.
The Company does not have any long-term contracts for the purchase of raw
materials. A prolonged labor strike against one of its principal domestic
suppliers could have a material adverse effect on the Company's operations.
Alternative sources, however, including foreign steel, are currently believed to
be sufficient to maintain required deliveries.
BACKLOG
On a combined basis at April 30, 1998, the total backlog for orders for
NCI's and MBCI's products believed by the Company to be firm was $138.8 million.
This compares with a total backlog for NCI's products of $110.0 million at
October 31, 1997, and $85.6 million at October 31, 1996, and for MBCI's products
of $16.1 million at December 31, 1997, and $14.9 million at December 31, 1996.
The increases in backlog reflect the results of the marketing activities of NCI
and MBCI and market demand. Backlog
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<PAGE>
primarily consists of pre-engineered metal building systems. Job orders
generally are cancelable by customers at any time for any reason and,
occasionally, orders in the backlog are not completed and shipped for reasons
that include changes in the requirements of the customers and the inability of
customers to obtain necessary financing or zoning variances. None of the backlog
at April 30, 1998, currently is scheduled to extend beyond April 30, 1999.
COMPETITION
The Company competes with a number of other manufacturers of metal
components and metal building systems for the building industry, ranging from
small local firms to large national firms. Most of these competitors operate on
a regional basis, although the Company believes that at least four other
manufacturers of metal building systems and several manufacturers of metal
components have nationwide coverage. In addition, the Company and other
manufacturers of metal components and metal building systems compete with
alternative methods of building construction, which may be perceived as more
traditional, more aesthetically pleasing or having other advantages. Competition
is based primarily on price, speed of construction, quality of builder/dealer
networks, the ability to provide added value in the design and engineering of
buildings and, among manufacturers of metal components and metal building
systems, service, quality and delivery times.
REGULATORY MATTERS
The Company's operations are subject to a wide variety of federal, state and
local laws and regulations governing, among other things, emissions to air,
discharges to waters, the generation, handling, storage, transportation,
treatment, and disposal of hazardous substances and other materials and health
and safety matters. Laws protecting the environment generally have become more
stringent than in the past and are expected to continue to do so. Environmental
laws and regulations generally impose "strict liability," which means that in
some situations the Company could be exposed to liability for cleanup costs, and
"toxic tort" or other damages as a result of conduct that was lawful at the time
it occurred or conduct of, or conditions caused by, prior operators or other
third parties, regardless of fault on the part of the Company. The Company
believes it is in substantial compliance with all environmental standards
applicable to its operations. However, there can be no assurance that cleanup
costs, natural resource damages, criminal sanctions, "toxic tort" or other
damages arising as a result of environmental laws and costs associated with
complying with changes in environmental laws and regulations will not be
substantial and will not have a material adverse effect on the Company's
financial condition. From time to time, claims have been made against the
Company under environmental laws. The Company has insurance coverage for certain
environmental claims and certain locations after payment of the applicable
deductible. The Company does not anticipate material capital expenditures to
meet current environmental quality control standards. There can be no assurance
that more stringent regulatory standards will not be established that might
require such expenditures.
The Company is also subject to federal, state and local laws and regulations
governing occupational safety and health, including review by the federal
Occupational Health and Safety Administration and similar state agencies. The
Company believes it is in substantial compliance with applicable laws and
regulations, and compliance does not have a material adverse affect on the
Company's business.
The pre-engineered metal building systems manufactured by the Company must
meet zoning and building code requirements promulgated by local governmental
agencies.
46
<PAGE>
PATENTS, LICENSES AND PROPRIETARY RIGHTS
The Company has a number of United States patents and pending patent
applications, including patents relating to metal roofing systems and metal
overhead doors. The Company does not, however, consider patent protection to be
a material competitive factor in its industry. The Company also has several
registered trademarks and pending registrations in the United States.
EMPLOYEES
As of June 30, 1998, the Company had approximately 3,700 employees, of whom
over 2,700 were manufacturing and engineering personnel. The Company regards its
employee relations as satisfactory.
The Company's employees are not represented by a labor union or collective
bargaining agreement, although the United Steel Workers of America petitioned
the National Labor Relations Board to be recognized as the collective bargaining
representative of the production and maintenance employees of the Company's
Tallapoosa, Georgia facility. An election for that purpose was held in January
1996 and the union lost the election to be recognized as the collective
bargaining representative of such employees. A similar election was held at the
Company's Mattoon, Illinois facility in November 1997 and the United Steel
Workers of America lost that election.
LEGAL PROCEEDINGS
The Company is involved in various legal proceedings that the Company
considers to be in the normal course of business. Management believes that such
litigation will not have a material adverse effect on the Company's results of
operations or financial condition.
PROPERTIES
The Company conducts manufacturing operations at the following facilities:
<TABLE>
<CAPTION>
SQUARE OWNED
FACILITY PRODUCTS FEET OR LEASED
- ---------------------------- --------------------------------- --------- ---------
<S> <C> <C> <C>
Chandler, Arizona Doors and related metal 35,000 Leased
components
Tomlinson, Arizona Metal components(1) 65,980 Owned
Atwater, California Metal components(2) 85,700 Owned
Rancho Cucamonga, California Metal coating and painting 98,000 Owned
Tampa, Florida Metal components(3) 28,775 Owned
Adel, Georgia Metal components(1) 59,550 Owned
Douglasville, Georgia Metal components(4) 110,536 Owned
Douglasville, Georgia Doors and related metal 60,000 Owned
components
Marietta, Georgia Metal coating and painting 125,700 Owned
Tallapoosa, Georgia Metal building systems(5) 246,000 Leased
Metal components
Napa, Idaho Metal components(6) 42,900 Owned
Mattoon, Illinois Metal components(2) 90,600 Owned
Shelbyville, Indiana Metal components(6) 66,450 Owned
Nicholasville, Kentucky Metal components(7) 41,280 Owned
Monterrey, Mexico(8) Metal building systems(9) 64,125 Owned
Jackson, Mississippi Metal components(2) 96,000 Owned
Jackson, Mississippi(10) Metal coating and painting 363,200 Owned
Omaha, Nebraska Metal components(7) 51,750 Owned
Hobbs, New Mexico Metal components(2) 60,800 Leased
Rome, New York Metal components(6) 57,700 Owned
Oklahoma City, Oklahoma Metal components(1) 59,695 Owned
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
SQUARE OWNED
FACILITY PRODUCTS FEET OR LEASED
- ---------------------------- --------------------------------- --------- ---------
<S> <C> <C> <C>
Chester, South Carolina Metal building systems(5) 124,000 Owned
Metal components
Caryville, Tennessee Metal building systems(5) 193,800 Owned
Metal components
Memphis, Tennessee Metal coating and painting 61,500 Owned
Nesbitt, Tennessee Metal components(1) 71,720 Owned
Ennis, Texas Metal components and studs 33,000 Owned
Grand Prairie, Texas Metal components(1) 48,027 Owned
Houston, Texas Metal components 97,000 Owned
Houston, Texas Metal components(4) 209,355 Owned
Houston, Texas Metal coating and painting 39,550 Owned
Houston, Texas(11) Metal building systems(5) 382,000 Owned
Metal components
Doors
Lubbock, Texas Metal components(1)(7) 64,320 Owned
San Antonio, Texas Metal components(6) 52,360 Owned
Southlake, Texas Metal building systems(5) 123,000 Owned
Metal components
Stafford, Texas Metal components 105,000 Leased
Stafford, Texas Metal components 56,840 Leased
Salt Lake City, Utah Metal components(1) 93,150 Owned
Colonial Heights, Virginia Metal components(1) 37,000 Owned
</TABLE>
- ------------------------------
(1) Secondary structures and covering systems.
(2) Includes secondary structures and covering systems.
(3) Covering products.
(4) Full product range.
(5) Primary structures, secondary structures and covering systems.
(6) Covering systems.
(7) Specialized products.
(8) The Company owns a 51% interest in a joint venture.
(9) Primary structures.
(10) The Company owns a 50% interest in a joint venture.
(11) Includes 33,600 square feet used for the Company's principal executive
offices.
The Company also maintains several drafting office facilities and retail
locations in various states. These additional facilities are subject to
short-term leases.
The Company believes that its present facilities are adequate for its
current and projected operations. As part of the integration plan implemented in
connection with the MBCI Acquisition, the Company is reviewing its manufacturing
facilities and considering the consolidation or closure of certain facilities as
part of its efforts to maximize production efficiencies.
48
<PAGE>
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND OTHER KEY MANAGERS
The directors, executive officers and other key managers of the Company, and
their ages as of July 31, 1998, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------- --- -------------------------------------------------------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
C. A. Rundell, Jr...................... 66 Chairman of the Board and Class II Director
Johnie Schulte, Jr..................... 63 President, Chief Executive Officer, President and Chief Executive
Officer of Metal Buildings Division and Class III Director
A. R. Ginn............................. 59 Executive Vice President and Chief Operating Officer, President and
Chief Executive Officer of Metal Components Division, Chief
Executive Officer of Metal Coaters Division and Class I Director
Leonard F. George...................... 46 Executive Vice President of Metal Buildings Division and Class III
Director
Robert J. Medlock...................... 58 Vice President, Treasurer and Chief Financial Officer and Vice
President, Chief Financial Officer and Treasurer of Metal
Buildings Division
Kenneth W. Maddox...................... 51 Vice President, Vice President and Chief Financial Officer of Metal
Components Division and Metal Coaters Division and Class I
Director
Donnie R. Humphries.................... 48 Secretary and Vice President, Human Relations of Metal Buildings
Division
Thomas C. Arnett....................... 65 Class I Director
William D. Breedlove................... 58 Class III Director
Gary L. Forbes......................... 54 Class II Director
Robert N. McDonald..................... 70 Class II Director
Daniel D. Zabcik....................... 69 Class I Director
OTHER KEY MANAGERS:
Jerry D. Boen.......................... 51 Vice President, Marketing of Metal Components Division
David B. Curtis........................ 38 President of Doors & Building Components Division
Charles W. Dickinson................... 47 Vice President, Sales of Metal Components Division
John T. Eubanks........................ 57 President of Mesco Metal Buildings Division
Kelly R. Ginn.......................... 37 Vice President, Manufacturing of Metal Components Division
John W. Holmes......................... 47 President of Metal Prep Division
Richard F. Klein....................... 59 President and Chief Operating Officer of Metal Coaters Division
Fredrick D. Koetting................... 39 Vice President, Operations of Metal Buildings Division
Alvan E. Richey, Jr.................... 62 Vice President, Sales and Marketing of Metal Buildings Division
</TABLE>
49
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS:
C.A. Rundell, Jr. has served as a director and Chairman of the Board of the
Company since April 1989. Since October 1997, Mr. Rundell has been President,
Chief Executive Officer and a director of Tyler Corporation, a provider of
information management systems and services for county governments and other
enterprises and a distributor of automotive aftermarket parts. Mr. Rundell
served as Chairman of the Board of Tyler Corporation from October 1996 until
October 1997, and as its temporary Chief Executive Officer from October 1996 to
March 1997. Since May 1988, Mr. Rundell has owned and operated Rundell
Enterprises, a sole proprietorship engaged in providing acquisition and
financial consulting services to various business enterprises. From 1977 to
1988, Mr. Rundell was the President, Chief Executive Officer and a director of
Cronus Industries, Inc. (now Business Records Corporation) ("Cronus"). Mr.
Rundell is also a director of Dain Rauscher Corporation, a holding company for a
full-service regional brokerage and investment banking company, and Tandy Brands
Accessories, Inc., a manufacturer of accessories for men, women and boys.
Johnie Schulte, Jr. a founder of the Company, has been a director, President
and Chief Executive Officer of the Company since 1984 and as the President and
Chief Executive Officer of the Metal Buildings Division since May 1998. Mr.
Schulte founded and was President of Mid-West Steel Buildings Co., Inc. from
1970 until its sale to American Buildings Company ("ABC"), a metal building
manufacturer, in 1980. Mr. Schulte remained as President of the Mid-West
Metallic Division of ABC until 1984, when he left to form the Company. Mr.
Schulte has spent 44 years in the metal building industry.
A. R. Ginn has served as a director and as Executive Vice President and
Chief Operating Officer of the Company, President and Chief Executive Officer of
the Metal Components Division and Chief Executive Officer of the Metal Coaters
Division since May 1998. Previously, he served as a director and the President
of MBCI since 1976 and was Chief Executive Officer of the Metal Coaters Division
of MBCI from 1987 to 1998. Mr. Ginn has over 40 years of experience in the metal
building and components industry. Mr. Ginn worked for four years with A&S Steel
Buildings and spent 14 years with Metallic Building Company, where he was Vice
President of Operations for seven years. Mr. Ginn is the father of Kelly R.
Ginn.
Leonard F. George has served as a director of the Company since March 1993
and as an Executive Vice President of the Metal Buildings Division since May
1998. Previously, Mr. George served as Executive Vice President of the Company
since September 1992 and as the President of the A&S Division from October 1992
until December 1992. From 1987 to September 1992, Mr. George was employed as
President, Vice President of Engineering, Assistant Vice President of
Engineering and Regional Sales Manager of ABC. Mr. George has spent over 20
years in the metal building industry.
Robert J. Medlock has served as Vice President and Chief Financial Officer
of the Company since February 1992 and as Vice President, Chief Financial
Officer and Treasurer of the Metal Buildings Division since May 1998. Mr.
Medlock served as the Chief Financial Officer and Treasurer of Enviropact, Inc.,
an environmental services company, from 1989 to 1991. He was the Vice President
and Chief Financial Officer of ABC from 1973 to 1978. After the acquisition of
ABC by Cronus, he became Vice President and Controller of Cronus and served in
that capacity from 1979 until 1981. Mr. Medlock is a certified public
accountant.
Kenneth W. Maddox has served as a director and as Vice President of the
Company and Vice President and Chief Financial Officer of the Metal Components
Division and the Metal Coaters Division since May 1998. Previously, he served as
the Chief Financial Officer and Treasurer of MBCI since 1980. Mr. Maddox is a
certified public accountant.
Donnie R. Humphries has been Secretary of the Company since 1985 and Vice
President, Human Relations of the Metal Buildings Division since May 1998. Mr.
Humphries previously served as Vice President, Human Relations of the Company
since 1997. Mr. Humphries was employed by Mid-West Steel
50
<PAGE>
Buildings Co., Inc. from 1976 to 1980 and by ABC from 1980 to 1985. Mr.
Humphries has over 21 years of experience in the metal building industry.
Thomas C. Arnett has served as a director of the Company since April 1989.
Mr. Arnett is currently retired and manages his own investments. Mr. Arnett was
an Executive Vice President of Cronus from 1977 to 1985 and served as a director
of Cronus from 1977 to 1988.
William D. Breedlove has served as a director of the Company since March
1992. Mr. Breedlove has been Vice Chairman of Hoak Breedlove Wesneski & Co., an
investment banking firm, since August 1996. Previously, he served as Chairman
and Managing Director of Breedlove Wesneski & Co., a private merchant banking
firm, for over five years. In addition, Mr. Breedlove served as a director of
Cronus from 1984 to 1988.
Gary L. Forbes has served as a director of the Company since December 1991.
Mr. Forbes has been a Vice President of Equus II Incorporated, an investment
company, since November 1991. Mr. Forbes is also a director of Consolidated
Graphics, Inc., a commercial printing company, Advanced Technical Products,
Inc., a manufacturer of high performance composite parts, and Drypers
Corporation, a manufacturer of disposable diapers. Mr. Forbes is a certified
public accountant.
Robert N. McDonald has served as a director since March 1992. Mr. McDonald
was a marketing consultant for ABC from 1985 until February 1992 and served as a
director of that company from 1989 to 1990. From 1956 to 1970, Mr. McDonald was
employed by Butler Manufacturing Company, a metal building manufacturer, and
served as Vice President of Marketing for ABC from 1970 to 1978.
Daniel D. Zabcik has been a director of the Company since April 1989 and
served as an Executive Vice President of the Company from April 1989 until
October 1993, when he resigned as an officer and assumed part-time employee
status. Since 1986, Mr. Zabcik has also served as a director of Southwest Bolt,
Inc., a distributor of structural bolts. From 1980 until April 1989, Mr. Zabcik
was employed as President, Executive Vice President and Vice Chairman of the
Mid-West Metallic division of ABC. Mr. Zabcik has spent over 40 years in the
metal building industry. Mr. Zabcik is a licensed engineer and served on the
Executive Committee of the MBMA in 1993.
The Board of Directors is comprised of four Class I Directors, three Class
II Directors and three Class III Directors. The terms of the Class I, Class II,
and Class III directors will expire at the annual meeting of stockholders held
in 2000, 2001 and 1999, respectively. At each of those annual meetings and
thereafter, directors will be elected for a three-year term to succeed the
directors of the same class whose terms are then to expire. Officers of the
Company serve at the discretion of the Board of Directors.
OTHER KEY MANAGERS:
Jerry D. Boen has served as Vice President, Marketing of the Metal
Components Division since May 1998. Previously, he served as Vice President of
Marketing of MBCI since 1980. Prior to joining MBCI, Mr. Boen was a sales
manager for another building components company.
David B. Curtis has served as President of the Doors & Building Components
Division of the Company since it was acquired from Doors & Building Components,
Inc. in November 1995. Mr. Curtis was the founder of Doors & Building
Components, Inc. and served as its President and Chief Executive Officer for
more than five years.
Charles W. Dickinson has served as Vice President, Sales of the Metal
Components Division since May 1998. Previously, he served as Vice President of
Sales of MBCI since 1991 and was employed by MBCI for more than 16 years. Mr.
Dickinson has over 23 years of experience in the metal building and components
industry.
51
<PAGE>
John T. Eubanks has served as President of the Mesco Metal Buildings
Division of the Company since 1989. Mesco Metal Buildings was a division of
Anderson Industries, Inc. prior to April 1, 1996, at which time it was acquired
by a subsidiary of the Company.
Kelly R. Ginn has served as Vice President, Manufacturing of the Metal
Components Divisions since May 1998. Previously, he served as Vice President of
Manufacturing of MBCI since 1990. Prior to joining MBCI in 1985, Mr. Ginn worked
as a Plant Superintendent for a large metal building manufacturer. Mr. Ginn has
19 years of experience in the metal building and components industry. Mr. Ginn
is the son of A.R. Ginn.
John W. Holmes has served as President of the Metal Prep Division since May
1998. Previously, he served as President of Metal Prep, Inc., a subsidiary of
MBCI, since 1996. Mr. Holmes was employed by MBCI for over 16 years and served
as Sales Manager for two of MBCI's plants and as President of American Building
Company, a subsidiary of MBCI. Before joining MBCI in 1981, Mr. Holmes was a
Regional Manager for a metal building components manufacturer.
Richard F. Klein has served as President and Chief Operating Officer of the
Metal Coaters Division since May 1998. Previously, he served as President of
Metal Coaters, Inc., a subsidiary of MBCI, since 1987. Before joining MBCI in
1987, Mr. Klein spent nine years as Vice President of a large coil coating
concern.
Fredrick D. Koetting has been Vice President, Operations of the Metal
Building Division since May 1998. He previously served as a Vice President of
the Company since May 1994. Prior to joining the Company in May 1994, Mr.
Koetting served as an Account Manager for National Steel Corporation, a steel
supplier of the Company, from 1991 until May 1994. Mr. Koetting served as a
Manager of Customer Service for Granite City Steel, a division of National Steel
Corporation, from 1989 until 1991.
Alvan E. Richey, Jr. has been Vice President, Sales and Marketing of the
Metal Buildings Division since May 1998. He previously served as Vice President,
Sales and Marketing of the Company since July 1995. Mr. Richey has also been
President of the A&S Division since December 1992. Prior to joining the Company
in September 1992, Mr. Richey was employed by ABC for over 22 years. Mr. Richey
has over 29 years of experience in the metal building industry.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Southwest Bolt, Inc., a corporation of which Mr. Zabcik is the President and
owns 32% of the capital stock, is the Company's primary supplier of structural
bolts. In fiscal 1997, the Company made purchases from Southwest Bolt, Inc., in
the amount of $1.9 million.
52
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, as of July 31, 1998 (the "Ownership
Date"), by (i) each person or group known by the Company to own beneficially
more than 5% of the outstanding shares of Common Stock, (ii) each director,
(iii) the Company's Chief Executive Officer and each of the Company's four other
most highly compensated executive officers for fiscal 1997, and (iv) all
directors and executive officers as a group. Except as otherwise indicated, each
of the persons or groups named below has sole voting power and investment power
with respect to such Common Stock.
<TABLE>
<CAPTION>
SHARES OWNED
SHARES OWNED BEFORE AFTER THE
THE OFFERING(1) OFFERING(1)
--------------------- SHARES BEING ---------------
NAME NUMBER PERCENT OFFERED NUMBER
- --------------------------------------------------------------- ---------- --------- ------- ---------------
<S> <C> <C> <C> <C>
Johnie Schulte, Jr.(2)......................................... 933,698 5.1%
A. R. Ginn..................................................... 500,000 2.8%
Daniel D. Zabcik(3)............................................ 332,010 1.8%
C.A. Rundell, Jr.(4)........................................... 256,218 1.4%
Kenneth W. Maddox.............................................. 238,000 1.3%
Gary L. Forbes(5).............................................. 200,500 1.1%
Leonard F. George(6)........................................... 146,028 *
John T. Eubanks(7)............................................. 125,250 *
Alvan E. Richey, Jr.(8)........................................ 71,554 *
Robert J. Medlock(9)........................................... 61,948 *
Thomas C. Arnett(10)........................................... 40,574 *
William D. Breedlove(11)....................................... 32,078 *
Robert N. McDonald(11)......................................... 18,078 *
All directors and executive officers as a group (12
persons)(12).................................................. 2,964,132 16.0%
<CAPTION>
NAME PERCENT
- --------------------------------------------------------------- -------
<S> <C>
Johnie Schulte, Jr.(2).........................................
A. R. Ginn.....................................................
Daniel D. Zabcik(3)............................................
C.A. Rundell, Jr.(4)...........................................
Kenneth W. Maddox..............................................
Gary L. Forbes(5)..............................................
Leonard F. George(6)...........................................
John T. Eubanks(7).............................................
Alvan E. Richey, Jr.(8)........................................
Robert J. Medlock(9)...........................................
Thomas C. Arnett(10)...........................................
William D. Breedlove(11).......................................
Robert N. McDonald(11).........................................
All directors and executive officers as a group (12
persons)(12)..................................................
</TABLE>
- ------------------------------
* Less than 1%
(1) Includes shares beneficially owned by such persons, including shares owned
pursuant to the NCI 401(k) Profit Sharing Plan. If a person has the right to
acquire beneficial ownership of any shares by exercise of options within 60
days after the Ownership Date, such shares are deemed beneficially owned by
such person and are deemed to be outstanding solely for the purpose of
determining the percentage of the Common Stock that he owns. Such shares are
not included in the computations for any other person.
(2) Includes options to purchase 168,666 shares held by Mr. Schulte that were
exercisable within 60 days after the Ownership Date. Mr. Schulte also holds
options to purchase an additional 77,500 shares that were not exercisable.
The principal business address of Mr. Schulte is 7301 Fairview, Houston,
Texas 77041.
(3) Includes 120,000 shares held in a testamentary trust, of which Mr. Zabcik is
sole trustee, for the benefit of his children, and options to purchase
40,500 shares held by Mr. Zabcik that were exercisable within 60 days after
the Ownership Date. Mr. Zabcik also holds options to purchase an additional
3,500 shares that were not exercisable.
(4) Includes options to purchase 12,500 shares held by Mr. Rundell that were
exercisable within 60 days after the Ownership Date. Mr. Rundell also holds
options to purchase an additional 77,500 shares that were not exercisable.
(5) Includes 200,000 shares held by Equus II Incorporated, of which Mr. Forbes
is a Vice President and may be deemed to share voting and investment power
with respect to such shares. Mr. Forbes disclaims beneficial ownership of
such shares. Also includes options to purchase 500 shares held by Mr. Forbes
that were exercisable within 60 days after the Ownership Date. Mr. Forbes
also holds options to purchase an additional 3,500 shares that were not
exercisable.
(6) Includes options to purchase 146,028 shares held by Mr. George that were
exercisable within 60 days after the Ownership Date. Mr. George also holds
options to purchase an additional 65,500 shares that were not exercisable.
(7) Includes 100,250 shares issuable with respect to a convertible debenture
that was exercisable as of the Ownership Date and options to purchase 25,000
shares held by Mr. Eubanks that were exercisable within 60 days after the
Ownership Date. Mr. Eubanks also holds options to purchase an additional
45,000 shares that were not exercisable.
53
<PAGE>
(8) Includes options to purchase 71,554 shares held by Mr. Richey that were
exercisable within 60 days after the Ownership Date. Mr. Richey also holds
options to purchase an additional 52,000 shares that were not exercisable.
(9) Includes options to purchase 61,948 shares held by Mr. Medlock that were
exercisable within 60 days after the Ownership Date. Mr. Medlock also holds
options to purchase an additional 49,000 shares that were not exercisable.
(10) Includes 40,074 shares held by La Plaza Partnership, of which Mr. Arnett is
a general partner and may be deemed to share voting and investment power
with respect to such shares. Also includes options to purchase 500 shares
held by Mr. Arnett that were exercisable within 60 days after the Ownership
Date. Mr. Arnett also holds options to purchase an additional 3,500 shares
that were not exercisable.
(11) Includes options to purchase 32,078 and 18,078 shares held by Messrs.
Breedlove and McDonald, respectively, that were exercisable within 60 days
after the Ownership Date. Each of Messrs. Breedlove and McDonald also holds
options to purchase an additional 3,500 shares that were not exercisable.
(12) In addition to the shares identified in notes (2) through (11), includes
options to purchase 5,000 shares held by other officers that were
exercisable within 60 days after the Ownership Date. These other officers
also hold options to purchase an additional 5,000 shares that were not
exercisable.
54
<PAGE>
UNDERWRITING
The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares that each severally has agreed to purchase
from the Company and the Selling Stockholders, subject to the terms and
conditions specified in the Underwriting Agreement, are as follows:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Warburg Dillon Read LLC...........................................................
J.C. Bradford & Co................................................................
Wheat First Securities, Inc.......................................................
Dain Rauscher Wessels.............................................................
-----------
Total...........................................................................
-----------
-----------
</TABLE>
The Managing Underwriters are Warburg Dillon Read LLC, J.C. Bradford & Co.,
Wheat First Union, a division of Wheat First Securities, Inc., and Dain Rauscher
Wessels, a division of Dain Rauscher Incorporated ("Dain Rauscher Wessels").
If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby, if any Underwriter defaults in its
obligation to purchase such shares, and the aggregate obligations of the
Underwriters so defaulting do not exceed ten percent of the shares offered
hereby, the remaining Underwriters, or some of them, must assume such
obligations.
The shares of Common Stock offered hereby are being initially offered
severally by the Underwriters for sale at the price set forth on the cover page
of this Prospectus or at such price less a concession not in excess of $
per share on sales to certain dealers. The Underwriters may allow, and such
dealers may re-allow, a concession not to exceed $ per share on sales to
certain other dealers. The Offering of shares is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. After the
shares of Common Stock are released for sale to the public, the offering price
and such concessions may be changed by the Managing Underwriters.
The Company and certain of the Selling Stockholders have granted to the
Underwriters an option, which may be exercised within 30 days after the date of
this Prospectus, to purchase up to an additional 570,000 shares of Common Stock
to cover over-allotments, if any, on the same terms per share. To the extent the
Underwriters exercise this option, each of the Underwriters will be obligated,
subject to certain conditions, to purchase the number of additional shares of
Common Stock proportionate to such Underwriter's initial commitment.
The Company and certain of the Selling Stockholders have agreed in the
Underwriting Agreement to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.
The Company, each of its directors and members of the senior management team
(other than, with respect to shares of Common Stock included in the Offering,
the Selling Stockholders) and certain of the Company's principal stockholders
have agreed that they will not sell, contract to sell, grant any option to sell
or otherwise dispose of, directly or indirectly, any shares of Common Stock, or
securities convertible into or exercisable or exchangeable for, any shares of
Common Stock or warrants or other rights to
55
<PAGE>
purchase shares of Common Stock, or permit the registration of any shares of
Common Stock for a period of 90 days after the date of this prospectus, without
the prior consent of Warburg Dillon Read LLC, except that the Company may issue
shares of Common Stock upon exercise of outstanding options and in connection
with acquisition transactions and may issue options to purchase shares of Common
Stock pursuant to its Employee Stock Option Plan.
Warburg Dillon Read LLC acted as financial advisor to the Company in
connection with the MBCI Acquisition and provided a fairness opinion to the
Company in such capacity, for which it received customary fees and reimbursement
of expenses. In connection with the Company's repayment of the 364-Day Revolver
with the net proceeds of the Offering, UBS AG and First Union National Bank,
lenders for the 364-Day Revolver and affiliates of Warburg Dillon Read LLC and
Wheat First Union, respectively, may receive more than 10% of the proceeds of
the Offering. Accordingly, the Offering is being made in compliance with Rule
2710(c)(8) of the conduct Rules of the National Association of Securities
Dealers, Inc. Certain Underwriters and their affiliates have provided from time
to time, and expect to provide in the future, investment or financial services
to the Company, for which such Underwriters or their affiliates have received or
will receive customary fees and commissions. C.A. Rundell, Jr., the Company's
Chairman of the Board, is a director of Dain Rauscher Corporation, the parent
company of Dain Rauscher Incorporated.
The Managing Underwriters, on behalf of the Underwriters, may engage in
over-allotment, stabilizing transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
Over-allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Syndicate covering transactions involve purchases of the
Common Stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the Managing
Underwriters to reclaim a selling concession from a syndicate member when the
Common Stock originally sold by such syndicate member is purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the Common Stock to be higher than it would otherwise be in
the absence of such transactions. These transactions may be effected on Nasdaq
or otherwise and, if commenced, may be discontinued at any time.
LEGAL MATTERS
The validity of the share of Common Stock offered hereby is being passed
upon for the Company and the Selling Stockholders by Gardere & Wynne, L.L.P.,
Dallas, Texas. Certain legal matters will be passed upon for the Underwriters by
Gibson, Dunn & Crutcher LLP, New York, New York. Partners of Gardere & Wynne,
L.L.P., who participated in the preparation of this Prospectus and Registration
Statement beneficially own an aggregate of 14,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of (i) NCI as of October 31, 1996 and
1997, and for each of the three years in the period ended October 31, 1997, and
(ii) Amatek as of December 31, 1996 and 1997, and for each of the three years in
the period ended December 31, 1997, appearing in this Prospectus and
Registration Statement, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere in this
Prospectus and Registration Statement and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Exchange Act,
and in accordance therewith files periodic reports, proxy statements and other
information with the Commission. Reports,
56
<PAGE>
proxy statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the regional
offices of the Commission located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Suite 1400, Northwestern Atrium Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material may also
be obtained at prescribed rates by writing to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and
such information may also be inspected at the offices of the National
Association of Securities Dealers, Inc., Listing Section, 1735 K Street,
Washington, D.C. 20006. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
and information statements and other information may be found on the
Commission's Web site address, HTTP://WWW.SEC.GOV.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all exhibits, schedules, amendments and supplements thereto,
the "Registration Statement") under the Securities Act with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth or incorporated by reference in the Registration Statement
(certain parts of which have been omitted in accordance with the rules and
regulations of the Commission). Statements contained in this Prospectus as to
the contents of any contract or any other document referred to are not
necessarily complete, and each such statement is qualified in all respects by
reference to the copy of such contract or document filed as an exhibit to the
Registration Statement. For further information with respect to the Company and
the Common Stock reference is made to the Registration Statement and the
exhibits and schedules filed as a part thereof, which may be inspected and
copied at the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Room 1024, Judiciary Plaza, Washington, D. C. 20549, and its public
reference facilities in New York, New York and Chicago, Illinois at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions thereof filed by the Company with the
Commission (Commission File No. 0-19885) pursuant to the Exchange Act are hereby
incorporated by reference in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1997;
(ii) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended January 31 and April 30, 1998;
(iii) the Company's Current Report on Form 8-K dated May 4, 1998, and
filed with the Commission on May 19, 1998, with respect to the MBCI
Acquisition, as amended by Current Report on Form 8-K/A filed with the
Commission on July 20, 1998, and Current Report on Form 8-K/A, Amendment No.
2, filed with the commission on August 5, 1998;
(iv) the Company's Current Report on Form 8-K dated June 24, 1998, and
filed with the Commission on July 9, 1998, with respect to the dividend of
preferred stock purchase rights; and
(v) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
July 20, 1998.
All reports and documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of Common Stock made
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the filing of such documents. Any statement contained
in this Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
the purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded
57
<PAGE>
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon oral or written request of such person, a
copy of any and all of the documents incorporated by reference herein (other
than exhibits and schedules to such documents, unless such exhibits or schedules
are specifically incorporated by reference into such documents). Such requests
should be directed to Robert J. Medlock, Vice President and Chief Financial
Officer, NCI Building Systems, Inc., 7301 Fairview, Houston, Texas 77041, or by
telephone at (713) 466-7788.
58
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Consolidated Financial Statements of the Company:
Report of Ernst & Young LLP.............................................................................. F-2
Consolidated Balance Sheets--October 31, 1996 and 1997, and April 30, 1998 (Unaudited)................... F-3
Consolidated Statements of Income--Years Ended October 31, 1995, 1996 and 1997, and for the Six Months
Ended April 30, 1997 and 1998 (Unaudited).............................................................. F-4
Consolidated Statements of Shareholders' Equity--Years Ended October 31, 1995, 1996 and 1997, and for the
Six Months Ended April 30, 1998 (Unaudited)............................................................ F-5
Consolidated Statements of Cash Flows--Years Ended October 31, 1995, 1996 and 1997 and for the Six Months
Ended April 30, 1997 and 1998 (Unaudited).............................................................. F-6
Notes to Consolidated Financial Statements............................................................... F-7
Consolidated Financial Statements of Amatek
Report of Ernst & Young LLP.............................................................................. F-16
Consolidated Balance Sheets--December 31, 1996 and 1997, and March 31, 1998 (Unaudited).................. F-17
Consolidated Statements of Operations--Years Ended December 31, 1995, 1996 and 1997, and for the Three
Months Ended March 31, 1997 and 1998 (Unaudited)....................................................... F-18
Consolidated Statements of Cash Flows--Years Ended December 31, 1995, 1996 and 1997, and for the Three
Months Ended March 31, 1998 (Unaudited)................................................................ F-19
Consolidated Statements of Stockholder's Equity--Years Ended December 31, 1995, 1996 and 1997, and for
the Three Months Ended March 31, 1997 and 1998 (Unaudited)............................................. F-20
Notes to Consolidated Financial Statements............................................................... F-21
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
NCI Building Systems, Inc.
We have audited the accompanying consolidated balance sheets of NCI Building
Systems, Inc. as of October 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended October 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NCI Building
Systems, Inc. at October 31, 1997 and 1996 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
October 31, 1997, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Houston, Texas
December 8, 1997
except for Note 9, as to which the date is
July 31, 1998
F-2
<PAGE>
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 31,
----------------------
1996 1997
---------- ---------- APRIL 30,
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 20,944 $ 32,166 $ 37,972
Accounts receivable--Trade................................................ 35,477 45,946 32,923
Other receivables--Note 11................................................ 2,272 1,060 3,031
Inventories--Note 1....................................................... 28,693 37,381 40,725
Deferred income taxes--Note 5............................................. 2,925 3,463 3,631
Prepaid expenses.......................................................... 299 942 1,233
---------- ---------- -----------
Total current assets...................................................... 90,610 120,958 119,515
Property, plant and equipment, net--Note 1.................................. 42,752 51,223 51,758
Other assets:
Excess of cost over fair value of acquired net assets--Note 1............. 22,673 21,072 20,361
Other..................................................................... 2,292 3,079 5,237
---------- ---------- -----------
Total other assets........................................................ 24,965 24,151 25,598
---------- ---------- -----------
Total assets................................................................ $ 158,327 $ 196,332 196,871
---------- ---------- -----------
---------- ---------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt......................................... $ 48 $ 47 $ 47
Accounts payable.......................................................... 21,527 23,921 14,170
Accrued compensation and benefits......................................... 7,762 9,688 5,269
Other accrued expense..................................................... 6,738 8,538 9,212
Accrued income taxes...................................................... 2,577 2,018 (831)
---------- ---------- -----------
Total current liabilities................................................. 38,652 44,212 27,867
Long-term debt, noncurrent portion--Note 3.................................. 1,730 1,679 1,653
Deferred income taxes--Note 5............................................... 1,770 2,626 2,934
---------- ---------- -----------
Contingencies--Note 8
Shareholders' equity--Note 7
Preferred stock, $1 par value, 1,000 shares authorized, none
outstanding............................................................. -- --
Common stock, $.01 par value, 25,000 shares authorized, 15,934, 16,251 and
16,518 shares issued and outstanding, respectively...................... 159 163 165
Additional paid-in capital................................................ 47,279 51,028 55,180
Retained earnings......................................................... 68,737 96,624 109,072
---------- ---------- -----------
Total shareholders' equity................................................ 116,175 147,815 164,417
---------- ---------- -----------
Total liabilities and shareholders' equity.................................. $ 158,327 $ 196,332 $ 196,871
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
See Independent Auditor's Report and
Accompanying Notes to the Consolidated Financial Statements.
F-3
<PAGE>
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
---------------------------------- ----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales................................................ $ 234,215 $ 332,880 $ 407,751 $ 174,512 $ 192,672
Cost of sales........................................ 169,815 241,374 299,407 128,408 140,621
---------- ---------- ---------- ---------- ----------
Gross profit....................................... 64,400 91,506 108,344 46,104 52,051
---------- ---------- ---------- ---------- ----------
Operating expenses................................... 38,111 53,095 66,055 30,363 34,030
---------- ---------- ---------- ---------- ----------
Income from operations............................. 26,289 38,411 42,289 15,741 18,021
Interest expense..................................... (56) (108) (163) (77) (84)
Other income......................................... 822 1,586 1,999 765 1,492
---------- ---------- ---------- ---------- ----------
Income before income taxes......................... 27,055 39,889 44,125 16,429 19,429
---------- ---------- ---------- ---------- ----------
Provision (benefit) for income taxes--Note 5
Current............................................ 10,493 15,899 15,920 5,973 6,841
Deferred........................................... (470) (823) 318 122 140
---------- ---------- ---------- ---------- ----------
Total income tax..................................... 10,023 15,076 16,238 6,095 6,981
---------- ---------- ---------- ---------- ----------
Net income........................................... $ 17,032 $ 24,813 $ 27,887 $ 10,334 $ 12,448
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income per share--Basic--Note 9.................. $ 1.36 $ 1.60 $ 1.73 $ .65 $ .76
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Net income per share--Diluted--Note 9................ $ 1.26 $ 1.51 $ 1.64 $ .61 $ .72
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See Independent Auditor's Report and
Accompanying Notes to the Consolidated Financial Statements.
F-4
<PAGE>
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED SHAREHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
----------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Balance, October 31, 1994....................................... $ 125 $ 12,666 $ 26,891 $ 39,682
Proceeds from exercise of stock options, including tax benefit
thereon....................................................... 145 -- 145
Shares issued for contribution to 401K plan..................... 1 822 -- 823
Net income...................................................... -- -- 17,032 17,032
----- ----------- ---------- -------------
Balance, October 31, 1995....................................... 126 13,633 43,923 57,682
Proceeds from stock offering.................................... 22 24,748 -- 24,770
Proceeds from exercise of stock options, including tax benefit
thereon....................................................... 5 2,720 -- 2,725
Shares issued for contribution to 401K plan..................... 1 1,008 -- 1,009
Shares issued in connection with the purchase of DBCI........... 6 5,169 -- 5,175
Net income...................................................... -- -- 24,814 24,814
----- ----------- ---------- -------------
Balance, October 31, 1996....................................... 160 47,278 68,737 116,175
Proceeds from exercise of stock options, including tax benefit
thereon....................................................... 2 2,233 -- 2,235
Shares issued for contribution to 401K plan..................... 1 1,517 -- 1,518
Net income...................................................... -- -- 27,887 27,887
----- ----------- ---------- -------------
Balance, October 31, 1997....................................... 163 51,028 96,624 147,815
Proceeds from exercise of stock options, including tax benefit
thereon....................................................... 2 4,152 -- 4,154
Net income...................................................... -- -- 12,448 12,448
----- ----------- ---------- -------------
Balance, April 30, 1998 (unaudited)............................. $ 165 $ 55,180 $ 109,072 $ 164,417
----- ----------- ---------- -------------
----- ----------- ---------- -------------
</TABLE>
See Independent Auditor's Report and
Accompanying Notes to the Consolidated Financial Statements.
F-5
<PAGE>
NCI BUILDING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
OCTOBER 31, APRIL 30,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities
Net income................................................ $ 17,032 $ 24,814 $ 27,887 $ 10,334 $ 12,448
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization........................... 3,226 5,791 7,876 3,795 4,417
(Gain)/loss on sale of fixed assets..................... 4 2 (3) (3) --
Provision for doubtful accounts......................... 1,101 681 1,223 428 993
Deferred income tax (benefit)/provision................. (470) (823) 318 122 140
Changes in current assets and liability accounts net of
effects of acquisitions:
Increase in accounts, notes and other receivable.......... (3,097) (9,857) (10,481) 866 10,059
Increase in inventories................................... (2,483) (4,521) (5,552) (4,494) (3,343)
(Increase) decrease in prepaid expenses................... 97 (35) (625) (596) (291)
Increase (decrease) in accounts payable................... (2,009) 3,043 2,394 (2,333) (8,928)
Increase in accrued expenses.............................. 4,858 1,603 5,244 886 (2,608)
Increase (decrease) in income taxes payable............... (245) 3,843 335 (2,604) (2,851)
--------- --------- --------- --------- ---------
Net cash provided by operating activities............... 18,014 24,541 28,616 6,401 10,036
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Proceeds from the sale of fixed assets.................... 7 115 25 25 36
Acquisition of Royal Buildings............................ (910) -- -- -- --
Acquisition of Mesco Metal Buildings...................... -- (20,631) -- -- --
Acquisition of Doors & Building Components, Inc. ......... -- (11,000) -- -- --
Acquisition of Carlisle Engineered Metals, Inc. .......... -- (2,840) (6,230) (6,230) --
(Increase) decrease in other noncurrent assets............ 8 (1,988) (1,147) (651) (2,476)
Capital expenditures...................................... (5,837) (10,319) (11,332) (4,038) (3,959)
--------- --------- --------- --------- ---------
Net cash applied to investing activities................ (6,732) (46,663) (18,684) (10,894) (6,399)
--------- --------- --------- --------- ---------
Cash flows from financing activities:
Net proceeds from sale of stock........................... -- 24,770 -- -- --
Exercise of stock options................................. 71 750 1,340 749 2,195
Borrowings on line of credit and notes.................... -- -- -- -- --
Principal payments on long-term debt, line of credit and
notes payable........................................... (47) (85) (50) (25) (26)
--------- --------- --------- --------- ---------
Net cash provided by (used in) financing activities..... 24 25,435 1,290 724 2,169
--------- --------- --------- --------- ---------
Net increase in cash.................................... 11,306 3,313 11,222 (3,769) 5,806
Cash beginning of period.................................... 6,325 17,631 20,944 20,944 32,166
--------- --------- --------- --------- ---------
Cash at end of period....................................... $ 17,631 $ 20,944 $ 32,166 $ 17,175 $ 37,972
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
See Independent Auditor's Report and
Accompanying Notes to the Consolidated Financial Statements.
F-6
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) REPORTING ENTITY
These financial statements include the operations and activities of NCI
Building Systems, Inc. and its wholly-owned subsidiaries (Company) after the
elimination of all material intercompany accounts and balances. The Company
designs, manufactures and markets metal building systems and components for
commercial, industrial, agricultural and community service use. The Company
recognizes revenues as jobs are shipped.
(B) ACCOUNTS RECEIVABLE
The Company reports accounts receivable net of the allowance for doubtful
accounts of $1,662, $1,629 and $1,498 at April 30, 1998, October 31, 1996 and
1997, respectively. Trade accounts receivable are the result of sales of
buildings and components to customers throughout the United States and
affiliated territories including international builders who resell to end users.
Although the Company's sales historically have been concentrated in Texas and
surrounding states, in recent years it has been expanding its authorized builder
organization and customer base into the midwestern states and, to a lesser
extent, into south central, southeastern and coastal states. All sales are
denominated in United States dollars. Credit sales do not normally require a
pledge of collateral; however, various types of liens may be filed to enhance
the collection process. Company management is not aware of any significant
concentrations of credit or market risks related to receivables or other
financial instruments reported in these financial statements.
(C) INVENTORIES
Inventories are stated at the lower of cost or market value, using specific
identification for steel coils and the weighted-average method for other raw
materials. A summary of inventories follows (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
--------------------
1996 1997
--------- --------- APRIL 30,
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.............................................. $ 21,515 $ 28,943 $ 31,898
Work-in-process and finished goods......................... 7,178 8,438 8,827
--------- --------- -----------
$ 28,693 $ 37,381 $ 40,725
--------- --------- -----------
--------- --------- -----------
</TABLE>
(D) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and depreciated over their
estimated useful lives. Depreciation is computed using the straight-line method
for financial reporting purposes and both straight-line and accelerated methods
for income tax purposes. Depreciation expense for the six months
F-7
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ended April 30, 1998 and the years ended October 31, 1995, 1996, and 1997 was
$3,424, $2,995, $4,236, and $5,893, respectively.
<TABLE>
<CAPTION>
OCTOBER 31,
-----------------------
1996 1997
----------- ----------
APRIL 30,
1998
-----------
(IN THOUSANDS)(UNAUDITED)
<S> <C> <C> <C>
Land.................................................... $ 3,174 $ 3,969 $ 3,935
Buildings and improvements.............................. 20,136 23,600 25,452
Machinery, equipment and furniture...................... 31,866 41,393 43,461
Transportation equipment................................ 911 1,089 1,069
Computer software....................................... 156 481 464
----------- ---------- -----------
$ 56,243 $ 70,532 $ 74,381
----------- ---------- -----------
Less accumulated depreciation........................... (13,492) (19,309) 22,623
----------- ---------- -----------
$ 42,751 $ 51,223 $ 51,758
----------- ---------- -----------
----------- ---------- -----------
</TABLE>
<TABLE>
<S> <C>
Estimated useful lives for depreciation are:
10-20
Buildings and improvements...................................... years
Machinery, equipment and furniture.............................. 5-10 years
Transportation equipment........................................ 3-10 years
Computer software............................................... 5 years
</TABLE>
(E) CASH FLOWS STATEMENT
For purposes of the cash flows statement, the Company considers all highly
liquid investments with an original maturity date of three months or less to be
cash equivalents. Total interest paid for the six months ended April 30, 1998
and the years ended October 31, 1995, 1996 and 1997 was $84, $56, $108 and $163,
respectively. Income taxes paid for the six months ended April 30, 1998 and the
years ended October 31, 1995, 1996 and 1997 was $9,277, $11,033, $12,763 and
$15,776 respectively. Non-cash investing or financing activities included:
$1,518 for the 1996 contribution for the 401k plan which was paid in common
stock in 1997, and $1,009 for the 1995 contribution for the 401k plan which was
paid in common stock in 1996.
(F) EXCESS OF COST OVER FAIR VALUE OF ACQUIRED NET ASSETS
Excess of cost over fair value of acquired net assets is amortized on a
straight-line basis over fifteen years. Accumulated amortization as of April 30,
1998 was $3,753, as of October 31, 1997 was $3,042 and as of October 31, 1996
was $1,441. The carrying value of goodwill is reviewed if the facts and
circumstances suggest that it may be impaired. If this review indicates that
goodwill will not be recoverable, as determined based on the undiscounted cash
flows of the entity acquired over the remaining amortization period, the
Company's carrying value of the goodwill would be reduced by the estimated
shortfall of cash flows.
F-8
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(H) ADVERTISING COSTS
Advertising costs are expensed as incurred. Advertising expense was $587,
$1,196, $1,267 and $1,416 for the six months ended April 30, 1998 and for the
years ended October 31, 1995, 1996 and 1997, respectively.
(I) LONG-LIVED ASSETS
In fiscal 1997, the Company adopted SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF.
Impairment losses are recognized when indicators of impairment are present and
the estimated undiscounted cash flows are not sufficient to recover the assets
carrying amount. Assets held for disposal are measured at the lower of carrying
value or estimated fair value, less costs to sell. The effect of adopting SFAS
No. 121 was not material to the financial statements.
(J) STOCK-BASED COMPENSATION
In October 1995, the FASB issued Statement No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, which encourages companies to apply a new fair value
approach allowing the recognition of compensation cost related to stock options
using an option pricing model. Under Statement No. 123, companies are permitted
to continue using current accounting rules for employee stock options, but are
required to disclose pro forma net income and earnings per share information as
if the new fair value approach had been adopted. The Company has elected to
continue to use the intrinsic value method under Accounting Principles Board
Opinion No. 25 ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related
Interpretations in accounting for its employee stock options. The pro forma
information regarding net income and earnings per share, as required by
Statement No. 123, has been disclosed as if the Company had accounted for its
employee stock options under the fair value method of that Statement.
(K) PENDING ACCOUNTING CHANGES
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, EARNINGS PER SHARE, which is effective for financial statements issued
for periods ending after December 15, 1997. The impact of Statement No. 128 on
the calculation of earnings per share is not expected to be material.
In June 1997, the Financial Accounting Standards Board issued Statement No.
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which
is effective for the Company's fiscal year ending October 31, 1999. The Company
does not anticipate that the adoption of this standard will have a material
impact on the financial statements.
F-9
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(2) NOTES PAYABLE (SHORT-TERM BORROWINGS)
The Company has a revolving unsecured credit line of $6 million with a bank
bearing interest that fluctuates with prime, (commitment fee 1/4% on unused
portion) all of which was unused at October 31, 1996 and 1997, respectively. The
revolving credit line expires in February, 1999.
(3) LONG-TERM DEBT
<TABLE>
<CAPTION>
OCTOBER 31,
-------------------- APRIL 30,
1996 1997 1998
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Six year reducing revolving credit line of $.7 million with a
bank bearing interest that fluctuates with prime, with
$73,000 quarterly reducing borrowing base.................. $ -- $ -- $ --
Notes payable to City of Mattoon bearing interest at 3%
secured by certain equipment, repayable in aggregate
monthly installments of $4,828 maturing through November
2001....................................................... 277 226 200
Note payable to employee bearing interest at 7% maturing
April 1, 2001, with an option to convert into common stock
at $14.9625 per share...................................... 1,500 1,500 1,500
--------- --------- -----------
1,777 1,726 1,700
Current portion of long-term debt............................ (47) (47) (47)
--------- --------- -----------
$ 1,730 $ 1,679 $ 1,653
--------- --------- -----------
--------- --------- -----------
</TABLE>
Aggregate required principal reductions are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
- -------------------------------------------------------------------------------------
<S> <C>
1998................................................................................. $ 47
1999................................................................................. 53
2000................................................................................. 55
2001................................................................................. 1,557
2002................................................................................. 14
---------
$ 1,726
---------
---------
</TABLE>
The loan agreements related to the revolving line and short-term borrowings
contain, among other things, provisions relative to additional borrowings and
restrictions on the amount of retained earnings available for the payment of
dividends and the repurchase of common stock and provisions requiring the
maintenance of certain net worth and other financial ratios.
F-10
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(3) LONG-TERM DEBT (CONTINUED)
Under the most restrictive of these covenants, such dividends or stock
repurchases are limited to 20% of the Company's net income for any 12-month
period, which is further restricted on a quarterly basis, based on the ratio of
cash flow (net income plus depreciation and amortization) for the previous
12-month period to current maturities of long-term debt plus dividends and stock
repurchases.
The carrying amount of the Company's long-term debt approximates its fair
value.
(4) RELATED PARTY TRANSACTIONS
During the six months ended April 30, 1998 and in the years ended October
31, 1995, 1996 and 1997, the Company purchased $829, $1,053, $1,417 and $1,869
respectively, of materials from a related party under arm's length transactions.
(5) INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Taxes on income from continuing operations consist of the following (in
thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Current:
Federal................................ $ 9,733 $ 14,531 $ 15,479 $ 5,744 $ 6,617
State.................................. 760 1,368 441 229 224
--------- --------- --------- --------- ---------
Total current............................ 10,493 15,899 15,920 5,973 6,841
Deferred:
Federal................................ (445) (746) 304 114 135
State.................................. (25) (77) 14 8 5
--------- --------- --------- --------- ---------
Total deferred........................... (470) (823) 318 122 140
--------- --------- --------- --------- ---------
Total provision.......................... $ 10,023 $ 15,076 $ 16,238 $ 6,095 $ 6,981
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The reconciliation of income tax computed at the United States federal
statutory tax rate to the effective income tax rate is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL
YEAR ENDED OCTOBER 31, 30,
------------------------------------- ------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Statutory federal income tax rate............. 35.0% 35.0% 35.0% 35.0% 35.0%
State income taxes............................ 1.8 2.4 1.2 1.5 .7
Other......................................... 0.3 0.4 0.6 .6 .2
--- --- --- --- ---
Effective tax rate.......................... 37.1% 37.8% 36.8% 37.1% 35.9%
--- --- --- --- ---
--- --- --- --- ---
</TABLE>
F-11
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(5) INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
are as follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL
1996 1997 30, 1998
--------- --------- -----------
<S> <C> <C> <C>
Deferred tax assets
Capitalized overhead in inventory........................... $ 1,211 $ 1,632 $ 1,746
Bad debt reserve............................................ 603 527 585
Accrued reserves............................................ 637 595 549
Other....................................................... 573 709 751
--------- --------- -----------
Total deferred tax assets..................................... 3,024 3,463 3,631
--------- --------- -----------
Deferred tax liabilities
Depreciation and amortization............................... 1,427 1,675 1,880
Other....................................................... 442 951 1,054
--------- --------- -----------
Total deferred tax liabilities................................ 1,869 2,626 2,934
--------- --------- -----------
Net deferred tax asset (liability)............................ $ 1,155 $ 837 $ 697
--------- --------- -----------
--------- --------- -----------
</TABLE>
(6) OPERATING LEASE COMMITMENTS
Total rental expense incurred from operating leases for the six months ended
April 30, 1998 and the years ended October 31, 1995, 1996 and 1997 was $2,380,
$2,639, $3,990 and $4,644 respectively.
Aggregate minimum required annual payments on long-term operating leases at
October 31, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
- ----------------------------------------------------------------------------------
<S> <C>
1998.............................................................................. $ 2,573
1999.............................................................................. 1,806
2000.............................................................................. 914
2001.............................................................................. 508
2002.............................................................................. 252
-----------
$ 6,053
-----------
-----------
</TABLE>
(7) STOCK OPTIONS
The Board of Directors has approved a non-statutory employee stock option
plan. This plan includes the future granting of stock options to purchase up to
4,100 shares as an incentive and reward for key management personnel. Options
expire ten years from date of grant. The right to acquire the option shares
F-12
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(7) STOCK OPTIONS (CONTINUED)
is earned in 25% increments over the first four years of the option period.
Stock option transactions during 1995, 1996 and 1997 are as follows (in
thousands):
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE
SHARES PRICE
----------- -------------
<S> <C> <C>
Balance, October 31, 1994........................................... 1,393 $ 2.73
Granted........................................................... 159 8.64
Canceled.......................................................... 0 0
Exercised......................................................... (28) (2.51)
----- -------------
Balance, October 31, 1995........................................... 1,524 $ 3.35
Granted........................................................... 630 12.75
Canceled.......................................................... (46) (9.82)
Exercised......................................................... (492) (1.52)
----- -------------
Balance, October 31, 1996........................................... 1,616 $ 7.39
Granted........................................................... 314 15.23
Canceled.......................................................... (10) (12.09)
Exercised......................................................... (211) (6.34)
----- -------------
Balance, October 31, 1997........................................... 1,709 $ 8.93
----- -------------
----- -------------
</TABLE>
Options exercisable at October 31, 1995, 1996, and 1997 were 1,095, 783, and
841, respectively. The weighted average exercise prices for options exercisable
at October 31, 1995, 1996 and 1997 were $1.88, $3.00 and $4.60, respectively.
Exercise prices for options outstanding at October 31, 1997 range from $.80 to
$18.62. The weighted average remaining contractual life of options outstanding
at October 31, 1997 is 6.3 years.
In accordance with the terms of APB No. 25, because the exercise price of
the Company's employee stock options equals the market price of the underlying
stock on the date of the grant, the Company records no compensation expense for
its stock option awards. As required by SFAS No. 123, the Company provides the
following disclosure of hypothetical values for these awards. The weighted
average grant-date fair value of options granted during 1996 was $6.05 and
during 1997 was $7.33. These values were estimated using the Black-Scholes
option-pricing model with the following weighted average assumptions: expected
dividend of 0%, expected volatility of 32.7%, risk free interest rates ranging
from 5.5% to 6.7% for 1996 and from 6.4% to 6.9% for 1997, and expected lives of
7 years. Had compensation expense been recorded based on these hypothetical
values, the Company's 1997 net income would have been $27.1 million or $1.59 per
share. A similar computation for 1996 would have resulted in net income of $24.4
million, or $1.48 per share. Because options vest over several years and
additional options grants are expected, the effects of these hypothetical
calculations are not likely to be representative of similar future calculations.
(8) LITIGATION
The Company is involved in certain litigation that the Company considers to
be in the normal course of business. Management of the Company believes that
such litigation will not result in any material losses.
F-13
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(9) NET INCOME PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, EARNINGS PER SHARE, which requires the
presentation of basic and diluted earnings per share. Under the new statement,
the dilutive effect of stock options is excluded from basic earnings per share,
but included in the computation of diluted earnings per share. The new statement
is effective for periods ending after December 15, 1997. The Company adopted the
new statement during the first quarter of fiscal year 1998. Earnings per share
amounts for all periods presented have been restated. The computations are as
follows (in thousands, except per share data):
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED OCTOBER 31, APRIL 30, 1998
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income...................................... $ 17,032 $ 24,814 $ 27,887 $ 10,334 $ 12,448
Add: Interest, net of tax on convertible
debentures assumed converted.................. -- 38 66 34 34
--------- --------- --------- --------- ---------
Adjusted net income............................. $ 17,032 $ 24,852 $ 27,953 $ 10,368 $ 12,482
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average common shares outstanding...... 12,545 15,499 16,127 15,970 16,390
Add: Common stock equivalents
Stock option plan............................. 985 898 858 966 896
Convertible debentures........................ -- 58 100 100 100
--------- --------- --------- --------- ---------
Weighted average common shares outstanding,
assuming dilution............................. 13,530 16,455 17,085 17,036 17,386
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share--basic..................... $ 1.36 $ 1.60 $ 1.73 $ .65 $ .76
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share--diluted................... $ 1.26 $ 1.51 $ 1.64 $ .61 $ .72
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
(10) EMPLOYEE BENEFIT PLAN
The Company has a 401(k) profit sharing plan (the "Savings Plan") which
covers all eligible employees. The Savings Plan requires the Company to match
employee contributions up to a certain percentage of a participant's salary. No
other contributions may be made to the Savings Plan. Contributions accrued for
the Savings Plan for the years ended October 31, 1995, 1996 and 1997 were $775,
$1,155 and $1,604 respectively.
(11) ACQUISITIONS
In November 1995, the Company acquired substantially all of the assets and
assumed certain liabilities of Doors and Building Components, Inc. ("DBCI"), a
manufacturer of roll-up steel overhead doors used primarily in self-storage and
commercial/industrial applications, for approximately $12 million in cash and
300,000 shares of common stock of the Company, valued at $5.2 million. Based on
the final determination of book value of the purchased assets, the price was
reduced by approximately $2.5 million of which $1.5 million is due from the
seller and was recorded as a receivable in the October 31, 1996 balance sheet.
This amount was settled in cash in December, 1996. The excess of cost over fair
value of the acquired net assets recorded was $11.4 million.
F-14
<PAGE>
NCI BUILDING SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION PRESENTED FOR THE SIX MONTH PERIODS ENDED APRIL 30, 1997 AND 1998
IS UNAUDITED)
(11) ACQUISITIONS (CONTINUED)
In April, 1996, the Company acquired substantially all of the assets and
assumed certain liabilities of Mesco Metal Buildings, a division of Anderson
Industries, Inc. ("Mesco"), a manufacturer of metal building systems and
components, for approximately $20.8 million in cash and a $1.5 million 7%
convertible subordinated debenture due April, 2001. The excess of cost over fair
value of the acquired net assets recorded was $10.9 million.
Accordingly, the consolidated results of operations include DBCI and Mesco
since the date of acquisition. Both acquisitions were accounted for using the
purchase method. Assuming the acquisition of DBCI and Mesco had been consummated
as of November 1, 1995, the pro forma unaudited results of operations for the
year ended October 31, 1996 are as follows (in millions, except per share data):
<TABLE>
<S> <C>
Sales................................................................ $ 347
Net income........................................................... 26
Net income per share................................................. $ 1.60
</TABLE>
F-15
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Stockholder
Amatek Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Amatek
Holdings, Inc. and subsidiaries (the "Company"), as of December 31, 1997, and
1996, and the related consolidated statements of operations, cash flows, and
stockholder's equity for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Amatek
Holdings, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Houston, Texas
August 5, 1998
F-16
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1996 1997
---------- ---------- MARCH 31,
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................................. $ 3,622 $ 7,012 $ 1,345
Accounts receivable:
Trade, net of allowance for doubtful accounts of $576, $658, and $395... 41,942 44,599 45,899
Other................................................................... 2,835 6,659 3,737
Inventories............................................................... 32,410 43,479 48,536
Prepaid expenses.......................................................... 2,004 2,715 3,419
Income taxes receivable................................................... -- 437 --
Deferred tax asset........................................................ 853 1,186 1,186
---------- ---------- -----------
Total current assets........................................................ 83,666 106,087 104,122
Property, plant, and equipment:
Land...................................................................... 4,390 5,916 6,227
Buildings and improvements................................................ 31,104 40,845 41,425
Machinery and equipment................................................... 72,381 88,354 90,283
Construction-in-progress.................................................. 11,659 8,272 7,116
---------- ---------- -----------
119,534 143,387 145,051
Less accumulated depreciation............................................. (34,813) (39,252) (41,088)
---------- ---------- -----------
84,721 104,135 103,963
Receivable from affiliate................................................... 19,261 1,364 --
Investments in and advances to DOUBLECOTE................................... 19,031 19,200 19,415
Intangible assets........................................................... 13,822 13,652 13,612
Other assets................................................................ -- 5,325 5,871
---------- ---------- -----------
Total assets................................................................ $ 220,501 $ 249,763 $ 246,983
---------- ---------- -----------
---------- ---------- -----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................................... $ 32,638 $ 18,174 $ 9,288
Accrued liabilities....................................................... 13,495 15,659 11,526
Income taxes payable...................................................... 2,544 -- 4,854
---------- ---------- -----------
Total current liabilities............................................. 48,677 33,833 25,668
Deferred tax liability...................................................... 6,776 11,142 10,588
Stockholder's equity:
Common stock--par value $-0-; 119,500, 3,500, 3,500 shares issued and
outstanding at March 31, 1998, December 31, 1997, and December 31,
1996.................................................................... 2,600 2,600 182,172
Additional paid-in capital................................................ 4,380 4,380 4,380
Retained earnings......................................................... 158,068 197,808 24,175
---------- ---------- -----------
Total stockholder's equity.................................................. 165,048 204,788 210,727
---------- ---------- -----------
Total liabilities and stockholder's equity.................................. $ 220,501 $ 249,763 $ 246,983
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
See accompanying notes.
F-17
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
------------------------------------- ----------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales............................................. $ 315,737 $ 362,867 $ 407,967 $ 82,505 $ 86,909
Cost of sales..................................... (234,042) (271,299) (312,329) (63,896) (67,844)
----------- ----------- ----------- ---------- ----------
Gross profit...................................... 81,695 91,568 95,638 18,609 19,065
Selling, general, and administrative
expenses........................................ (24,900) (29,652) (36,637) (8,543) (9,598)
Equity in income (losses) of DOUBLECOTE........... (1,293) (304) 83 (170) (161)
Interest income, net.............................. 1,379 1,871 2,019 267 267
Unusual/nonrecurring gain......................... -- -- 3,284 -- --
----------- ----------- ----------- ---------- ----------
Income before income taxes........................ 56,881 63,483 64,387 10,163 9,573
Provision for income taxes........................ (22,993) (24,920) (24,647) (4,096) (3,634)
----------- ----------- ----------- ---------- ----------
Net income........................................ $ 33,888 $ 38,563 $ 39,740 $ 6,067 $ 5,939
----------- ----------- ----------- ---------- ----------
----------- ----------- ----------- ---------- ----------
</TABLE>
See accompanying notes.
F-18
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31 MARCH 31
---------------------------------- ----------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income..................................................... $ 33,888 $ 38,563 $ 39,740 $ 6,067 $ 5,939
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization................................ 4,136 5,477 6,844 1,639 2,019
Provision for deferred income taxes.......................... 82 716 4,033 1,866 (554)
Provision for losses on accounts receivable.................. 71 (266) 262 1,867 (82)
Changes in operating assets and liabilities:
Increase in accounts receivable--trade..................... (1,980) (5,517) (2,919) 924 (1,218)
Increase in other accounts receivable...................... 134 (2,326) (3,824) (1,357) 2,922
Increase in inventories.................................... 5,383 (6,744) (11,069) 102 (5,057)
Increase in prepaid expenses............................... (123) (1,163) (711) 208 (704)
(Increase) decrease in other assets........................ (432) 1,018 (5,962) 84 (546)
(Decrease) increase in accounts payable and accrued
liabilities.............................................. 2,307 13,169 (12,300) (18,808) (13,019)
(Decrease) increase in income taxes payable................ (1,438) 1,239 (2,544) 1,053 4,854
---------- ---------- ---------- ---------- ----------
Net cash (used in) provided by operating activities............ 42,028 44,166 11,550 (6,355) (5,446)
INVESTING ACTIVITIES
Purchase of property, plant, and equipment..................... (12,501) (21,146) (27,166) (5,847) (1,646)
Proceeds from sale of property, plant, and equipment........... 32 73 1,632 -- --
Advances to and investments in DOUBLECOTE...................... (2,835) (2,000) (86) (369) (376)
Cash paid for acquired business................................ -- (21,221) -- -- --
---------- ---------- ---------- ---------- ----------
Net cash used in investing activities.......................... (15,304) (44,294) (25,620) (6,216) (2,022)
FINANCING ACTIVITIES
Net borrowings under credit facilities......................... (4,754) -- -- -- --
Proceeds to related party...................................... (21,471) 1,080 17,460 13,549 1,801
---------- ---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities............ (26,225) 1,080 17,460 13,549 1,801
---------- ---------- ---------- ---------- ----------
Net (decrease) increase in cash and cash equivalents........... 499 952 3,390 978 (5,667)
Cash and cash equivalents at beginning of year................. 2,171 2,670 3,622 3,622 7,012
---------- ---------- ---------- ---------- ----------
Cash and cash equivalents at end of year....................... $ 2,670 $ 3,622 $ 7,012 $ 4,600 $ 1,345
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
See accompanying notes.
F-19
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1994................................... $ 2,600 $ 4,380 $ 85,617 $ 92,597
Net income................................................... -- -- 33,888 33,888
---------- ----------- ----------- -----------
Balance at December 31, 1995................................... 2,600 4,380 119,505 126,485
Net income................................................... -- -- 38,563 38,563
---------- ----------- ----------- -----------
Balance at December 31, 1996................................... 2,600 4,380 158,068 165,048
Net income................................................... -- -- 39,740 39,740
---------- ----------- ----------- -----------
Balance at December 31, 1997................................... 2,600 4,380 197,808 204,788
Net income................................................... -- -- 5,939 5,939
Dividend to Parent............................................. -- -- (179,572) (179,572)
Capital contribution from Parent............................... 179,572 -- -- 179,572
---------- ----------- ----------- -----------
Balance at March 31, 1998 (UNAUDITED).......................... $ 182,172 $ 4,380 $ 24,175 $ 210,727
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>
See accompanying notes.
F-20
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All outstanding common stock of Amatek Holdings, Inc. ("AHI"), is owned by
Amatek Limited (the "Parent," which is an Australian company), a wholly owned
subsidiary of BTR Nylex (an Australian company), which is ultimately owned by
BTR plc (a British company). AHI is a manufacturer of steel roofing and siding
products. Principal markets are in the continental United States.
The consolidated financial statements include the accounts of AHI and all
majority-owned subsidiaries (the "Company"). The Company's investment in
DOUBLECOTE, L.L.C. ("DOUBLECOTE"), is accounted for using the equity method (see
Note 9). All significant intercompany balances and transactions have been
eliminated in consolidation.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of all cash balances and highly liquid
investments which have a maturity of three months or less when acquired.
INVENTORY
Inventories are valued at the lower of cost or market, determined on the
first-in, first-out method.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. The cost of repairs and
maintenance is charged to operations as incurred. Depreciation of property,
plant, and equipment is provided on a straight-line basis over the estimated
useful lives of the assets as follows:
<TABLE>
<S> <C>
Building and improvements..................................... 40 years
4 to 13
Machinery and equipment....................................... years
3 to 10
Computer and office equipment................................. years
</TABLE>
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. This statement
generally requires a periodic review of long-lived assets for indications that
their carrying amounts may not be recoverable, and governs the measurement and
disclosure of any resulting impairment loss. Its application did not have a
material impact on the Company's financial position or results of operations.
INCOME TAXES
The Company uses SFAS No. 109, ACCOUNTING FOR INCOME TAXES, in accounting
for income taxes. This statement requires an asset and liability approach for
financial accounting and reporting of income taxes.
INTANGIBLE ASSETS
Goodwill of $15,479,000, $15,333,000, and $14,777,000, which relates to the
acquisition of certain assets and other stockholder interest at March 31, 1998
and December 31, 1997 and 1996, respectively, is being amortized on a
straight-line basis over 20 years. Accumulated amortization of goodwill was
$1,867,000, $1,681,000, and $955,000 as of March 31, 1998 and December 31, 1997
and 1996, respectively.
F-21
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. OWNERSHIP AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company's financial instruments (cash, accounts
receivable, and accounts payable) approximates fair value.
MANAGEMENT ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to 1996 financial information in
order to conform to 1997 presentation.
In the opinion of management, the unaudited consolidated financial
statements include all adjustments, consisting solely of normal recurring
adjustments, necessary for a fair presentation of the financial position as of
March 31, 1998, and the results of operations and cash flows for each of the
three-month periods ended March 31, 1998 and 1997. Although management believes
the disclosures in these financial statements are adequate to make the
information presented not misleading, certain information and footnote
disclosures normally included in annual audited financial statements prepared in
accordance with generally accepted accounting principals have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The results of operations and the cash flows for the three-month
period ended March 31, 1998 are not necessarily indicative of the results to be
expected for the full year.
2. INVENTORIES
The components of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1996 1997
--------- --------- MARCH 31
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials.............................................. $ 22,581 $ 34,638 $ 36,267
Finished goods............................................. 9,829 8,841 12,269
--------- --------- -----------
Total...................................................... $ 32,410 $ 43,479 $ 48,536
--------- --------- -----------
--------- --------- -----------
</TABLE>
3. NOTES PAYABLE TO BANK
The Company had an overdraft line of credit facility for $10 million which
terminated on March 31, 1998. There were no advances outstanding at March 31,
1998 and December 31, 1997 and 1996.
F-22
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. RELATED PARTY TRANSACTIONS
The Company periodically advances funds to its Parent and charges the Parent
interest at a rate which approximates prime for net advances. In addition, the
Company remits its federal income taxes payable to the Parent (see Notes 5 and
7). Based on intercompany lending rates for advances and payables with similar
terms, the fair value of these advances approximates their carrying values.
5. FEDERAL INCOME TAX
The provisions for federal income taxes are composed of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current income taxes......................................... $ 22,917 $ 24,203 $ 20,612 $ 2,229 $ 4,189
Deferred income taxes........................................ 76 717 4,035 1,867 (555)
--------- --------- --------- --------- ---------
Total........................................................ $ 22,993 $ 24,920 $ 24,647 $ 4,096 $ 3,634
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
The effective income tax rate of the Company approximates the sum of the
statutory federal income tax rate and certain state income tax rates less
related federal tax benefit.
Significant components of the Company's deferred tax assets and liabilities
were as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31 MARCH 31
-------------------------------------------------- ------------------------
1996 1997 1998
------------------------ ------------------------ ------------------------
CURRENT LONG-TERM CURRENT LONG-TERM CURRENT LONG-TERM
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Property....................................... $ -- $ (9,442) $ -- $ (14,069) $ -- $ (14,368)
Insurance reserves............................. 461 -- 782 -- 782 --
Bad debt reserve............................... 147 -- 248 -- 248 --
Inventory...................................... 245 -- 183 -- 183 --
Deferred compensation and incentive
plan......................................... -- 2,660 -- 2,931 -- 3,780
Other.......................................... -- 11 (27) -- (27)
----- ----------- ----------- ----------- ----------- -----------
Total.......................................... $ 853 $ (6,771) $ 1,186 $ (11,138) $ 1,186 $ (10,588)
----- ----------- ----------- ----------- ----------- -----------
----- ----------- ----------- ----------- ----------- -----------
Total deferred tax assets...................... $ 3,524 $ 4,346 $ 4,993
Total deferred tax liabilities................. (9,442) (14,298) (14,395)
----------- ----------- -----------
Net deferred tax liability..................... $ (5,918) $ (9,952) $ (9,402)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
6. LEASES
The Company leases certain equipment (primarily vehicles) and operating
facilities under operating leases expiring at various dates through 2000. Total
rental expense under operating leases was $1,514,000, $1,291,000, and $1,096,000
in 1997, 1996, and 1995, respectively.
F-23
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LEASES (CONTINUED)
Aggregate minimum lease payments under operating leases are as follows (in
thousands):
<TABLE>
<S> <C>
1998................................................................ $ 508
1999................................................................ 567
2000................................................................ 391
2001................................................................ 72
---------
$ 1,538
---------
---------
</TABLE>
7. SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest during the years ended December 31, 1997, 1996, and
1995 was $81,000, $80,000, and $131,000, respectively. Cash paid for income
taxes during the years ended December 31, 1997, 1996, and 1995 was $24,349,000,
$21,402,000, and $23,639,000, respectively.
8. EMPLOYEE BENEFIT PLANS
The Company sponsors a 401(k) savings plan for its full-time employees. The
Company matches 100% of employee-elected pre-tax contributions to a maximum of
4% of their salaries. The Company's contributions were $1,132,000, $943,000, and
$830,000 in 1997, 1996, and 1995, respectively.
An Incentive Compensation Plan (the "Plan") was established in 1992, in part
because of the purchase of the minority interest of a partnership of which
certain officers of the Company were limited partners. Under the terms of the
Plan, an annual contribution is determined based upon the Company's earnings and
revenues. Annual contributions are placed in trust (with the trustee,
NationsBank) and vest to participants over a seven- to ten-year period. In the
event that a participant voluntarily leaves the Company or is terminated for
"good cause," the unvested portion of contributions to the Plan is forfeited to
the Company. The contributions were $4,302,000, $3,714,000, and $2,766,000 for
1997, 1996, and 1995, respectively.
9. INVESTMENT IN DOUBLECOTE
The Company, through a subsidiary, owns 50% of the common stock in
DOUBLECOTE, a corporate joint venture.
F-24
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INVESTMENT IN DOUBLECOTE (CONTINUED)
Summarized financial information of DOUBLECOTE is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
----------------------
1996 1997
---------- ---------- MARCH 31
1998
-----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets............................................................... $ 7,266 $ 8,165 $ 9,210
Noncurrent assets............................................................ 30,524 28,601 28,102
---------- ---------- -----------
Total assets................................................................. $ 37,790 $ 36,766 $ 37,312
---------- ---------- -----------
---------- ---------- -----------
Liabilities--advances from stockholder....................................... $ 36,232 $ 36,404 $ 37,157
Other liabilities............................................................ 2,753 1,390 1,505
Stockholder's equity:
Contributed capital........................................................ 2,000 2,000 2,000
Accumulated deficit........................................................ (3,195) (3,028) (3,350)
---------- ---------- -----------
Total liabilities and stockholder's equity................................... $ 37,790 $ 36,766 $ 37,312
---------- ---------- -----------
---------- ---------- -----------
Sales........................................................................ $ 28,034 $ 30,348 $ 6,427
Cost of sales................................................................ (24,682) (26,150) (5,722)
---------- ---------- -----------
Gross profit................................................................. 3,352 4,198 705
Selling, general, and administrative expenses................................ (964) (1,080) (303)
Interest expense............................................................. (2,997) (2,952) (724)
---------- ---------- -----------
Net income (loss)............................................................ $ (609) $ 166 $ (322)
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The facility owned by DOUBLECOTE was completed and began operations in 1995.
DOUBLECOTE is charged interest at prime for advances by the Company. Total
interest income earned by the Company was $1,500,000 in 1997 and 1996 and
$1,465,000 in 1995.
10. LUBBOCK PLANT FIRE
In February 1997, the Company's Lubbock, Texas, plant sustained major damage
from a fire. The Company has since rebuilt the plant, and resumed operations in
July 1997.
The Company maintains insurance under one policy for both property damage
and business interruption applicable to its production facilities. The policy
provides coverage subject to a $25,000 deductible. Insurance recoveries as of
December 31, 1997 included $1.5 million for property damage and $500,000 for
business interruption. The Company is pursuing additional recoveries of $4
million related to the damage of the Lubbock plant.
Insurance recoveries for property damage associated with events of this type
require the recognition of a new cost basis for the rebuilt facility. As a
result, the Company has recognized a $3.3 million unusual/ nonrecurring
adjustment in its income statement for the year ended December 31, 1997. Total
spending to restore the Lubbock plant was approximately $4.8 million.
F-25
<PAGE>
AMATEK HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. ACQUISITION OF BUSINESS
On April 1, 1996, the Company purchased certain assets of Steelco Metal
Construction Products and Construction Metals ("Steelco") for a total cost of
approximately $21,221,000. Steelco was engaged in the manufacturing of steel
roofing and siding products. The acquisition was accounted for as a purchase.
The excess of the purchase price over the fair values of the net assets acquired
of $11,266,000 has been recorded as goodwill and is being amortized over a
period of 20 years. The statement of operations for 1996 includes the operating
results of Steelco since the date of acquisition.
12. YEAR 2000 (UNAUDITED)
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and is
implementing its plan to resolve the issue. The Year 2000 problem is a result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in major system failure or miscalculation. The Company
presently believes that, with modifications to existing software and converting
to new software, the Year 2000 problem will not pose significant operational
problems for the Company's computer systems as so modified and converted.
However, if such modifications or conversions are not made, or not completed
timely, the Year 2000 issue could have a material impact on the Company's
operations.
13. COMMITMENTS AND CONTINGENCIES
In March 1998, the Company entered into an agreement with NCI Building
Systems, Inc. to purchase 100% of the stock of the Company, which was effective
May 4, 1998. Upon the successful completion of this acquisition, certain
executives of the Company will receive compensation payments totaling
approximately $8.5 million.
F-26
<PAGE>
[Graphics]
The inside back cover of the Prospectus includes a map of the United States
on the upper half of the page with symbols placed on the map to represent the
Company's manufacturing facilities and various of the Company's trademarks on
the lower half of the page.
<PAGE>
No dealer, salesperson or other individual has been authorized to give any
information or to make any representation other than those contained in this
Prospectus in connection with the offer contained herein, and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company, the Selling Stockholders or any Underwriter. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, shares of Common Stock in any jurisdiction to any person to whom it is
not lawful to make such offer or solicitation in such jurisdiction or in which
the person making such offer or solicitation is not qualified to do so. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
- ------------------------------------------------
<TABLE>
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 10
The MBCI Acquisition...................................................... 15
Use of Proceeds........................................................... 15
Capitalization............................................................ 16
Price Range of Common Stock............................................... 17
Dividend Policy........................................................... 17
Unaudited Pro Forma Condensed Combined Financial Statements............... 18
Selected Historical Consolidated Financial Information.................... 25
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 27
Industry Overview......................................................... 35
Business.................................................................. 37
Management................................................................ 49
Certain Relationships and Related Transactions............................ 52
Principal and Selling Stockholders........................................ 53
Underwriting.............................................................. 55
Legal Matters............................................................. 56
Experts................................................................... 56
Available Information..................................................... 56
Incorporation of Certain Documents by Reference........................... 57
Index to Financial Statements............................................. F-1
</TABLE>
PROSPECTUS , 1998
[NCI LOGO]
3,800,000 Shares
Common Stock
WARBURG DILLON READ LLC
J.C. BRADFORD & CO.
WHEAT FIRST UNION
DAIN RAUSCHER WESSELS
A DIVISION OF DAIN RAUSCHER INCORPORATED
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses in connection with the offering
described in this Registration Statement will be as follows. All of the amounts
except the Commission registration fee and the Nasdaq additional listing fee are
estimates.
<TABLE>
<CAPTION>
ITEM AMOUNT
- ---------------------------------------------------------------------------------- ----------
<S> <C>
Commission registration fee....................................................... 28,845
National Association of Securities Dealers, Inc. filing fee....................... 10,267
Nasdaq additional listing fee..................................................... 17,500
Legal fees and expenses........................................................... 200,000
Accounting fees and expenses...................................................... 150,000
Printing expenses................................................................. 75,000
Fees and expenses for qualification under state securities laws (including legal
fees)........................................................................... 5,000
Transfer agent's fees and expenses................................................ 2,500
Miscellaneous..................................................................... 10,888
----------
Total......................................................................... 500,000*
----------
----------
</TABLE>
- ------------------------
* None of this amount is to be borne by the Selling Stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated By-Laws provide that the directors and officers of the
Registrant shall be indemnified by the Registrant against certain liabilities
that those persons may incur in their capacities as directors or officers.
Furthermore, the Registrant's Restated Certificate of Incorporation eliminates
the liability of directors of the Registrant, under certain circumstances, to
the maximum extent permitted by the Delaware General Corporation Law.
The Underwriting Agreement to be filed as Exhibit 1.1 hereto contains
reciprocal agreements of indemnity between the Registrant and the underwriters
as to certain liabilities, including liabilities under the Securities Act and in
certain circumstances provides for indemnification of the Registrant's directors
and officers.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement
4.1 Form of certificate representing shares of Registrant's common stock
(filed as Exhibit 4.1 to the Registrant's registration statement no.
33-45612 and incorporated by reference herein)
4.2 Stock Registration Agreement dated April 10, 1989, between Registrant and
Equus II Incorporated, formerly Equus II, L.P. (filed as Exhibit 4.2 to
Registrant's Form S-1 registration statement no. 33-45612 and
incorporated by reference herein)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
*4.3 Credit Agreement, dated March 25, 1998 (the "Credit Agreement"), by and
among the Registrant, NationsBank, N.A. (as successor in interest to
NationsBank of Texas, N.A.), as administrative agent ("NationsBank"),
NationsBanc Montgomery Securities LLC, as arranger and syndication
agent, Swiss Bank Corporation, as documentation agent ("Swiss Bank"),
and the several lenders named therein
*4.4 First Amendment to Credit Agreement, dated May 1, 1998, among the
Registrant, NationsBank, Swiss Bank and the parties named therein
*4.5 Second Amendment to Credit Agreement, dated May 5, 1998, among the
Registrant, NationsBank, Swiss Bank and the parties named therein
*4.6 Master Assignment and Acceptance, dated as of May 6, 1998, among
NationsBank, Swiss Bank and the several lenders named therein
*4.7 Facility A Notes (Revolving Credit), dated May 6, 1998, of the Registrant
in favor of lenders named therein
*4.8 Facility B Notes (Term Loan), dated May 6, 1998, of the Registrant in
favor of lenders named therein
*4.9 Facility C Notes (364-day Revolving Facility), dated May 6, 1998, of the
Registrant in favor of lenders named therein
*4.10 Guaranty, dated May 1, 1998, between NationsBank and A&S Business
Interests, Inc.
*4.11 Guaranty, dated May 1, 1998, between NationsBank and A&S Building Systems,
L.P.
*4.12 Guaranty, dated May 1, 1998, between NationsBank and NCI Building Systems,
L.P.
*4.13 Guaranty, dated May 1, 1998, between NationsBank and NCI Holding Corp.
*4.14 Guaranty, dated May 1, 1998, between NationsBank and NCI Operating Corp.
*4.15 Guaranty, dated May 1, 1998, between NationsBank and Metal Building
Components Holding, Inc.
*4.16 Guaranty, dated May 1, 1998, between NationsBank and Metal Coaters
Holding, Inc.
*4.17 Guaranty, dated May 1, 1998, between NationsBank and Metal Building
Components, L.P. (formerly MBCI Operating, L.P.)
*4.18 Guaranty, dated May 1, 1998, between NationsBank and Metal Coaters
Operating, L.P.
*4.19 Guaranty, dated May 13, 1998, between NationsBank and Metal Coaters of
California, Inc.
*4.20 Pledge Agreement, dated May 1, 1998, between the Registrant and
NationsBank
*4.21 Pledge Agreement, dated May 1, 1998, between NCI Holding Corp. and
NationsBank
*4.22 Pledge Agreement, dated May 13, 1998, between the Metal Coaters Holding,
Inc. and NationsBank
*4.23 Assignment of Partnership Interests, dated May 1, 1998, between NCI
Operating Corp. and NationsBank
*4.24 Assignment of Partnership Interests, dated May 1, 1998, between NCI
Holding Corp. and NationsBank
*4.25 Assignment of Partnership Interests, dated May 1, 1998, between Metal
Building Components Holding, Inc. and NationsBank
*4.26 Assignment of Partnership Interests, dated May 1, 1998, between Metal
Coaters Holding, Inc. and NationsBank
*4.27 Promissory Note, dated May 5, 1998, of NCI Holding Corp. in favor of the
Registrant
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
*4.28 Note Pledge Agreement, dated May 5, 1998, between the Registrant and
NationsBank
4.29 Loan Agreement "A," dated September 1, 1991, between the City of Mattoon
and the Company (filed as Exhibit 4.11 to the Registrant's registration
statement no. 33-45612 and incorporated by reference herein)
4.30 $250,000 Promissory Note A, dated October 31, 1991, in favor of the City
of Mattoon executed by the Company (filed as Exhibit 4.12 to the
Registrant's registration statement no. 33-45612 and incorporated by
reference herein)
4.31 Loan Agreement "B," dated September 1, 1991, between the City of Mattoon
and the Company (filed as Exhibit 4.13 to the Registrant's registration
statement no. 33-45612 and incorporated by reference herein)
4.32 $250,000 Promissory Note B, dated January 20, 1992, in favor of the City
of Mattoon executed by the Company (filed as Exhibit 4.14 to the
Registrant's registration statement no. 33-45612 and incorporated by
reference herein)
4.33 Stock Retention and Registration Agreement, dated November 13, 1995, by
and between the Company, Doors & Building Components, Inc., and David B.
Curtis (filed as Exhibit 4.14 to the Registrant's Annual Report on Form
10-K for the fiscal year ended October 31, 1995, and incorporated by
reference herein)
4.34 7% Convertible Subordinated Debenture dated April 1, 1996, Due April 1,
2001, between NCI Building Systems, Inc. and John T. Eubanks (filed as
Exhibit 4.15 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1996, and incorporated by reference
herein)
4.35 Rights Agreement, dated June 24, 1998, between the Registrant and Harris
Trust and Savings Bank (filed as Exhibit 2 to the Company's registration
statement on Form 8-A and incorporated by reference herein)
**5.1 Legal Opinion of Gardere & Wynne, L.L.P., regarding legality of securities
being registered
*23.1 Consent of Ernst & Young LLP
**23.2 Consent of Gardere & Wynne, L.L.P. (included in Exhibit 5.1)
*24.1 Power of Attorney (set forth on page II-5)
</TABLE>
- ------------------------
* Filed herewith.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefits plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. If a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or
II-3
<PAGE>
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas on the 6th day of August, 1998.
<TABLE>
<S> <C> <C>
NCI BUILDING SYSTEMS, INC.
By: /s/ JOHNIE SCHULTE
-----------------------------------------
Johnie Schulte,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each of the undersigned hereby appoints Johnie Schulte and Robert J. Medlock
and each of them (with full power to act alone), as attorneys and agents for the
undersigned, with full power of substitution, for and in the name, place and
stead of the undersigned, to sign and file with the Commission under the
Securities Act any and all amendments and exhibits to this Registration
Statement, any registration statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act, and any
and all applications, instruments and other documents to be filed with the
Commission pertaining to the registration of the securities covered hereby or
thereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons and in the capacities
indicated on the 6th day of August, 1998.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
President, Chief Executive
/s/ JOHNIE SCHULTE Officer and Director
- ------------------------------ (principal executive
Johnie Schulte officer)
Vice President and Chief
/s/ ROBERT J. MEDLOCK Financial Officer
- ------------------------------ (principal financial and
Robert J. Medlock accounting officer)
/s/ THOMAS C. ARNETT
- ------------------------------ Director
Thomas C. Arnett
/s/ WILLIAM D. BREEDLOVE
- ------------------------------ Director
William D. Breedlove
/s/ GARY L. FORBES
- ------------------------------ Director
Gary L. Forbes
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ --------------------------
<C> <S>
/s/ LEONARD F. GEORGE
- ------------------------------ Director and Executive
Leonard F. George Vice President
/s/ A.R. GINN
- ------------------------------ Director and Executive
A.R. Ginn Vice President
/s/ KENNETH W. MADDOX
- ------------------------------ Director and Vice
Kenneth W. Maddox President
/s/ ROBERT N. MCDONALD
- ------------------------------ Director
Robert N. McDonald
/s/ C.A. RUNDELL, JR.
- ------------------------------ Director
C.A. Rundell, Jr.
/s/ DANIEL D. ZABCIK
- ------------------------------ Director
Daniel D. Zabcik
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
**1.1 Form of Underwriting Agreement
4.1 Form of certificate representing shares of Registrant's common stock
(filed as Exhibit 4.1 to the Registrant's registration statement no.
33-45612 and incorporated by reference herein)
4.2 Stock Registration Agreement dated April 10, 1989, between Registrant and
Equus II Incorporated, formerly Equus II, L.P. (filed as Exhibit 4.2 to
Registrant's Form S-1 registration statement no. 33-45612 and
incorporated by reference herein)
*4.3 Credit Agreement, dated March 25, 1998 (the "Credit Agreement"), by and
among the Registrant, NationsBank, N.A. (as successor in interest to
NationsBank of Texas, N.A.), as administrative agent ("NationsBank"),
NationsBanc Montgomery Securities LLC, as arranger and syndication
agent, Swiss Bank Corporation, as documentation agent ("Swiss Bank"),
and the several lenders named therein
*4.4 First Amendment to Credit Agreement, dated May 1, 1998, among the
Registrant, NationsBank, Swiss Bank and the parties named therein
*4.5 Second Amendment to Credit Agreement, dated May 5, 1998, among the
Registrant, NationsBank, Swiss Bank and the parties named therein
*4.6 Master Assignment and Acceptance, dated as of May 6, 1998, among
NationsBank, Swiss Bank and the several lenders named therein
*4.7 Facility A Notes (Revolving Credit), dated May 6, 1998, of the Registrant
in favor of lenders named therein
*4.8 Facility B Notes (Term Loan), dated May 6, 1998, of the Registrant in
favor of lenders named therein
*4.9 Facility C Notes (364-day Revolving Facility), dated May 6, 1998, of the
Registrant in favor of lenders named therein
*4.10 Guaranty, dated May 1, 1998, between NationsBank and A&S Business
Interests, Inc.
*4.11 Guaranty, dated May 1, 1998, between NationsBank and A&S Building Systems,
L.P.
*4.12 Guaranty, dated May 1, 1998, between NationsBank and NCI Building Systems,
L.P.
*4.13 Guaranty, dated May 1, 1998, between NationsBank and NCI Holding Corp.
*4.14 Guaranty, dated May 1, 1998, between NationsBank and NCI Operating Corp.
*4.15 Guaranty, dated May 1, 1998, between NationsBank and Metal Building
Components Holding, Inc.
*4.16 Guaranty, dated May 1, 1998, between NationsBank and Metal Coaters
Holding, Inc.
*4.17 Guaranty, dated May 1, 1998, between NationsBank and Metal Building
Components, L.P. (formerly MBCI Operating, L.P.)
*4.18 Guaranty, dated May 1, 1998, between NationsBank and Metal Coaters
Operating, L.P.
*4.19 Guaranty, dated May 13, 1998, between NationsBank and Metal Coaters of
California, Inc.
*4.20 Pledge Agreement, dated May 1, 1998, between the Registrant and
NationsBank
*4.21 Pledge Agreement, dated May 1, 1998, between NCI Holding Corp. and
NationsBank
*4.22 Pledge Agreement, dated May 13, 1998, between the Metal Coaters Holding,
Inc. and NationsBank
*4.23 Assignment of Partnership Interests, dated May 1, 1998, between NCI
Operating Corp. and NationsBank
*4.24 Assignment of Partnership Interests, dated May 1, 1998, between NCI
Holding Corp. and NationsBank
</TABLE>
<PAGE>
<TABLE>
<C> <S>
*4.25 Assignment of Partnership Interests, dated May 1, 1998, between Metal
Building Components Holding, Inc. and NationsBank
*4.26 Assignment of Partnership Interests, dated May 1, 1998, between Metal
Coaters Holding, Inc. and NationsBank
*4.27 Promissory Note, dated May 5, 1998, of NCI Holding Corp. in favor of the
Registrant
*4.28 Note Pledge Agreement, dated May 5, 1998, between the Registrant and
NationsBank
4.29 Loan Agreement "A," dated September 1, 1991, between the City of Mattoon
and the Company (filed as Exhibit 4.11 to the Registrant's registration
statement no. 33-45612 and incorporated by reference herein)
4.30 $250,000 Promissory Note A, dated October 31, 1991, in favor of the City
of Mattoon executed by the Company (filed as Exhibit 4.12 to the
Registrant's registration statement no. 33-45612 and incorporated by
reference herein)
4.31 Loan Agreement "B," dated September 1, 1991, between the City of Mattoon
and the Company (filed as Exhibit 4.13 to the Registrant's registration
statement no. 33-45612 and incorporated by reference herein)
4.32 $250,000 Promissory Note B, dated January 20, 1992, in favor of the City
of Mattoon executed by the Company (filed as Exhibit 4.14 to the
Registrant's registration statement no. 33-45612 and incorporated by
reference herein)
4.33 Stock Retention and Registration Agreement, dated November 13, 1995, by
and between the Company, Doors & Building Components, Inc., and David B.
Curtis (filed as Exhibit 4.14 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1995, and incorporated by
reference herein)
4.34 7% Convertible Subordinated Debenture dated April 1, 1996, Due April 1,
2001, between NCI Building Systems, Inc. and John T. Eubanks (filed as
Exhibit 4.15 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended October 31, 1996, and incorporated by reference
herein)
4.35 Rights Agreement, dated June 24, 1998, between the Registrant and Harris
Trust and Savings Bank (filed as Exhibit 2 to the Company's registration
statement on Form 8-A and incorporated by reference herein)
**5.1 Legal Opinion of Gardere & Wynne, L.L.P., regarding legality of securities
being registered
*23.1 Consent of Ernst & Young LLP
**23.2 Consent of Gardere & Wynne, L.L.P. (included in Exhibit 5.1)
*24.1 Power of Attorney (set forth on page II-5)
</TABLE>
- ------------------------
* Filed herewith.
** To be filed by amendment.
<PAGE>
- -------------------------------------------------------------------------------
CREDIT AGREEMENT
AMONG
NCI BUILDING SYSTEMS, INC,
BORROWER
NATIONSBANK OF TEXAS, N.A.,
ADMINISTRATIVE AGENT
NATIONSBANC MONTGOMERY SECURITIES LLC,
ARRANGER AND SYNDICATION AGENT
SWISS BANK CORPORATION,
DOCUMENTATION AGENT
AND
THE LENDERS NAMED HEREIN
$600,000,000
MARCH 25, 1998
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
SECTION 1 DEFINITIONS AND TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . 11
1.3 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1 Facilities A, B and C. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.1 Facility A . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.2 Facility B . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.1.3 Facility C . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Loan Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 LC Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4 Termination of Revolving Facilities. . . . . . . . . . . . . . . . . . . 16
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.2 Interest and Principal Payments. . . . . . . . . . . . . . . . . . . . . 16
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.7 Interest Calculations. . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Conversions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.13 Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.14 Booking Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.15 Increased Cost and Reduced Return. . . . . . . . . . . . . . . . . . . . 21
3.16 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . 23
3.17 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.18 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . 23
3.19 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.20 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.21 Extensions and Conversions of Facility C Termination Date. . . . . . . . 26
3.22 Replacement Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Treatment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.2 Underwriting and Administrative Fees . . . . . . . . . . . . . . . . . . 27
4.3 LC Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(i)
<PAGE>
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SECTION 5 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Additional Security and Guaranties . . . . . . . . . . . . . . . . . . . 27
SECTION 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Supplements to Schedules . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 29
7.1 Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 Corporate Existence, Good Standing, Authority and Compliance . . . . . . 29
7.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 Authorization and Contravention. . . . . . . . . . . . . . . . . . . . . 29
7.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Financial Statements; Fiscal Year. . . . . . . . . . . . . . . . . . . . 30
7.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.9 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.10 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.11 Properties; Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.12 Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.13 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.14 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 31
7.15 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.16 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.18 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.20 Trade Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.21 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.22 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.23 Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8 AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.1 Items to be Furnished. . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.2 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.4 Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.7 Expenses; Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . 35
8.9 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 Preservation and Protection of Rights. . . . . . . . . . . . . . . . . . 36
8.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(ii)
<PAGE>
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----
8.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 9 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.4 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.5 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . 37
9.7 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . 37
9.8 Loans, Advances and Investments. . . . . . . . . . . . . . . . . . . . . 37
9.9 Dividends and Distributions. . . . . . . . . . . . . . . . . . . . . . . 38
9.10 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.11 Mergers and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . 38
9.12 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.13 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . 38
9.14 New Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.15 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.16 Tax Sharing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 10 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Maximum Senior Debt Ratio. . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Minimum Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . . . . . 40
SECTION 11 DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Payment of Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Debtor Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Judgments and Attachments. . . . . . . . . . . . . . . . . . . . . . . . 41
11.5 Government Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.6 Misrepresentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.7 Ownership of Other Companies . . . . . . . . . . . . . . . . . . . . . . 41
11.8 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . 41
11.9 LCs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.10 Validity and Enforceability of Loan Documents. . . . . . . . . . . . . . 41
11.11 Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(iii)
<PAGE>
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----
SECTION 12 RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.1 Remedies Upon Default. . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Performance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.5 Course of Dealing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.6 Cumulative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.7 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 43
12.8 Diminution in Value of Collateral. . . . . . . . . . . . . . . . . . . . 43
12.9 Certain Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 13 AGREEMENT AMONG LENDERS. . . . . . . . . . . . . . . . . . . . . . . . . 43
13.1 Appointment, Powers, and Immunities of Agent . . . . . . . . . . . . . . 43
13.2 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.3 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.4 Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.6 Non-Reliance on Agent and Other Lenders. . . . . . . . . . . . . . . . . 45
13.7 Resignation of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.8 Relationship of Lenders. . . . . . . . . . . . . . . . . . . . . . . . . 45
13.9 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.10 Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 14 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.2 Nonbusiness Days; Time . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . 47
14.5 Exceptions to Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 47
14.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.9 Venue; Service of Process; Jury Trial. . . . . . . . . . . . . . . . . . 48
14.10 Amendments, Consents, Conflicts and Waivers. . . . . . . . . . . . . . . 48
14.11 Multiple Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 49
14.12 Successors and Assigns; Assignments and Participations . . . . . . . . . 49
14.13 Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.14 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
(iv)
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 Addresses, Commitments and Wiring Information
Schedule 6 Conditions Precedent
Schedule 7.2 Jurisdictions of Incorporation and Business
Schedule 7.3 Corporate Structure
Schedule 7.7 Material Litigation
Schedule 7.9 Environmental Matters
Schedule 7.11 Permitted Liens
Schedule 7.12 Chief Executive Offices
Schedule 7.14 Material Transactions with Affiliates
Schedule 7.15 Permitted Debt
Schedule 7.20 Trade Names
Schedule 9.8 Existing Investments
Exhibit A Facility A Note (Revolving Credit)
Exhibit B Facility B Note (Term Loan)
Exhibit C Facility C Note (364-day Revolving Facility)
Exhibit D Guaranty
Exhibit E Loan Request
Exhibit F Conversion Request
Exhibit G LC Request
Exhibit H Compliance Certificate
Exhibit I Assignment and Acceptance
Exhibit J Pledge Agreement
Exhibit K Assignment of Partnership Interests
Exhibit L Legal Opinion
(v)
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 25, 1998, among NCI
Building Systems, Inc., a Delaware corporation ("BORROWER"), the Lenders
(defined below), NationsBank of Texas, N.A., as Administrative Agent for
itself and the other Lenders ("AGENT"), NationsBanc Montgomery Securities
LLC, as Arranger and Syndication Agent, and Swiss Bank Corporation, as
Documentation Agent.
Borrower has requested Lenders to extend credit not to exceed an
aggregate principal amount of $600,000,000, to be allocated as follows:
A. A revolving facility of up to $200,000,000 ("FACILITY A");
B. A term loan in the principal amount of up to $200,000,000
("FACILITY B"); and
C. A 364-day revolving facility of up to $200,000,000 ("FACILITY C").
Lenders are willing to extend the requested credit on the terms and
conditions of this Agreement. Accordingly, the undersigned agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used in the Loan Documents:
ACQUISITION means the purchase by Borrower of the stock of Amatek
pursuant to the Purchase Agreement.
ADJUSTED EURODOLLAR RATE means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Agent to be equal to the SUM of (a) the
quotient obtained by dividing (i) the Eurodollar Rate for such Eurodollar
Loan for such Interest Period by (ii) 1 minus the Reserve Requirement for
such Eurodollar Loan for such Interest Period, PLUS (b) the Applicable Margin.
AFFILIATE of a Person means any other individual or entity who directly
or indirectly controls, or is controlled by, or is under common control with,
that Person. For purposes of this definition, "CONTROL," "CONTROLLED BY,"
and "UNDER COMMON CONTROL WITH" mean possession, directly or indirectly, of
power to direct (or cause the direction of) management or policies (whether
through ownership of voting securities, or other ownership interests, by
contract, or otherwise).
AGENT means NationsBank of Texas, N.A., a national banking association,
and its successor or successors as agent for Lenders under this Agreement.
AGREEMENT means this Credit Agreement, as amended, supplemented or
restated from time to time.
AMATEK means Amatek Holdings, Inc., a Texas corporation.
APPLICABLE LENDING OFFICE means, for each Lender and for each Type of
Loan, the "LENDING OFFICE" of such Lender (or of an affiliate of such Lender)
as such Lender may from time to time specify to the Agent
<PAGE>
and the Borrower by written notice in accordance with the terms hereof as the
office by which its Loans of such Type are to be made and maintained.
APPLICABLE MARGIN means, on any day, the interest margin over the Base
Rate or the Eurodollar Rate, as the case may be, based on the ratio of Funded
Debt to EBITDA, as follows:
<TABLE>
- ---------------------------------------------------------------------------
RATIO OF FUNDED DEBT APPLICABLE APPLICABLE
TO EBITDA MARGIN FOR MARGIN FOR
BASE RATE EURODOLLAR
LOANS LOANS
- ---------------------------------------------------------------------------
<S> <C> <C>
Greater than 3.75 to 1.0 0.500% 2.000%
- ---------------------------------------------------------------------------
Less than or equal to 3.75 to 1.0, but greater 0.250% 1.750%
than 3.25 to 1.0
- ---------------------------------------------------------------------------
Less than or equal to 3.25 to 1.0, but greater 0% 1.375%
than 2.5 to 1.0
- ---------------------------------------------------------------------------
Less than or equal to 2.5 to 1.0, but greater 0% 1.000%
than 2.0 to 1.0
- ---------------------------------------------------------------------------
Less than or equal to 2.0 to 1.0 0% 0.750%
- ---------------------------------------------------------------------------
</TABLE>
The ratio of Funded Debt to EBITDA is determined from the Current Financials
and any related Compliance Certificate. EBITDA is calculated for the most
recently-completed four fiscal quarters of Borrower (using PRO FORMA combined
information for the Companies and Amatek and its Subsidiaries for any fiscal
period (or portion thereof) of Borrower prior to the Acquisition included in
the calculation) and Funded Debt is calculated as of the last day of such
four fiscal quarter period. The Applicable Margin, as adjusted to reflect
such calculations, shall become effective on the first day following the last
day of the four fiscal quarter period for which such calculation is made,
notwithstanding that Current Financials are delivered, and the calculations
are actually made, at a later date. If Borrower fails to timely furnish to
Agent the Current Financials and any related Compliance Certificate or, if
for some other reason, a new Applicable Margin for a current period cannot be
calculated, then the Applicable Margin in effect on the last day of the last
four fiscal quarter period for which EBITDA was calculated shall remain in
effect until a new Applicable Margin can be calculated, which new Applicable
Margin shall become effective as provided in the immediately preceding
sentence. Notwithstanding the foregoing, the ratio of Funded Debt to EBITDA
shall be deemed to be (a) less than 2.00 to 1.0 until consummation of the
Acquisition, and (b) thereafter, greater than 3.75 to 1.0, in each case,
until delivery of Current Financials (and any related Compliance Certificate)
for the fiscal quarter of Borrower ending July 31, 1998.
APPLICABLE PERCENTAGE means, on any day, the commitment fee percentage
applicable under SECTION 4 based on the ratio of Funded Debt to EBITDA, as
follows (calculated in accordance with the definition of "APPLICABLE MARGIN"):
2
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------
RATIO OF FUNDED DEBT APPLICABLE
TO EBITDA PERCENTAGE
- ------------------------------------------------------------------------------
<S> <C>
Greater than 3.75 to 1.0 0.500%
- ------------------------------------------------------------------------------
Less than or equal to 3.75 to 1.0, but greater than 3.25 to 1.0 0.500%
- ------------------------------------------------------------------------------
Less than or equal to 3.25 to 1.0, but greater than 2.5 to 1.0 0.375%
- ------------------------------------------------------------------------------
Less than or equal to 2.5 to 1.0, but greater than 2.0 to 1.0 0.300%
- ------------------------------------------------------------------------------
Less than or equal to 2.0 to 1.0 0.250%
- ------------------------------------------------------------------------------
</TABLE>
ASSIGNMENT OF PARTNERSHIP INTERESTS means an assignment substantially in
the form of EXHIBIT K.
BASE RATE means, for any day, the rate per annum equal to the SUM of (a)
the higher of (i) the Federal Funds Rate for such day plus one-half of one
percent (0.5%) and (ii) the Prime Rate for such day. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or Federal
Funds Rate.
BASE RATE LOANS means Loans that bear interest at rates based upon the
Base Rate.
BORROWER is defined in the preamble to this Agreement.
BUSINESS DAY means (a) for all purposes, any day OTHER THAN Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in Texas or New York and (b) for purposes of any Eurodollar Loan, a
day that satisfies the requirements of CLAUSE (a) and is a day that
commercial banks are open for domestic or international business in London.
CAPITAL LEASE means any capital lease or sublease that has been
capitalized on a balance sheet.
CODE means the INTERNAL REVENUE CODE OF 1986, as amended, and related
rules and regulations.
COLLATERAL is defined in SECTION 5.2.
COMMITMENT USAGE means, at any time, for each Lender, the SUM of its
Facility A Commitment Usage, its Facility B Principal Debt, and its Facility
C Principal Debt.
COMMITMENT means the amounts (which are subject to reduction and
cancellation as provided in this Agreement) stated beside a Lender's name for
Facility A, Facility B and Facility C on SCHEDULE 1 as most recently amended
under this Agreement.
COMPANY or COMPANIES means, at any time, Borrower and each of its
Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
EXHIBIT H and signed by a Responsible Officer.
3
<PAGE>
CONTINUE, CONTINUATION, and CONTINUED shall refer to the continuation
pursuant to SECTION 3.9 or SECTIONS 3.15 through 3.19 of a Loan of one Type
as a Loan of the same Type from one Interest Period to the next Interest
Period.
CONVERT, CONVERSION, and CONVERTED shall refer to a conversion pursuant
to SECTION 3.10 or SECTIONS 3.15 through 3.19 of one Type of Loan into
another Type of Loan.
CONVERSION REQUEST means a request substantially in the form of EXHIBIT F.
CURRENT FINANCIALS means, at any time, the consolidated Financial
Statements of Borrower and its Subsidiaries most recently delivered to Agent
under SECTIONS 8.1(a) or 8.1(b), as the case may be.
DEBT means (without duplication), for any Person, (a) all obligations
required by GAAP to be classified upon such Person's balance sheet as
liabilities, (b) liabilities secured (or for which the holder of the Debt has
an existing Right, contingent or otherwise, to be so secured) by any Lien
existing on property owned or acquired by that Person, (c) obligations that
have been (or under GAAP should be) capitalized for financial reporting
purposes, and (d) all guaranties, endorsements and other contingent
obligations with respect to obligations of others of the types described in
CLAUSES (a), (b) and (c) above.
DEBTOR RELIEF LAWS means TITLE 11 of the U.S. Code and all other
applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar Laws affecting creditors' Rights in effect
from time to time.
DEFAULT is defined in SECTION 11.
DEFAULT RATE means an annual rate of interest equal from day to day to
the LESSER of (a) the rate otherwise applicable under this Agreement (or if
no rate is otherwise specified by this Agreement, then the Base Rate plus the
Applicable Margin) plus 2% and (b) the Maximum Rate.
DETERMINING LENDERS means any combination of Lenders holding more than
(a) 51% of the Total Commitments, if no Principal Debt or LC Exposure is
outstanding, or (b) 51% of the Total Commitment Usage if any Principal Debt
or LC Exposure is outstanding.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities or other interests issued by a Person, (a) the
retirement, redemption, purchase or other acquisition for value of those
securities by such Person, (b) the declaration or payment of any dividend on
or with respect to those securities by such Person, (c) any loan or advance
by that Person to, or other investment by that Person in, the holder of any
of those securities, and (d) any other payment by that Person with respect to
those securities.
EBITDA means, in respect of any period, the following (calculated on a
consolidated basis for the Companies in accordance with GAAP): net income
before interest expenses, Taxes, non-cash operating charges (such as
depreciation and amortization expense), non-cash charges in respect of
pension and retiree benefits, and extraordinary gains and losses; PROVIDED
THAT, with respect to Amatek and its Subsidiaries, EBITDA shall include
amounts expended for corporate overhead and executive employee compensation
4
<PAGE>
during the three fiscal quarters of Amatek preceding the Acquisition and the
fiscal quarter of Amatek in which the Acquisition is consummated.
EMPLOYEE PLAN means an employee pension benefit plan covered by TITLE IV
of ERISA and established or maintained by any Company.
ENDING CALENDAR MONTH is defined in SECTION 3.9.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Materials of Environmental Concern.
ERISA means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, as
amended, and related rules and regulations.
EURODOLLAR LOANS means Loans that bear interest at rates based upon the
Adjusted Eurodollar Rate.
EURODOLLAR RATE means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in U.S. dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term "EURODOLLAR RATE" shall mean, for
any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page
as the London interbank offered rate for deposits in U.S. dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
PROVIDED, HOWEVER, THAT if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates
(rounded upwards, if necessary, to the nearest 1/100 of 1%).
EXISTING BANK DEBT means all obligations of the Companies under the
Credit Agreement dated as of March 12, 1993, as amended.
FACILITIES means Facility A, Facility B and Facility C.
FACILITY A is defined in the preamble to this Agreement.
FACILITY A COMMITMENT means, at any time, the sum of all Commitments for
all Lenders under Facility A (as reduced or canceled under this Agreement)
then in effect.
FACILITY A COMMITMENT USAGE means, at any time, the SUM of the Facility
A Principal Debt PLUS the LC Exposure.
FACILITY A NOTE means a promissory note substantially in the form of
EXHIBIT A.
FACILITY A PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Loans under Facility A.
5
<PAGE>
FACILITY A TERMINATION DATE means the EARLIER of (a) July 1, 2003, and
(b) the effective date that Lenders' commitments to lend under Facility A are
otherwise canceled or terminated in accordance with this Agreement.
FACILITY B is defined in the preamble to this Agreement.
FACILITY B COMMITMENT means, at any time, the sum of all Commitments for
all Lenders under Facility B (as reduced or canceled under this Agreement)
then in effect.
FACILITY B MATURITY DATE means the earlier of (a) July 1, 2003, or (b)
the acceleration of maturity of Facility B in accordance with SECTION 12 of
this Agreement.
FACILITY B NOTE means a promissory note substantially in the form of
EXHIBIT B.
FACILITY B PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Loans under Facility B.
FACILITY C is defined in the preamble to this Agreement.
FACILITY C COMMITMENT means, at any time, the sum of all Commitments for
all Lenders under Facility C (as reduced or canceled under this Agreement)
then in effect.
FACILITY C NOTE means a promissory note substantially in the form of
EXHIBIT C.
FACILITY C PRINCIPAL DEBT means, at any time, the unpaid principal
balance of all Loans under Facility C.
FACILITY C TERMINATION DATE means, for each Lender, the EARLIER of (a)
the date 364 days after the date on which the Acquisition is consummated
(subject to extensions and conversions of such Lender's Loans for Facility C
under SECTION 3.21), but in no event later than July 1, 2003, and (b) the
effective date that Lenders' commitments to lend under Facility C are
otherwise canceled or terminated in accordance with this Agreement.
FEDERAL FUNDS RATE means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; PROVIDED THAT (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding
Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
charged to Agent (in its individual capacity) on such day on such
transactions as determined by Agent.
FINANCIAL HEDGE means a swap, collar, floor, cap, or other contract
between any Company and any Lender, which is intended to reduce or eliminate
the risk of fluctuations in interest rates and which is legal and enforceable
under applicable Law.
6
<PAGE>
FINANCIAL STATEMENTS of a Person means balance sheets, profit and loss
statements, reconciliations of capital and surplus, and statements of cash
flow prepared (a) according to GAAP, (b) except as stated in SECTION 1.3, in
comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year, as applicable, and (c) on a consolidated basis if that
Person had any consolidated Subsidiaries during the applicable period.
FUNDED DEBT means, when determined, the following (calculated on a
consolidated basis for the Companies in accordance with GAAP): (a) all
obligations for borrowed money (whether as a direct obligor on a promissory
note, bond, debenture or other similar instrument, a reimbursement obligor on
an LC or other letter of credit, a guarantor, or otherwise) PLUS (b) all
Capital Lease obligations.
FUNDING LOSS, means, without duplication, (a) the administrative or
reemployment costs customarily charged by a Lender when (i) Borrower fails or
refuses (for any reason OTHER THAN such Lender's failure to comply with this
Agreement) to take any Loan that it has requested under this Agreement, or
(ii) Borrower prepays or pays any Loan or Converts any Loan to a Loan of
another Type, in each case, before the last day of the applicable Interest
Period, PLUS (b) an amount equal to the excess of the amount of interest that
would have accrued on the Loan at the elected interest rate during the
remainder of the applicable Interest Period (but for such failure, refusal,
payment, prepayment or Conversion) over the amount of interest that would
accrue on the same Type of Loan for an interest period of the same duration
as the remainder of the applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board that are applicable on the date
of this Agreement.
GUARANTORS means A&S Building Interests, Inc., a Texas corporation
(f/k/a A&S Building Systems, Inc.), A&S Building Systems, L.P., a Texas
limited partnership, NCI Building Systems, L.P., a Texas limited partnership,
NCI Holding Corp., a Delaware corporation, NCI Operating Corp., a Nevada
corporation, and any future domestic Subsidiary of Borrower (including,
without limitation, Amatek and its domestic Subsidiaries upon consummation of
the Acquisition and delivery of Guarantees under SECTION 8.12).
GUARANTY means a guaranty substantially in the form of EXHIBIT D.
INTEREST PERIOD is determined in accordance with SECTION 3.9.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, permits, orders, writs, injunctions, decrees, judgments,
opinions and interpretations of any Tribunal.
LC means a letter of credit (in such form as shall be customary in
respect of obligations of a similar nature) (a) existing on the date hereof
and issued by NationsBank in connection with the Existing Bank Debt, or (b)
issued by Agent under this Agreement and under an LC Agreement.
LC AGREEMENT means a letter of credit application and agreement (in form
and substance satisfactory to Agent) submitted by Borrower to Agent for a
letter of credit for the account of any Company.
LC EXPOSURE means, at any time (without duplication) the SUM of (a) the
aggregate undrawn and uncancelled portions of all outstanding LCs PLUS (b)
the aggregate unpaid reimbursement obligations of
7
<PAGE>
Borrower under drawings or drafts under any LC, excluding Loans to fund such
reimbursement obligations under SECTION 2.3(c).
LC REQUEST means a request substantially in the form of EXHIBIT G.
LENDER LIENS means Liens in favor of Lenders, or Agent on behalf of
Lenders, securing any of the Obligation.
LENDERS means the financial institutions named on the attached SCHEDULE
1 or on the most recently amended SCHEDULE 1, if any, delivered by Agent
under this Agreement, and, subject to this Agreement, their respective
successors and assigns (but not any Participant who is not otherwise a party
to this Agreement).
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds
prior to the claims of other creditors or the owners.
LITIGATION means any action by or before any Tribunal.
LOAN means (without duplication) any amount disbursed by (a) one or more
Lenders to or on behalf of Borrower under the Loan Documents, whether such
amount constitutes an original disbursement of funds, the Continuation of an
amount outstanding under Facility A, Facility B or Facility C, or the
financing of an LC reimbursement obligation under Facility A, or (b) any
Lender in accordance with, and to satisfy the obligations of any Company
under, any Loan Document.
LOAN DATE means for any Loan the date for which funds are requested by
Borrower.
LOAN DOCUMENTS means (a) this Agreement, certificates and reports
delivered under this Agreement, and exhibits and schedules to this Agreement,
(b) the Notes, Guarantees, Security Documents and other agreements, documents
and instruments in favor of Agent or Lenders (or Agent on behalf of Lenders)
ever delivered in connection with or under this Agreement or otherwise
delivered in connection with all or any part of the Obligation (excluding
financial projections), (c) all LCs and LC Agreements, (d) any Financial
Hedge between any Company and any Lender (or any Affiliate of any Lender),
and (e) all renewals, extensions and restatements of, and amendments and
supplements to, any of the foregoing.
LOAN REQUEST means a request substantially in the form of EXHIBIT E.
MATERIAL ADVERSE EVENT means (a) any Default, or (b) any circumstance or
event that, individually or collectively with other circumstances or events,
reasonably is expected to result in any (i) impairment of the ability of
Borrower (individually) or the Companies (as a whole) to perform any payment
or other material obligations under any Loan Document, (ii) impairment of the
ability of Agent or any Lender to enforce (A) any of the material obligations
of Borrower (individually) or the Companies (as a whole) under this
Agreement, or (B) any of their respective material Rights under the Loan
Documents, or (iii) material and adverse effect on the financial condition of
Borrower (individually) or the Companies (as a whole) as represented to
Lenders in the Current Financials.
MATERIAL AGREEMENT means, for any Person, any agreement (excluding
purchase orders for material or inventory in the ordinary course of business)
to which that Person is a party, by which that Person is
8
<PAGE>
bound, or to which any assets of that Person may be subject, and that is not
cancelable by that Person upon 30 or fewer days' notice without liability for
further payment OTHER THAN nominal penalty, and that requires that Person to
pay more than $5,000,000 during any 12-month period.
MATERIALS OF ENVIRONMENTAL CONCERN means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenals, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactive materials, and any other substances of
any kind, whether or not such substance is defined as hazardous or toxic
under any Environmental Law, that is regulated pursuant to or could give rise
to liability under any Environmental Law.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest
that, under applicable Law, such Lender is permitted to contract for, charge,
take, reserve or receive on the Obligation.
MBCI means Metal Buildings Components, Inc., an indirect wholly-owned
subsidiary of Amatek.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in SECTIONS
3(37) or 4001(a)(3) of ERISA or SECTION 414(f) of the Code to which any
Company (or any Person that, for purposes of TITLE IV of ERISA, is a member
of Borrower's controlled group or is under common control with Borrower
within the meaning of SECTION 414 of the Code) is making, or has made, or is
accruing, or has accrued, an obligation to make contributions.
NATIONSBANK means NationsBank of Texas, N.A.
NET WORTH means, when determined, total assets MINUS total liabilities
(in each case calculated on a consolidated basis for the Companies in
accordance with GAAP).
NOTES means all outstanding and unpaid Facility A Notes, Facility B
Notes and Facility C Notes.
OBLIGATION means all present and future indebtedness and obligations,
and all renewals, increases and extensions thereof, or any part thereof, now
or hereafter owed to Agent or any Lender by any Company under any Loan
Document, TOGETHER WITH all interest accruing thereon, fees, costs and
expenses (including, without limitation, all attorneys' fees and expenses
incurred in the enforcement or collection thereof) payable under the Loan
Documents or in connection with the protection of Rights under the Loan
Documents.
OTHER TAXES is defined in SECTION 3.20.
PARTICIPANT is defined in SECTION 14.12(e).
PAYMENT TAXES is defined in SECTION 3.20.
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means Debt described on SCHEDULE 7.15.
PERMITTED LIENS means Liens described on SCHEDULE 7.11.
9
<PAGE>
PERSON means any individual, entity or Tribunal.
PLEDGE AGREEMENT means a Pledge Agreement substantially in the form of
EXHIBIT J.
POTENTIAL DEFAULT means the occurrence of any event or the existence of
any circumstance that would, upon notice or lapse of time or both, become a
Default.
PRIME RATE means the per annum rate of interest established from time to
time by NationsBank as its prime rate, which rate may not be the lowest rate
of interest charged by NationsBank to its customers.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Loans.
PRINCIPAL OFFICE means the principal office of NationsBank, presently
located at 901 Main Street, Dallas, Texas 75202.
PRO RATA and PRO RATA PART means, when determined for any Lender, (a) if
there is no Principal Debt or LC Exposure, the proportion (stated as a
percentage) that such Lender's Commitment bears to the Total Commitment, or
(b) if there is any Principal Debt or LC Exposure, the proportion (stated as
a percentage) that the sum of (i) the Principal Debt owed to such Lender and
(ii) and (without duplication) the LC Exposure of such Lender, bears to the
(x) aggregate Principal Debt owed to and (y) (without duplication) the LC
Exposure of all Lenders.
PURCHASE AGREEMENT means the Stock Purchase Agreement (and all schedules
and exhibits) between Borrower and BTR Australia Limited, a company organized
under the laws of Australian, and joined in for certain limited purposes, by
BTR plc, dated as of March 25, 1998.
PURCHASER is defined in SECTION 14.12(b).
REGISTER is defined in SECTION 14.12(c).
REPLACEMENT LENDER is defined in SECTION 3.22.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys and agents.
RESERVE REQUIREMENT means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental,
or emergency reserves) are required to be maintained under regulations issued
from time to time by the Board of Governors of the Federal Reserve System (or
any successor) by member banks of the Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect
any other reserves required to be maintained by such member banks with
respect to (i) any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined, or (ii)
any category of extensions of credit or other assets which include Eurodollar
Loans. The Adjusted Eurodollar Rate shall be adjusted automatically on and
as of the effective date of any change in the Reserve Requirement.
RESPONSIBLE OFFICER means the chairman, president, chief executive
officer, chief financial officer, chief operating officer, chief accounting
officer, any vice president, controller or treasurer of Borrower.
10
<PAGE>
RIGHTS means rights, remedies, powers, privileges and benefits.
SCHEDULE means one of the Schedules attached to this Agreement, as
amended or supplemented pursuant to SECTION 6.2.
SECURITY DOCUMENTS means, collectively, the Pledge Agreements, the
Assignments of Partnership Interests, and any other security agreement,
mortgage, deed of trust or other agreement or document, together with all
related financing statements, stock powers, etc., in form and substance
satisfactory to Agent and its legal counsel, executed and delivered by any
Person in connection with this Agreement to create a Lender Lien on any of
its real or personal property, as amended, supplemented or restated.
SENIOR DEBT means, when determined, the Obligation and all other Funded
Debt, except for Debt which is contractually subordinated or junior in right
of payment to the Obligation.
SOLVENT means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to
enable it to pay its Debts as they mature, and (c) it does not have
unreasonably small capital to conduct its businesses.
SUBSIDIARY of any Person means any entity of which greater than 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
TAXES means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises or assets.
TERMINATION DATE means, as applicable, the Facility A Termination Date,
the Facility B Maturity Date, or the Facility C Termination Date.
TOTAL COMMITMENT means, at any time, the SUM of the Facility A
Commitment, the Facility B Commitment, and the Facility C Commitment.
TOTAL COMMITMENT USAGE means, at any time, the SUM of the Facility A
Commitment Usage, the Facility B Principal Debt, and the Facility C Principal
Debt.
TRIBUNAL means any (a) local, state or federal judicial, executive, or
legislative instrumentality or agency, (b) private arbitration board or
panel, or (c) central bank.
TYPE means any type of Loan (I.E., a Base Rate Loan or Eurodollar Loan).
U.S. means United States of America.
1.2 NUMBER AND GENDER OF WORDS. The singular includes the plural where
appropriate and VICE VERSA, and words of any gender include each other gender
where appropriate.
1.3 ACCOUNTING PRINCIPLES. Under the Loan Documents, unless otherwise
stated, (a) GAAP determines compliance with financial covenants, (b)
otherwise, all accounting principles applied in a current period must be
comparable in all material respects to those applied during the preceding
comparable period,
11
<PAGE>
and (c) while Borrower has any consolidated Subsidiaries, all accounting and
financial terms and compliance with financial covenants must be on a
consolidated basis, as applicable.
SECTION 2 COMMITMENT.
2.1 FACILITIES A, B AND C. Subject to the provisions in the Loan
Documents, each Lender severally and not jointly agrees to lend to Borrower
under Facility A, under Facility B and under Facility C on the following
conditions:
2.1.1 FACILITY A. Each Lender agrees to lend Borrower its Pro
Rata Part of one or more Loans under Facility A, which Borrower may borrow,
repay and reborrow under this Agreement. Loans under Facility A are
subject to the following conditions:
(a) Each Loan under Facility A must occur on a Business Day and
no later than the Business Day immediately preceding the Facility A
Termination Date;
(b) Each Loan under Facility A must be in an amount not less
than (i) $500,000 or a greater integral multiple of $100,000 (if a
Base Rate Loan), or (ii) $5,000,000 or a greater integral multiple of
$1,000,000 (if a Eurodollar Loan); and
(c) When determined, (i) the Facility A Commitment Usage may not
exceed the Facility A Commitment, (ii) no Lender's Pro Rata Part of
the Facility A Commitment Usage may exceed such Lender's Commitment
for Facility A, and (iii) the Facility A Commitment Usage, when
aggregated with the Facility B Principal Debt and the Facility C
Principal Debt, may not exceed the Total Commitment.
2.1.2 FACILITY B. Each Lender agrees to lend to Borrower its Pro
Rata Part of a single Loan under Facility B, which, after it has been
prepaid, may not be reborrowed. The Loan under Facility B is subject to
the following conditions:
(a) The Loan under Facility B must occur on or before July 1,
1998;
(b) The Loan must be in an amount equal to the Facility B
Commitment; and
(c) (i) The Facility B Principal Debt may not exceed the
Facility B Commitment; (ii) no Lender's Pro Rata Part of the Facility
B Principal Debt may exceed such Lender's Commitment for Facility B;
and (iii) the Facility B Principal Debt, when aggregated with the
Facility A Commitment Usage and the Facility C Principal Debt, may not
exceed the Total Commitment.
2.1.3 FACILITY C. Each Lender agrees to lend to Borrower its Pro
Rata Part of one or more Loans under Facility C, which Borrower may borrow,
repay and reborrow under this Agreement. Loans under Facility C are
subject to the following conditions:
(a) Each Loan under Facility C must occur on a Business Day and
no later than the Business Day immediately preceding the Facility C
Termination Date;
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(b) Each Loan under Facility C must be in an amount not less
than (i) $500,000 or a greater integral multiple of $100,000 (if a
Base Rate Loan), or (ii) $5,000,000 or a greater integral multiple of
$1,000,000 (if a Eurodollar Loan); and
(c) When determined, (i) the Facility C Principal Debt may not
exceed the Facility C Commitment, (ii) no Lender's Pro Rata Part of
the Facility C Principal Debt may exceed such Lender's Commitment for
Facility C, and (iii) the Facility C Principal Debt, when aggregated
with the Facility A Commitment Usage and the Facility B Principal
Debt, may not exceed the Total Commitment.
2.2 LOAN PROCEDURE. The following procedures apply to Loans:
(a) Borrower may request a Loan by submitting to Agent a Loan
Request. The Loan Request must be received by Agent no later than 12:00
noon on (i) the third Business Day preceding the Loan Date for any
Eurodollar Loan or (ii) the Business Day preceding the Loan Date for any
Base Rate Loan. Agent shall promptly notify each Lender of its receipt of
any Loan Request and its contents. A Loan Request is irrevocable and
binding on Borrower.
(b) By 11:00 a.m. on the applicable Loan Date, each Lender shall
remit its Pro Rata Part of each requested Loan by wire transfer to Agent
pursuant to Agent's wire transfer instructions on SCHEDULE 1 (or as
otherwise directed by Agent) in funds that are available for immediate use
by Agent. Subject to receipt of such funds, Agent shall make such funds
available to Borrower as directed in the Loan Request (unless it has actual
knowledge that any applicable condition precedent either has not been
satisfied by Borrower or has been waived by Determining Lenders).
(c) Absent contrary written notice from a Lender, Agent may assume
that each Lender has made its Pro Rata Part of the requested Loan available
to Agent on the applicable Loan Date, and Agent may, in reliance upon such
assumption (but is not required to), make available to Borrower a
corresponding amount. If a Lender fails to make its Pro Rata Part of any
requested Loan available to Agent on the applicable Loan Date, Agent may
recover the applicable amount on demand (i) from that Lender, TOGETHER WITH
interest at the Federal Funds Rate for the period commencing on the date
the amount was made available to Borrower by Agent and ending on (but
excluding) the date Agent recovers the amount from that Lender, or (ii), if
that Lender fails to pay its amount upon demand, then from Borrower,
TOGETHER WITH interest at an annual interest rate equal to the rate
applicable to the requested Loan for the period commencing on the Loan Date
and ending on (but excluding) the date Agent recovers the amount from
Borrower. No Lender is responsible for the failure of any other Lender to
make its Pro Rata Part of any Loan.
2.3 LC SUBFACILITY.
(a) Subject to the terms and conditions of this Agreement and
applicable Law, Agent agrees to issue LCs under Facility A upon Borrower's
delivery of an LC Request and a duly executed LC Agreement, each of which
must be received by Agent no later than 10:00 a.m. on the third Business
Day before the requested LC is to be issued; PROVIDED THAT the LC Exposure
may not exceed $20,000,000 and the Facility A Commitment Usage may not
exceed the Facility A Commitment. Each LC must expire no LATER than the
EARLIER of 30 days before the Facility A Termination Date AND 13 months
after such LC's issuance (PROVIDED THAT LCs may be self-extending with up
to 120 days cancellation notice by Agent to beneficiary).
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(b) Immediately upon Agent's issuance of any LC (and as of the date
of the initial Loan, with respect to existing LCs issued by NationsBank and
included in the Existing Bank Debt), Agent shall be deemed to have sold and
transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from Agent,
without recourse or warranty, an undivided interest and participation (to
the extent of such Lender's Pro Rata Part of the Facility A Commitment) in
the LC and all applicable Rights of Agent in the LC (OTHER THAN Rights to
receive certain fees provided for in SECTION 4.3). Agent agrees to provide
a copy of each LC to each other Lender upon request. However, Agent's
failure to send a copy of an issued LC shall not affect the rights and
obligations of Agent and Lenders under this Agreement.
(c) To induce Agent to issue and maintain LCs, and to induce Lenders
to participate in issued LCs, Borrower agrees to pay or reimburse Agent (i)
within one (1) Business Day after Borrower receives notice from Agent that
any draft or draw request has been properly presented under any LC, or, if
the draft or draw request is for payment at a future date, within one (1)
Business Day before the payment date specified in the draw request, the
amount paid or to be paid by Agent and (ii) promptly, upon demand, the
amount of any additional fees Agent customarily charges for confirming,
negotiating or amending LC Agreements, for honoring drafts and draw
requests, and taking similar action in connection with letters of credit.
Borrower hereby requests and irrevocably authorizes Agent to fund
Borrower's reimbursement obligations as a Base Rate Loan under Facility A,
and the proceeds of the Facility A Base Rate Loan shall be advanced
directly to Agent to pay Borrower's unpaid reimbursement obligations. If
funds cannot be advanced under Facility A, then Borrower's reimbursement
obligation shall constitute a demand obligation. Borrower's reimbursement
obligations shall accrue interest (x) at the Base Rate PLUS the Applicable
Margin from the date Agent pays the applicable draft or draw request
through the date Agent is paid or reimbursed by Borrower and, (y) if funds
are not advanced under Facility A, at the Default Rate from the date Agent
pays the applicable draft or draw request through the date Agent is paid or
reimbursed by Borrower. Borrower's obligations under this SECTION 2.3(c)
are absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that
Borrower may have at any time against Agent or any other Person. Agent
shall promptly distribute reimbursement payments received from Borrower to
all Lenders according to their Pro Rata Part of the Facility A Commitment.
(d) Agent shall promptly notify Borrower of the date and amount of
any draft or draw request presented for honor under any LC (but failure to
give notice will not affect Borrower's obligations under this Agreement).
Agent shall pay the requested amount upon presentment of a draft or draw
request unless presentment on its face does not comply with the terms of
the applicable LC. When making payment, Agent may disregard (i) any
default or potential default that exists under any other agreement and (ii)
obligations under any other agreement that have or have not been performed
by the beneficiary or any other Person (and Agent is not liable for any of
those obligations). Borrower's reimbursement obligations to Agent and
Lenders, and each Lender's obligations to Agent, under this SECTION 2.3 are
absolute and unconditional irrespective of, (1) the validity,
enforceability, sufficiency, accuracy or genuineness of documents or
endorsements (even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent or forged), (2) any dispute by any
Company with or any Company's claims, setoffs, defenses, counterclaims or
other Rights against Agent, any Lender or any other Person, or (3) the
occurrence of any Potential Default or Default.
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(e) If Borrower fails to reimburse Agent as provided in
SECTION 2.3(c) and funds are not advanced under Facility A to satisfy the
reimbursement obligations, Agent shall promptly notify each Lender of
Borrower's failure, of the date and amount paid, and of each Lender's Pro
Rata Part of the unreimbursed amount. Each Lender shall promptly and
unconditionally make available to Agent in immediately available funds its
Pro Rata Part of the unpaid reimbursement obligation. Such funds are due
and payable to Agent before the close of business on (i) the Business Day
Agent gives notice to each Lender of Borrower's reimbursement failure if
the notice is received by a Lender before 2:00 p.m. in the time zone where
such Lender's Applicable Lending Office is located, or (ii) on the next
succeeding Business Day after the Business Day Agent gives notice to each
Lender of Borrower's reimbursement failure, if notice is received after
2:00 p.m. in the time zone where such Lender's Applicable Lending Office is
located. All amounts payable by any Lender accrue interest at the Federal
Funds Rate from the day the applicable draft or draw is paid by Agent to
(but not including) the date the amount is paid by the Lender to Agent.
(f) Borrower acknowledges that each LC is deemed issued upon delivery
to the beneficiary or Borrower. If Borrower requests any LC be delivered
to Borrower rather than the beneficiary, and Borrower subsequently cancels
that LC, Borrower agrees to return it to Agent together with Borrower's
written certification that it has never been delivered to the beneficiary.
If any LC is delivered to the beneficiary under Borrower's instructions,
Borrower's cancellation is ineffective without Agent's receipt of the LC
and the beneficiary's written consent to the cancellation.
(g) Agent will examine all documents with reasonable care to
ascertain that they appear on their face to be in accordance with the terms
and conditions of the LC. Each Lender and Borrower agree that, in paying
any draft or draw under any LC, Agent has no responsibility to obtain any
document (OTHER THAN any documents expressly required by the respective LC)
or to ascertain or inquire as to any document's validity, enforceability,
sufficiency, accuracy or genuineness or the authority of any Person
delivering it. Neither Agent nor its Representatives will be liable to any
Lender or any Company for any LC's use or for any beneficiary's acts or
omissions. Any action, inaction, error, delay or omission taken or
suffered by Agent or any of its Representatives in connection with any LC,
applicable draws, drafts or documents, or the transmission, dispatch or
delivery of any related message or advice, if in conformity with applicable
Laws and in accordance with the standards of care specified in the Uniform
Customs and Practice for Documentary Credits (International Chamber of
Commerce Publication 500), is binding upon the Companies and Lenders.
Agent is not liable to any Company or any Lender for any action taken or
omitted by Agent or its Representative in connection with any LC in the
absence of gross negligence or willful misconduct.
(h) On the Facility A Termination Date, upon a termination under
SECTION 2.4, during the continuance of a Default under SECTION 11.3, or
upon any demand by Agent during the continuance of any other Default,
Borrower shall provide to Agent, for the benefit of Lenders, cash
collateral in an amount equal to the then-existing LC Exposure. Any cash
collateral provided by Borrower to Agent in accordance with this SECTION
2.3(h) shall be deposited by Agent in an interest bearing cash collateral
account maintained with Agent at the office of Agent and invested in
obligations issued or guaranteed by the U.S. and, upon the surrender of any
LC, Agent shall deliver the appropriate funds on deposit in such collateral
account to Borrower together with interest accrued on such funds.
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(i) BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND SAVE AGENT, EACH
LENDER AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR
OR BE SUBJECT TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE
ABOUT IT, ANY CANCELLATION OF ANY LC BY BORROWER, OR THE FAILURE OF AGENT
TO HONOR A DRAFT OR DRAW REQUEST UNDER ANY LC AS A RESULT OF ANY ACT OR
OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL.
HOWEVER, NO PERSON IS ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(j) Although referenced in any LC, terms of any particular agreement
or other obligation to the beneficiary are not incorporated into this
Agreement in any manner. The fees and other amounts payable with respect
to each LC are as provided in this Agreement, drafts and draws under each
LC are part of the Obligation, and the terms of this Agreement control any
conflict between the terms of this Agreement and any LC Agreement.
2.4 TERMINATION OF REVOLVING FACILITIES. Without premium or penalty, and
upon giving at least 10 Business Days prior written and irrevocable notice to
Agent, Borrower may terminate all or part of the unused portion of the
Facility A Commitment or the Facility C Commitment. Each partial termination
must be in an amount of not less than $5,000,000 or a greater integral multiple
of $1,000,000, and shall be Pro Rata among all Lenders. Once all or a portion
of the Facility A Commitment or the Facility C Commitment is terminated, it may
not be increased or reinstated.
SECTION 3 TERMS OF PAYMENT.
3.1 NOTES AND PAYMENTS.
(a) (i) The Facility A Principal Debt shall be evidenced by the
Facility A Notes, one payable to each Lender in the stated principal
amount of its Commitment for Facility A.
(ii) The Facility B Principal Debt shall be evidenced by the
Facility B Notes, one payable to each Lender in the stated principal
amount of its Commitment for Facility B.
(iii) The Facility C Principal Debt shall be evidenced by the
Facility C Notes, one payable to each Lender in the stated principal
amount of its Commitment for Facility C.
(b) Borrower must make each payment and prepayment on the Obligation,
without offset, counterclaim, or deduction, to Agent's principal office in
Dallas, Texas, in funds that will be available for immediate use by Agent
by 12:00 noon on the day due. Payments received after such time shall be
deemed received on the next Business Day. Agent shall pay to each Lender
any payment to which that Lender is entitled on the same day Agent receives
the funds from Borrower, if Agent receives the payment or prepayment before
12:00 noon, and otherwise before 12:00 noon on the following Business Day.
If and to the extent that Agent does not make payments to Lenders when due,
unpaid amounts due by Agent to such Lender shall accrue interest at the
Federal Funds Rate from the due date until (but not including) the payment
date.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
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(a) INTEREST PAYMENTS. Accrued interest on each Eurodollar Loan is
due and payable on the last day of its respective Interest Period. If any
Interest Period with respect to a Eurodollar Loan is a period greater than
three months, then accrued interest is also due and payable on the date
three months after the commencement of the Interest Period. Accrued
interest on each Base Rate Loan is due and payable on the last day of each
fiscal quarter of Borrower (commencing July 31, 1998) and on the relevant
Termination Date.
(b) PRINCIPAL PAYMENTS.
(i) The Facility A Principal Debt is due and payable on the
Facility A Termination Date.
(ii) Principal payments on the Facility B Principal Debt are due
and payable in quarterly installments commencing October 31, 1998, and
continuing on the last day of each fiscal quarter of Borrower
thereafter until the Facility B Maturity Date when the outstanding
Facility B Principal Debt shall be due and payable, as follows:
<TABLE>
<S> <C> <C> <C>
October 31, 1998 - $7,500,000 April 30, 2001 - $10,000,000
January 31, 1999 - $7,500,000 July 31, 2001 - $10,000,000
April 30, 1999 - $7,500,000 October 31, 2001 - $11,250,000
July 31, 1999 - $7,500,000 January 31, 2002 - $11,250,000
October 31, 1999 - $8,750,000 April 30, 2002 - $11,250,000
January 31, 2000 - $8,750,000 July 31, 2002 - $11,250,000
April 30, 2000 - $8,750,000 October 31, 2002 - $12,500,000
July 31, 2000 - $8,750,000 January 31, 2003 - $12,500,000
October 31, 2000 - $10,000,000 April 30, 2003 - $12,500,000
January 31, 2001 - $10,000,000 July 1, 2003 - $12,500,000
</TABLE>
(iii) The Facility C Principal Debt owed to each Lender is due
and payable on the Facility C Termination Date for such Lender.
(c) MANDATORY PREPAYMENT. The Principal Debt is subject to mandatory
prepayment from time to time as follows:
(i) If the Facility A Commitment Usage ever exceeds the
Facility A Commitment, or if the Facility C Principal Debt ever
exceeds the Facility C Commitment, or if the sum of the Facility A
Principal Debt, the Facility B Principal Debt and the Facility C
Principal Debt, together with the LC Exposure, ever exceeds the Total
Commitment, then Borrower shall immediately prepay the Principal Debt
in the amount of that excess.
(ii) Borrower shall prepay the Principal Debt in the amount of
100% of the cash proceeds (after selling expenses and taxes related
thereto to the extent paid and any reserves for retained liabilities
until such liabilities are extinguished) received by any Company from
the disposition of any asset (including proceeds from the disposition
of the stock of Subsidiaries and proceeds received as a result of any
casualty (OTHER THAN proceeds used by such Company to repair or
replace such casualty in a like-kind manner) and including
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installment payments under promissory notes or other non-cash
consideration received by any Company for such asset), OTHER THAN
proceeds of dispositions permitted by SECTIONS 9.10(a), (b), (c),
(d), (e) and (g), within three Business Days after receipt of such
proceeds.
(iii) Borrower shall prepay the Principal Debt in the amount
of 100% of any Funded Debt incurred by any Company after the date
hereof (net of underwriting discounts and commissions and other costs
associated therewith), OTHER THAN inter-Company Loans and Capital
Lease obligations, simultaneously with the incurrence of such Debt.
(iv) Borrower shall prepay the Principal Debt in the amount of
100% (if the ratio of Funded Debt, after giving effect to such
prepayment, to EBITDA for the 12-month period ending on the last day
of the immediately preceding month was greater than or equal to 3.50
to 1.00) or 50% (if such ratio was less than 3.50 to 1.00) of the cash
proceeds (net of underwriting discounts and commissions and other
costs associated therewith) received by any Company from the issuance
and sale of equity securities (OTHER THAN sales of Borrower's common
stock to employees as a result of the exercise of any options with
regard thereto) simultaneous with the receipt of such proceeds.
Each prepayment under this SECTION 3.2(c) shall be accompanied by payment
of any resulting Funding Loss and all accrued and unpaid interest on the
principal amount prepaid. Subject to the provisions of SECTION 3.11,
mandatory prepayments under this SECTION 3.2(c) shall be applied in the
following order: FIRST to the Facility C Principal Debt (and a matching
reduction of the Facility C Commitment); SECOND to installments of
principal due under Facility B in the inverse order of maturity; and THIRD
to the Facility A Principal Debt (and a matching reduction of the Facility
A Commitment).
(d) VOLUNTARY PREPAYMENT. Borrower may voluntarily repay or prepay
all or any part of the Principal Debt at any time without premium or
penalty, subject to the following conditions:
(i) Agent must receive Borrower's written payment notice by
noon on (A) the third Business Day preceding the date of payment of a
Eurodollar Loan and (B) the Business Day preceding the date of payment
of a Base Rate Loan which shall specify the payment date, the facility
or the subfacility under this Agreement being paid and the Type and
amount of the Loan(s) to be paid, and which shall constitute an
irrevocable and binding obligation of Borrower to make a repayment or
prepayment on the designated date;
(ii) each partial repayment or prepayment must be in a minimum
amount of at least $5,000,000 or a greater integral multiple of
$500,000 (if a Eurodollar Loan) and $500,000 or a greater integral
multiple of $100,000 (if a Base Rate Loan); and
(iii) each prepayment under this SECTION 3.2(d) shall be
accompanied by payment of any resulting Funding Loss and all accrued
and unpaid interest on the principal amount prepaid.
3.3 INTEREST OPTIONS. Except as specifically otherwise provided, Loans
bear interest at an annual rate equal to the LESSER OF (a) the Base Rate PLUS
the Applicable Margin or the Eurodollar Rate PLUS the Applicable Margin (in each
case as designated or deemed designated by Borrower and, in the case of
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Eurodollar Loans, for the Interest Period designated by Borrower), as the case
may be, AND (b) the Maximum Rate. Each change in the Base Rate and Maximum Rate
is effective, without notice to Borrower or any other Person, upon the date of
change.
3.4 QUOTATION OF RATES. A Responsible Officer of Borrower may call Agent
before delivering a Loan Request to receive an indication of the interest rates
then in effect, but the indicated rates do not bind Agent or Lenders or affect
the interest rate that is actually in effect when Borrower delivers its Loan
Request or on the Loan Date.
3.5 DEFAULT RATE. If permitted by Law, all past-due Principal Debt,
Borrower's past-due payment and reimbursement obligations in connection with
LCs, and past-due interest accruing on any of the foregoing, bears interest from
the date due (stated or by acceleration) at the Default Rate until paid,
regardless whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable to any
Loan exceeds the Maximum Rate, the interest rate on that Loan is limited to the
Maximum Rate, but any subsequent reductions in the designated rate shall not
reduce the interest rate thereon below the Maximum Rate until the total amount
of accrued interest equals the amount of interest that would have accrued if
that designated rate had always been in effect. If at maturity (stated or by
acceleration), or at final payment of the Notes, the total interest paid or
accrued is less than the interest that would have accrued if the designated
rates had always been in effect, then, at that time and to the extent permitted
by applicable Law, Borrower shall pay an amount equal to the difference between
(a) the LESSER of the amount of interest that would have accrued if the
designated rates had always been in effect AND the amount of interest that would
have accrued if the Maximum Rate had always been in effect, and (b) the amount
of interest actually paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS.
(a) Interest will be calculated on the basis of actual number of days
elapsed (including the first day but excluding the last day) but computed
as if each calendar year consisted of 360 days for Eurodollar Loans (unless
the calculation would result in an interest rate greater than the Maximum
Rate, in which event interest will be calculated on the basis of a year of
365 or 366 days, as the case may be), and 365 or 366 days, as the case may
be, for Base Rate Loans. All interest rate determinations and calculations
by Agent are conclusive and binding absent manifest error.
(b) The provisions of this Agreement relating to calculation of the
Base Rate and the Eurodollar Rate are included only for the purpose of
determining the rate of interest or other amounts to be paid under this
Agreement that are based upon those rates. Each Lender may fund and
maintain its funding of all or any part of each Loan as it selects.
3.8 MAXIMUM RATE. Regardless of any provision contained in any Loan
Document or any document related thereto, it is the intent of the parties to
this Agreement that neither Agent nor any Lender contract for, charge, take,
reserve, receive or apply, as interest on all or any part of the Obligation any
amount in excess of the Maximum Rate or the Maximum Amount or receive any
unearned interest in violation of any applicable Law, and, if Lenders ever do
so, then any excess shall be treated as a partial repayment or prepayment of
principal and any remaining excess shall be refunded to Borrower. In
determining if the interest paid or payable exceeds the Maximum Rate, Borrower
and Lenders shall, to the maximum extent permitted under applicable Law,
(a) treat all Loans as but a single extension of credit (and Lenders and
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Borrower agree that is the case and that provision in this Agreement for
multiple Loans is for convenience only), (b) characterize any nonprincipal
payment as an expense, fee or premium rather than as interest, (c) exclude
voluntary repayments or prepayments and their effects, and (d) amortize,
prorate, allocate and spread the total amount of interest throughout the entire
contemplated term of the Obligation. However, if the Obligation is paid in full
before the end of its full contemplated term, and if the interest received for
its actual period of existence exceeds the Maximum Amount, Lenders shall refund
any excess (and Lenders may not, to the extent permitted by Law, be subject to
any penalties provided by any Laws for contracting for, charging, taking,
reserving or receiving interest in excess of the Maximum Amount). If the Laws
of the State of Texas are applicable for purposes of determining the "MAXIMUM
RATE" or the "MAXIMUM AMOUNT," then such terms refer to the "revised ceiling or
bracket" from time to time in effect under V.T.C.A., FINANCE CODE Section 1.001
et seq (West 1997). Borrower agrees that V.T.C.A., FINANCE CODE CHAPTER 346
(which regulates certain revolving credit loan accounts and revolving tri-party
accounts), does not apply to the Obligation, OTHER THAN Section 346.004.
3.9 INTEREST PERIODS. When Borrower requests any Eurodollar Loan,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, and one, two, three or six months for
Eurodollar Loans, subject to the following conditions: (a) the initial Interest
Period for a Eurodollar Loan commences on the applicable Loan Date or Conversion
date, and each subsequent Interest Period applicable to any Loan commences on
the day when the next preceding applicable Interest Period expires; (b) if any
Interest Period for a Eurodollar Loan begins on a day for which there exists no
numerically corresponding Business Day in the calendar month at the end of the
Interest Period ("ENDING CALENDAR MONTH"), then the Interest Period ends on the
next succeeding Business Day of the Ending Calendar Month, unless there is no
succeeding Business Day in the Ending Calendar Month in which case the Interest
Period ends on the next preceding Business Day of the Ending Calendar Month;
(c) no Interest Period for any portion of Principal Debt may extend beyond the
scheduled repayment date for that portion of Principal Debt; and (d) there may
not be in effect at any one time more than (i) 10 Interest Periods for the
Eurodollar Loan portion of Facility A, (ii) one Interest Period for the
Eurodollar Loan portion of Facility B, and (iii) 10 Interest Periods for the
Eurodollar Loan portion of Facility C.
3.10 CONVERSIONS. Borrower may (a) on the last day of the applicable
Interest Period Convert all or part of a Eurodollar Loan to a Base Rate Loan,
(b) at any time Convert all or part of a Base Rate Loan to a Eurodollar Loan,
and (c) elect a new Interest Period for a Eurodollar Loan. Any such Conversion
is subject to the dollar limits and denominations of SECTION 2.1 and may be
accomplished by delivering a Conversion Request to Agent no later than 10:00
a.m. (i) on the third Business Day before the Conversion date for Conversion to
a Eurodollar Loan and the last day of the Interest Period, for the election of a
new Interest Period, and (ii) one Business Day before the last day of the
Interest Period for Conversion to a Base Rate Loan. Absent Borrower's notice of
Conversion or election of a new Interest Period, a Eurodollar Loan shall be
Converted to a Base Rate Loan when the applicable Interest Period expires.
3.11 ORDER OF APPLICATION.
(a) If no Default or Potential Default exists, any payment shall be
applied to the Obligation in the order and manner as provided in this
Agreement.
(b) If a Default or Potential Default exists, any payment (including
proceeds from the exercise of any Rights) shall be applied in the following
order: (i) to all fees and expenses for which Agent or Lenders have not
been paid or reimbursed in accordance with the Loan Documents (and if such
payment is less than all unpaid or unreimbursed fees and expenses, then the
payment shall
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be paid against unpaid and unreimbursed fees and expenses in the order of
incurrence or due date); (ii) to accrued interest on the Principal Debt;
(iii) to any LC reimbursement obligations that are due and payable and that
remain unfunded by any Loan under Facility A; (iv) to the remaining
Obligation in the order and manner Determining Lenders deem appropriate;
and (v) as a deposit with Agent, for the benefit of Lenders, as security
for and payment of any subsequent LC reimbursement obligations.
3.12 RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Default, each Lender (and each of its Affiliates) is hereby authorized at
any time and from time to time, to the fullest extent permitted by Law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender (or any of its Affiliates) to or for the credit or the account of
Borrower against any and all of the obligations of Borrower now or hereafter
existing under this Agreement and any Note held by such Lender, irrespective of
whether such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify Borrower after any such set-off and application made by such Lender;
PROVIDED, HOWEVER, THAT the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
SECTION 3.12 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
3.13 ADJUSTMENTS. If any Lender (a "BENEFITTED LENDER") shall at any time
receive any payment of all or part of the Loans owing to it, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise), in a greater proportion than any such
payment to or Collateral received by any other Lender, if any, in respect of
such other Lender's Loans owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans owing to it, or shall provide
such other Lenders with the benefits of any such Collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share the
excess payment or benefits of such Collateral or proceeds ratably with each of
the Lenders; PROVIDED, HOWEVER, THAT if all or any portion of such excess
payment or benefits is thereafter recovered from such benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest. Borrower agrees that any
Lender so purchasing a participation from a Lender pursuant to this SECTION 3.13
may, to the fullest extent permitted by Law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Person were the direct creditor of Borrower in the amount of
such participation.
3.14 BOOKING LOANS. To the extent permitted by Law, any Lender may make,
carry or transfer its Loans at, to, or for the account of any of its branch
offices or the office of any of its Affiliates. However, no Affiliate is
entitled to receive any greater payment under SECTION 3.15 than the transferor
Lender would have been entitled to receive with respect to those Loans.
3.15 INCREASED COST AND REDUCED RETURN.
(a) If, after the date hereof, the adoption of any applicable Law, or
any change in any applicable Law, or any change in the interpretation or
administration thereof by any Tribunal charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable
Lending Office) with any request or directive (whether or not having the
force of law) of any such Tribunal:
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(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loan, or any Note, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to such
Lender (or its Applicable Lending Office) under this Agreement or any
Note in respect of any Eurodollar Loans (OTHER THAN Taxes imposed on
the overall net income of such Lender by the jurisdiction in which
such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (OTHER THAN the
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition
affecting this Agreement or any Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such
Lender (or its Applicable Lending Office) of making, Converting into,
Continuing, or maintaining any Eurodollar Loan or to reduce any sum
received or receivable by such Lender (or its Applicable Lending Office)
under this Agreement or any Note with respect to any Eurodollar Loan, then
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for any such increased cost or reduction incurred
not more than 180 days prior to such demand. If any Lender requests
compensation by Borrower under this SECTION 3.15(a), Borrower may, by
notice to such Lender (with a copy to Agent), suspend the obligation of
such Lender to make or Continue Loans of the Type with respect to which
such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such
request ceases to be in effect (in which case the provisions of SECTION
3.18 shall be applicable); PROVIDED THAT such suspension shall not affect
the right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable Law regarding capital adequacy or any change
therein or in the interpretation or administration thereof by any Tribunal
charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such Tribunal, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling
such Lender as a consequence of such Lender's obligations hereunder to a
level below that which such Lender or such corporation could have achieved
but for such adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy), then from
time to time upon demand Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for any such reduction
incurred not more than 180 days prior to such demand.
(c) Each Lender shall promptly notify Borrower and Agent of any event
of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this SECTION 3.15 and will
designate a different Applicable Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section
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shall furnish to Borrower and Agent a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
3.16 LIMITATION ON TYPES OF LOANS. If on or prior to the first day of any
Interest Period for any Eurodollar Loan:
(a) Agent determines (which determination shall be conclusive) that
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or
(b) Determining Lenders determine (which determination shall be
conclusive) and notify Agent that the Adjusted Eurodollar Rate will not
adequately and fairly reflect the cost to Lenders of funding Eurodollar
Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof specifying the relevant
Type of Loans and the relevant amounts or periods, and so long as such condition
remains in effect, Lenders shall be under no obligation to make additional Loans
of such Type, Continue Loans of such Type, or to Convert Loans of any other Type
into such Type and Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Loans of the affected Type, either prepay
them or Convert them into another Type in accordance with the terms of this
Agreement.
3.17 ILLEGALITY. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Loans hereunder, then such Lender
shall promptly notify Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert other Types of Loans into Eurodollar
Loans shall be suspended until such time as such Lender may again make,
maintain, and fund Eurodollar Loans (in which case the provisions of SECTION
3.18 shall be applicable).
3.18 TREATMENT OF AFFECTED LOANS. If the obligation of any Lender to make
a particular Type of Loan or to Continue, or to Convert Loans of any other Type
into, Loans of a particular Type shall be suspended pursuant to SECTION 3.15 or
3.17 (Loans of such Type being herein called "AFFECTED LOANS" and such Type
being herein called the "AFFECTED TYPE"), such Lender's Affected Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by SECTION 3.17, on such earlier date as such Lender may specify to
Borrower with a copy to Agent) and, unless and until such Lender gives notice as
provided below that the circumstances specified in SECTION 3.15 or 3.17 that
gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Loans of the Affected Type shall be made or Continued instead as
Base Rate Loans, and all Loans of such Lender that would otherwise be
Converted into Loans of the Affected Type shall be Converted instead into
(or shall remain as) Base Rate Loans.
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If such Lender gives notice to Borrower (with a copy to the Agent) that the
circumstances specified in SECTION 3.15 or 3.17 that gave rise to the Conversion
of such Lender's Affected Loans pursuant to this SECTION 3.18 no longer exist
(which such Lender agrees to do promptly upon such circumstances ceasing to
exist) at a time when Loans of the Affected Type made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically Converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Loans of the Affected Type, to the extent necessary so that, after giving effect
thereto, all Loans held by Lenders holding Loans of the Affected Type and by
such Lender are held PRO RATA (as to principal amounts, Types, and Interest
Periods) in accordance with their respective Commitments.
3.19 COMPENSATION. Upon the request of any Lender, Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, Conversion of a Eurodollar Loan for any
reason (including, without limitation, the acceleration of the Loans
pursuant to SECTION 12 or any syndication of one or more of the Facilities,
if such syndication occurs on or before December 31, 1998) on a date other
than the last day of the Interest Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in SECTION 6
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
3.20 TAXES.
(a) Any and all payments by Borrower to or for the account of any
Lender or Agent hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future
Taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, EXCLUDING, in the case of each Lender
and Agent, Taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction under the laws of which such Lender (or its Applicable
Lending Office) or Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded Taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter
referred to as "PAYMENT TAXES"). If Borrower shall be required by law to
deduct any Payment Taxes from or in respect of any sum payable under this
Agreement or any other Loan Document to any Lender or Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this SECTION 3.20) such Lender or Agent receives an amount equal to
the sum it would have received had no such deductions been made, (ii)
Borrower shall make such deductions, (iii) Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Law, and (iv) Borrower shall furnish to Agent,
at its address referred to in SECTION 14.3, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution or delivery of, or otherwise with respect
to, any Loan Document (hereinafter referred to as "OTHER TAXES").
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(c) BORROWER AGREES TO INDEMNIFY EACH LENDER AND AGENT FOR THE FULL
AMOUNT OF PAYMENT TAXES AND OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY
PAYMENT TAXES OR OTHER TAXES IMPOSED OR ASSERTED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION 3.20) PAID BY SUCH LENDER OR AGENT (AS
THE CASE MAY BE) AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST, AND
EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO.
(d) Each Lender organized under the laws of a jurisdiction outside
the U.S., on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof
and on or prior to the date on which it becomes a Lender in the case of
each other Lender, and from time to time thereafter if requested in writing
by Borrower or Agent (but only so long as such Lender remains lawfully able
to do so), shall provide Borrower and Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the U.S. is a party which
reduces the rate of withholding tax on payments of interest or certifying
that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the U.S., (ii)
Internal Revenue Service Form W-8 or W-9, as appropriate, or any successor
form prescribed by the Internal Revenue Service, and (iii) any other form
or certificate required by any taxing authority (including any certificate
required by SECTIONS 871(h) and 881(c) of the Internal Revenue Code),
certifying that such Lender is entitled to an exemption from or a reduced
rate of tax on payments pursuant to any of the Loan Documents.
(e) For any period with respect to which a Lender has failed to
provide Borrower and Agent with the appropriate form pursuant to SECTION
3.20(d) (unless such failure is due to a change in Law occurring subsequent
to the date on which a form originally was required to be provided), such
Lender shall not be entitled to indemnification under SECTION 3.20(a) or
3.20(b) with respect to Taxes imposed by the U.S.; PROVIDED, HOWEVER, THAT
should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such
Taxes.
(f) If Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this SECTION 3.20, then such Lender will
agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of such
Lender, is not otherwise disadvantageous to such Lender.
(g) Within 30 days after the date of any payment of Taxes, Borrower
shall furnish to Agent the original or a certified copy of a receipt
evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 3.20 shall survive the termination of the Commitments and the
payment in full of the Notes.
3.21 EXTENSIONS AND CONVERSIONS OF FACILITY C TERMINATION DATE.
(a) If no Default or Potential Default exists, Borrower may request
364-day extensions of the then-existing Facility C Termination Date by
making such request to Agent and each Lender
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not earlier than 60 days preceding the then-existing Termination Date
for such Lender. The then-existing Termination Date shall be extended
for 364 days with respect to each Lender only if such Lender consents in
writing to such extension within 30 days following Borrower's request,
with a failure to respond by any Lender being deemed a denial of such
consent by such party;
(b) If any 364-day period with respect to Facility C has not been
extended under SECTION 3.21(a) with respect to any Lender's Facility C
Commitment (whether due to Borrower's failure to timely request an
extension or such Lender's failure to timely consent to such extension),
and if no Default or Potential Default exists, then Borrower may elect to
convert such Lender's Loans under Facility C to a term Loan maturing on the
third anniversary of the last day of such 364-day period but in no event
later than July 1, 2003. Principal and interest on any such term Loan
shall be payable in accordance with SECTION 3.2.
3.22 REPLACEMENT LENDER. In the event any Lender invokes SECTION 3.16 or
3.17 or Borrower becomes obligated to pay any additional amounts to any Lender
pursuant to SECTION 3.15, then, unless such Lender has removed or cured the
conditions actuating SECTION 3.15, 3.16, or 3.17, Borrower may designate a
substitute lender reasonably acceptable to Agent (such lender referred to in
this Agreement as a "REPLACEMENT LENDER") to purchase such Lender's rights and
obligations with respect to its entire Pro Rata Part under this Agreement. Any
such purchase shall be without recourse to or warranty by, or expense to, the
Lender in accordance with SECTION 14.12, and shall have a purchase price equal
to the outstanding principal amounts payable to the Lender with respect to its
entire Pro Rata Part under this Agreement, PLUS any accrued and unpaid interest,
fees and charges in respect of such Lender's Pro Rata Part, and on other terms
reasonably satisfactory to Agent. Upon such purchase by the Replacement Lender
and payment of all other amounts owing to the Lender being replaced, such
exiting Lender shall no longer be a party to this Agreement or have any rights
or obligations under this Agreement and the Replacement Lender shall succeed to
the Rights and obligations of the exiting Lender with respect to the exiting
Lender's Pro Rata Part and Commitments under this Agreement.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a) are not
compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement, (c) are payable in accordance with SECTION 3.1, (d) are
non-refundable, (e) to the fullest extent permitted by Law, bear interest, if
not paid when due, at the Default Rate, and (f) are calculated on the basis
of actual number of days (including the first day but excluding the last day)
elapsed, but computed as if each calendar year consisted of 360 days, unless
computation would result in an interest rate in excess of the Maximum Rate in
which event the computation is made on the basis of a year of 365 or 366
days, as the case may be. The fees described in this SECTION 4 are in all
events subject to the provisions of SECTION 3.8 of this Agreement.
4.2 UNDERWRITING AND ADMINISTRATIVE FEES. Borrower shall pay the
underwriting and administrative fees previously agreed to by Borrower and Agent
in the letter agreement dated March 13, 1998, and the letter agreement dated
March 25, 1998.
4.3 LC FEES. Borrower shall pay Agent, for its own account, a fronting
fee for the issuance of each LC equal to 0.125% per annum on the face amount of
such LC. Such fee shall be payable on the last day of the fiscal quarter of
Borrower in which such LC is issued. In addition, Borrower shall pay Agent
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quarterly, in arrears, on the last day of each fiscal quarter of Borrower during
which such LC is outstanding, a fee equal to the Applicable Margin for
Eurodollar Loans per annum on the face amount of the LC, PROVIDED THAT the
amount of such fee (as calculated on a per annum basis) shall not be less than
$350. Such fee shall be calculated on the basis of actual days elapsed, but
computed as if each calendar year consisted of 360 days. Borrower also agrees
to pay on demand and solely for the account Agent, any and all additional
customary LC fees described in SECTION 2.3(c).
4.4 COMMITMENT FEE. Borrower shall pay to Agent for the ratable account
of Lenders a commitment fee, payable as it accrues on the last day of each
fiscal quarter of Borrower (commencing July 31, 1998) and on the Facility A
Termination Date, and with respect to each Lender, on the Facility C Termination
Date, equal to the Applicable Percentage per annum on the SUM of (a) amount by
which the Facility A Commitment exceeds the average daily Facility A Commitment
Usage, in each case during the fiscal quarter ending on such date (or, in the
case of the first such payment, during the period from the date of the
Acquisition through July 31, 1998), PLUS (b) the amount by which the Facility C
Commitment exceeds the average daily Facility C Principal Debt, in each case
during the fiscal quarter ending on such date (or, in the case of the first such
payment, during the period from the date of the Acquisition through July 31,
1998).
SECTION 5 SECURITY.
5.1 GUARANTY. Full and complete payment of the Obligation (a) is
guaranteed in accordance with the Guaranty of even date herewith executed by
each current Guarantor, and (b) shall be guaranteed through the execution and
delivery of a Guaranty by each future domestic direct or indirect Subsidiary of
Borrower.
5.2 COLLATERAL. Full and complete payment of the Obligation shall be
secured through the execution and delivery of Pledge Agreements and Assignments
of Partnership Interests with respect to all capital stock, partnership
interests or other equity interests of any Company in any domestic direct or
indirect Subsidiaries (TOGETHER WITH proceeds thereof and any additional
collateral ever furnished under SECTIONS 2.3(h), 3.11(b) OR 5.3, the
"COLLATERAL").
5.3 ADDITIONAL SECURITY AND GUARANTIES. Agent may, without notice or
demand and without affecting any Person's obligations under the Loan Documents,
from time to time (a) receive and hold additional collateral from any Person for
the payment of all or any part of the Obligation and exchange, enforce or
release all or any part of that collateral and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligation and
release any endorser or guarantor, or any Person who has given any other
security for the payment of all or any part of the Obligation, or any other
Person in any way obligated to pay all or any part of the Obligation.
SECTION 6 CONDITIONS PRECEDENT.
6.1 GENERAL.
Lenders will not be obligated to fund the initial Loan on the date of the
Acquisition unless: (a) Agent has timely received a Loan Request and all of the
items described on SCHEDULE 6; (b) no circumstance or event exists that,
individually or collectively with other circumstances or events, has had a
material and adverse effect on the financial condition of Borrower or MBCI
(individually) or Borrower, Amatek and their respective Subsidiaries (as a
whole) as represented in the Financial Statements of Borrower dated as of
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October 31, 1997, and the financial statements of MBCI dated as of December 31,
1997; and (c) the funding of the Loan is permitted by Law.
After the Acquisition, Lenders will not be obligated to fund (as opposed to
Continue or Convert) any Loan, and Agent will not be obligated to issue any LC
unless on the applicable Loan Date, issue date, or creation date (and after
giving effect to the requested Loan or LC, as the case may be): (i) Agent shall
have timely received a Loan Request or LC Request (together with the applicable
duly executed LC Agreement); (ii) all of the representations and warranties of
the Companies in the Loan Documents are true and correct in all material
respects (unless they speak to a specific date or are based on facts which have
changed by transactions contemplated or permitted by this Agreement); (iii) no
Material Adverse Event, Default or Potential Default exists; and (iv) the
funding of the Loan or issuance of the LC, as the case may be, is permitted by
Law.
Upon Agent's request, Borrower shall deliver to Agent evidence
substantiating any of the matters in the Loan Documents that are necessary to
enable Borrower to qualify for the Loan or LC, as the case may be. Each
condition precedent in this Agreement (including, without limitation, those on
SCHEDULE 6) is material to the transactions contemplated by this Agreement, and
time is of the essence with respect to each condition precedent. Subject to the
prior approval of Determining Lenders, Lenders may fund any Loan, and Agent may
issue any LC, without all conditions being satisfied, but, to the extent
permitted by Law, that funding and issuance shall not be deemed to be a waiver
of the requirement that each condition precedent be satisfied as a prerequisite
for any subsequent funding or issuance, unless Determining Lenders specifically
waive each item in writing.
6.2 SUPPLEMENTS TO SCHEDULES. Borrower may, from time to time but in no
event less than five Business Days prior to delivery of any Loan Request or LC
Request, amend or supplement the Schedules to this Agreement by delivering
(effective upon receipt) to Agent and each Lender a copy of such revised
Schedule or Schedules, which shall (i) be dated the date of delivery, (ii) be
certified by a Responsible Officer as true, complete and correct as of such date
and as delivered in replacement for the corresponding Schedule or Schedules
previously in effect, and (iii) show in reasonable detail (by blacklining or
other appropriate graphic means) the changes from each such corresponding
predecessor Schedule. Notwithstanding anything to the contrary contained herein
or in any of the other Loan Documents, in the event that Determining Lenders
determine based upon such revised Schedules (whether individually or in the
aggregate or cumulatively) that a Material Adverse Event has occurred, Lenders
shall have no further obligation to make Loans or continue or convert any Loan
previously made and Agent shall have no further obligation to issue LCs or to
renew or extend existing LCs.
SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Agent and Lenders as follows:
7.1 PURPOSE OF CREDIT FACILITY. Borrower will use the proceeds of the
initial Loans to consummate the Acquisition and to repay and cancel the Existing
Bank Debt. Borrower will use all other proceeds of the Loans and LCs for
working capital and general corporate purposes of the Companies. No Company is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any "MARGIN STOCK"
within the meaning of REGULATION U of the Board of Governors of the Federal
Reserve System, as amended. No part of the proceeds of any LC draft or drawing
or Loan will be used, directly or indirectly, for a purpose that violates any
Law, including without limitation, the provisions of REGULATION U.
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7.2 CORPORATE EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE. Each
Company is duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it is incorporated or organized as identified on
SCHEDULE 7.2. Except where failure is not a Material Adverse Event, each
Company (a) is duly qualified to transact business and is in good standing as a
foreign corporation or other entity in each jurisdiction where the nature and
extent of its business and properties require due qualification and good
standing (those jurisdictions being identified on SCHEDULE 7.2), (b) possesses
all requisite authority, permits and power to conduct its business as is now
being, or is contemplated by this Agreement to be, conducted, and (c) is in
compliance with all applicable Laws.
7.3 SUBSIDIARIES. As of the date of this Agreement, Borrower has no
Subsidiaries except as disclosed on SCHEDULE 7.3. All of the outstanding shares
of capital stock (or similar voting interests) of those Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and together with the
partnership interests pledged pursuant to SECTION 5.2 hereof are owned of record
and beneficially as set forth thereon, free and clear of any Liens,
restrictions, claims or Rights of another Person (OTHER THAN Lender Liens and,
with respect to partnership interests, any Liens, restrictions, claims or Rights
contained in the relevant partnership agreement), and are not subject to any
warrant, option or other acquisition Right of any Person or subject to any
transfer restriction (OTHER THAN restrictions imposed by securities Laws and
general corporate Laws and, with respect to partnership interests, any
restrictions contained in the relevant partnership agreement).
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by each
Company of each Loan Document or related document to which it is a party and the
performance by it of its obligations thereunder (a) are within its corporate
power, (b) have been duly authorized by all necessary corporate action, (c)
require no action by or filing with any Tribunal (OTHER THAN any action or
filing that has been taken or made on or before the date of this Agreement), (d)
do not violate any provision of its charter or bylaws, (e) do not violate any
provision of Law or order of any Tribunal applicable to it, OTHER THAN
violations that individually or collectively are not a Material Adverse Event,
(f) do not violate any Material Agreements to which it is a party, or (g) do not
result in the creation or imposition of any Lien (OTHER THAN the Lender Liens)
on any asset of any Company.
7.5 BINDING EFFECT. Upon execution and delivery by all parties thereto,
each Loan Document will constitute a legal and binding obligation of each
Company party thereto, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable Debtor Relief Laws and
general principles of equity.
7.6 FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the consolidated financial condition, results of operations, and cash flows of
the Companies as of, and for the portion of the fiscal year ending on the date
or dates thereof (subject only to normal year-end adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by, the Loan Documents, no subsequent
material adverse changes have occurred in the consolidated financial condition
of the Companies from that shown in the Current Financials, nor has any Company
incurred any subsequent material liability. All financial projections
concerning the Companies that have been or are hereafter made available to Agent
or Lenders by Borrower have been or will be prepared in good faith based upon
assumptions Borrower believes to be reasonable. The fiscal year of each Company
ends on October 31.
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7.7 LITIGATION. Except as disclosed on SCHEDULE 7.7, no Company is
subject to, or aware of the threat of, any Litigation that is reasonably likely
to be determined adversely to any Company and, if so adversely determined, is a
Material Adverse Event. Except as permitted under SECTION 11.4, no outstanding
and unpaid judgments against any Company exist.
7.8 TAXES. All Tax returns of each Company required to be filed have been
filed (or extensions have been granted) before delinquency, except for returns
for which the failure to file is not a Material Adverse Event, and all Taxes
imposed upon each Company that are due and payable have been paid before
delinquency, OTHER THAN (a) Taxes which are being contested in good faith by
lawful proceedings diligently conducted, against which reserve or other
provision required by GAAP has been made, and in respect of which levy and
execution of any Lien have been and continue to be stayed, and (b) state and
local Taxes (except income Taxes) which are immaterial in amount and in respect
of which levy and execution of any Lien have been and continue to be stayed.
7.9 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 7.9, (a) each
Company is, and within the period of all applicable statutes of limitations has
been, in substantial compliance with all applicable Environmental Laws and with
all permits required thereunder; (b) no Materials of Environmental Concern are
present at, on, under, in or about any real property now or formerly owned,
leased, operated or used by any Company (including, without limitation, any
location to which any Materials of Environmental Concern have been sent for
reuse or recycling or for treatment, storage or disposal) which could reasonably
be expected to give rise to material liability of any Company under any
applicable Environmental Law, materially interfere with the continued operations
of any Company, or materially impair the fair saleable value of any real
property owned or leased by any Company; (c) except for violations or alleged
violations which have been fully and finally resolved or have been barred by the
applicable statute of limitations, no Company has received any notice or report,
or has knowledge, of any Company's violation or alleged violation of any
Environmental Law; (d) no Company is under any obligation to fund or conduct
remediation of any property; (e) no Company knows of any environmental condition
or circumstances materially adversely affecting any Company's properties or
operations; (f) there are no pending or, to the Companies' knowledge,
threatened, judicial, administrative, or arbitral proceedings under or relating
to any Environmental Law to which any Company is, or to Company's knowledge is
threatened to be, named as a party; (g) no Company has received any written
request for information or been notified that it is a potentially responsible
party under any Environmental Law; and (h) no Company has assumed or retained,
by contract or operation of law, any material liabilities of any kind under or
relating to any Environmental Law. Each Company has taken prudent steps to
determine that its properties and operations do not violate any Environmental
Law, OTHER THAN violations that are not, individually or in the aggregate, a
Material Adverse Event.
7.10 EMPLOYEE PLANS. Except where occurrence or existence is not a
Material Adverse Event, (a) no Employee Plan has incurred an "ACCUMULATED
FUNDING DEFICIENCY" (as defined in section 302 of ERISA or section 412 of the
Code), (b) no Company has incurred liability under ERISA to the PBGC in
connection with any Employee Plan (OTHER THAN required insurance premiums, all
of which have been paid), (c) no Company has withdrawn in whole or in part from
participation in a Multiemployer Plan, (d) no Company has engaged in any
"PROHIBITED TRANSACTION" (as defined in section 406 of ERISA or section 4975 of
the Code), and (e) no "REPORTABLE EVENT" (AS DEFINED IN SECTION 4043 of ERISA)
has occurred, excluding events for which the notice requirement is waived under
applicable PBGC regulations.
7.11 PROPERTIES; LIENS. Each Company has good and indefeasible title to
all its property reflected on the Current Financials (except for property that
is obsolete or that has been disposed in the ordinary
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course of business or, after the date of this Agreement, as otherwise
permitted by SECTION 9.10 or SECTION 9.11). Except for Permitted Liens, no
Lien exists on any property of any Company, and the execution, delivery,
performance or observance of the Loan Documents will not require or result in
the creation of any Lien (OTHER THAN Lender Liens) on any Company's property.
7.12 LOCATION. Each Company's chief executive office is located at the
address on SCHEDULE 7.12.
7.13 GOVERNMENT REGULATIONS. No Company is subject to regulation under the
INVESTMENT COMPANY ACT OF 1940, as amended, or the PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935, as amended.
7.14 TRANSACTIONS WITH AFFILIATES. Except as disclosed on SCHEDULE 7.14.
no Company is a party to a material transaction with any of its Affiliates
(excluding other Companies), OTHER THAN transactions in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than
it could obtain or could become entitled to in an arm's-length transaction with
a Person that was not its Affiliate. For purposes of this SECTION 7.14, a
transaction is "MATERIAL" if it requires any Company to pay more than $5,000,000
during the term of the governing agreement.
7.15 DEBT. No Company is an obligor on any Debt, OTHER THAN Permitted
Debt.
7.16 MATERIAL AGREEMENTS. All Material Agreements of the Companies
are in full force and effect, and no default or potential default exists on the
part of any Company thereunder that is a Material Adverse Event.
7.17 INSURANCE. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which it operates) insurance
concerning its properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
7.18 LABOR MATTERS. No actual or, to the Companies' knowledge, threatened
strikes, labor disputes, slow downs, walkouts, or other concerted interruptions
of operations by the employees of any Company that are a Material Adverse Event
exist. Hours worked by and payment made to employees of the Companies have not
been in violation of the FAIR LABOR STANDARDS ACT or any other applicable Law
dealing with labor matters, OTHER THAN any violations, individually or
collectively, that are not a Material Adverse Event. All payments due from any
Company for employee health and welfare insurance have been paid or accrued as a
liability on its books, OTHER THAN any nonpayments that are not, individually or
collectively, a Material Adverse Event.
7.19 SOLVENCY. On each Loan Date, each Company is, and after giving effect
to the requested Loan will be, Solvent.
7.20 TRADE NAMES. No Company has used or transacted business under any
other corporate or trade name in the five-year period preceding the initial Loan
Date, except as disclosed on SCHEDULE 7.20.
7.21 INTELLECTUAL PROPERTY. Each Company owns or has the right to use
all material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications and trade names necessary to continue to
conduct its businesses as presently conducted by it and proposed to be conducted
by it immediately after the date of this Agreement. Each Company is conducting
its business without
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infringement or claim of infringement of any license, patent, copyright,
service mark, trademark, trade name, trade secret or other intellectual
property right of others, OTHER THAN any infringements or claims that, if
successfully asserted against or determined adversely to any Company, would
not, individually or collectively, constitute a Material Adverse Event. To
the knowledge of any Company, no infringement or claim of infringement by
others of any material license, patent, copyright, service mark, trademark,
trade name, trade secret or other intellectual property of any Company exists.
7.22 FULL DISCLOSURE. Each material fact or condition relating to the Loan
Documents or the financial condition, business or property of any Company has
been disclosed in writing to Agent. All information previously furnished,
furnished on the date of this Agreement, and furnished in the future, by any
Company to Agent in connection with the Loan Documents (a) was, is, and will be,
true and accurate in all material respects or, in the case of projections, was
based on reasonable estimates on the date the information is stated or
certified, and (b) (i) in the case of projections, was not based on unreasonable
estimates as of the date the information is stated or certified, or (ii) in the
case of all other information, did not, does not, and will not, fail to state
any fact the omission of which would otherwise make any such information
materially misleading.
7.23 ACQUISITION. Prior to, or simultaneously with, the funding of the
initial Loan (a) the Acquisition has been consummated in accordance with the
Purchase Agreement and all applicable Laws for a total cost (excluding fees and
expenses, but including assumed indebtedness for borrowed money) of not more
than $570,000,000 PLUS up to 700,000 shares of Borrower's common stock, (b) all
consents and approvals of, and filings and registrations with, and all other
actions in respect of, all Tribunals required to consummate the Acquisition have
been obtained, given, filed, taken or waived and are in full force and effect,
(c) all applicable waiting periods with respect thereto have expired without any
action being taken by any Tribunal to restrain, prevent or impose material
adverse conditions upon the Acquisition, and (d) no judgment, order or
injunction exists which prohibits or imposes any material adverse condition upon
the Acquisition or the performance of any Company of its obligations in
connection therewith. No Company or any Affiliate of any Company is entering
into the Acquisition with the intent to hinder, delay or defraud any creditor of
any Company.
SECTION 8 AFFIRMATIVE COVENANTS. So long as Lenders are committed to fund any
Loans and Agent is committed to issue LCs under this Agreement, and thereafter
until the Obligation is paid in full, Borrower covenants and agrees as follows:
8.1 ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Agent:
(a) Promptly after preparation, and no later than 120 days after the
last day of each fiscal year of Borrower, Financial Statements showing the
consolidated financial condition and results of operations of the Companies
as of, and for the year ended on, that last day, accompanied by:
(i) the unqualified opinion of a firm of nationally-recognized
independent certified public accountants, based on an audit using
generally accepted auditing standards, that the Financial Statements
were prepared in accordance with GAAP and present fairly, in all
material respects, the consolidated financial condition and results of
operations of the Companies,
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(ii) any management letter prepared by the accounting firm
delivered in connection with its audit, and
(iii) a Compliance Certificate with respect to the Financial
Statements.
(b) Promptly after preparation, and no later than 45 days after the
last day of each fiscal quarter of Borrower, Financial Statements showing
the consolidated financial condition and results of operations of the
Companies for the fiscal quarter and for the period from the beginning of
the current fiscal year to the last day of the fiscal quarter, accompanied
by a Compliance Certificate with respect to the Financial Statements.
(c) Promptly after receipt, a copy of each interim or special audit
report and management letter issued by independent accountants with respect
to any Company or its financial records.
(d) Notice, promptly (and, in any event, within five Business Days)
after Borrower knows or has reason to know, of (i) the existence and status
of any Litigation that, if determined adversely to any Company, would be a
Material Adverse Event, (ii) any change in any material fact or
circumstance represented or warranted by any Company in any Loan Document,
(iii) the receipt by any Company of notice of any violation or alleged
violation of ERISA or any Environmental Law or of any condition which,
under any applicable Environmental Law, could give rise to liability or
impair the saleable value of any real property now or previously owned,
leased or used by any Company, or (iv) a Default, Potential Default or
Material Adverse Event, in each case specifying the nature thereof and what
action the Companies have taken, are taking, or propose to take.
(e) Promptly (and, in any event, within 10 days) after filing or
sending, copies of all material reports or filings filed by or on behalf of
any Company with any Tribunal (including, without limitation, copies of
each Form 10-K, Form 10-Q and Form S-8 filed by or on behalf of any Company
with the Securities and Exchange Commission) or sent to its stockholders.
(f) Promptly after preparation, and no later than 30 days after the
last day of each fiscal quarter of Borrower, copies of all Phase I
Environmental Site Assessment Reports obtained by the Companies in
connection with acquisitions of interests in real property (or acquisitions
of Persons owning interests in real property) closed during such fiscal
quarter.
(g) Promptly upon reasonable request by Agent or Determining Lenders
(through Agent), information (not otherwise required to be furnished under
the Loan Documents) respecting the business affairs, assets and liabilities
of the Companies and opinions, certifications and documents in addition to
those mentioned in this Agreement.
8.2 USE OF PROCEEDS. Borrower shall use the proceeds of Loans only for
the purposes represented in this Agreement.
8.3 BOOKS AND RECORDS. The Companies will maintain books, records and
accounts necessary to prepare financial statements in accordance with GAAP.
8.4 INSPECTIONS. Upon three Business Days notice, each Company will allow
Agent or any Lender (or their Representatives) to inspect any of its properties,
to review reports, files and other records
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and to make and take away copies, to conduct tests or investigations, and to
discuss any of its affairs, conditions and finances with such Company's other
creditors, directors, officers, employees or representatives from time to
time, during reasonable business hours.
8.5 TAXES. The Companies will promptly pay when due any and all Taxes,
OTHER THAN (a) Taxes which are being contested in good faith by lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any Lien have been and continue to be stayed, and (b) state and local Taxes
(except income Taxes) which are immaterial in amount and in respect of which
levy and execution of any Lien have been and continue to be stayed. No Company
shall use any proceeds of Loans hereunder to pay the wages of employees unless a
timely payment to or deposit with the U.S. of all amounts of tax required to be
deducted or withheld with respect to such wages is also made.
8.6 PAYMENT OF OBLIGATIONS. Each Company will promptly pay (or renew and
extend) all of its material obligations as they become due (unless the
obligations are being contested in good faith by appropriate proceedings).
8.7 EXPENSES; INDEMNIFICATION.
(a) Borrower agrees to pay on demand all costs and expenses of Agent
in connection with the preparation, due diligence, execution, delivery,
administration, syndication, modification, and amendment of the Loan
Documents and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for Agent
(including the cost of internal counsel) with respect thereto and with
respect to advising Agent as to its rights and responsibilities under the
Loan Documents. Borrower further agrees to pay on demand all costs and
expenses of Agent and Lenders, if any (including, without limitation,
reasonable attorneys' fees and expenses and the cost of internal counsel),
in connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Loan Documents and the other documents to
be delivered hereunder.
(b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT AND EACH
LENDER AND EACH OF THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY")
FROM AND AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS,
AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES)
THAT MAY BE INCURRED BY OR ASSERTED OR AWARDED AGAINST ANY INDEMNIFIED
PARTY, IN EACH CASE ARISING OUT OF OR IN CONNECTION WITH OR BY REASON OF
(INCLUDING, WITHOUT LIMITATION, IN CONNECTION WITH ANY INVESTIGATION,
LITIGATION, OR PROCEEDING OR PREPARATION OF DEFENSE IN CONNECTION
THEREWITH) THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN
OR THE ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS (INCLUDING ANY
OF THE FOREGOING ARISING FROM THE NEGLIGENCE OF THE INDEMNIFIED PARTY),
EXCEPT TO THE EXTENT SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE
IS FOUND IN A FINAL, NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED PARTY'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. IN THE CASE OF AN INVESTIGATION,
LITIGATION OR OTHER PROCEEDING TO WHICH THE INDEMNITY IN THIS
SECTION 8.7(B) APPLIES, SUCH INDEMNITY SHALL BE EFFECTIVE WHETHER OR NOT
SUCH INVESTIGATION, LITIGATION OR PROCEEDING IS BROUGHT BY BORROWER, ITS
DIRECTORS, SHAREHOLDERS OR CREDITORS OR AN INDEMNIFIED PARTY OR ANY OTHER
PERSON OR ANY
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INDEMNIFIED PARTY IS OTHERWISE A PARTY THERETO AND WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED; SUBJECT, HOWEVER, TO
THE LIMITATION AS TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT CONTAINED IN
THE PRECEDING SENTENCE. BORROWER AGREES NOT TO ASSERT ANY CLAIM AGAINST
ANY INDEMNIFIED PARTY, ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT,
CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO
THE LOAN DOCUMENTS, ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE LOANS. SO LONG AS NO DEFAULT
EXISTS, NO CLAIM FOR WHICH INDEMNITY IS CLAIMED HEREUNDER SHALL BE
COMPROMISED OR SETTLED BY AN INDEMNIFIED PARTY WITHOUT THE PRIOR WRITTEN
CONSENT OF BORROWER. NOTHING CONTAINED HEREIN SHALL PREVENT BORROWER FROM
BRINGING A SEPARATE ACTION AGAINST ANY PARTY HERETO FOR BREACH OF ANY
CONTRACTUAL OBLIGATION CONTAINED IN THE LOAN DOCUMENTS, NOR SHALL THE
PROVISIONS OF THIS SECTION 8.7(B) BE APPLICABLE WITH RESPECT TO ANY ACTION
BETWEEN BORROWER AND ANY OTHER PARTY FOR BREACH OF CONTRACTUAL OBLIGATION
CONTAINED IN THE LOAN DOCUMENTS IN WHICH BORROWER IS THE PREVAILING PARTY.
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 8.7 shall survive the payment in full of the Loans and all
other amounts payable under this Agreement.
(d) Amounts payable under this SECTION 8.7 shall be a part of the
Obligation and, if not paid upon demand, shall bear interest at the Default
Rate until paid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Except as otherwise
permitted by SECTION 9.11, each Company will (a) maintain its corporate
existence and good standing in its state of incorporation and its authority to
transact business in all other states where failure to maintain its authority to
transact business is a Material Adverse Event; (b) maintain all licenses,
permits and franchises necessary for its business where failure to do so is a
Material Adverse Event; (c) keep all of its assets that are useful in and
necessary to its business in good working order and condition (ordinary wear and
tear excepted) and make all necessary repairs and replacements. No Company will
relocate its chief executive office unless prior thereto it gives Agent 30 days
prior written notice of such proposed location (such notice to include, without
limitation, the name of the county or parish and state of such location).
8.9 INSURANCE. The Companies will maintain with financially sound,
responsible and reputable insurance companies or associations (or, as to
workers' compensation or similar insurance, with an insurance fund or by
self-insurance authorized by the jurisdictions in which they operate) insurance
concerning their properties and businesses against casualties and contingencies
and of types and in amounts (and with co-insurance and deductibles) as is
customary in the case of similar businesses.
8.10 PRESERVATION AND PROTECTION OF RIGHTS. The Companies will perform the
acts and duly authorize, execute, acknowledge, deliver, file and record any
Security Documents, financing statements, stock powers and other writings as
Agent or Determining Lenders may reasonably deem necessary or appropriate to
perfect and maintain the Lender Liens and preserve and protect the Rights of
Agent and Lenders under any Loan Document, and will pay all costs of any related
filings or recordations and any Lien searches.
8.11 ENVIRONMENTAL LAWS. The Companies will (a) conduct their business so
as to comply with all applicable Environmental Laws and shall promptly take
corrective action to remedy any non-compliance
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with any Environmental Law, except where failure to comply or take action
would not be a Material Adverse Event, and (b) establish and maintain a
management system designed to ensure compliance with applicable Environmental
Laws and minimize financial and other risks to each Company arising under
applicable Environmental Laws or as the result of environmentally related
injuries to Persons or property. Borrower shall deliver reasonable evidence
of compliance with the foregoing covenant to Agent within 30 days after any
request from Determining Lenders.
8.12 SUBSIDIARIES. The Companies will pledge to Agent for the benefit of
Lenders all stock or partnership interests of each Person that becomes a
domestic direct or indirect Subsidiary of Borrower after the date of this
Agreement (whether as a result of acquisition, creation or otherwise) and shall
cause each such new Subsidiary to execute and deliver a Guaranty, an Officer's
Certificate (concerning articles of incorporation, bylaws, resolutions and
incumbency) and an opinion of counsel (addressing points 4(a), (b), (c), (d) and
(e) of EXHIBIT L with respect to such Subsidiary), in each case within 10
Business Days after becoming a Subsidiary of Borrower.
SECTION 9 NEGATIVE COVENANTS. So long as Lenders are committed to fund Loans
and Agent is committed to issue LCs under this Agreement, and thereafter until
the Obligation is paid in full, Borrower covenants and agrees as follows:
9.1 TAXES. No Company may use any portion of the proceeds of any Loan to
pay the wages of employees, unless a timely payment to or deposit with the U.S.
of all amounts of Tax required to be deducted and withheld with respect to such
wages is also made.
9.2 PAYMENT OF OBLIGATIONS. No Company may voluntarily prepay principal
of, or interest on, any Debt, OTHER THAN the Obligation, if a Default or
Potential Default exists.
9.3 EMPLOYEE PLANS. Except where a Material Adverse Event would not
result, no Company may permit any of the events or circumstances described in
SECTION 7.10 to exist or occur.
9.4 DEBT. No Company may create, incur or suffer to exist any Funded
Debt, OTHER THAN Permitted Debt.
9.5 LIENS. No Company may (a) create, incur or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets, OTHER THAN
Permitted Liens, or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets, OTHER THAN the Loan Documents, leases
that place a Lien prohibition on only the leased property and transactions which
result in purchase money debt.
9.6 TRANSACTIONS WITH AFFILIATES. Except as disclosed on SCHEDULE 7.14
(if the disclosures are approved by Determining Lenders), no Company may enter
into any material transaction with any of its Affiliates (excluding other
Companies), OTHER THAN transactions in the ordinary course of business and upon
fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm's-length transaction with a Person that was
not its Affiliate. For purposes of this SECTION 9.6, a transaction is
"MATERIAL" if it requires any Company to pay more than $5,000,000 during the
term of the agreement governing such transaction.
9.7 COMPLIANCE WITH LAWS AND DOCUMENTS. No Company may (a) violate the
provisions of any Laws applicable to it or of any Material Agreement to which it
is a party if that violation alone, or when
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aggregated with all other violations, would be a Material Adverse Event
(unless such Company disagrees that a violation has occurred, is contesting
the allegation of a violation in good faith by lawful proceedings diligently
conducted, has made any reserve or other provision against such alleged
violation required by GAAP, and has stayed any levy or execution of Lien
relating to such alleged violation), (b) violate the provisions of its
charter or bylaws, or (c) repeal, replace or amend any provision of its
charter or bylaws if that action would be a Material Adverse Event.
9.8 LOANS, ADVANCES AND INVESTMENTS. Except as permitted by SECTION 9.9
or SECTION 9.11, no Company may make any loan, advance, extension of credit or
capital contribution to, make any investment in, or purchase or commit to
purchase any stock or other securities or evidences of Debt of, or interests in,
any other Person, OTHER THAN (a) expense accounts for and other advances to its
directors, officers and employees in the ordinary course of business;
(b) marketable obligations issued or unconditionally guaranteed by the U.S.
Government or issued by any of its agencies and backed by the full faith and
credit of the U. S., in each case maturing within one year from the date of
acquisition (and investments in mutual funds investing primarily in those
obligations); (c) short-term investment grade domestic and eurodollar
certificates of deposit or time deposits that are fully insured by the Federal
Deposit Insurance Corporation or are issued by commercial banks having combined
capital, surplus, and undivided profits of not less than $100,000,000 (as shown
on its most recently published statement of condition); (d) commercial paper and
similar obligations rated "P-1" by Moody's Investors Service, Inc., or "A-1" by
Standard & Poor's Ratings Group (a division of McGraw Hill, Inc.); (e)
inter-Company loans and advances; (f) readily marketable tax-free municipal
bonds of a domestic issuer rated "Aaa" by Moody's Investors Service, Inc., or
"AAA" by Standard & Poors Ratings Group (a division of McGraw Hill, Inc.),
and maturing within one year from the date of issuance (and investments in
mutual funds investing primarily in those bonds); (g) demand deposit accounts
maintained in the ordinary course of business; (h) other investments existing
on the initial Loan Date and described on SCHEDULE 9.8 (and, with respect to
Amatek and its Subsidiaries, existing on the date of Acquisition); (i)
extensions of credit in connection with trade receivables and overpayments of
trade payables, in each case resulting from transactions in the ordinary
course of business; and (j) as long as no Default or Potential Default
exists, other loans, advances, and investments aggregating no more than 5% of
the Companies' Net Worth at any time.
9.9 DIVIDENDS AND DISTRIBUTIONS. No Company may declare, make or pay any
Distribution, OTHER THAN Distributions declared, made or paid by (a) Borrower
wholly in the form of its capital stock and (b) any other Company to Borrower.
No Company shall enter into any arrangement or agreement (OTHER THAN this
Agreement) that prohibits it from paying dividends or other distributions to its
shareholders.
9.10 SALE OF ASSETS. No Company may sell, assign, lease, transfer or
otherwise dispose of any of its assets, OTHER THAN (a) sales of inventory in the
ordinary course of business, (b) the sale, discount or transfer of delinquent
accounts receivable in the ordinary course of business for purposes of
collection, (c) occasional sales, leases or other dispositions of immaterial
assets for consideration not less than fair market value, (d) sales, leases or
other dispositions of assets that are obsolete or have negligible fair market
value, (e) sales of equipment for a fair and adequate consideration (but the
seller must promptly replace the sold equipment), (f) sales for which the cash
proceeds thereof (after selling expenses and taxes related thereto to the extent
paid and any reserves for retained liabilities until such liabilities are
extinguished) are applied in prepayment of the Principal Debt in accordance with
SECTION 3.2(c), and (g) other sales of assets which do not exceed $500,000 in
the aggregate annually.
9.11 MERGERS AND DISSOLUTIONS. No Company may acquire all or any
substantial portion of stock issued by, interest in, or assets of any other
Person (the "ACQUIREE"), UNLESS (a) immediately after the
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acquisition no Default or Potential Default exists and a Responsible Officer
represents to Agent and Lenders in writing that the acquisition will not
reasonably be expected to cause any Default or Potential Default then or
within the one-year period thereafter, (b) the Acquiree has consented to the
acquisition, and (c) the Acquiree is in the same or similar business as the
Companies (or a reasonably related business). Borrower may not, and may not
permit any Subsidiary to, merge or consolidate with any other Person, UNLESS
immediately thereafter no Default or Potential Default exists and (i)
Borrower, if a party thereto, is the surviving corporation or (ii) if
Borrower is not a party thereto, the surviving corporation has either
previously executed a Guaranty or assumes, in writing, the non-surviving
corporation's obligations created by any Guaranty executed by the
non-surviving corporation. Except as a result of a transaction permitted by
this SECTION 9.11, no Company will liquidate, wind up, or dissolve (or suffer
any liquidation or dissolution).
9.12 ASSIGNMENT. No Company may assign or transfer any of its Rights,
duties, or obligations under any of the Loan Documents, EXCEPT if any Company
merges with another Company as permitted by SECTION 9.11, the assignment or
transfer of the Rights, duties, and obligations of the non-surviving Company is
permitted if the surviving Company assumes in writing all Rights, duties, and
obligations of the non-surviving Company under the Loan Documents.
9.13 FISCAL YEAR AND ACCOUNTING METHODS. No Company may change its fiscal
year or its method of accounting (OTHER THAN immaterial changes in methods or as
required by GAAP).
9.14 NEW BUSINESSES. No Company may engage in any business EXCEPT the
businesses in which they are presently engaged and any other reasonably related
business.
9.15 GOVERNMENT REGULATIONS. No Company may conduct its business in a way
that it becomes regulated under the INVESTMENT COMPANY ACT OF 1940, as amended,
or the PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, as amended.
9.16 TAX SHARING AGREEMENTS. The Companies shall not enter into any tax
sharing arrangements which obligate them to pay more Taxes collectively than
they would otherwise pay absent such arrangements.
SECTION 10 FINANCIAL COVENANTS. So long as Lenders are committed to fund
Loans and Agent is committed to issue LCs under this Agreement, and thereafter
until the Obligation is paid and performed in full, Borrower covenants and
agrees as follows:
10.1 MINIMUM NET WORTH. Borrower shall not permit Net Worth, as of the
last day of any fiscal quarter of Borrower, commencing with October 31, 1998, to
be less than the SUM of (a) $150,000,000, PLUS (b) an amount equal to the
greater of zero (0) and 75% of the consolidated net earnings after taxes of the
Companies determined in accordance with GAAP for the period (taken as a single
accounting period) from and including August 1, 1998, to and including such day,
PLUS (c) an amount equal to 100% of any cash proceeds (net of underwriting
discounts and commissions and other costs associated therewith) received by the
Companies from the issuance and sale of equity securities for the period (taken
as a single accounting period) from and including August 1, 1998, to and
including such day.
10.2 MAXIMUM LEVERAGE RATIO. Borrower shall not permit the ratio, as of
the last day of each fiscal quarter of Borrower listed below, of Funded Debt as
of such date to EBITDA for the four fiscal quarters ended on such date to exceed
the ratio set forth below opposite such day:
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<TABLE>
<S> <C>
October 31, 1998 4.50 to 1.00
January 31, 1999 4.50 to 1.00
April 30, 1999 4.50 to 1.00
July 31, 1999 4.50 to 1.00
October 31, 1999 4.25 to 1.00
January 31, 2000 4.25 to 1.00
April 30, 2000 4.25 to 1.00
July 31, 2000 4.25 to 1.00
October 31, 2000 4.00 to 1.00
January 31, 2001 4.00 to 1.00
April 30, 2001 4.00 to 1.00
July 31, 2001 4.00 to 1.00
Thereafter 3.50 to 1.00
</TABLE>
10.3 MAXIMUM SENIOR DEBT RATIO. Effective upon the incurrence by any
Company of Funded Debt in the amount of $100,000,000 or more which is
contractually subordinated or junior in right of payment to the Obligation,
Borrower shall not permit the ratio, as of the last day of each fiscal quarter
of Borrower listed below, of Senior Debt as of such date to EBITDA for the four
fiscal quarters ended on such date to exceed the ratio set forth below opposite
such day:
<TABLE>
<S> <C>
October 31, 1998 4.50 to 1.00
January 31, 1999 3.25 to 1.00
April 30, 1999 3.25 to 1.00
July 31, 1999 3.25 to 1.00
October 31, 1999 3.25 to 1.00
January 31, 2000 3.00 to 1.00
April 30, 2000 3.00 to 1.00
July 31, 2000 3.00 to 1.00
October 31, 2000 3.00 to 1.00
January 31, 2001 2.75 to 1.00
April 30, 2001 2.75 to 1.00
July 31, 2001 2.75 to 1.00
October 31, 2001 2.75 to 1.00
Thereafter 2.50 to 1.00
</TABLE>
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10.4 MINIMUM FIXED CHARGE COVERAGE RATIO. Borrower shall not permit the
ratio, as of the last day of any fiscal quarter of Borrower, of (a) the SUM of
EBITDA, MINUS cash taxes paid with respect to income, in each case for the four
fiscal quarters ended on such date to (b) the SUM of interest expenses PLUS
current maturities of the Companies' long-term Funded Debt, PLUS cash dividends
paid by Borrower, PLUS repurchases by any Company of its own capital stock or
other equity securities (whether or not permitted under SECTION 9.9), in each
case during the four fiscal quarters ended on such date to be less than the
ratio set forth opposite such day:
<TABLE>
<S> <C>
October 31, 1998 1.25 to 1.00
January 31, 1999 1.25 to 1.00
April 30, 1999 1.25 to 1.00
July 31, 1999 1.25 to 1.00
October 31, 1999 1.30 to 1.00
January 31, 2000 1.30 to 1.00
April 30, 2000 1.30 to 1.00
July 31, 2000 1.30 to 1.00
Thereafter 1.35 to 1.00
</TABLE>
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
11.1 PAYMENT OF OBLIGATION.
(a) The failure of any Company to make any principal payment on any
Note or to pay or reimburse Agent with respect to any draft or draw request
under any LC after it becomes due and payable under the Loan Documents; or
(b) The failure of any Company to pay any other portion of the
Obligation within three Business Days after it becomes due and payable
under the Loan Documents.
11.2 COVENANTS. The failure of Borrower (and, if applicable, any other
Company) to punctually and properly perform, observe and comply with:
(a) Any covenant or agreement contained in SECTIONS 2.3(h), 8.1, 8.4
OR 9; or
(b) Any other covenant or agreement contained in any Loan Document
(OTHER THAN the covenants to pay the Obligation and the covenants in CLAUSE
(a) above), unless, if such breach is curable, such breach is cured within
30 days after Borrower knows of such failure.
11.3 DEBTOR RELIEF. Any Company (a) is not Solvent, (b) fails to pay its
Debts generally as they become due, (c) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law,
OTHER THAN as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Agent or any
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Lender granted in the Loan Documents (UNLESS, if the proceeding is
involuntary, the applicable petition is dismissed within 60 days after its
filing).
11.4 JUDGMENTS AND ATTACHMENTS. Any Company fails, within 60 days after
entry, to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $1,000,000 (individually or collectively) or any warrant
of attachment, sequestration or similar proceeding against any Company's assets
having a value (individually or collectively) of $1,000,000, which is neither
(a) stayed on appeal nor (b) diligently contested in good faith by appropriate
proceedings and adequate reserves have been set aside on its books in accordance
with GAAP.
11.5 GOVERNMENT ACTION. (a) A final non-appealable order is issued by any
Tribunal (including, but not limited to, the U.S. Justice Department) seeking to
cause any Company to divest a significant portion of its assets under any
antitrust, restraint of trade, unfair competition, industry regulation or
similar Laws, or (b) any Tribunal condemns, seizes or otherwise appropriates, or
takes custody or control of all or any substantial portion of the assets of any
Company.
11.6 MISREPRESENTATION. Any material representation or warranty made by
any Company contained in any Loan Document at any time proves to have been
materially incorrect when made.
11.7 OWNERSHIP OF OTHER COMPANIES. Borrower fails to own, beneficially and
of record, with power to vote, 100% of the issued and outstanding shares of
capital stock of any other Company that has executed a Loan Document (EXCEPT as
a result of a transaction permitted by this Agreement), or NCI Operating Corp.
and NCI Holding Corp. fail to own the partnership interests described in
SCHEDULE 7.3.
11.8 DEFAULT UNDER OTHER AGREEMENTS. (a) Any Company fails to pay when due
(after lapse of any applicable grace period) any Debt in excess (individually or
collectively) of $1,000,000; (b) any default exists (and is not waived or cured)
under any agreement to which a Company is a party, the effect of which is to
cause, or to permit any Person (OTHER THAN a Company) to cause, an amount in
excess (individually or collectively) of $1,000,000 to become due and payable by
any Company before its stated maturity; or (c) any Debt in excess (individually
or collectively) of $1,000,000 is declared to be due and payable (unless such
declaration is rescinded) or required to be prepaid by any Company before its
stated maturity.
11.9 LCS. Agent is served with, or becomes subject to, a court order,
injunction, or other process or decree restraining or seeking to restrain it
from paying any amount under any LC and either (a) a drawing has occurred under
the LC and Borrower has refused to reimburse Agent for payment or (b) the
expiration date of the LC has occurred but the right of any beneficiary
thereunder to draw under the LC has been extended past the expiration date in
connection with the pendency of the related court action or proceeding and
Borrower has failed to deposit with Agent cash collateral in an amount equal to
Agent's maximum exposure under the LC.
11.10 VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Except in
accordance with its terms or as otherwise expressly permitted by this Agreement,
any Loan Document at any time after its execution and delivery ceases to be in
full force and effect in any material respect or is declared by a Tribunal to be
null and void or its validity or enforceability is contested by any Company
party thereto or any Company denies that it has any further liability or
obligations under any Loan Document to which it is a party.
11.11 CHANGE OF CONTROL. The acquisition by any Person, or two or
more Persons acting in concert (OTHER THAN any Person or Persons who own, prior
to that acquisition, 20% or more of the outstanding shares
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<PAGE>
of Borrower's voting stock), of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of Borrower's
voting stock.
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON DEFAULT.
(a) If a Default (i) occurs under SECTION 11.3(c) or (ii) occurs and
is continuing under SECTION 11.3(a), (b) OR (d), the commitment to extend
credit under this Agreement automatically terminates, the entire unpaid
balance of the Obligation automatically becomes due and payable without any
action of any kind whatsoever, and Borrower must provide cash collateral in
an amount equal to the then-existing LC Exposure.
(b) If a Default occurs and is continuing, Agent may (with the
consent of, and must, upon the request of, Determining Lenders), do any one
or more of the following: (i) if the maturity of the Obligation has not
already been accelerated under SECTION 12.1(a), declare the entire unpaid
balance of all or any part of the Obligation immediately due and payable,
whereupon it is due and payable; (ii) terminate the commitments of Lenders
to extend credit under this Agreement; (iii) reduce any claim to judgment;
(iv) to the extent permitted by Law, exercise (or request each Lender to,
and each Lender is entitled to, exercise) the Rights of offset or banker's
Lien against the interest of any Company in and to every account and other
property of any Company that are in the possession of Agent or any Lender
to the extent of the full amount of the Obligation (and to the extent
permitted by Law, each Company is deemed directly obligated to each Lender
in the full amount of the Obligation for this purpose); (v) demand Borrower
to provide cash collateral in an amount equal to the LC Exposure then
existing; and (vi) exercise any and all other legal or equitable Rights
afforded by the Loan Documents, the Laws of the State of Texas, or any
other applicable jurisdiction.
(c) If Agent refuses to take any action under SECTION 12.1(b) at the
request of Determining Lenders, then Determining Lenders may take that
action.
12.2 COMPANY WAIVERS. To the extent permitted by Law, each Company waives
presentment and demand for payment, protest, notice of intention to accelerate,
notice of acceleration and notice of protest and nonpayment, and agrees that its
liability with respect to all or any part of the Obligation is not affected by
any renewal or extension in the time of payment of all or any part of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of all or any part of the Obligation.
12.3 PERFORMANCE BY AGENT. If any covenant, duty or agreement of any
Company is not performed in accordance with the terms of the Loan Documents,
Agent may, while a Default exists, at its option (but subject to the approval of
Determining Lenders), perform or attempt to perform that covenant, duty or
agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and
severally, to Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of Agent's expenditure until paid).
However, neither Agent nor any Lender assumes or shall have, except by its
express written consent, any liability or responsibility for the performance of
any covenant, duty or agreement of any Company.
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<PAGE>
12.4 NOT IN CONTROL. None of the covenants or other provisions contained
in any Loan Document shall, or shall be deemed to, give Agent or Lenders the
Right to exercise control over the assets (including, without limitation, real
property), affairs, or management of any Company; the power of Agent and Lenders
is limited to the Right to exercise the remedies provided in this SECTION 12.
12.5 COURSE OF DEALING. The acceptance by Agent or Lenders of any partial
payment on the Obligation shall not be deemed to be a waiver of any Default then
existing. No waiver by Agent, Determining Lenders or Lenders of any Default
shall be deemed to be a waiver of any other then-existing or subsequent Default.
No delay or omission by Agent, Determining Lenders or Lenders in exercising any
Right under the Loan Documents will impair that Right or be construed as a
waiver thereof or any acquiescence therein, nor will any single or partial
exercise of any Right preclude other or further exercise thereof or the exercise
of any other Right under the Loan Documents or otherwise.
12.6 CUMULATIVE RIGHTS. All Rights available to Agent, Determining
Lenders, and Lenders under the Loan Documents are cumulative of and in addition
to all other Rights granted to Agent, Determining Lenders, and Lenders at law or
in equity, whether or not the Obligation is due and payable and whether or not
Agent, Determining Lenders, or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Documents.
12.7 APPLICATION OF PROCEEDS. Any and all proceeds ever received by Agent
or Lenders from the exercise of any Rights pertaining to the Obligation shall be
applied to the Obligation according to SECTION 3.11.
12.8 DIMINUTION IN VALUE OF COLLATERAL. Neither Agent nor any Lender has
any liability or responsibility whatsoever for any diminution in or loss of
value of any collateral now or hereafter securing payment or performance of all
or any part of the Obligation (OTHER THAN diminution in or loss of value caused
by its gross negligence or willful misconduct).
12.9 CERTAIN PROCEEDINGS. Borrower will promptly execute and deliver, or
cause the execution and delivery of, all applications, certificates,
instruments, registration statements and all other documents and papers Agent or
Determining Lenders reasonably request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license or authorization
of any Tribunal or other Person necessary or appropriate for the effective
exercise of any Rights under the Loan Documents. Because Borrower agrees that
Agent's and Determining Lenders' remedies at Law for failure of Borrower to
comply with the provisions of this paragraph would be inadequate and that
failure would not be adequately compensable in damages, Borrower agrees that the
covenants of this paragraph may be specifically enforced.
SECTION 13 AGREEMENT AMONG LENDERS.
13.1 APPOINTMENT, POWERS, AND IMMUNITIES OF AGENT. Each Lender hereby
irrevocably appoints and authorizes Agent to act as its agent under the Loan
Documents with such powers and discretion as are specifically delegated to Agent
by the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Agent (which term as used in this sentence and
in SECTION 13.5 and the first sentence of SECTION 13.6 shall include its
Affiliates and its own and its Affiliates' officers, directors, employees, and
agents): (a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or fiduciary
for any Lender; (b) shall not be responsible to Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in or in
connection with any Loan Document or any certificate or other document referred
to or provided for in, or received by any
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<PAGE>
of them under, any Loan Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Loan Document, or any
other document referred to or provided for therein or for any failure by any
Company or any other Person to perform any of its obligations thereunder; (c)
shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Company or the satisfaction of any condition or to inspect the property
(including the books and records) of any Company; (d) shall not be required
to initiate or conduct any litigation or collection proceedings under any
Loan Document; and (e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Loan Document,
except for its own gross negligence or willful misconduct. Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence
or misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
13.2 RELIANCE BY AGENT. Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy) believed by it to be
genuine and correct and to have been signed, sent or made by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel
(including counsel for any Company), independent accountants, and other experts
selected by Agent. Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until Agent receives and accepts an
Assignment and Acceptance executed in accordance with SECTION 14.12. As to any
matters not expressly provided for by this Agreement, Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Determining Lenders, and such
instructions shall be binding on all Lenders; PROVIDED, HOWEVER, THAT Agent
shall not be required to take any action that exposes Agent to personal
liability or that is contrary to any Loan Document or applicable Law or unless
it shall first be indemnified to its satisfaction by Lenders against any and all
liability and expense which may be incurred by it by reason of taking any such
action.
13.3 DEFAULTS. Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or Potential Default unless Agent has received
written notice from a Lender or Borrower specifying such Default or Potential
Default and stating that such notice is a "Notice of Default". In the event
that Agent receives such a notice of the occurrence of a Default or Potential
Default, Agent shall give prompt notice thereof to Lenders. Agent shall
(subject to SECTION 13.2) take such action with respect to such Default or
Potential Default as shall reasonably be directed by Determining Lenders,
PROVIDED THAT, unless and until Agent shall have received such directions, Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Potential Default as it shall deem
advisable in the best interest of Lenders.
13.4 RIGHTS AS LENDER. With respect to its Commitments and the Loans made
by it, NationsBank (and any successor acting as Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include Agent in its individual capacity. NationsBank (and any successor acting
as Agent) and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to, make investments in, provide
services to, and generally engage in any kind of lending, trust, or other
business with any Company as if it were not acting as Agent, and NationsBank
(and any successor acting as Agent) and its Affiliates may accept fees and other
consideration from any Company for services in connection with this Agreement or
otherwise without having to account for the same to Lenders.
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13.5 INDEMNIFICATION. LENDERS AGREE TO INDEMNIFY AGENT (TO THE EXTENT NOT
REIMBURSED UNDER SECTION 14.12, BUT WITHOUT LIMITING THE OBLIGATIONS OF BORROWER
UNDER SUCH SECTION) RATABLY IN ACCORDANCE WITH THEIR RESPECTIVE COMMITMENTS, FOR
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), OR DISBURSEMENTS
OF ANY KIND AND NATURE WHATSOEVER THAT MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST AGENT (INCLUDING BY ANY LENDER) IN ANY WAY RELATING TO OR
ARISING OUT OF ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY OR ANY
ACTION TAKEN OR OMITTED BY AGENT UNDER ANY LOAN DOCUMENT (INCLUDING ANY OF THE
FOREGOING ARISING FROM THE NEGLIGENCE OF AGENT); PROVIDED THAT NO LENDER SHALL
BE LIABLE FOR ANY OF THE FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT
LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON
DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR EXPENSES PAYABLE BY BORROWER UNDER
SECTION 8.7, TO THE EXTENT THAT AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH COSTS
AND EXPENSES BY BORROWER. THE AGREEMENTS CONTAINED IN THIS SECTION 13.5 SHALL
SURVIVE PAYMENT IN FULL OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE UNDER THIS
AGREEMENT.
13.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it
has, independently and without reliance on Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Companies and decision to enter into this Agreement and
that it will, independently and without reliance upon Agent or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to Lenders by Agent
hereunder, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial
condition, or business of any Company that may come into the possession of Agent
or any of its Affiliates.
13.7 RESIGNATION OF AGENT. Agent may resign at any time by giving notice
thereof to Lenders and Borrower. Upon any such resignation, Determining Lenders
shall have the right to appoint a successor Agent with the consent of Borrower
(which consent shall not unreasonably be withheld). If no successor Agent shall
have been so appointed by Determining Lenders and shall have accepted such
appointment within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
U.S. having combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor, such successor
shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges, and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions of this SECTION
13 shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
13.8 RELATIONSHIP OF LENDERS. The Loan Documents, and the documents
delivered in connection therewith, do not create a partnership or joint venture
among Agent and Lenders or among Lenders.
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13.9 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Agent to enter into the
Security Documents for the ratable benefit of Lenders. Each Lender agrees
that any action taken by Agent concerning any Collateral with the consent
of, or at the request of, Determining Lenders in accordance with the
provisions of this Agreement, the Security Documents or the other Loan
Documents, and the exercise by Agent (with the consent of, or at the
request of, Determining Lenders) of powers concerning the Collateral set
forth in any Loan Document, together with other reasonably incidental
powers, shall be authorized and binding upon all Lenders.
(b) Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time before a Default or Potential Default, to take any action with respect
to any Collateral or Security Documents that may be necessary to perfect
and maintain perfected the Lender Liens upon the Collateral granted by the
Security Documents.
(c) Agent has no obligation whatsoever to any Lender or to any other
Person to assure that the Collateral exists or is owned by any Company or
is cared for, protected or insured or has been encumbered or that the Liens
granted to Agent for the benefit of Lenders under the Security Documents
have been properly or sufficiently or lawfully created, perfected,
protected or enforced, or are entitled to any particular priority.
(d) Agent shall exercise the same care and prudent judgment with
respect to the Collateral and the Security Documents as it normally and
customarily exercises in respect of similar collateral and security
documents.
(e) Lenders irrevocably authorize Agent, at its option and in its
discretion, to release any Lender Lien upon any Collateral (i) upon full
payment of the Obligation; (ii) constituting property being sold or
disposed of as permitted under SECTION 9.10, if Agent determines that the
property being sold or disposed is being sold or disposed in accordance
with the requirements and limitations of SECTION 9.10 and Agent
concurrently receives all mandatory prepayments with respect thereto, if
any, in accordance with SECTION 9.10; or (iii) if approved, authorized or
ratified in writing by Determining Lenders, subject to SECTION 14.10(a)(v).
Upon request by Agent at any time, Lenders will confirm in writing Agent's
authority to release particular types or items of Collateral under this
SECTION 13.9(e).
13.10 BENEFITS OF AGREEMENT. None of the provisions of this SECTION 13
inure to the benefit of any Company or any other Person OTHER THAN Agent and
Lenders; consequently, no Company or any other Person is entitled to rely upon,
or to raise as a defense, in any manner whatsoever, the failure of Agent or any
Lender to comply with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 HEADINGS. The headings, captions and arrangements used in any of the
Loan Documents are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of the Loan Documents, nor
affect the meaning thereof.
14.2 NONBUSINESS DAYS; TIME. Any payment or action that is due under any
Loan Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to
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accrue on any applicable payment until payment is in fact made) unless the
payment concerns a Eurodollar Loan, in which case if the next-succeeding
Business Day is in the next calendar month, then such payment shall be made
on the next-preceding Business Day. Unless otherwise indicated, all time
references (E.G., 10:00 a.m.) are to Dallas, Texas time.
14.3 COMMUNICATIONS. Unless otherwise specifically provided, whenever any
Loan Document requires or permits any consent, approval, notice, request, demand
or other communication from one party to another, communication must be in
writing (which may be by telex or telecopy) to be effective and shall be deemed
to have been given (a) if by telex, when transmitted to the appropriate telex
number and the appropriate answerback is received, (b) if by telecopy, when
transmitted to the appropriate telecopy number (and all communications sent by
telecopy must be confirmed promptly thereafter by telephone; but any requirement
in this parenthetical shall not affect the date when the telecopy shall be
deemed to have been delivered), (c) if by mail, on the third Business Day after
it is enclosed in an envelope and properly addressed, stamped, sealed, certified
mail, return receipt requested, and deposited in the appropriate official postal
service, or (d) if by any other means, when actually delivered. Until changed
by notice pursuant to this Agreement, the address (and telecopy number) for
Agent, Borrower and each Guarantor is set forth on SCHEDULE 1.
14.4 FORM AND NUMBER OF DOCUMENTS. The form, substance, and number of
counterparts of each writing to be furnished under this Agreement must be
satisfactory to Agent and its counsel.
14.5 EXCEPTIONS TO COVENANTS. Borrower may not and may not permit any
Company to take or fail to take any action that is permitted as an exception to
any of the covenants contained in this Agreement if that action or omission
would result in the breach of any other covenant contained in this Agreement.
14.6 SURVIVAL. All covenants, agreements, undertakings, representations
and warranties made in any of the Loan Documents survive all closings under the
Loan Documents and, except as otherwise indicated, are not affected by any
investigation made by any party.
14.7 GOVERNING LAW. Except as expressly provided in a Loan Document, the
Laws (other than conflict-of-laws provisions) of the State of Texas and of the
U.S. govern the Rights and duties of the parties to the Loan Documents and the
validity, construction, enforcement and interpretation of the Loan Documents.
14.8 INVALID PROVISIONS. Any provision in any Loan Document held to be
illegal, invalid or unenforceable is fully severable; the appropriate Loan
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Agent, Lenders, and each
Company party to the affected Loan Document agree to negotiate, in good faith,
the terms of a replacement provision as similar to the severed provision as may
be possible and be legal, valid and enforceable. However, if the provision held
to be illegal, invalid or unenforceable is a material part of this Agreement,
such invalid, illegal or unenforceable provision shall be, to the extent
permitted by Law, replaced by a clause or provision judicially construed and
interpreted to be as similar in substance and content to the original terms of
such illegal, invalid or unenforceable clause or provision as the context
thereof would reasonably allow, so that such clause or provision would
thereafter be legal, valid and enforceable.
14.9 VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY TO ANY LOAN
DOCUMENT, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE
OF BORROWER,
47
<PAGE>
FOR EACH OTHER COMPANY), (a) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS, (b)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION
ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE OBLIGATION
BROUGHT IN DISTRICT COURTS OF DALLAS OR HARRIS COUNTY, TEXAS, OR IN THE U.S.
DISTRICT COURT FOR THE NORTHERN OR SOUTHERN DISTRICT OF TEXAS, DALLAS OR
HOUSTON DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY OF THE AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY,
OR BY DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL
BE DEEMED COMPLETE UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS SET
FORTH IN THIS AGREEMENT, (e) IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDING
AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF THE
AFOREMENTIONED COURTS, AND (f) IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT. The scope of each
of the foregoing waivers is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Borrower (for itself and on behalf of each other Company) acknowledges that
these waivers are a material inducement to Agent's and each Lender's
agreement to enter into a business relationship, that Agent and each Lender
has already relied on these waivers in entering into this Agreement, and that
Agent and each Lender will continue to rely on each of these waivers in
related future dealings. Borrower (for itself and on behalf of each other
Company) further warrants and represents that it has reviewed these waivers
with its legal counsel, and that it knowingly and voluntarily agrees to each
waiver following consultation with legal counsel. THE WAIVERS IN THIS
SECTION 14.9 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN
DOCUMENT. In the event of Litigation, this Agreement may be filed as a
written consent to a trial by the court.
14.10 AMENDMENTS, CONSENTS, CONFLICTS AND WAIVERS.
(a) Any provision of any Loan Document may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by
Borrower and Determining Lenders (and, if SECTION 13 or the rights or
duties of Agent are affected thereby, by Agent); PROVIDED THAT no such
amendment or waiver shall, unless signed by all Lenders, (i) increase the
Commitments, (ii) reduce the principal of or rate of interest on any Loan
or any fees or other amounts payable hereunder, (iii) postpone any date
fixed for the payment of any scheduled installment of principal of or
interest on any Loan or any fees or other amounts payable hereunder or for
termination of any Commitment, (iv) change the percentage of the
Commitments or of the unpaid principal amount of the Notes, or the number
of Lenders, which shall be required for Lenders or any of them to take any
action under this SECTION 14.10 or any other provision of this Agreement or
(v) release any Guarantor or all or substantially all of the Collateral.
48
<PAGE>
(b) Any conflict or ambiguity between the terms and provisions of
this Agreement and terms and provisions in any other Loan Document is
controlled by the terms and provisions of this Agreement.
(c) No course of dealing or any failure or delay by Agent, any
Lender, or any of their respective Representatives with respect to
exercising any Right of Agent or any Lender under this Agreement operates
as a waiver thereof. A waiver must be in writing and signed by Agent and
Lenders (or Determining Lenders, if permitted under this Agreement) to be
effective, and a waiver will be effective only in the specific instance and
for the specific purpose for which it is given.
14.11 MULTIPLE COUNTERPARTS. Any Loan Document may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of thereof, it shall not be necessary to produce or account for
more than one counterpart. Each Lender need not execute the same counterpart of
this Agreement so long as identical counterparts are executed by Borrower, each
Lender, and Agent. This Agreement shall become effective when counterparts of
this Agreement have been executed and delivered to Agent by each Lender, Agent
and Borrower, or, in the case only of Lenders, when Agent has received
telecopied, telexed or other evidence satisfactory to it that each Lender has
executed and is delivering to Agent a counterpart of this Agreement.
14.12 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Loan Document binds and inures to the benefit of the parties
thereto, any intended beneficiary thereof, and each of their respective
successors and permitted assigns. No Lender may transfer, pledge, assign,
sell any participation in, or otherwise encumber its portion of the
Obligation except as permitted by this SECTION 14.12.
(b) Each Lender may assign to one or more financial institutions
approved by Borrower and Agent (which approval shall not be unreasonably
withheld) (each a "PURCHASER") all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Loans, its Notes, and its Commitments); PROVIDED, HOWEVER,
THAT
(i) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount at least
equal to $10,000,000 or an integral multiple of $1,000,000 in excess
thereof;
(ii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under
this Agreement and the Notes; and
(iii) the parties to such assignment shall execute and deliver
to Agent for its acceptance an Assignment and Acceptance in the
form of EXHIBIT I, together with any Note subject to such assignment
and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Agreement. Upon the
49
<PAGE>
consummation of any assignment pursuant to this SECTION 14.12(b), the
assignor, Agent and Borrower shall make appropriate arrangements so that,
if required, new Notes are issued to the assignor and the assignee. If
the assignee is not incorporated under the laws of the U.S. or a state
thereof, it shall deliver to Borrower and Agent certification as to
exemption from deduction or withholding of Taxes in accordance with
SECTION 3.20.
(c) Agent shall maintain at its address referred to in SECTION 14.3 a
copy of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of Lenders and
the Commitments of, and principal amount of the Loans owing to, each Lender
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and
Borrower, Agent and Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of
EXHIBIT I, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under
this Agreement (including all or a portion of its Commitments or its
Loans); PROVIDED, HOWEVER, THAT (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the Participant shall be entitled to the benefit of the
yield protection provisions contained in SECTIONS 3.15 through 3.20
(however, no Participant is entitled to receive any greater payment than
the transferor Lender would have been entitled to receive) and the right of
set-off contained in SECTION 3.12, and (iv) Borrower shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain
the sole right to enforce the obligations of Borrower relating to its Loans
and its Notes and to approve any amendment, modification, or waiver of any
provision of this Agreement (OTHER THAN amendments, modifications, or
waivers decreasing the amount of principal of or the rate at which interest
is payable on such Loans or Notes, extending any scheduled principal
payment date or date fixed for the payment of interest on such Loans or
Notes, or extending its Commitments).
(f) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its
Loans and its Notes to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from
its obligations hereunder.
(g) Any Lender may furnish any information concerning Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
Purchasers and Participants (including prospective Purchasers and
Participants).
50
<PAGE>
14.13 DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. Each Company's obligations under the Loan Documents remain in
full force and effect until the Total Commitment is terminated and the
Obligation is paid in full (EXCEPT for provisions under the Loan Documents which
by their terms expressly survive payment of the Obligation and termination of
the Loan Documents). If at any time any payment of the principal of or interest
on any Note or any other amount payable by Borrower or any other obligor on the
Obligation under any Loan Document is rescinded or must be restored or returned
upon the insolvency, bankruptcy or reorganization of Borrower or otherwise, the
obligations of each Company under the Loan Documents with respect to that
payment shall be reinstated as though the payment had been due but not made at
that time.
14.14 ENTIRETY. THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
(EACH AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY ANY COMPANY, ANY
LENDER OR AGENT REPRESENT THE FINAL AGREEMENT AMONG THE COMPANIES, LENDERS AND
AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
EXECUTED as of the day and year first mentioned.
NCI BUILDING SYSTEMS, INC.
AS BORROWER
By: /s/ Robert J. Medlock
---------------------------------------------
Robert J. Medlock
Vice President and Chief Financial Officer
51
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
--------------------------------------------
Richard L. Nichols, Jr.
Vice President
52
<PAGE>
NATIONSBANC MONTGOMERY SECURITIES
LLC, AS ARRANGER AND SYNDICATION AGENT
By: /s/ Gary L. Kahn
---------------------------------------
Gary L. Kahn
Managing Director
53
<PAGE>
SWISS BANK CORPORATION,
STAMFORD BRANCH
AS DOCUMENTATION AGENT AND A LENDER
By: /s/ Dorothy McKinley
-------------------------------------------------
Name: Dorothy McKinley
-----------------------------------------------
Title: Associate Director Loan Portfolio Support, US
----------------------------------------------
By: /s/ Rett Jenal
-------------------------------------------------
Name: Rett Jenal
-----------------------------------------------
Title: Director, Banking Finance
----------------------------------------------
54
<PAGE>
As of May 1, 1998
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Attn: Robert J. Medlock
Chief Financial Officer
Re: First Amendment to Credit Agreement
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of March 25, 1998 (the
"CREDIT AGREEMENT"), among NCI Building Systems ("BORROWER"), NationsBank of
Texas, N.A., as Administrative Agent ("AGENT"), NationsBanc Montgomery
Securities LLC, as Syndication Agent, Swiss Bank Corporation, as Documentation
Agent, and the financial institutions named therein (collectively, "LENDERS").
Unless otherwise indicated, all capitalized terms herein are used as defined in
the Credit Agreement.
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Borrower, Guarantors, Agent and Lenders agree as follows:
1. CERTAIN DEFINITIONS.
(a) The definition of "APPLICABLE MARGIN" in SECTION 1.1 of the
Credit Agreement is hereby amended by replacing the table therein with the
following table:
<TABLE>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIO OF FUNDED DEBT APPLICABLE MARGIN FOR APPLICABLE
TO EBITDA BASE RATE LOANS MARGIN FOR EURODOLLAR LOANS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Equal to or greater than 4.0 to 1.0 0.500% 2.000%
- ------------------------------------------------------------------------------------------------------------
Less than 4.0 to 1.0, but greater than 3.75 to 0.500% 2.000%
1.0 (0.250% if Subordinated Debt (1.750% if Subordinated Debt
equals or exceeds equals or exceeds
$200,000,000) $200,000,000)
- ------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
RATIO OF FUNDED DEBT APPLICABLE MARGIN FOR APPLICABLE
TO EBITDA BASE RATE LOANS MARGIN FOR EURODOLLAR LOANS
- ------------------------------------------------------------------------------------------------------------
Less than or equal to 3.75 to 1.0, but greater 0.250% 1.750%
than 3.25 to 1.0 (0% if Subordinated Debt (1.500% if Subordinated
equals or exceeds Debt equals or exceeds
$200,000,000) $200,000,000)
- ------------------------------------------------------------------------------------------------------------
Less than or equal to 3.25 to 1.0, but greater 0% 1.375%
than 2.5 to 1.0
- ------------------------------------------------------------------------------------------------------------
Less than or equal to 2.5 to 1.0, but greater 0% 1.000%
than 2.0 to 1.0
- ------------------------------------------------------------------------------------------------------------
Less than or equal to 2.0 to 1.0 0% 0.750%
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(b) The definition of "EBITDA" in SECTION 1.1 of the Credit Agreement
is hereby amended to read in its entirety as follows:
EBITDA means, in respect of any period, the following
(calculated on a consolidated basis for the Companies in
accordance with GAAP, and using PRO FORMA combined
information for the Companies and Amatek and its
Subsidiaries for any fiscal period (or portion thereof) of
Borrower prior to the Acquisition, including amounts
expended by Amatek and its Subsidiaries for corporate
overhead and executive employee compensation): the sum of
(a) net income before interest expenses, Taxes, non-cash
operating charges (such as depreciation and amortization
expense), non-cash charges in respect of pension and retiree
benefits, and extraordinary gains and losses; plus (b)
expenses incurred by Borrower in connection with the
Acquisition during the fiscal quarters of Borrower ending on
April 30, 1998, and July 31, 1998, up to an aggregate
maximum amount for both quarters of $5,000,000; plus (c) for
each of the following fiscal periods, the following amounts
(without duplication): $10,000,000 for the four fiscal
quarters of Borrower ending on July 31, 1998; $7,500,000 for
the four fiscal quarters of Borrower ending on October 31, 1998,
$5,000,000 for the four fiscal quarters of Borrower ending on
January 31, 1999; and $2,500,000 for the four fiscal quarters
of Borrower ending on April 30, 1999.
(c) The definition of "GUARANTORS" in SECTION 1.1 of the Credit
Agreement is hereby amended by changing the name "A&S Building Interests,
Inc." to "A&S Business Interests, Inc."
(d) Section 1.1 of the Credit Agreement is hereby further amended by
adding the following new definition (in proper alphabetical order):
2
<PAGE>
SUBORDINATED DEBT means Funded Debt which is
contractually subordinated or junior in right of payment to
the Obligation on terms satisfactory to Determining Lenders.
2. SECURITY. SECTION 5.2 of the Credit Agreement is hereby amended by
adding the underlined language shown below, so that the entire section shall
read as follows:
5.2 COLLATERAL. Full and complete payment of the
Obligation shall be secured through the execution and delivery of
Pledge Agreements and Assignments of Partnership Interests with
respect to (a) all capital stock, partnership interests or other
equity interests of any Company in any domestic direct or
indirect Subsidiaries, AND (b) THE CAPITAL STOCK, PARTNERSHIP
INTERESTS OR OTHER EQUITY INTERESTS OF ANY COMPANY IN ANY FOREIGN
DIRECT OR INDIRECT SUBSIDIARIES (OTHER THAN BUILDING SYSTEMS DE
MEXICO, S.A. DE C.V.), UP TO A MAXIMUM OF 65% OF TOTAL COMBINED
VOTING POWER OF ALL CLASSES OF EQUITY INTERESTS IN SUCH
SUBSIDIARY WHICH ARE ENTITLED TO VOTE (TOGETHER WITH proceeds
thereof and any additional collateral ever furnished under
SECTIONS 2.3(h), 3.11(b) OR 5.3, the "COLLATERAL").
3. DEBT. SECTION 9.4 of the Credit Agreement is hereby amended by
changing the words "Funded Debt" to "Debt," so that such section shall read as
follows:
9.4 DEBT. No Company may create, incur or suffer to exist
any Debt, OTHER THAN Permitted Debt.
4. DIVIDENDS AND DISTRIBUTIONS. The first sentence of SECTION 9.9 of
the Credit Agreement is hereby amended, so that the entire section shall read as
follows:
9.9 DIVIDENDS AND DISTRIBUTIONS. Borrower may not declare,
make or pay any Distribution, OTHER THAN Distributions declared,
made or paid by Borrower wholly in the form of its capital stock.
No Company shall enter into any arrangement or agreement (OTHER
THAN this Agreement) that prohibits it from paying dividends or
other distributions to its shareholders (OTHER THAN prohibitions
with respect to Borrower contained in the Indenture governing
Borrower's proposed issuance of up to $200,000,000 of
Subordinated Debt).
5. MINIMUM NET WORTH. SECTION 10.1 of the Credit Agreement is hereby
amended by changing the date "October 31, 1998" to "July 31, 1998."
6. MAXIMUM LEVERAGE RATIO. SECTION 10.2 of the Credit Agreement is
hereby amended by inserting the following line at the beginning of the table set
forth therein:
July 31, 1998 4.50 to 1.00
7. MAXIMUM DEBT RATIO. SECTION 10.3 of the Credit Agreement is hereby
amended by inserting the following line at the beginning of the table set forth
therein:
July 31, 1998 4.50 to 1.00
3
<PAGE>
8. MINIMUM FIXED CHARGE COVERAGE RATIO. SECTION 10.4 of the Credit
Agreement is hereby amended by inserting the following line at the beginning of
the table set forth therein:
July 31, 1998 1.25 to 1.00
9. CONDITIONS PRECEDENT TO FUTURE ADVANCES. Lenders will not be
obligated to make any further Advances, and this instrument shall not become
effective, unless and until Agent receives (a) counterparts of this instrument
executed by Borrower, each Guarantor and each Lender, and (b) such other items
related to the transactions contemplated by this instrument as Agent may
reasonably request.
10. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that
it possesses all requisite power and authority to execute, deliver and comply
with the terms of this instrument, which has been duly authorized and approved
by all necessary corporate action and for which no consent of any person is
required, and agrees to furnish Agent with evidence of such authorization and
approval upon request.
11. FEES AND EXPENSES. Borrower agrees to pay the reasonable fees and
expenses of counsel to Agent for services rendered in connection with the
preparation, negotiation and execution of this instrument.
12. LOAN DOCUMENT; EFFECT. This instrument is a Loan Document and,
therefor, is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which are incorporated herein by reference the same as if set
forth herein verbatim. Except as amended in this instrument, the Loan Documents
are and shall be unchanged and shall remain in full force and effect. In the
event of any inconsistency between the terms of the Credit Agreement as hereby
modified (the "AMENDED AGREEMENT") and any other Loan Documents, the terms of
the Amended Agreement shall control and such other document shall be deemed to
be amended hereby to conform to the terms of the Amended Agreement. Borrower
hereby releases Agent and Lenders from any liability for actions or failures to
act in connection with the Loan Documents prior to the date hereof.
13. NO WAIVER OF DEFAULTS. This instrument does not constitute a waiver
of, or a consent to any present or future violation of or default under, any
provision of the Loan Documents, or a waiver of Lenders' right to insist upon
future compliance with each term, covenant, condition and provision of the Loan
Documents, and the Loan Documents shall continue to be binding upon, and inure
to the benefit of, Borrower, Guarantors, Agent and Lenders and their respective
successors and assigns.
14. FORM. Each agreement, document, instrument or other writing to be
furnished Agent or Lenders under any provision of this instrument must be in
form and substance satisfactory to Agent and its counsel.
15. MULTIPLE COUNTERPARTS. This instrument may be executed in more than
one counterpart, each of which shall be deemed an original, and all of which
constitute, collectively, one instrument; but, in making proof of this
instrument, it shall not be necessary to produce or account for more than one
such counterpart. It shall not be necessary for Borrower, Guarantors, Agent
and all Lenders to execute the same counterpart hereof so long as Borrower, each
Guarantor, Agent and each Lender execute a counterpart hereof.
16. FINAL AGREEMENT. THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
4
<PAGE>
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
If the foregoing terms and conditions are acceptable to Borrower and
Guarantors, Borrower and Guarantors should indicate its acceptance by signing in
the space provided below, whereupon this letter shall become an agreement
binding upon and inuring to the benefit of Agent, Lenders, Borrower and
Guarantors and their respective successors and assigns.
Very truly yours,
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
-------------------------------------------------
Name: Richard L. Nichols, Jr.
-----------------------------------------------
Title: Vice President
----------------------------------------------
SWISS BANK CORPORATION,
STAMFORD BRANCH,
AS DOCUMENTATION AGENT AND A LENDER
By: /s/ Gary Riddell
-------------------------------------------------
Name: Gary Riddell
-----------------------------------------------
Title: Executive Director, Credit Risk Management
----------------------------------------------
By: /s/ Dorothy McKinley
-------------------------------------------------
Name: Dorothy McKinley
-----------------------------------------------
Title: Associate Director Loan Portfolio Support, US
----------------------------------------------
5
<PAGE>
Accepted and agreed to as of the day and year first set forth in the
foregoing letter.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
GUARANTORS' CONSENT AND AGREEMENT
As an inducement to Agent and Lenders to execute, and in consideration of
Agent's and Lenders' execution of the foregoing, the undersigned hereby consent
thereto and agree that the same shall in no way release, diminish, impair,
reduce or otherwise adversely affect the respective obligations and liabilities
of each of the undersigned under the Guaranty dated as of May 1, 1998, executed
by the undersigned, or any agreements, documents or instruments executed by any
of the undersigned to create liens, security interests or charges to secure the
Obligation. This consent and agreement shall be binding upon the undersigned,
and the respective successors and assigns of each, and shall inure to the
benefit of Agent and Lenders, and respective successors and assigns of each.
A & S BUSINESS INTERESTS, INC.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
A & S BUILDING SYSTEMS, L.P.
By: NCI OPERATING CORP.,
as General Partner
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
6
<PAGE>
NCI BUILDING SYSTEMS, L.P.
By: NCI OPERATING CORP.,
as General Partner
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
NCI HOLDING CORP.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Treasurer
--------------------------------------------
NCI OPERATING CORP.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
METAL BUILDING COMPONENTS HOLDING, INC.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Treasurer
--------------------------------------------
7
<PAGE>
METAL COATERS HOLDING, INC.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Treasurer
--------------------------------------------
MBCI OPERATING, L.P.
By: NCI Operating Corp., as General Partner
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
METAL COATERS OPERATING, L.P.
By: NCI Operating Corp., as General Partner
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
8
<PAGE>
As of May 5, 1998
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Attn: Robert J. Medlock
Chief Financial Officer
Re: Second Amendment to Credit Agreement
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of March 25, 1998 (as
amended by the First Amendment dated as of May 1, 1998, the "CREDIT AGREEMENT"),
among NCI Building Systems ("BORROWER"), NationsBank of Texas, N.A., as
Administrative Agent ("AGENT"), NationsBanc Montgomery Securities LLC, as
Syndication Agent, Swiss Bank Corporation, as Documentation Agent, and the
financial institutions named therein (collectively, "LENDERS"). Unless
otherwise indicated, all capitalized terms herein are used as defined in the
Credit Agreement.
For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Borrower, Guarantors, Agent and Lenders agree as follows:
1. BASE RATE. A typographical error in the definition of "BASE RATE" in
SECTION 1.1 of the Credit Agreement is hereby corrected by deleting the words
"THE SUM OF (a)."
2. PRO RATA PART. The definitions of "PRO RATA" and "PRO RATA PART" in
SECTION 1.1 of the Credit Agreement are hereby amended to read in their entirety
as follows:
PRO RATA and PRO RATA PART mean, when determined for any Lender:
(a) with respect to Facility A, (i) if there is no Facility A
Principal Debt or LC Exposure, the proportion (stated as a percentage) that
such Lender's portion of the Facility A Commitment bears to the total
Facility A Commitment, or (ii) if any Facility A Principal Debt or LC
Exposure is outstanding, the proportion (stated as a percentage) that the
Facility A Principal Debt owed to such Lender and (without duplication) the
LC Exposure of such Lender bears to the Facility A Commitment Usage;
(b) with respect to Facility B, the proportion (stated as a
percentage) that the Facility B Principal Debt owed to such Lender bears to
the total Facility B Principal Debt;
(c) with respect to Facility C, (i) if there is no Facility C
Principal Debt, the proportion (stated as a percentage) that such Lender's
portion of the Facility C Commitment bears to the total
<PAGE>
Facility C Commitment, or (ii) if any Facility C Principal Debt is
outstanding, the proportion (stated as a percentage) that the Facility C
Principal Debt owed to such Lender bears to the total Facility C Principal
Debt; and
(d) with respect to the Facility as a whole, (i) if there is no
Principal Debt or LC Exposure, the proportion (stated as a percentage) that
such Lender's Commitment bears to the Total Commitment, or (ii) if there is
any Principal Debt or LC Exposure, the proportion (stated as a percentage)
that the Principal Debt owed to such Lender and (without duplication) the
LC Exposure of such Lender bears to the aggregate Principal Debt and
(without duplication) LC Exposure.
3. PURCHASE AGREEMENT. A typographical error in the definition of
"PURCHASE AGREEMENT" in SECTION 1.1 of the Credit Agreement is hereby corrected
by replacing the word "AUSTRALIAN" with the word "AUSTRALIA."
4. INTEREST OPTIONS. A typographical error in the first sentence of
SECTION 3.3 of the Credit Agreement is hereby corrected by adding the word
"ADJUSTED" before the words "EURODOLLAR RATE."
5. LC FEES. A typographical error in the third sentence of SECTION 4.3
of the Credit Agreement is hereby corrected by adding the phrase "FOR THE
RATABLE ACCOUNT OF LENDERS" after the word "AGENT."
6. COMMITMENT FEES. SECTION 4.4 of the Credit Agreement is hereby
amended to read in its entirety as follows:
4.4 COMMITMENT FEES. Borrower shall pay to Agent for the ratable
account of all Lenders with Commitments for Facility A a commitment fee,
payable as it accrues on the last day of each fiscal quarter of Borrower
(commencing July 31, 1998) and on the Facility A Termination Date, equal to
the Applicable Percentage per annum on the amount by which the Facility A
Commitment exceeds the average daily Facility A Commitment Usage, in each
case during the fiscal quarter ending on such date (or, in the case of the
first such payment, during the period from the date of the Acquisition
through July 31, 1998). Borrower shall also pay to Agent for the ratable
account of all Lenders with Commitments for Facility C a commitment fee,
payable as it accrues on the last day of each fiscal quarter of Borrower
(commencing July 31, 1998) and on the Facility C Termination Date for each
such Lender, equal to the Applicable Percentage per annum on the amount by
which Facility C exceeds the average daily Facility C Principal Debt, in
each case during the fiscal quarter ending on such date (or, in the case of
the first such payment, during the period from the date of the Acquisition
through July 31, 1998).
7. ITEMS TO BE FURNISHED. A typographical error in SECTION 8.1(e) of the
Credit Agreement is hereby corrected by replacing the reference to "FORM S-8"
with a reference to "FORM 8-K."
8. DEBTOR RELIEF. SECTION 11.3 of the Credit Agreement is hereby amended
by deleting the phrase", THAT COULD SUSPEND OR OTHERWISE ADVERSELY AFFECT THE
RIGHTS OF AGENT OR ANY LENDER GRANTED IN THE LOAN DOCUMENTS."
9. REMEDIES UPON DEFAULT. SECTION 12.1(a) of the Credit Agreement is
hereby amended by replacing the phrase "IF A DEFAULT (i) OCCURS UNDER SECTION
11.3(c) OR (ii) OCCURS AND IS CONTINUING UNDER SECTION 11.3(a), (b) OR (d),"
with the phrase "IF A DEFAULT (i) OCCURS UNDER SECTION 11.3(c) OR (d), OR
(ii) OCCURS AND IS CONTINUING UNDER SECTION 11.3(a) OR (b)."
2
<PAGE>
10. DEFAULTS. SECTION 13.3 of the Credit Agreement is hereby amended by
adding the following phrase at the end thereof:
"(except to the extent that this Agreement expressly requires that
such action may only be taken with, or may not be taken without, the
consent of the Determining Lenders)."
11. INDEMNIFICATION. A typographical error in SECTION 13.5 of the Credit
Agreement is hereby corrected by replacing the reference to "SECTION 14.12" with
a reference to "SECTION 8.7."
12. ASSIGNMENTS.
(a) SECTION 14.12(b) of the Credit Agreement is hereby amended by
adding the phrase "(IF NO DEFAULT EXISTS)" at the end of the first line
thereof after the word "BORROWER."
(b) SECTION 14.12(b) of the Credit Agreement is hereby further
amended by inserting the word "AND" at the end of CLAUSE (i), deleting
CLAUSE (ii), and redesignating CLAUSE (iii) as CLAUSE (ii).
(c) EXHIBIT I to the Credit Agreement is hereby replaced with EXHIBIT
I attached hereto.
13. PARTICIPATIONS. SECTION 14.12(e) of the Credit Agreement is hereby
amended by restating the parenthetical clause at the end of such section to read
as follows:
"(OTHER THAN amendments, modifications or waivers decreasing the amount of
principal or the rate at which interest or any commitment fee is payable on
such Loans or Notes, extending any scheduled principal payment date or date
fixed for the payment of interest or any commitment fee on such Loans or
Notes, extending its Commitments, releasing any Guarantor, or releasing all
or substantially all of the Collateral)."
14. LOAN REQUEST. EXHIBIT E to the Credit Agreement is hereby amended by
restating PARAGRAPH 3 to read in its entirety as follows:
3. The requested Loan will not cause (a) the Facility A Commitment
Usage to exceed the Facility A Commitment, (b) the Facility B Principal
Debt to exceed the Facility B Commitment, (c) the Facility C Principal Debt
to exceed the Facility C Commitment, or (d) the Principal Debt and LC
Exposure to exceed the Total Commitment.
15. CONDITIONS PRECEDENT TO FUTURE ADVANCES. Lenders will not be
obligated to make any further Advances, and this instrument shall not become
effective, unless and until Agent receives (a) counterparts of this instrument
executed by Borrower, each Guarantor and each Lender, and (b) such other items
related to the transactions contemplated by this instrument as Agent may
reasonably request.
16. COVENANTS; REPRESENTATIONS AND WARRANTIES. Borrower hereby covenants
to pledge and deliver to Agent for the benefit of Lenders that certain
Promissory Note in the face amount of $550,000,000 made by NCI Holding Corp. on
or before May 11, 1998. Borrower represents and warrants that it possesses all
requisite power and authority to execute, deliver and comply with the terms of
this instrument, which has been duly authorized and approved by all necessary
corporate action and for which no consent of any person is required, and agrees
to furnish Agent with evidence of such authorization and approval upon request.
17. FEES AND EXPENSES. Borrower agrees to pay the reasonable fees and
expenses of counsel to Agent for services rendered in connection with the
preparation, negotiation and execution of this instrument.
18. LOAN DOCUMENT; EFFECT. This instrument is a Loan Document and,
therefor, is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which are incorporated herein by reference the same as if set
forth herein verbatim. Except as amended in this instrument, the Loan
3
<PAGE>
Documents are and shall be unchanged and shall remain in full force and
effect. In the event of any inconsistency between the terms of the Credit
Agreement as hereby modified (the "AMENDED AGREEMENT") and any other Loan
Documents, the terms of the Amended Agreement shall control and such other
document shall be deemed to be amended hereby to conform to the terms of the
Amended Agreement. Borrower hereby releases Agent and Lenders from any
liability for actions or failures to act in connection with the Loan Documents
prior to the date hereof.
19. NO WAIVER OF DEFAULTS. This instrument does not constitute a waiver
of, or a consent to any present or future violation of or default under, any
provision of the Loan Documents, or a waiver of Lenders' right to insist upon
future compliance with each term, covenant, condition and provision of the Loan
Documents, and the Loan Documents shall continue to be binding upon, and inure
to the benefit of, Borrower, Guarantors, Agent and Lenders and their respective
successors and assigns.
20. FORM. Each agreement, document, instrument or other writing to be
furnished Agent or Lenders under any provision of this instrument must be in
form and substance satisfactory to Agent and its counsel.
21. MULTIPLE COUNTERPARTS. This instrument may be executed in more than
one counterpart, each of which shall be deemed an original, and all of which
constitute, collectively, one instrument; but, in making proof of this
instrument, it shall not be necessary to produce or account for more than one
such counterpart. It shall not be necessary for Borrower, Guarantors, Agent
and all Lenders to execute the same counterpart hereof so long as Borrower, each
Guarantor, Agent and each Lender execute a counterpart hereof.
22. FINAL AGREEMENT. THE LOAN DOCUMENTS, AS AMENDED HEREBY, REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO ORAL AGREEMENTS BETWEEN THE PARTIES.
If the foregoing terms and conditions are acceptable to Borrower and
Guarantors, Borrower and Guarantors should indicate its acceptance by signing in
the space provided below, whereupon this letter shall become an agreement
binding upon and inuring to the benefit of Agent, Lenders, Borrower and
Guarantors and their respective successors and assigns.
Very truly yours,
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ RICHARD L. NICHOLS, JR.
----------------------------------------
Name: Richard L. Nichols, Jr.
--------------------------------------
Title: Vice President
-------------------------------------
4
<PAGE>
SWISS BANK CORPORATION,
STAMFORD BRANCH,
AS DOCUMENTATION AGENT AND A LENDER
By: /s/ Gary Riddell
-------------------------------------------------
Name: Gary Riddell
-----------------------------------------------
Title: Executive Director, Credit Risk Management
----------------------------------------------
By: /s/ Dorothy McKinley
-------------------------------------------------
Name: Dorothy McKinley
-----------------------------------------------
Title: Associate Director Loan Portfolio Support, US
----------------------------------------------
Accepted and agreed to as of the day and year first set forth in the
foregoing letter.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
-------------------------------------------------
Name: Robert J. Medlock
-----------------------------------------------
Title: Vice President and Chief Financial Officer
----------------------------------------------
5
<PAGE>
GUARANTORS' CONSENT AND AGREEMENT
As an inducement to Agent and Lenders to execute, and in consideration of
Agent's and Lenders' execution of the foregoing, the undersigned hereby consent
thereto and agree that the same shall in no way release, diminish, impair,
reduce or otherwise adversely affect the respective obligations and liabilities
of each of the undersigned under the Guaranty dated as of May 1, 1998, executed
by the undersigned, or any agreements, documents or instruments executed by any
of the undersigned to create liens, security interests or charges to secure the
Obligation. This consent and agreement shall be binding upon the undersigned,
and the respective successors and assigns of each, and shall inure to the
benefit of Agent and Lenders, and respective successors and assigns of each.
A & S BUSINESS INTERESTS, INC.
NCI HOLDING CORP.
NCI OPERATING CORP.
METAL BUILDING COMPONENTS HOLDING, INC.
METAL COATERS HOLDING, INC.
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President
--------------------------------------------
A & S BUILDING SYSTEMS, L.P.
NCI BUILDING SYSTEMS, L.P.
MBCI OPERATING, L.P.
METAL COATERS OPERATING, L.P.
By: NCI OPERATING CORP.,
as General Partner
By: /s/ Robert J. Medlock
-----------------------------------------------
Name: Robert J. Medlock
---------------------------------------------
Title: Vice President and Chief Financial Officer
--------------------------------------------
6
<PAGE>
MASTER ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of March 25, 1998 (as
amended by that CERTAIN First Amendment dated as of May 1, 1998 and by that
certain Second Amendment dated as of May 5, 1998 and as hereinafter amended
from time to time, the "CREDIT AGREEMENT") among NCI Building Systems, Inc.,
a Delaware corporation ("BORROWER"), the Lenders (as defined in the Credit
Agreement), the other parties to such Credit Agreement and NationsBank of
Texas, N.A., as Administrative Agent for the Lenders ("AGENT"). Terms defined
in the Credit Agreement are used herein with the same meaning.
THE "ASSIGNORS" and the "ASSIGNEES" referred to on SCHEDULE 1 agree as
follows:
1. The Assignors hereby sell and assign to the Assignees, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignees hereby purchase and assume from the Assignors,
interests in and to the Assignors' rights and obligations under the Loan
Documents as of the date hereof equal to the percentage interests specified
on SCHEDULE 1 of all outstanding rights and obligations under the Loan
Documents. After giving effect to such sales and assignments, the Commitments
of the Assignees and the remaining Commitments of the Assignors and the
amounts of the Loans owing to the Assignees and Assignors will be as set
forth on SCHEDULE 1.
2. Each Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interests being assigned by it hereunder and that
such interests are free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Company or the performance or observance by any
Company of any of its obligations under the Loan Documents; and (iv) attaches
the Note held by the Assignor and requests that Agent exchange such Note for
new Notes payable to the order of each Assignee in an amount equal to the
Commitments assumed by such Assignee pursuant hereto and to such Assignor in
an amount equal to the Commitments retained by such Assignor as specified on
SCHEDULE 1.
3. Each Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred
to in SECTION 8.1 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (ii) agrees that it will, independently and
without reliance upon Agent, the Assignors or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) appoints and authorizes Agent to take such
action as agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental
thereto; (iv) agrees that it will perform in accordance with their terms all
of the obligations that by the terms of the Credit Agreement are required to
be performed by it as a Lender; and (v) attaches any U.S. Internal Revenue
Service or other forms required under SECTION 3.20(d) of the Credit Agreement.
<PAGE>
4. Following the execution of this Assignment and Acceptance, it will
be delivered to Agent for acceptance and recording by Agent. The effective
date for this Assignment and Acceptance (the "EFFECTIVE DATE") shall be the
date specified on SCHEDULE 1.
5. Upon such acceptance and recording by Agent, as of the Effective
Date, (i) each Assignee shall be a parry to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) each Assignor shall, to the
extent provided in this Assignment and Acceptance and in the Credit
Agreement, relinquish its rights and be released from its obligations under
the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignees. The Assignors and Assignees shall make
all appropriate adjustments in payments under the Credit Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of Texas.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of SCHEDULE 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignors and the Assignees have caused SCHEDULE 1
to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
2
<PAGE>
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
<TABLE>
FACILITY A COMMITMENT FACILITY B COMMITMENT FACILITY C COMMITMENT TOTAL COMMITMENT
LENDER AND PERCENTAGE AND PERCENTAGE AND PERCENTAGE AND PERCENTAGE
- ------------------------------ --------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NationsBank of Texas, N.A. $ 15,250,000 7.625% $ 15,250,000 7.625% $140,000,000 70% $170,500,000 28.42%
Swiss Bank Corporation $ 13,000,000 6.50% $ 13,000,000 6.50% $ 60,000,000 30% $ 86,500,000 14.33%
First Union National Bank $ 13,000,000 6.50% $ 13,000,000 6.50% $ 0 0% $ 26,000,000 4.33%
The Bank of Nova Scotia $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Compagnie Financiere de
CIC et de L'Union Europeenne $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Comerica Bank $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Credit Lyonnais New York Branch $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Creditanstalt Corporate
Finance, Inc. $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
General Electric Capital
Corporation $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Societe Generale $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
The Sumitomo Bank, Limited $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
Wachovia Bank, N.A. $ 11,250,000 5.625% $ 11,250,000 5.625% $ 0 0% $ 22,500,000 3.75%
CIBC, Inc. $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
Credit Agricole Indosuez $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
The Fuji Bank, Limited -
Houston Agency $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
Imperial Bank, a California
Banking Corp. $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
The Industrial Bank of Japan,
Limited $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
The Long-Term Credit Bank of
Japan, Limited $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
Union Bank of California, N.A. $ 7,500,000 3.75% $ 7,500,000 3.75% $ 0 0% $ 15,000,000 2.50%
Southwest Bank of Texas N.A. $ 5,000,000 2.50% $ 5,000,000 2.50% $ 0 0% $ 10,000,000 1.67%
------------ ----- ------------ ------ ------------ ---- ------------ ------
TOTAL $200,000,000 100% $200,000,000 100% $200,000,000 100% $600,000,000 100%
------------ ----- ------------ ------ ------------ ---- ------------ ------
------------ ----- ------------ ------ ------------ ---- ------------ ------
</TABLE>
<PAGE>
Effective Date: May 6, 1998
ASSIGNORS
NATIONSBANK OF TEXAS, N.A.
By: /s/ Richard L. Nichols, Jr.
------------------------------------
Richard L. Nichols, Jr.
Vice President
SWISS BANK CORPORATION,
STAMFORD BRANCH
Re: /s/ Dorothy McKinley
------------------------------------
Dorothy McKinley
Associate Director Loan Portfolio
Support, US
By: /s/ Denise M. Clerkin
------------------------------------
Denise M. Clerkin
Associate Director Loan Portfolio
Support, US
ASSIGNEES
FIRST UNION NATIONAL BANK
By: /s/ Braxton B. Comer
------------------------------------
Braxton B. Comer
Senior Vice President
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
------------------------------------
F.C.H. Ashby
Senior Manager Loan Operations
4
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ Anthony Rock /s/ Brian O'Leary
---------------------------------------------
Anthony Rock Brian O'Leary
Vice Presidents
COMERICA BANK
By: /s/ Reginald M. Goldsmith, III
------------------------------------
Reginald M. Goldsmith, III
Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Robert Ivosevich
------------------------------------
Robert Ivosevich
Senior Vice President
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Carl G. Drake
------------------------------------
Carl G. Drake
Vice President
By: /s/ Stephen W. Hipp
------------------------------------
Stephen W. Hipp
Associate
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Janet K. Williams
------------------------------------
Janet K. Williams
Duly Authorized Signatory
SOCIETE GENERALE
By: /s/ Thierry Namuroy
------------------------------------
Thierry Namuroy
Vice President
5
<PAGE>
THE SUMITOMO BANK, LIMITED
By: /s/ William R. McKown, III
------------------------------------
William R. McKown, III
Vice President and Manager
WACHOVIA BANK, N.A.
By: /s/ Paige D. Mesaros
------------------------------------
Paige D. Mesaros
Vice President
CIBC, INC.
By: /s/ Elizabeth Fischer
------------------------------------
Elizabeth Fischer
Executive Director
CIBC Oppenheimer Corp., AS AGENT
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl
------------------------------------
David Bouhl, E.V.P.
Head of Corporate Banking - Chicago
By: /s/ W. Leroy Startz
------------------------------------
W. Leroy Startz
First Vice President
THE FUJIBANK, LIMITED - HOUSTON AGENCY
By: /s/ Philip C. Lauinger III
------------------------------------
Philip C. Lauinger III
Vice President and Manager
IMPERIAL BANK, A CALIFORNIA BANKING
CORPORATION
By: /s/ Ray Vadalma
------------------------------------
Ray Valdalma
Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Takuya Honjo
------------------------------------
Takuya Honjo
Senior Vice President
6
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
By: /s/ Sadao Muraoka
------------------------------------
Sadao Muraoka
Head of Southwest Region
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Albert W. Kelley
------------------------------------
Albert W. Kelley
Vice President
SOUTHWEST BANK OF TEXAS, N.A.
By: /s/ Gary Tolbert
------------------------------------
Gary Tolbert
Senior Vice President
ACCEPTED AND APPROVED AS OF MAY 6, 1998
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT
By: /s/ Richard L. Nichols, Jr.
------------------------------------
Richard L. Nichols, Jr.
Vice President
APPROVED AS OF MAY 6, 1998
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
------------------------------------
Robert J. Medlock
Vice President and Chief Financial Officer
7
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$15,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of NATIONSBANK OF TEXAS, N.A.
("PAYEE") on or before the Facility A Termination Date, the principal amount
of FIFTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as
may be disbursed and outstanding as the Facility A Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$13,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SWISS BANK CORPORATION
("PAYEE") on or before the Facility A Termination Date, the principal amount
of THIRTEEN MILLION DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility A Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$13,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK
("PAYEE") on or before the Facility A Termination Date, the principal amount
of THIRTEEN MILLION DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility A Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE BANK OF NOVA SCOTIA
("PAYEE") on or before the Facility A Termination Date, the principal amount
of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as
may be disbursed and outstanding as the Facility A Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENNE ("PAYEE") on or before the Facility A Termination
Date, the principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND
DOLLARS or so much thereof as may be disbursed and outstanding as the
Facility A Principal Debt under this note, together with interest, as
described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of COMERICA BANK ("PAYEE") on
or before the Facility A Termination Date, the principal amount of ELEVEN
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may be
disbursed and outstanding as the Facility A Principal Debt under this note,
together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDIT LYONNAIS NEW YORK
BRANCH ("PAYEE") on or before the Facility A Termination Date, the principal
amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much
thereof as may be disbursed and outstanding as the Facility A Principal Debt
under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDITANSTALT CORPORATE
FINANCE, INC. ("PAYEE") on or before the Facility A Termination Date, the
principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so
much thereof as may be disbursed and outstanding as the Facility A Principal
Debt under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of GENERAL ELECTRIC CAPITAL
CORPORATION ("PAYEE") on or before the Facility A Termination Date, the
principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so
much thereof as may be disbursed and outstanding as the Facility A Principal
Debt under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SOCIETE GENERALE ("PAYEE")
on or before the Facility A Termination Date, the principal amount of ELEVEN
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may be
disbursed and outstanding as the Facility A Principal Debt under this note,
together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$6,250,000 Houston, Texas As of June 30, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE SUMITOMO BANK, LIMITED
("PAYEE") on or before the Facility A Termination Date, the principal amount
of SIX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may
be disbursed and outstanding as the Facility A Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$5,000,000 Houston, Texas As of June 30, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CITY NATIONAL BANK
("PAYEE") on or before the Facility A Termination Date, the principal amount
of FIVE MILLION DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility A Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of WACHOVIA BANK, N.A.
("PAYEE") on or before the Facility A Termination Date, the principal amount
of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as
may be disbursed and outstanding as the Facility A Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CIBC, INC. ("PAYEE") on or
before the Facility A Termination Date, the principal amount of SEVEN MILLION
FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility A Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDIT AGRICOLE INDOSUEZ
("PAYEE") on or before the Facility A Termination Date, the principal amount
of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may be
disbursed and outstanding as the Facility A Principal Debt under this note,
together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE FUJI BANK, LIMITED -
HOUSTON AGENCY ("PAYEE") on or before the Facility A Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may be disbursed and outstanding as the Facility A Principal Debt
under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of IMPERIAL BANK, a California
banking corporation ("PAYEE") on or before the Facility A Termination Date,
the principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so
much thereof as may be disbursed and outstanding as the Facility A Principal
Debt under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE INDUSTRIAL BANK OF
JAPAN, LIMITED ("PAYEE") on or before the Facility A Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may be disbursed and outstanding as the Facility A Principal Debt
under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED ("PAYEE") on or before the Facility A Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may be disbursed and outstanding as the Facility A Principal Debt
under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of UNION BANK OF CALIFORNIA,
N.A. ("PAYEE") on or before the Facility A Termination Date, the principal
amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much thereof as
may be disbursed and outstanding as the Facility A Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY A NOTE
(Revolving Credit)
$5,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SOUTHWEST BANK OF TEXAS,
N.A. ("PAYEE") on or before the Facility A Termination Date, the principal
amount of FIVE MILLION DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility A Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank
of Texas, N.A., as Administrative Agent, and the Lenders and other parties
named in the Credit Agreement (including, without limitation, Payee) and is
one of the Facility A Notes referred to in the Credit Agreement. Unless
defined in this note, or the context requires otherwise, capitalized terms
used in this note have the meanings given to such terms in the Credit
Agreement. Reference is made to the Credit Agreement for provisions
affecting this note regarding applicable interest rates, principal and
interest payment dates, final maturity, voluntary and mandatory prepayments,
acceleration of maturity, exercise of Rights, payment of attorneys' fees,
court costs and other costs of collection, certain waivers by Maker and
others now or hereafter obligated for payment of any sums due under this
note, and security for the payment of this note. This note is a Loan
Document and, therefore, is subject to the applicable provisions of SECTION
14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note
verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the
United States of America shall govern the Rights and duties of Maker and
Payee and the validity, construction, enforcement and interpretation of this
note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED
SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR
ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH
WRITINGS. THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO
TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE
PAYEE (OR BY THE MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL
AGREEMENT BETWEEN THE MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J Medlock
--------------------------
Name: Robert J. Medlock
------------------------
Title: Vice President and
Chief Financial Officer
-----------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$15,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of NATIONSBANK OF TEXAS, N.A.
("PAYEE") on or before the Facility B Termination Date, the principal amount of
FIFTEEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may
then be outstanding as the Facility B Principal Debt under this note, together
with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$13,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SWISS BANK CORPORATION
("PAYEE") on or before the Facility B Termination Date, the principal amount of
THIRTEEN MILLION DOLLARS or so much thereof as may then be outstanding as the
Facility B Principal Debt under this note, together with interest, as described
below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$13,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK
("PAYEE") on or before the Facility B Termination Date, the principal amount of
THIRTEEN MILLION DOLLARS or so much thereof as may then be outstanding as the
Facility B Principal Debt under this note, together with interest, as described
below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE BANK OF NOVA SCOTIA
("PAYEE") on or before the Facility B Termination Date, the principal amount of
ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may then
be outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENE ("PAYEE") on or before the Facility B Termination Date, the
principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of COMERICA BANK ("PAYEE") on or
before the Facility B Termination Date, the principal amount of ELEVEN MILLION
TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may then be outstanding
as the Facility B Principal Debt under this note, together with interest, as
described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDIT LYONNAIS NEW YORK
BRANCH ("PAYEE") on or before the Facility B Termination Date, the principal
amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof
as may then be outstanding as the Facility B Principal Debt under this note,
together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDITANSTALT CORPORATE
FINANCE, INC. ("PAYEE") on or before the Facility B Termination Date, the
principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of GENERAL ELECTRIC CAPITAL
CORPORATION ("PAYEE") on or before the Facility B Termination Date, the
principal amount of ELEVEN MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SOCIETE GENERALE ("PAYEE") on
or before the Facility B Termination Date, the principal amount of ELEVEN
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may then be
outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$6,250,000 Houston, Texas As of June 30, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE SUMITOMO BANK, LIMITED
("PAYEE") on or before the Facility B Termination Date, the principal amount of
SIX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may then be
outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$5,000,000 Houston, Texas As of June 30, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CITY NATIONAL BANK ("PAYEE")
on or before the Facility B Termination Date, the principal amount of FIVE
MILLION DOLLARS or so much thereof as may then be outstanding as the Facility B
Principal Debt under this note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$11,250,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of WACHOVIA BANK, N.A. ("PAYEE")
on or before the Facility B Termination Date, the principal amount of ELEVEN
MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS or so much thereof as may then be
outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CIBC, INC. ("PAYEE") on or
before the Facility B Termination Date, the principal amount of SEVEN MILLION
FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may then be outstanding as
the Facility B Principal Debt under this note, together with interest, as
described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of CREDIT AGRICOLE INDOSUEZ
("PAYEE") on or before the Facility B Termination Date, the principal amount of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may then be
outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE FUJI BANK LIMITED -
HOUSTON AGENCY ("PAYEE") on or before the Facility B Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of IMPERIAL BANK, a California
banking corporation ("PAYEE") on or before the Facility B Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE INDUSTRIAL BANK OF JAPAN,
LIMITED ("PAYEE") on or before the Facility B Termination Date, the principal
amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may
then be outstanding as the Facility B Principal Debt under this note, together
with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED ("PAYEE") on or before the Facility B Termination Date, the
principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much
thereof as may then be outstanding as the Facility B Principal Debt under this
note, together with interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$7,500,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of UNION BANK OF CALIFORNIA, N.A.
("PAYEE") on or before the Facility B Termination Date, the principal amount of
SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS or so much thereof as may then be
outstanding as the Facility B Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY B NOTE
(Term Loan)
$5,000,000 Houston, Texas As of May 6, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SOUTHWEST BANK OF TEXAS, N.A.
("PAYEE") on or before the Facility B Termination Date, the principal amount of
FIVE MILLION DOLLARS or so much thereof as may then be outstanding as the
Facility B Principal Debt under this note, together with interest, as described
below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility B Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY C NOTE
(364-day Revolving Facility)
$140,000,000 Houston, Texas As of May 1, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of NATIONSBANK OF TEXAS, N.A.
("PAYEE") on or before the Facility C Termination Date, the principal amount of
ONE HUNDRED FORTY MILLION DOLLARS or so much thereof as may be disbursed and
outstanding as the Facility C Principal Debt under this note, together with
interest, as described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility C Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
<PAGE>
FACILITY C NOTE
(364-day Revolving Facility)
$60,000,000 Houston, Texas As of May 1, 1998
FOR VALUE RECEIVED, NCI BUILDING SYSTEMS, INC., a Delaware corporation
("MAKER"), hereby promises to pay to the order of SWISS BANK CORPORATION
("PAYEE") on or before the Facility C Termination Date, the principal amount of
SIXTY MILLION DOLLARS or so much thereof as may be disbursed and outstanding as
the Facility C Principal Debt under this note, together with interest, as
described below.
This note has been executed and delivered under, and is subject to the
terms of, the Credit Agreement dated as of March 25, 1998 (as amended,
supplemented or restated, the "CREDIT AGREEMENT"), among Maker, NationsBank of
Texas, N.A., as Administrative Agent, and the Lenders and other parties named in
the Credit Agreement (including, without limitation, Payee) and is one of the
Facility C Notes referred to in the Credit Agreement. Unless defined in this
note, or the context requires otherwise, capitalized terms used in this note
have the meanings given to such terms in the Credit Agreement. Reference is
made to the Credit Agreement for provisions affecting this note regarding
applicable interest rates, principal and interest payment dates, final maturity,
voluntary and mandatory prepayments, acceleration of maturity, exercise of
Rights, payment of attorneys' fees, court costs and other costs of collection,
certain waivers by Maker and others now or hereafter obligated for payment of
any sums due under this note, and security for the payment of this note. This
note is a Loan Document and, therefore, is subject to the applicable provisions
of SECTION 14 of the Credit Agreement, all of which applicable provisions are
incorporated into this note by reference as if set forth in this note verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for usury
savings provisions.
This note is being executed and delivered, and is intended to be performed,
in the State of Texas, and the Laws of such State and of the United States of
America shall govern the Rights and duties of Maker and Payee and the validity,
construction, enforcement and interpretation of this note.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE DETERMINED SOLELY
FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS, AND ANY PRIOR ORAL
AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED INTO SUCH WRITINGS.
THIS NOTE, THE CREDIT AGREEMENT (AS AMENDED IN WRITING FROM TIME TO TIME) AND
THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY THE MAKER AND THE PAYEE (OR BY THE
MAKER FOR THE BENEFIT OF THE PAYEE) REPRESENT THE FINAL AGREEMENT BETWEEN THE
MAKER AND THE PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
NCI BUILDING SYSTEMS, INC.
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
2
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Borrower or all or
substantially all of Borrower's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Debtor Relief Law from time to
time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender to
enforce Borrower's, Guarantor's, or any other obligor's, payment of any of
the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
2
<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
4
<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
A&S Business Interests, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
A&S BUSINESS INTERESTS, INC.,
a Texas corporation
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1,
1998, by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or
hereafter party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership
by Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the
Guaranteed Debt (as defined below) and continue to provide these services to
Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit
Agreement as Guarantor may be the indirect recipient of funds advanced by
Lenders to Borrower under the Credit Agreement or the account party of LCs
issued by Agent pursuant to the Credit Agreement, and as such the value of
the consideration received and to be received by it under the Loan Documents
is reasonably worth at least as much as its liability and obligation under
this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times
thereafter, of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM
IN THE CREDIT AGREEMENT. The following terms shall have the following
meanings as used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a debtor-
in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Borrower or all or
substantially all of Borrower's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Debtor Relief Law from time to
time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-
<PAGE>
maturity interest thereon (including, without limitation, all post-petition
interest if Borrower or any Subsidiary voluntarily or involuntarily files
for bankruptcy protection) and any and all costs, attorneys' fees and
expenses reasonably incurred by Agent or any Lender to enforce Borrower's,
Guarantor's, or any other obligor's, payment of any of the foregoing
indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty
of payment of the Guaranteed Debt which will remain in effect until the
Guaranteed Debt is completely paid and all commitments to lend under the
Credit Agreement have terminated. The circumstance that at any time or from
time to time all or any portion of the Guaranteed Debt may be paid in full
shall not affect the Guarantor's obligation with respect to the Guaranteed
Debt of Borrower to Agent and Lenders thereafter incurred. The Guarantor may
not rescind or revoke its obligations to Agent and Lenders with respect to
the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated
by the Credit Agreement, Guarantor does not intend to disturb, delay, hinder,
or defraud either its present or future creditors. Guarantor is familiar
with, and has independently reviewed books and records regarding, the
financial condition of Borrower and is familiar with the value of the
security and support for the payment and performance of the Guaranteed Debt.
Based upon such examination, and taking into account the fairly discounted
value of Guarantor's contingent obligations under this Guaranty and the
limitation of liability set forth in Section 4 hereof and the value of the
subrogation and contribution claims Guarantor could make in connection with
this Guaranty, and assuming each of the transaction contemplated by the
Credit Agreement is consummated and Borrower makes full use of the credit
facilities thereunder, the present realizable fair market value of the assets
of Guarantor exceeds the total obligations of Guarantor, and Guarantor is
able to realize upon its assets and pay its obligations as such obligations
mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall
be limited to an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under Section 548 of
the U.S. Bankruptcy Code or any comparable provisions of any applicable state
Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability
shall not be, in any manner, impaired or affected hereby, and the Rights of
Agent or Lenders under this Guaranty shall be cumulative of any and all other
Rights that Agent or Lenders may ever have against Guarantor. The exercise
by Agent or Lenders of any Right or remedy under this Guaranty under the Loan
Documents, or other instrument, or at Law or in equity, shall not preclude
the concurrent or subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any
prior notice to Guarantor of the acceptance by Agent or Lenders of this
Guaranty, (c) any notice having been given to Guarantor prior to such demand
of the creating or incurring of such indebtedness,
2
<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly
subordinated to the final payment in full of the Guaranteed Debt. Guarantor
agrees not to receive or accept any payment from Borrower with respect to the
Subordinated Debt at any time a Default exists; and, in the event Guarantor
receives any payment on the Subordinated Debt in violation of the foregoing,
Guarantor shall hold any such payment in trust for Agent and Lenders and
promptly turn it over to Agent, in the form received (with any necessary
endorsements), to be applied to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens
of Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b)
any right of recourse, reimbursement, subrogation, contribution,
indemnification, or similar right against Borrower or any other obligor or
other guarantor on all or any part of the Guaranteed Debt or any guarantor
thereof (whether such rights in CLAUSE (a) or CLAUSE (b) arise in equity,
under contract, by statute, under common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced
or affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of
the Guaranteed Debt or require suit against Borrower or others, whether
arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as
amended (regarding Guarantor's right to require Agent or Lenders to sue
Borrower on accrued right of action following Guarantor's written notice to
Agent or Lenders), Section 17.001 of the Texas Civil Practice and Remedies
Code, as amended (allowing suit against Guarantor without suit against
Borrower, but precluding entry of judgment against Guarantor prior to entry
of judgment against Borrower), Rule 31 of the Texas Rules of Civil Procedure,
as amended (requiring Agent or Lenders to join Borrower in any suit against
Guarantor unless judgment has been previously entered against Borrower), or
otherwise. Guarantor waives notice of acceptance of this Guaranty, notice of
any loan to which it may apply, and waives presentment, demand for payment,
protest, notice of dishonor or nonpayment of any loan, notice of intent to
accelerate, notice of acceleration, and notice of any suit or notice of the
taking of other action by Lender against Borrower, Guarantor or any other
person and any notice to any party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it
has executed and delivered this Guaranty after reviewing the terms and
conditions of the Loan Documents and such other information as it has deemed
appropriate in order to make its own credit analysis and decision to execute
and deliver this Guaranty. Guarantor confirms that it has made its own
independent investigation with respect to Borrower's creditworthiness and is
not executing and delivering this Guaranty in reliance on any representation
or warranty by Agent or Lender as to such creditworthiness. Guarantor
expressly assumes all responsibilities to remain informed of the financial
condition of Borrower and any circumstances affecting (a) Borrower's ability
to perform under the Loan Documents to which Borrower is a party or (b) any
collateral securing all or any part of the Guaranteed Debt.
4
<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that
certain representations and warranties set forth in the Credit Agreement are
in respect of it, and Guarantor reaffirms that each such representation and
warranty is true and correct in all material respects. Furthermore,
Guarantor represents and warrants to Agent and Lenders that Guarantor's board
of directors has determined that its liability and obligation hereunder may
reasonably be expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent,
or fail to pay its debts generally as they become due, or voluntarily seek,
consent to, or acquiesce in the benefit or benefits of any Debtor Relief Law
or become a party to (or be made the subject of) any proceeding provided for
by any Debtor Relief Law (other than as a creditor or claimant) that could
suspend or otherwise adversely affect the Rights of Agent or Lenders granted
hereunder, then, in any such event, the Guaranteed Debt shall be, as between
Guarantor, Agent and Lender, a fully matured, due, and payable obligation of
Guarantor to Agent or Lender (without regard to whether Borrower is then in
Default or whether the Guaranteed Debt, or any part thereof is then due and
owing by Borrower to Lender), payable in full by Guarantor to Agent or Lender
upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth
in the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their
respective parents, subsidiaries, directors, officers, employees,
representatives, agents, successors, permitted assigns, and attorneys
(collectively, the "INDEMNIFIED PARTIES") harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, and proceedings and all costs, expenses (including, without
limitation, all reasonable attorneys' fees and legal expenses whether or not
suit is brought), and reasonable disbursements of any kind or nature (the
"INDEMNIFIED LIABILITIES") that may at any time be imposed on, incurred by,
or asserted against the indemnified parties, in any way relating to or
arising out of (a) the direct or indirect result of the violation by any
Company of any Environmental Law, (b) any Company's generation, manufacture,
production, storage, release, threatened release, discharge, disposal, or
presence in connection with its properties of a Hazardous Substance
(including, without limitation, (i) all damages from any use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal, or presence, or (ii) the costs of any environmental investigation,
monitoring, repair, cleanup, or detoxification and the preparation and
implementation of any closure, remedial, or other plans), or (c) the Loan
Documents or any of the transactions contemplated therein. However, although
each indemnified party has the Right to be indemnified under the Loan
Documents for its own ordinary negligence, no indemnified party has the Right
to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction
and payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced,
discharged or released because or by reason of any existing or future offset,
claim or defense (except for the defense of complete and final payment of the
Guaranteed Debt) of Borrower or any other party against Agent or Lenders or
against payment of the Guaranteed Debt, whether such offset, claim, or
defense arises in connection with the Guaranteed Debt or otherwise. Such
claims and defenses include, without limitation, failure of consideration,
breach of warranty, fraud, statute of frauds, bankruptcy, infancy, statute of
limitations, lender liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof
in accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor
and its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore,
this Guaranty is subject to the applicable provisions of SECTION 14 of the
Credit Agreement, all of which applicable provisions are incorporated into
this Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
A&S Building Systems, L.P.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days
written notice, any party to this Guaranty shall have the right from time to
time and at any time while this Guaranty is in effect to change their
respective addresses or fax numbers and each shall have the right to specify
a different address or fax number within the United States of America.
Nothing in this SECTION 18 shall be construed to require any notice to
Guarantor not otherwise expressly required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN
INCIDENT TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN
HARRIS COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE
STATE OF TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HERETO SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND
INSTRUMENTS, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED
BY AND MERGED INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
A&S BUILDING SYSTEMS, L.P.,
a Texas limited partnership
By: NCI Operating Corp.,
a Nevada corporation and its general
partner
By: /s/ Robert J. Medlock
---------------------------
Name: Robert J. Medlock
-------------------------
Title: Vice President and Chief
Financial Officer
------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian,
or similar party hereafter appointed for Borrower or all or substantially
all of Borrower's assets pursuant to any liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar Debtor Relief Law from time to time in effect
affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
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or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to enforce
Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
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<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
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<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
NCI Building Systems, L.P.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
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<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY
BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
NCI BUILDING SYSTEMS, L.P.,
a Texas limited partnership
By: NCI Operating Corp.,
a Nevada corporation and its general
partner
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party hereafter appointed for Borrower
or all or substantially all of Borrower's assets pursuant to any
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar Debtor Relief Law
from time to time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
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<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
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<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
NCI Holding Corp.
c/o Delaware Corporate Management, Inc.
1105 North Market Street, Suite 1300
P.O. Box 8985
Wilmington, Delaware 19899
Telephone No.: (302) 427-0803
Attention: David P. Fontello
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
NCI HOLDING CORP.,
a Delaware corporation
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Treasurer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM
IN THE CREDIT AGREEMENT. The following terms shall have the following
meanings as used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party hereafter appointed for Borrower
or all or substantially all of Borrower's assets pursuant to any
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar Debtor Relief Law
from time to time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
2
<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
4
<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
NCI Operating Corp.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
NCI OPERATING CORP.,
a Nevada corporation
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1,
1998, by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or
hereafter party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party hereafter appointed for
Borrower or all or substantially all of Borrower's assets pursuant to
any liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar Debtor Relief Law
from time to time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at ANY TIME OR FROM TIME TO TIME ALL OR
ANY PORTION OF THE GUARANTEED DEBT MAY BE PAID IN FULL SHALL NOT AFFECT THE
GUARANTOR'S OBLIGATION WITH RESPECT TO THE GUARANTEED DEBT OF BORROWER TO AGENT
AND LENDERS THEREAFTER INCURRED. THE GUARANTOR MAY NOT RESCIND OR REVOKE ITS
OBLIGATIONS TO AGENT AND LENDERS WITH RESPECT TO THE GUARANTEED DEBT.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
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or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
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(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
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16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
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with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
Metal Building Components Holding, Inc.
c/o Delaware Corporate Management, Inc.
1105 North Market Street, Suite 1300
P.O. Box 8985
Wilmington, Delaware 19899
Telephone No.: (302) 427-0803
Attention: David P. Fontello
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
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IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
METAL BUILDING COMPONENTS HOLDING, INC.,
a Delaware corporation
By: /s/ Robert J. Medlock
-----------------------------------
Name: Robert J. Medlock
---------------------------------
Title: Vice President and Treasurer
--------------------------------
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GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian,
or similar party hereafter appointed for Borrower or all or substantially
all of Borrower's assets pursuant to any liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar Debtor Relief Law from time to time in effect
affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment
of any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
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or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to enforce
Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
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<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
Metal Coaters Holding, Inc.
c/o Delaware Corporate Management, Inc.
1105 North Market Street, Suite 1300
P.O. Box 8985
Wilmington, Delaware 19899
Telephone No.: (302) 427-0803
Attention: David P. Fontello
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY
BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
METAL COATERS HOLDING, INC.,
a Delaware corporation
By: /s/ Robert J. Medlock
-------------------------------------
Name: Robert J. Medlock
-----------------------------------
Title: Vice President and Treasurer
----------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian,
or similar party hereafter appointed for Borrower or all or substantially
all of Borrower's assets pursuant to any liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar Debtor Relief Law from time to time in effect
affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
2
<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to enforce
Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
MBCI Operating, L.P.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Vice President
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY
BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
MBCI OPERATING, L.P.,
a Texas limited partnership
By: NCI Operating Corp.,
a Nevada corporation and its general
partner
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 1, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian,
or similar party hereafter appointed for Borrower or all or substantially
all of Borrower's assets pursuant to any liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar Debtor Relief Law from time to time in effect
affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
2
<PAGE>
or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to enforce
Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
3
<PAGE>
(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
4
<PAGE>
12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
5
<PAGE>
16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
6
<PAGE>
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
Metal Coaters Operating, L.P.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Vice President
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
7
<PAGE>
IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED BY
BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
METAL COATERS OPERATING, L.P.,
a Texas limited partnership
By: NCI Operating Corp.,
a Nevada corporation and its general
partner
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
8
<PAGE>
GUARANTY
THIS GUARANTY (as amended, this "GUARANTY") is executed as of May 13, 1998,
by the undersigned ("GUARANTOR") in favor of NationsBank of Texas, N.A.
("AGENT"), as Agent for the benefit of the Lenders ("LENDERS") now or hereafter
party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"),
Agent and Lenders have executed a Credit Agreement dated March 25, 1998 (as
amended, supplemented or restated, the "CREDIT AGREEMENT"), together with
certain other Loan Documents.
B. Guarantor is a Subsidiary of Borrower and, because of its ownership by
Borrower, expects to continue to receive business opportunities, financial
support and management support from Borrower. Guarantor has agreed to enter
into this Guaranty so that Borrower can receive the benefits of the Guaranteed
Debt (as defined below) and continue to provide these services to Guarantor.
C. Guarantor's board of directors has determined that Guarantor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as Guarantor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Guaranty.
D. It is expressly understood among Borrower, Guarantor, Agent and
Lenders that the execution and delivery of this Guaranty is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Guarantor guarantees to Lenders the prompt
payment at maturity (by acceleration or otherwise), and at all times thereafter,
of the Guaranteed Debt, as follows:
1. DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS GUARANTY, ANY
CAPITALIZED TERM USED IN THIS GUARANTY SHALL HAVE THE MEANING GIVEN THAT TERM IN
THE CREDIT AGREEMENT. The following terms shall have the following meanings as
used in this Guaranty:
1.1 "BORROWER" includes, without limitation, Borrower as a
debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party hereafter appointed for Borrower
or all or substantially all of Borrower's assets pursuant to any
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar Debtor Relief Law
from time to time in effect affecting the Rights of creditors generally.
1.2 "GUARANTEED DEBT" means the Obligation as defined in the Credit
Agreement (including, without limitation, amounts that would become due but
for operation of any applicable provision of Title 11 of the U.S. Code
(including, without limitation, 11 U.S.C. Sections 502 and 506)), TOGETHER
WITH all pre- and post-maturity interest thereon (including, without
limitation, all post-
<PAGE>
petition interest if Borrower or any Subsidiary voluntarily or
involuntarily files for bankruptcy protection) and any and all costs,
attorneys' fees and expenses reasonably incurred by Agent or any Lender
to enforce Borrower's, Guarantor's, or any other obligor's, payment of
any of the foregoing indebtedness.
1.3 "SUBORDINATED DEBT" means all obligations of Borrower to
Guarantor, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, now or hereafter
existing, due or to become due to Guarantor, or held or to be held by
Guarantor, whether created directly or acquired by assignment or otherwise,
and whether or not evidenced by written instrument.
2. GUARANTY. This is an absolute, irrevocable and continuing guaranty of
payment of the Guaranteed Debt which will remain in effect until the Guaranteed
Debt is completely paid and all commitments to lend under the Credit Agreement
have terminated. The circumstance that at any time or from time to time all or
any portion of the Guaranteed Debt may be paid in full shall not affect the
Guarantor's obligation with respect to the Guaranteed Debt of Borrower to Agent
and Lenders thereafter incurred. The Guarantor may not rescind or revoke its
obligations to Agent and Lenders with respect to the Guaranteed Debt.
3. AMOUNT OF GUARANTY. In consummating the transactions contemplated by
the Credit Agreement, Guarantor does not intend to disturb, delay, hinder, or
defraud either its present or future creditors. Guarantor is familiar with, and
has independently reviewed books and records regarding, the financial condition
of Borrower and is familiar with the value of the security and support for the
payment and performance of the Guaranteed Debt. Based upon such examination,
and taking into account the fairly discounted value of Guarantor's contingent
obligations under this Guaranty and the limitation of liability set forth in
Section 4 hereof and the value of the subrogation and contribution claims
Guarantor could make in connection with this Guaranty, and assuming each of the
transaction contemplated by the Credit Agreement is consummated and Borrower
makes full use of the credit facilities thereunder, the present realizable fair
market value of the assets of Guarantor exceeds the total obligations of
Guarantor, and Guarantor is able to realize upon its assets and pay its
obligations as such obligations mature in the normal course of business.
4. LIMIT OF LIABILITY. The obligations of Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the U.S.
Bankruptcy Code or any comparable provisions of any applicable state Law.
5. LIABILITY FOR OTHER INDEBTEDNESS OF BORROWER. If Guarantor becomes
liable for any indebtedness owing by Borrower to Agent or any Lender, by
endorsement or otherwise, other than under this Guaranty, such liability shall
not be, in any manner, impaired or affected hereby, and the Rights of Agent or
Lenders under this Guaranty shall be cumulative of any and all other Rights that
Agent or Lenders may ever have against Guarantor. The exercise by Agent or
Lenders of any Right or remedy under this Guaranty under the Loan Documents, or
other instrument, or at Law or in equity, shall not preclude the concurrent or
subsequent exercise of any other Right or remedy.
6. DEFAULT BY BORROWER. If a Default exists, Guarantor shall pay the
amount of the Guaranteed Debt then due and payable to Agent and Lenders on
demand and without (a) further notice of dishonor, to Guarantor, (b) any prior
notice to Guarantor of the acceptance by Agent or Lenders of this Guaranty, (c)
any notice having been given to Guarantor prior to such demand of the creating
or incurring of such indebtedness,
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or (d) notice of intent to accelerate or notice of acceleration to Guarantor
or Borrower. To enforce such payment by Guarantor it shall not be necessary
for Agent or Lenders to first or contemporaneously institute suit or exhaust
remedies against Borrower or others liable on such indebtedness, or to
enforce Rights against any security or collateral ever given to secure such
indebtedness.
7. SUBORDINATION. All Subordinated Debt shall be expressly subordinated
to the final payment in full of the Guaranteed Debt. Guarantor agrees not to
receive or accept any payment from Borrower with respect to the Subordinated
Debt at any time a Default exists; and, in the event Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, Guarantor shall
hold any such payment in trust for Agent and Lenders and promptly turn it over
to Agent, in the form received (with any necessary endorsements), to be applied
to the Guaranteed Debt.
8. SUBROGATION. Guarantor agrees that it will not assert, enforce, or
otherwise exercise (a) any right of subrogation to any of the rights or liens of
Agent or any Lender or any other beneficiary against Borrower or any other
obligor on the Guaranteed Debt or any Collateral or other security, or (b) any
right of recourse, reimbursement, subrogation, contribution, indemnification, or
similar right against Borrower or any other obligor or other guarantor on all or
any part of the Guaranteed Debt or any guarantor thereof (whether such rights in
CLAUSE (a) or CLAUSE (b) arise in equity, under contract, by statute, under
common law, or otherwise).
9. NO RELEASE. Guarantor hereby agrees that its obligations under the
terms of this Guaranty shall not be released, diminished, impaired, reduced or
affected by the occurrence of any one or more of the following events:
(a) Agent's or Lenders' taking or accepting of any other security or
guaranty for any or all of the Guaranteed Debt;
(b) any release, surrender, exchange, subordination or loss of any
security at any time existing in connection with any or all of the
Guaranteed Debt;
(c) any full or partial release of the liability of any other obligor
on the Obligation;
(d) the insolvency, becoming subject to any Debtor Relief Law, or
lack of corporate power of Borrower, any of the undersigned, or any party
at any time liable for the payment of any or all of the Guaranteed Debt,
whether now existing or hereafter occurring;
(e) any renewal, extension or rearrangement of the payment of any or
all of the Guaranteed Debt, either with or without notice to or consent of
Guarantor, or any adjustment, indulgence, forbearance, or compromise that
may be granted or given by Agent or any Lender to Borrower, Guarantor, or
any other obligor on the Obligation;
(f) any neglect, delay, omission, failure or refusal of Agent or any
Lender to take or prosecute any action for the collection of all or any
part of the Guaranteed Debt or to foreclose or take or prosecute any action
in connection with any instrument or agreement evidencing or securing any
or all of the Guaranteed Debt;
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(g) any failure of Agent or any Lender to notify Guarantor of any
renewal, extension, or assignment of any or all of the Guaranteed Debt, or
the release of any security or of any other action taken or refrained from
being taken by Agent or any Lender against Borrower or any new agreement
between Agent, any Lender, and Borrower, it being understood that neither
Agent nor any Lender shall be required to give Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection
with the Guaranteed Debt, other than any notice required to be given to
Guarantor elsewhere herein;
(h) the unenforceability of all or any part of the Guaranteed Debt
against Borrower by reason of the fact that the Guaranteed Debt exceeds the
amount permitted by Law, the act of creating the Guaranteed Debt, or any
part thereof, is ULTRA VIRES, or the officers creating same exceeded their
authority or violated their fiduciary duties in connection therewith;
(i) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Relief Law or if for any other
reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment), or if there is more than
one person or entity signing this Guaranty or otherwise guaranteeing
payment of the Guaranteed Debt, the release of any one or more of them
hereunder; or
(j) any discharge, release, or other forgiveness of Borrower's
personal liability for the payment of the Guaranteed Debt.
10. WAIVER. Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Debt or require suit against Borrower or others, whether arising
pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended
(regarding Guarantor's right to require Agent or Lenders to sue Borrower on
accrued right of action following Guarantor's written notice to Agent or
Lenders), Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended (allowing suit against Guarantor without suit against Borrower, but
precluding entry of judgment against Guarantor prior to entry of judgment
against Borrower), Rule 31 of the Texas Rules of Civil Procedure, as amended
(requiring Agent or Lenders to join Borrower in any suit against Guarantor
unless judgment has been previously entered against Borrower), or otherwise.
Guarantor waives notice of acceptance of this Guaranty, notice of any loan to
which it may apply, and waives presentment, demand for payment, protest, notice
of dishonor or nonpayment of any loan, notice of intent to accelerate, notice of
acceleration, and notice of any suit or notice of the taking of other action by
Lender against Borrower, Guarantor or any other person and any notice to any
party liable thereon (including Guarantor).
11. RELIANCE AND DUTY TO REMAIN INFORMED. Guarantor confirms that it has
executed and delivered this Guaranty after reviewing the terms and conditions of
the Loan Documents and such other information as it has deemed appropriate in
order to make its own credit analysis and decision to execute and deliver this
Guaranty. Guarantor confirms that it has made its own independent investigation
with respect to Borrower's creditworthiness and is not executing and delivering
this Guaranty in reliance on any representation or warranty by Agent or Lender
as to such creditworthiness. Guarantor expressly assumes all responsibilities
to remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Loan Documents to which
Borrower is a party or (b) any collateral securing all or any part of the
Guaranteed Debt.
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12. REPRESENTATIONS AND WARRANTIES. Guarantor acknowledges that certain
representations and warranties set forth in the Credit Agreement are in respect
of it, and Guarantor reaffirms that each such representation and warranty is
true and correct in all material respects. Furthermore, Guarantor represents
and warrants to Agent and Lenders that Guarantor's board of directors has
determined that its liability and obligation hereunder may reasonably be
expected to benefit it directly or indirectly.
13. CHANGE IN GUARANTOR'S STATUS. Should Guarantor become insolvent, or
fail to pay its debts generally as they become due, or voluntarily seek, consent
to, or acquiesce in the benefit or benefits of any Debtor Relief Law or become a
party to (or be made the subject of) any proceeding provided for by any Debtor
Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the Rights of Agent or Lenders granted hereunder,
then, in any such event, the Guaranteed Debt shall be, as between Guarantor,
Agent and Lender, a fully matured, due, and payable obligation of Guarantor to
Agent or Lender (without regard to whether Borrower is then in Default or
whether the Guaranteed Debt, or any part thereof is then due and owing by
Borrower to Lender), payable in full by Guarantor to Agent or Lender upon
demand, which shall be the estimated amount owing in respect of the contingent
claim created hereunder.
14. COVENANTS. Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of a
Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Documents or any of the transactions contemplated therein.
However, although each indemnified party has the Right to be indemnified under
the Loan Documents for its own ordinary negligence, no indemnified party has the
Right to be indemnified under the Loan Documents for its own fraud, gross
negligence, or willful misconduct. The provisions of and undertakings and
indemnification set forth in this paragraph shall survive the satisfaction and
payment of the Obligation and termination of this Guaranty.
15. OFFSET CLAIMS. The Guaranteed Debt shall not be reduced, discharged
or released because or by reason of any existing or future offset, claim or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other party against Agent or Lenders or against payment
of the Guaranteed Debt, whether such offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Such claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
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16. BINDING AGREEMENT. This Guaranty is for the benefit of Agent and
Lenders and their respective successors and assigns. Guarantor acknowledges
that in the event of an assignment of the Guaranteed Debt or any part thereof in
accordance with the Credit Agreement, the rights and benefits under this
Guaranty, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on Guarantor and
its successors and permitted assigns.
17. LOAN DOCUMENT. This Guaranty is a Loan Document and, therefore, this
Guaranty is subject to the applicable provisions of SECTION 14 of the Credit
Agreement, all of which applicable provisions are incorporated into this
Guaranty by reference as if set forth verbatim.
18. NOTICES. All notices required or permitted to be given under this
Guaranty, if any, must be in writing and shall or may, as the case may be, be
given in the same manner as notice is given under the Credit Agreement as
follows:
If to Agent:
NationsBank of Texas, N.A.
Corporate Finance Group
700 Louisiana Street, 8th Floor
P.O. Box 2518
Houston, Texas 77252-2518
Telephone No.: (713) 247-6258
Facsimile No.: (713) 247-6360
Attention: Richard L. Nichols, Jr.
Vice President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Telephone No.: (713) 226-0681
Facsimile No.: (713) 226-0281
Attention: F. Walter Bistline, Jr.
If to Borrower:
NCI Building Systems, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Vice President
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with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
If to Guarantor:
Metal Coaters of California, Inc.
7301 Fairview
Houston, Texas 77041
Telephone No.: (713) 466-7788
Facsimile No.: (713) 466-3368
Attention: Robert J. Medlock
Chief Financial Officer
with a copy to:
Gardere & Wynne, L.L.P.
Thanksgiving Tower
1301 Elm Street, Suite 3000
Dallas, Texas 75201
Telephone No.: (214) 999-3000
Facsimile No.: (214) 999-4667
Attention: John K. Sterling
Subject to the terms of the Credit Agreement, by giving at least 30 days written
notice, any party to this Guaranty shall have the right from time to time and at
any time while this Guaranty is in effect to change their respective addresses
or fax numbers and each shall have the right to specify a different address or
fax number within the United States of America. Nothing in this SECTION 18
shall be construed to require any notice to Guarantor not otherwise expressly
required in this Guaranty.
19. GOVERNING LAW. THIS GUARANTY IS EXECUTED AND DELIVERED AS AN INCIDENT
TO A LENDING TRANSACTION NEGOTIATED, CONSUMMATED, AND PERFORMABLE IN HARRIS
COUNTY, TEXAS, AND SHALL BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF
TEXAS AND, AS APPLICABLE, THE LAWS OF THE UNITED STATES.
20. NO ORAL AGREEMENTS. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
SHALL BE DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS, AND INSTRUMENTS,
AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY AND MERGED
INTO SUCH WRITINGS. THIS GUARANTY (AS AMENDED
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IN WRITING FROM TIME TO TIME) AND THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
BY BORROWER, AGENT, LENDERS OR GUARANTOR (OR BY BORROWER OR GUARANTOR FOR THE
BENEFIT OF AGENT AND LENDERS) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
GUARANTOR, AND LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS SECTION IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, AS
AMENDED FROM TIME TO TIME.
This Guaranty is executed as of the date set forth above.
METAL COATERS OF CALIFORNIA, INC.,
a Texas corporation
By: /s/ Robert J. Medlock
------------------------------------
Name: Robert J. Medlock
----------------------------------
Title: Vice President
---------------------------------
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, this "PLEDGE AGREEMENT") is
executed as of May 1, 1998, by the undersigned ("PLEDGOR") for the benefit of
NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for itself and for
the Lenders (collectively, "LENDERS") now or hereafter party to the Credit
Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. Pledgor is the sole owner of all of the capital stock of NCI Operating
Corp., a Nevada corporation and NCI Holding Corp., a Delaware corporation.
C. It is expressly understood among Pledgor, Borrower, Agent and Lenders
that the execution and delivery of this Pledge Agreement is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS PLEDGE
AGREEMENT, ANY CAPITALIZED TERM USED IN THIS PLEDGE AGREEMENT HAS THE MEANING
GIVEN THAT TERM IN THE CREDIT AGREEMENT OR IN THE UCC. If the definition given
a term in the Credit Agreement conflicts with the definition given that term in
the UCC, the Credit Agreement definition shall control to the extent allowed by
Law. If the definition given a term in Chapter 9 of the UCC conflicts with the
definition given that term in any other chapter of the UCC, the Chapter 9
definition shall control. As used in this Pledge Agreement:
"COLLATERAL" means Borrower's right, title and interest in and to the
Pledged Shares, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation" under and as defined in the Credit
Agreement.
"PLEDGE AGREEMENT" means this Pledge Agreement together with all
schedules and annexes attached to this Pledge Agreement, and all amendments and
modifications to this Agreement, the schedules and exhibits.
<PAGE>
"PLEDGED SHARES" means all shares of capital stock now or hereafter
issued to Borrower by any Subsidiary and the certificate(s) representing the
Pledged Shares (including the shares listed on SCHEDULE I) and all dividends,
cash, instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Pledged Shares.
"PLEDGOR" includes, without limitation, Pledgor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Pledgor or all or
substantially all of Pledgor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Pledge Agreement.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Pledge Agreement is being executed and
delivered pursuant to the terms and conditions of the Credit Agreement. Each
Security Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Borrower hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment are made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Borrower with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Borrower's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this Pledge
Agreement, or its taking any action in carrying out this Pledge Agreement, does
not constitute Agent's approval of the Collateral or Agent's assumption of any
obligation under or in connection with the Collateral. This Pledge Agreement
does not affect or modify Borrower's obligations with respect to the Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Pledge Agreement to the contrary, Borrower agrees that if, but for the
application of this SECTION 5 the Obligation or any Security Interest would
constitute a preferential transfer under 11 U.S.C. Section 547, a fraudulent
conveyance under 11 U.S.C. Section 548 (or any successor section) or a
fraudulent conveyance or transfer under any state fraudulent
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conveyance or fraudulent transfer Law or similar Law in effect from time to
time (each a "FRAUDULENT CONVEYANCE"), then the Obligation and each affected
Security Interest will be enforceable against Borrower to the maximum extent
possible without causing the Obligation or any Security Interest to be a
Fraudulent Conveyance, and shall be deemed to have been automatically amended
to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby confirms and restates
each of the representations and warranties in the Credit Agreement and further
represents and warrants to Agent and Lenders as follows:
(a) The Pledged Shares are duly authorized, validly issued, fully
paid and non-assessable, and their transfer thereof is not subject to any
restrictions other than restrictions imposed by applicable securities and
corporate laws.
(b) Borrower owns the Collateral free and clear of all liens.
(c) The information contained in SCHEDULE 1 which attached to this
Pledge Agreement is true and accurate and sufficiently describes all of the
Collateral.
7. COVENANTS. Borrower shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Borrower with respect to any of the Collateral.
(b) Promptly notify Agent of any additional shares in any domestic
corporation that becomes a Subsidiary of Borrower subsequent to the execution of
this Pledge Agreement.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lender, appear in and defend, at Borrower's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
(f) At Borrower's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Borrower agrees that Agent's remedies
at law for failure of Borrower to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages, Borrower
agrees that its covenants in this provision may be specifically enforced).
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(g) From time to time promptly execute and deliver to Agent all such
other stock powers, assignments, certificates, supplemental documents, and
financing statements (if appropriate), and do all other acts or things as Agent
may reasonably request in order to more fully create, evidence, perfect,
continue and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, including, without limitation,
exercising the Stock Power, a form of which is attached as ANNEX "A" to this
Pledge Agreement, or applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Borrower hereby
consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Borrower and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF SECURITIES. In connection with the sale of the
Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lender shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in retaking,
holding and preparing any of the Collateral for sale(s) or other disposition, in
arranging for such sale(s) or other disposition, and in actually selling or
disposing of the same (all of which are part of the Obligation); SECOND, toward
repayment of amounts expended by Agent under Paragraph 8; THIRD, toward payment
of the balance of the Obligation in accordance with the Credit Agreement. Any
surplus remaining shall be delivered to Borrower or as a court of competent
jurisdiction may direct. If the proceeds are insufficient to pay the Obligation
in full, Borrower shall remain liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Borrower shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Borrower is
required, but has failed or refused, to take. Any sum which may be expended or
paid by Agent under this subparagraph (including, without limitation, court
costs and attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Maximum Rate (as defined in the Credit Agreement) until paid and,
together with such interest, shall be payable by Borrower upon demand and shall
be part of the Obligation.
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(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Borrower
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Borrower was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Borrower is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Borrower to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Borrower on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Borrower, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Borrower to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Borrower with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lender. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF SECURITIES. Whether or not a Default has
occurred and is continuing, Agent at any time may have the Collateral registered
in its name, or in the name of its nominee or nominees, as pledgee; and Agent
shall execute and deliver to Borrower all such proxies, powers of attorney,
dividend coupons or orders and other documents as Borrower may reasonably
request for the purpose of enabling Borrower to exercise the voting rights and
powers which it is entitled to exercise hereunder and to receive the dividends
and other payments which it is authorized to receive and retain hereunder.
Nothing in this Pledge Agreement shall prohibit the issuance of cash dividends
by Pledgor if such distribution is permitted under the Credit Agreement.
A. VOTING OF SECURITIES. So long as no Default has occurred,
Borrower shall be entitled to exercise all voting rights pertaining to the
Collateral. After the occurrence and during the continuance of a Default, the
right to vote the Collateral shall be vested exclusively in Agent. To this end,
Borrower irrevocably appoints Agent the proxy and attorney-in-fact of Borrower,
with full power of substitution, to vote and to act with respect to the
Collateral, subject to the understanding that such proxy may not be exercised
unless a Default has occurred and is continuing. The proxy herein granted is
coupled with an interest, is irrevocable, and shall continue until the
Obligation has been paid and performed in full.
B. CERTAIN PROCEEDS. Any and all stock dividends or distributions
in property made on or in respect of the Collateral, and any proceeds of the
Collateral, whether such dividends, distributions, or
5
<PAGE>
proceeds result from a subdivision, combination or reclassification of the
outstanding capital stock of Borrower or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Borrower may
be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Borrower, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of
assignment and/or stock and/or bond powers executed by Borrower in accordance
with Agent's instructions) to be held subject to the terms hereof. Any cash
proceeds of Collateral which come into the possession of Agent may, at
Agent's option, be applied in whole or in part to the Obligation (to the
extent then due), be released in whole or in part to or on the written
instructions of Borrower for any general or specific purpose, or be retained
in whole or in part by Lender as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Pledge Agreement is
one of the "Loan Documents" referred to in the Credit Agreement, and,
therefore, this Pledge Agreement is subject to the applicable provisions of
SECTION 14 of the Credit Agreement, all of which are incorporated in this
Pledge Agreement by reference the same as if set forth in this Pledge
Agreement verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Secured Party's and the Lenders' commitment to lend
under the Credit Agreement without Secured Party having exercised its
rights under this Pledge Agreement, this Pledge Agreement shall terminate;
PROVIDED THAT no Obligor on any of the Collateral shall be obligated to
inquire as to the termination of this Pledge Agreement, but shall be fully
protected in making payment directly to Secured Party, which payment shall
be promptly paid over to Borrower after termination of this Pledge
Agreement.
(c) NOTICE. Any notice or communication required or permitted under
this Pledge Agreement must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
EXECUTED as of the date set forth in the preamble.
NCI BUILDING SYSTEMS, INC.
AS BORROWER AND PLEDGOR
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
6
<PAGE>
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
------------------------------------
Name: Richard L. Nichols, Jr.
----------------------------------
Title: Vice President
---------------------------------
7
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, this "PLEDGE AGREEMENT") is
executed as of May 1, 1998, by the undersigned ("PLEDGOR") for the benefit of
NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for itself and for
the Lenders (collectively, "LENDERS") now or hereafter party to the Credit
Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. Pledgor is the sole owner of all of the capital stock of (i) A&S
Business Interests, Inc. (f/k/a A&S Building Systems, Inc.), a Texas
corporation, (ii) Metal Building Components Holding, Inc., a Delaware
corporation and (iii) Metal Coaters Holding, Inc., a Delaware corporation.
C. It is expressly understood among Pledgor, Borrower, Agent and Lenders
that the execution and delivery of this Pledge Agreement is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS PLEDGE
AGREEMENT, ANY CAPITALIZED TERM USED IN THIS PLEDGE AGREEMENT HAS THE MEANING
GIVEN THAT TERM IN THE CREDIT AGREEMENT OR IN THE UCC. If the definition given
a term in the Credit Agreement conflicts with the definition given that term in
the UCC, the Credit Agreement definition shall control to the extent allowed by
Law. If the definition given a term in Chapter 9 of the UCC conflicts with the
definition given that term in any other chapter of the UCC, the Chapter 9
definition shall control. As used in this Pledge Agreement:
"COLLATERAL" means Borrower's right, title and interest in and to the
Pledged Shares, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PLEDGE AGREEMENT" means this Pledge Agreement together with all
schedules and annexes attached to this Pledge Agreement, and all amendments and
modifications to this Agreement, the schedules and exhibits.
<PAGE>
"PLEDGED SHARES" means all shares of capital stock now or hereafter
issued to Borrower by any Subsidiary and the certificate(s) representing the
Pledged Shares (including the shares listed on SCHEDULE I) and all dividends,
cash, instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Pledged Shares.
"PLEDGOR" includes, without limitation, Pledgor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Pledgor or all or
substantially all of Pledgor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Pledge Agreement.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Pledge Agreement is being executed and
delivered pursuant to the terms and conditions of the Credit Agreement. Each
Security Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Borrower hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment are made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Borrower with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Borrower's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this Pledge
Agreement, or its taking any action in carrying out this Pledge Agreement, does
not constitute Agent's approval of the Collateral or Agent's assumption of any
obligation under or in connection with the Collateral. This Pledge Agreement
does not affect or modify Borrower's obligations with respect to the Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Pledge Agreement to the contrary, Borrower agrees that if, but for the
application of this SECTION 5 the Obligation or any Security Interest would
constitute a preferential transfer under 11 U.S.C. Section 547, a fraudulent
conveyance under 11 U.S.C. Section 548 (or any successor section) or a
fraudulent conveyance or transfer under any state fraudulent
2
<PAGE>
conveyance or fraudulent transfer Law or similar Law in effect from time to
time (each a "FRAUDULENT CONVEYANCE"), then the Obligation and each affected
Security Interest will be enforceable against Borrower to the maximum extent
possible without causing the Obligation or any Security Interest to be a
Fraudulent Conveyance, and shall be deemed to have been automatically amended
to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby confirms and restates
each of the representations and warranties in the Credit Agreement and further
represents and warrants to Agent and Lenders as follows:
(a) The Pledged Shares are duly authorized, validly issued, fully
paid and non-assessable, and their transfer thereof is not subject to any
restrictions other than restrictions imposed by applicable securities and
corporate laws.
(b) Borrower owns the Collateral free and clear of all liens.
(c) The information contained in SCHEDULE 1 which attached to this
Pledge Agreement is true and accurate and sufficiently describes all of the
Collateral.
7. COVENANTS. Borrower shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Borrower with respect to any of the Collateral.
(b) Promptly notify Agent of any additional shares in any domestic
corporation that becomes a Subsidiary of Borrower subsequent to the execution of
this Pledge Agreement.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lender, appear in and defend, at Borrower's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
(f) At Borrower's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Borrower agrees that Agent's remedies
at law for failure of Borrower to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages, Borrower
agrees that its covenants in this provision may be specifically enforced).
3
<PAGE>
(g) From time to time promptly execute and deliver to Agent all such
other stock powers, assignments, certificates, supplemental documents, and
financing statements (if appropriate), and do all other acts or things as Agent
may reasonably request in order to more fully create, evidence, perfect,
continue and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, including, without limitation,
exercising the Stock Power, a form of which is attached as ANNEX "A" to this
Pledge Agreement, or applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Borrower hereby
consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Borrower and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF SECURITIES. In connection with the sale of the
Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lender shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in retaking,
holding and preparing any of the Collateral for sale(s) or other disposition, in
arranging for such sale(s) or other disposition, and in actually selling or
disposing of the same (all of which are part of the Obligation); SECOND, toward
repayment of amounts expended by Agent under Paragraph 8; THIRD, toward payment
of the balance of the Obligation in accordance with the Credit Agreement. Any
surplus remaining shall be delivered to Borrower or as a court of competent
jurisdiction may direct. If the proceeds are insufficient to pay the Obligation
in full, Borrower shall remain liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Borrower shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Borrower is
required, but has failed or refused, to take. Any sum which may be expended or
paid by Agent under this subparagraph (including, without limitation, court
costs and attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Maximum Rate (as defined in the Credit Agreement) until paid and,
together with such interest, shall be payable by Borrower upon demand and shall
be part of the Obligation.
4
<PAGE>
(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Borrower
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Borrower was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Borrower is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Borrower to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Borrower on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Borrower, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Borrower to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Borrower with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lender. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF SECURITIES. Whether or not a Default has
occurred and is continuing, Agent at any time may have the Collateral registered
in its name, or in the name of its nominee or nominees, as pledgee; and Agent
shall execute and deliver to Borrower all such proxies, powers of attorney,
dividend coupons or orders and other documents as Borrower may reasonably
request for the purpose of enabling Borrower to exercise the voting rights and
powers which it is entitled to exercise hereunder and to receive the dividends
and other payments which it is authorized to receive and retain hereunder.
Nothing in this Pledge Agreement shall prohibit the issuance of cash dividends
by Pledgor if such distribution is permitted under the Credit Agreement.
A. VOTING OF SECURITIES. So long as no Default has occurred,
Borrower shall be entitled to exercise all voting rights pertaining to the
Collateral. After the occurrence and during the continuance of a Default, the
right to vote the Collateral shall be vested exclusively in Agent. To this end,
Borrower irrevocably appoints Agent the proxy and attorney-in-fact of Borrower,
with full power of substitution, to vote and to act with respect to the
Collateral, subject to the understanding that such proxy may not be exercised
unless a Default has occurred and is continuing. The proxy herein granted is
coupled with an interest, is irrevocable, and shall continue until the
Obligation has been paid and performed in full.
B. CERTAIN PROCEEDS. Any and all stock dividends or distributions
in property made on or in respect of the Collateral, and any proceeds of the
Collateral, whether such dividends, distributions, or
5
<PAGE>
proceeds result from a subdivision, combination or reclassification of the
outstanding capital stock of Borrower or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Borrower may
be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Borrower, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of
assignment and/or stock and/or bond powers executed by Borrower in accordance
with Agent's instructions) to be held subject to the terms hereof. Any cash
proceeds of Collateral which come into the possession of Agent may, at
Agent's option, be applied in whole or in part to the Obligation (to the
extent then due), be released in whole or in part to or on the written
instructions of Borrower for any general or specific purpose, or be retained
in whole or in part by Lender as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Pledge Agreement is
one of the "Loan Documents" referred to in the Credit Agreement, and,
therefore, this Pledge Agreement is subject to the applicable provisions of
SECTION 14 of the Credit Agreement, all of which are incorporated in this
Pledge Agreement by reference the same as if set forth in this Pledge
Agreement verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Secured Party's and the Lenders' commitment to lend
under the Credit Agreement without Secured Party having exercised its
rights under this Pledge Agreement, this Pledge Agreement shall terminate;
PROVIDED THAT no Obligor on any of the Collateral shall be obligated to
inquire as to the termination of this Pledge Agreement, but shall be fully
protected in making payment directly to Secured Party, which payment shall
be promptly paid over to Borrower after termination of this Pledge
Agreement.
(c) NOTICE. Any notice or communication required or permitted under
this Pledge Agreement must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
EXECUTED as of the date set forth in the preamble.
NCI HOLDING CORP.
AS PLEDGOR
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Treasurer
-------------------------------------------
6
<PAGE>
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
------------------------------------
Name: Richard L. Nichols, Jr.
----------------------------------
Title: Vice President
---------------------------------
7
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, this "PLEDGE AGREEMENT") is
executed as of May 13, 1998, by the undersigned ("PLEDGOR") for the benefit of
NationsBank, N.A., successor by merger with NationsBank of Texas, N.A.
("AGENT"), as Administrative Agent for itself and for the Lenders (collectively,
"LENDERS") now or hereafter party to the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. Pledgor is the sole owner of all of the capital stock of Metal Coaters
of California, Inc., a Texas corporation.
C. It is expressly understood among Pledgor, Borrower, Agent and Lenders
that the execution and delivery of this Pledge Agreement is a condition
precedent to Lenders' obligations to extend credit under the Credit Agreement
and Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS PLEDGE
AGREEMENT, ANY CAPITALIZED TERM USED IN THIS PLEDGE AGREEMENT HAS THE MEANING
GIVEN THAT TERM IN THE CREDIT AGREEMENT OR IN THE UCC. If the definition given
a term in the Credit Agreement conflicts with the definition given that term in
the UCC, the Credit Agreement definition shall control to the extent allowed by
Law. If the definition given a term in Chapter 9 of the UCC conflicts with the
definition given that term in any other chapter of the UCC, the Chapter 9
definition shall control. As used in this Pledge Agreement:
"COLLATERAL" means Borrower's right, title and interest in and to the
Pledged Shares, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PLEDGE AGREEMENT" means this Pledge Agreement together with all
schedules and annexes attached to this Pledge Agreement, and all amendments and
modifications to this Agreement, the schedules and exhibits.
<PAGE>
"PLEDGED SHARES" means all shares of capital stock now or hereafter
issued to Borrower by any Subsidiary and the certificate(s) representing the
Pledged Shares (including the shares listed on SCHEDULE I) and all dividends,
cash, instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Pledged Shares.
"PLEDGOR" includes, without limitation, Pledgor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Pledgor or all or
substantially all of Pledgor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Pledge Agreement.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Pledge Agreement is being executed and
delivered pursuant to the terms and conditions of the Credit Agreement. Each
Security Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Borrower hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment are made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Borrower with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Borrower's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this Pledge
Agreement, or its taking any action in carrying out this Pledge Agreement, does
not constitute Agent's approval of the Collateral or Agent's assumption of any
obligation under or in connection with the Collateral. This Pledge Agreement
does not affect or modify Borrower's obligations with respect to the Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Pledge Agreement to the contrary, Borrower agrees that if, but for the
application of this SECTION 5 the Obligation or any Security Interest would
constitute a preferential transfer under 11 U.S.C. Section 547, a fraudulent
conveyance under 11 U.S.C. Section 548 (or any successor section) or a
fraudulent conveyance or transfer under any state fraudulent
2
<PAGE>
conveyance or fraudulent transfer Law or similar Law in effect from time to
time (each a "FRAUDULENT CONVEYANCE"), then the Obligation and each affected
Security Interest will be enforceable against Borrower to the maximum extent
possible without causing the Obligation or any Security Interest to be a
Fraudulent Conveyance, and shall be deemed to have been automatically amended
to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby confirms and restates
each of the representations and warranties in the Credit Agreement and further
represents and warrants to Agent and Lenders as follows:
(a) The Pledged Shares are duly authorized, validly issued, fully
paid and non-assessable, and their transfer thereof is not subject to any
restrictions other than restrictions imposed by applicable securities and
corporate laws.
(b) Borrower owns the Collateral free and clear of all liens.
(c) The information contained in SCHEDULE 1 which attached to this
Pledge Agreement is true and accurate and sufficiently describes all of the
Collateral.
7. COVENANTS. Borrower shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Borrower with respect to any of the Collateral.
(b) Promptly notify Agent of any additional shares in any domestic
corporation that becomes a Subsidiary of Borrower subsequent to the execution of
this Pledge Agreement.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lender, appear in and defend, at Borrower's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
(f) At Borrower's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Borrower agrees that Agent's remedies
at law for failure of Borrower to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages, Borrower
agrees that its covenants in this provision may be specifically enforced).
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(g) From time to time promptly execute and deliver to Agent all such
other stock powers, assignments, certificates, supplemental documents, and
financing statements (if appropriate), and do all other acts or things as Agent
may reasonably request in order to more fully create, evidence, perfect,
continue and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, including, without limitation,
exercising the Stock Power, a form of which is attached as ANNEX "A" to this
Pledge Agreement, or applying by appropriate judicial proceedings for
appointment of a receiver for all or part of the Collateral (and Borrower hereby
consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Borrower and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF SECURITIES. In connection with the sale of the
Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lender shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in retaking,
holding and preparing any of the Collateral for sale(s) or other disposition, in
arranging for such sale(s) or other disposition, and in actually selling or
disposing of the same (all of which are part of the Obligation); SECOND, toward
repayment of amounts expended by Agent under Paragraph 8; THIRD, toward payment
of the balance of the Obligation in accordance with the Credit Agreement. Any
surplus remaining shall be delivered to Borrower or as a court of competent
jurisdiction may direct. If the proceeds are insufficient to pay the Obligation
in full, Borrower shall remain liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Borrower shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Borrower is
required, but has failed or refused, to take. Any sum which may be expended or
paid by Agent under this subparagraph (including, without limitation, court
costs and attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Maximum Rate (as defined in the Credit Agreement) until paid and,
together with such interest, shall be payable by Borrower upon demand and shall
be part of the Obligation.
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(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Borrower
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Borrower was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Borrower is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Borrower to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Borrower on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Borrower, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Borrower to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Borrower with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lender. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF SECURITIES. Whether or not a Default has
occurred and is continuing, Agent at any time may have the Collateral registered
in its name, or in the name of its nominee or nominees, as pledgee; and Agent
shall execute and deliver to Borrower all such proxies, powers of attorney,
dividend coupons or orders and other documents as Borrower may reasonably
request for the purpose of enabling Borrower to exercise the voting rights and
powers which it is entitled to exercise hereunder and to receive the dividends
and other payments which it is authorized to receive and retain hereunder.
Nothing in this Pledge Agreement shall prohibit the issuance of cash dividends
by Pledgor if such distribution is permitted under the Credit Agreement.
A. VOTING OF SECURITIES. So long as no Default has occurred,
Borrower shall be entitled to exercise all voting rights pertaining to the
Collateral. After the occurrence and during the continuance of a Default, the
right to vote the Collateral shall be vested exclusively in Agent. To this end,
Borrower irrevocably appoints Agent the proxy and attorney-in-fact of Borrower,
with full power of substitution, to vote and to act with respect to the
Collateral, subject to the understanding that such proxy may not be exercised
unless a Default has occurred and is continuing. The proxy herein granted is
coupled with an interest, is irrevocable, and shall continue until the
Obligation has been paid and performed in full.
B. CERTAIN PROCEEDS. Any and all stock dividends or distributions
in property made on or in respect of the Collateral, and any proceeds of the
Collateral, whether such dividends, distributions, or
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proceeds result from a subdivision, combination or reclassification of the
outstanding capital stock of Borrower or as a result of any merger,
consolidation, acquisition or other exchange of assets to which Borrower may
be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Borrower, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of
assignment and/or stock and/or bond powers executed by Borrower in accordance
with Agent's instructions) to be held subject to the terms hereof. Any cash
proceeds of Collateral which come into the possession of Agent may, at
Agent's option, be applied in whole or in part to the Obligation (to the
extent then due), be released in whole or in part to or on the written
instructions of Borrower for any general or specific purpose, or be retained
in whole or in part by Lender as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Pledge Agreement is
one of the "Loan Documents" referred to in the Credit Agreement, and,
therefore, this Pledge Agreement is subject to the applicable provisions of
SECTION 14 of the Credit Agreement, all of which are incorporated in this
Pledge Agreement by reference the same as if set forth in this Pledge
Agreement verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Secured Party's and the Lenders' commitment to lend
under the Credit Agreement without Secured Party having exercised its
rights under this Pledge Agreement, this Pledge Agreement shall terminate;
PROVIDED THAT no Obligor on any of the Collateral shall be obligated to
inquire as to the termination of this Pledge Agreement, but shall be fully
protected in making payment directly to Secured Party, which payment shall
be promptly paid over to Borrower after termination of this Pledge
Agreement.
(c) NOTICE. Any notice or communication required or permitted under
this Pledge Agreement must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
EXECUTED as of the date set forth in the preamble.
METAL COATERS HOLDING, INC.,
a Delaware corporation, AS PLEDGOR
By: /s/ ROBERT J. MEDLOCK
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Treasurer
-------------------------------------------
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NATIONSBANK, N.A., SUCCESSOR BY
MERGER WITH NATIONSBANK OF TEXAS,
N. A., AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
------------------------------------
Name: Richard L. Nichols, Jr.
----------------------------------
Title: Vice President
---------------------------------
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ASSIGNMENT OF PARTNERSHIP INTERESTS
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS (as amended, this
"ASSIGNMENT") is executed as of May 1, 1998, by the undersigned ("ASSIGNOR") for
the benefit of NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for
itself and for the Lenders (collectively, "LENDERS") now or hereafter party to
the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. NCI Operating Corp., a Delaware corporation and a wholly-owned
subsidiary of Borrower is the general partner of (i) NCI Building Systems, L.P.,
a Texas limited partnership, (ii) A&S Building Systems, L.P., a Texas limited
partnership, (iii) MBCI Operating, L.P., a Texas limited partnership and (iv)
Metal Coaters Operating, L.P., a Texas limited partnership.
C. It is expressly understood among Assignor, Borrower and Lenders that
the execution and delivery of this Assignment is a condition precedent to
Lenders' obligations to extend credit under the Credit Agreement and Agent's
obligation to issue LCs under the Credit Agreement.
D. Assignor's board of directors has determined that the Assignor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as the Assignor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS ASSIGNMENT, ANY
CAPITALIZED TERM USED IN THIS ASSIGNMENT HAS THE MEANING GIVEN THAT TERM IN THE
CREDIT AGREEMENT OR IN THE UCC. If the definition given a term in the Credit
Agreement conflicts with the definition given that term in the UCC, the Credit
Agreement definition shall control to the extent allowed by Law. If the
definition given a term in Chapter 9 of the UCC conflicts with the definition
given that term in any other chapter of the UCC, the Chapter 9 definition shall
control. As used in this Assignment:
"ASSIGNMENT" means this Assignment together with all schedules and
annexes attached to this Assignment, and all amendments and modifications to
this Assignment, the schedules and exhibits.
"ASSIGNOR" includes, without limitation, Assignor as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian, or
similar party hereafter appointed for Assignor or all
<PAGE>
or substantially all of Assignor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"COLLATERAL" means Assignors's right, title and interest in and to the
Partnership Interests, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PARTNERSHIP INTERESTS" means all partnership interests, now or
hereafter owned by Assignor in any Subsidiary and all distributions, cash,
instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Partnership Interest.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Assignment.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Assignment is being executed and delivered
pursuant to the terms and conditions of the Credit Agreement. Each Security
Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Assignor hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment is made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Assignor with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Assignor's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this
Assignment, or its taking any action in carrying out this Assignment, does not
constitute Agent's approval of the Collateral or Agent's assumption
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<PAGE>
of any obligation under or in connection with the Collateral. This Assignment
does not affect or modify Assignor's obligations with respect to the
Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Assignment to the contrary, Assignor agrees that if, but for the application of
this SECTION 5 the Obligation or any Security Interest would constitute a
preferential transfer under 11 U.S.C. Section 547, a fraudulent conveyance under
11 U.S.C. Section 548 (or any successor section) or a fraudulent conveyance or
transfer under any state fraudulent conveyance or fraudulent transfer Law or
similar Law in effect from time to time (each a "FRAUDULENT CONVEYANCE"), then
the Obligation and each affected Security Interest will be enforceable against
Assignor to the maximum extent possible without causing the Obligation or any
Security Interest to be a Fraudulent Conveyance, and shall be deemed to have
been automatically amended to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. To the extent applicable, Assignor
hereby adopts and restates each of the representations and warranties in the
Credit Agreement and further represents and warrants to Lenders as follows:
(a) Except as provided in the relevant partnership agreement, the
assignment, pledge, or transfer of the Partnership Interests is not subject to
any restrictions other than restrictions imposed by applicable securities and
partnership laws.
(b) Except as provided in the relevant partnership agreement,
Assignor owns the Collateral free and clear of all liens.
(c) The information contained in item B in the recitals above is true
and accurate and the Collateral is accurately described in this Assignment.
7. COVENANTS. Assignor shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Assignor with respect to any of the Collateral.
(b) Promptly notify Agent of any additional partnership interest that
it acquires or owns in any domestic partnership that becomes a Subsidiary
subsequent to the execution of this Assignment.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lenders, appear in and defend, at Assignor's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
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(f) At Assignor's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Assignor agrees that Agent's remedies
at law for failure of Assignor to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages, Assignor
agrees that its covenants in this provision may be specifically enforced).
(g) From time to time promptly execute and deliver to Agent all such
other assignments, certificates, supplemental documents, and financing
statements (if appropriate), and do all other acts or things as Agent may
reasonably request in order to more fully create, evidence, perfect, continue
and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, or applying by appropriate judicial
proceedings for appointment of a receiver for all or part of the Collateral (and
Assignor hereby consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Assignor and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF PARTNERSHIP INTERESTS. In connection with the sale of
the Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lenders shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in preparing
any of the Collateral for sale(s) or other disposition(s), in arranging for such
sale(s) or other disposition(s), and in actually selling or disposing of the
same (all of which are part of the Obligation); SECOND, toward repayment of
amounts expended by Agent under Paragraph 8; THIRD, toward payment of the
balance of the Obligation in accordance with the Credit Agreement. Any surplus
remaining shall be delivered to Assignor or as a court of competent jurisdiction
may direct. If the proceeds are insufficient to pay the Obligation in full,
Borrower, Assignor and other Guarantors shall remain jointly and severally
liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
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(a) PERFORMANCE. In the event Assignor shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Assignor is
required, but has failed or refused, to take. Any sum which may be expended or
paid by Agent under this subparagraph (including, without limitation, court
costs and attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Maximum Rate (as defined in the Credit Agreement) until paid and,
together with such interest, shall be payable by Assignor upon demand and shall
be part of the Obligation.
(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Assignor
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Assignor was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Assignor is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Assignor to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Assignor on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Assignor, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Assignor to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Assignor with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lenders. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF PARTNERSHIP INTERESTS. Whether or not a
Default has occurred and is continuing and to the extent applicable, Agent at
any time may have the Collateral registered in its name, or in the name of its
nominee or nominees, as assignee; and Agent shall execute and deliver to
Assignor all such proxies, powers of attorney, dividend coupons or orders and
other documents as Assignor may reasonably request for the purpose of enabling
Assignor to exercise the voting rights and powers which it is entitled to
exercise hereunder and to receive the distributions and other payments which it
is authorized to receive and retain hereunder. Nothing in this Assignment shall
prohibit the payment of cash distributions by the Partnership if such
distribution is permitted under the Credit Agreement.
(d) PARTNERSHIP ACTION. So long as no Default has occurred, Assignor
shall be entitled to exercise all rights pertaining to the Collateral. After
the occurrence and during the continuance of a
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Default, the right to vote or take action as a result of owning the Collateral
shall be vested exclusively in Agent. To this end, Assignor irrevocably
appoints Agent the proxy and attorney-in-fact of Assignor, with full power of
substitution, to vote and to act with respect to the Collateral, subject to
the understanding that such proxy may not be exercised unless a Default has
occurred and is continuing. The proxy herein granted is coupled with an
interest, is irrevocable, and shall continue until the Obligation has been
paid and performed in full.
(e) CERTAIN PROCEEDS. Any and all distributions in property made on
or in respect of the Collateral, and any proceeds of the Collateral, whether
such distributions, or proceeds result from a subdivision, combination or
reclassification of the partnership interests of Assignor or as a result of any
merger, consolidation, acquisition or other exchange of assets to which Assignor
may be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Assignor, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of assignment
and/or stock and/or bond powers executed by Assignor in accordance with Agent's
instructions) to be held subject to the terms hereof. Any cash proceeds of
Collateral which come into the possession of Agent may, at Agent's option, be
applied in whole or in part to the Obligation (to the extent then due), be
released in whole or in part to or on the written instructions of Assignor for
any general or specific purpose, or be retained in whole or in part by Lenders
as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Assignment is one of
the "Loan Documents" referred to in the Credit Agreement, and, therefore,
this Assignment is subject to the applicable provisions of SECTION 14 of
the Credit Agreement, all of which are incorporated in this Assignment by
reference the same as if set forth in this Assignment verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Lenders' commitment to lend under the Credit Agreement
without Lenders' having exercised their rights under this Assignment, this
Assignment shall terminate; PROVIDED THAT no Obligor on any of the
Collateral shall be obligated to inquire as to the termination of this
Assignment, but shall be fully protected in making payment directly to
Lenders, which payment shall be promptly paid over to Assignor after
termination of this Assignment.
(c) NOTICE. Any notice or communication required or permitted under
this Assignment must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
6
<PAGE>
EXECUTED as of the date set forth in the preamble.
NCI OPERATING CORP,
AS ASSIGNOR
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Chief Financial Officer
-------------------------------------------
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
----------------------------------------------
Name: Richard L. Nichols, Jr.
--------------------------------------------
Title: Vice President
-------------------------------------------
7
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTERESTS
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS (as amended, this
"ASSIGNMENT") is executed as of May 1, 1998, by the undersigned ("ASSIGNOR") for
the benefit of NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for
itself and for the Lenders (collectively, "LENDERS") now or hereafter party to
the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. NCI Holding Corp., a Delaware corporation and a wholly-owned
subsidiary of Borrower is a limited general partner of (i) NCI Building Systems,
L.P., a Texas limited partnership, (ii) A&S Building Systems, L.P., a Texas
limited partnership, (iii) MBCI Operating, L.P., a Texas limited partnership and
(iv) Metal Coaters Operating, L.P., a Texas limited partnership.
C. It is expressly understood among Assignor, Borrower and Lenders that
the execution and delivery of this Assignment is a condition precedent to
Lenders' obligations to extend credit under the Credit Agreement and Agent's
obligation to issue LCs under the Credit Agreement.
D. Assignor's board of directors has determined that the Assignor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as the Assignor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS ASSIGNMENT, ANY
CAPITALIZED TERM USED IN THIS ASSIGNMENT HAS THE MEANING GIVEN THAT TERM IN THE
CREDIT AGREEMENT OR IN THE UCC. If the definition given a term in the Credit
Agreement conflicts with the definition given that term in the UCC, the Credit
Agreement definition shall control to the extent allowed by Law. If the
definition given a term in Chapter 9 of the UCC conflicts with the definition
given that term in any other chapter of the UCC, the Chapter 9 definition shall
control. As used in this Assignment:
"ASSIGNMENT" means this Assignment together with all schedules and
annexes attached to this Assignment, and all amendments and modifications to
this Assignment, the schedules and exhibits.
"ASSIGNOR" includes, without limitation, Assignor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Assignor or all
<PAGE>
or substantially all of Assignor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"COLLATERAL" means Assignors's right, title and interest in and to the
Partnership Interests, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PARTNERSHIP INTERESTS" means all partnership interests, now or
hereafter owned by Assignor in any Subsidiary and all distributions, cash,
instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Partnership Interest.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Assignment.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Assignment is being executed and delivered
pursuant to the terms and conditions of the Credit Agreement. Each Security
Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Assignor hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment is made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Assignor with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Assignor's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this
Assignment, or its taking any action in carrying out this Assignment, does not
constitute Agent's approval of the Collateral or Agent's assumption
2
<PAGE>
of any obligation under or in connection with the Collateral. This
Assignment does not affect or modify Assignor's obligations with respect to
the Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Assignment to the contrary, Assignor agrees that if, but for the application of
this SECTION 5 the Obligation or any Security Interest would constitute a
preferential transfer under 11 U.S.C. Section 547, a fraudulent conveyance under
11 U.S.C. Section 548 (or any successor section) or a fraudulent conveyance or
transfer under any state fraudulent conveyance or fraudulent transfer Law or
similar Law in effect from time to time (each a "FRAUDULENT CONVEYANCE"), then
the Obligation and each affected Security Interest will be enforceable against
Assignor to the maximum extent possible without causing the Obligation or any
Security Interest to be a Fraudulent Conveyance, and shall be deemed to have
been automatically amended to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. To the extent applicable, Assignor
hereby adopts and restates each of the representations and warranties in the
Credit Agreement and further represents and warrants to Lenders as follows:
(a) Except as provided in the relevant partnership agreement, the
assignment, pledge, or transfer of the Partnership Interests is not subject to
any restrictions other than restrictions imposed by applicable securities and
partnership laws.
(b) Except as provided in the relevant partnership agreement,
Assignor owns the Collateral free and clear of all liens.
(c) The information contained in item B in the recitals above is true
and accurate and the Collateral is accurately described in this Assignment.
7. COVENANTS. Assignor shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Assignor with respect to any of the Collateral.
(b) Promptly notify Agent of any additional partnership interest that
it acquires or owns in any domestic partnership that becomes a Subsidiary
subsequent to the execution of this Assignment.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lenders, appear in and defend, at Assignor's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
3
<PAGE>
(f) At Assignor's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Assignor agrees that Agent's remedies
at law for failure of Assignor to comply with this provision would be inadequate
and that such failure would not be adequately compensable in damages, Assignor
agrees that its covenants in this provision may be specifically enforced).
(g) From time to time promptly execute and deliver to Agent all such
other assignments, certificates, supplemental documents, and financing
statements (if appropriate), and do all other acts or things as Agent may
reasonably request in order to more fully create, evidence, perfect, continue
and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, or applying by appropriate judicial
proceedings for appointment of a receiver for all or part of the Collateral (and
Assignor hereby consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Assignor and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF PARTNERSHIP INTERESTS. In connection with the sale of
the Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lenders shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in preparing
any of the Collateral for sale(s) or other disposition(s), in arranging for such
sale(s) or other disposition(s), and in actually selling or disposing of the
same (all of which are part of the Obligation); SECOND, toward repayment of
amounts expended by Agent under Paragraph 8; THIRD, toward payment of the
balance of the Obligation in accordance with the Credit Agreement. Any surplus
remaining shall be delivered to Assignor or as a court of competent jurisdiction
may direct. If the proceeds are insufficient to pay the Obligation in full,
Borrower, Assignor and other Guarantors shall remain jointly and severally
liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
4
<PAGE>
(a) PERFORMANCE. In the event Assignor shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Assignor is
required, but has failed or refused, to take. Any sum which may be expended or
paid by Agent under this subparagraph (including, without limitation, court
costs and attorneys' fees) shall bear interest from the dates of expenditure or
payment at the Maximum Rate (as defined in the Credit Agreement) until paid and,
together with such interest, shall be payable by Assignor upon demand and shall
be part of the Obligation.
(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Assignor
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Assignor was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Assignor is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Assignor to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Assignor on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Assignor, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Assignor to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Assignor with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lenders. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF PARTNERSHIP INTERESTS. Whether or not a
Default has occurred and is continuing and to the extent applicable, Agent at
any time may have the Collateral registered in its name, or in the name of its
nominee or nominees, as assignee; and Agent shall execute and deliver to
Assignor all such proxies, powers of attorney, dividend coupons or orders and
other documents as Assignor may reasonably request for the purpose of enabling
Assignor to exercise the voting rights and powers which it is entitled to
exercise hereunder and to receive the distributions and other payments which it
is authorized to receive and retain hereunder. Nothing in this Assignment shall
prohibit the payment of cash distributions by the Partnership if such
distribution is permitted under the Credit Agreement.
(d) PARTNERSHIP ACTION. So long as no Default has occurred, Assignor
shall be entitled to exercise all rights pertaining to the Collateral. After
the occurrence and during the continuance of a
5
<PAGE>
Default, the right to vote or take action as a result of owning the
Collateral shall be vested exclusively in Agent. To this end, Assignor
irrevocably appoints Agent the proxy and attorney-in-fact of Assignor, with
full power of substitution, to vote and to act with respect to the
Collateral, subject to the understanding that such proxy may not be exercised
unless a Default has occurred and is continuing. The proxy herein granted is
coupled with an interest, is irrevocable, and shall continue until the
Obligation has been paid and performed in full.
(e) CERTAIN PROCEEDS. Any and all distributions in property made on
or in respect of the Collateral, and any proceeds of the Collateral, whether
such distributions, or proceeds result from a subdivision, combination or
reclassification of the partnership interests of Assignor or as a result of any
merger, consolidation, acquisition or other exchange of assets to which Assignor
may be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Assignor, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of assignment
and/or stock and/or bond powers executed by Assignor in accordance with Agent's
instructions) to be held subject to the terms hereof. Any cash proceeds of
Collateral which come into the possession of Agent may, at Agent's option, be
applied in whole or in part to the Obligation (to the extent then due), be
released in whole or in part to or on the written instructions of Assignor for
any general or specific purpose, or be retained in whole or in part by Lenders
as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Assignment is one of
the "Loan Documents" referred to in the Credit Agreement, and, therefore,
this Assignment is subject to the applicable provisions of SECTION 14 of
the Credit Agreement, all of which are incorporated in this Assignment by
reference the same as if set forth in this Assignment verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Lenders' commitment to lend under the Credit Agreement
without Lenders' having exercised their rights under this Assignment, this
Assignment shall terminate; PROVIDED THAT no Obligor on any of the
Collateral shall be obligated to inquire as to the termination of this
Assignment, but shall be fully protected in making payment directly to
Lenders, which payment shall be promptly paid over to Assignor after
termination of this Assignment.
(c) NOTICE. Any notice or communication required or permitted under
this Assignment must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
6
<PAGE>
EXECUTED as of the date set forth in the preamble.
NCI HOLDING CORP.,
AS ASSIGNOR
By: /s/ Robert J. Medlock
----------------------------------
Name: Robert J. Medlock
--------------------------------
Title: Vice President and
Treasurer
-------------------------------
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
----------------------------------
Name: Richard L. Nichols, Jr.
--------------------------------
Title: Vice President
-------------------------------
7
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTERESTS
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS (as amended, this
"ASSIGNMENT") is executed as of May 1, 1998, by the undersigned ("ASSIGNOR") for
the benefit of NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for
itself and for the Lenders (collectively, "LENDERS") now or hereafter party to
the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. Metal Building Components Holding, Inc., a Delaware corporation and a
wholly-owned subsidiary of Borrower is a limited general partner of MBCI
Operating, L.P., a Texas limited partnership.
C. It is expressly understood among Assignor, Borrower and Lenders that
the execution and delivery of this Assignment is a condition precedent to
Lenders' obligations to extend credit under the Credit Agreement and Agent's
obligation to issue LCs under the Credit Agreement.
D. Assignor's board of directors has determined that the Assignor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as the Assignor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS ASSIGNMENT, ANY
CAPITALIZED TERM USED IN THIS ASSIGNMENT HAS THE MEANING GIVEN THAT TERM IN THE
CREDIT AGREEMENT OR IN THE UCC. If the definition given a term in the Credit
Agreement conflicts with the definition given that term in the UCC, the Credit
Agreement definition shall control to the extent allowed by Law. If the
definition given a term in Chapter 9 of the UCC conflicts with the definition
given that term in any other chapter of the UCC, the Chapter 9 definition shall
control. As used in this Assignment:
"ASSIGNMENT" means this Assignment together with all schedules and
annexes attached to this Assignment, and all amendments and modifications to
this Assignment, the schedules and exhibits.
"ASSIGNOR" includes, without limitation, Assignor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Assignor or all or
substantially all of Assignor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium,
<PAGE>
rearrangement, receivership, insolvency, reorganization, or similar Law from
time to time in effect affecting the rights of creditors generally.
"COLLATERAL" means Assignors's right, title and interest in and to the
Partnership Interests, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PARTNERSHIP INTERESTS" means all partnership interests, now or
hereafter owned by Assignor in any Subsidiary and all distributions, cash,
instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Partnership Interest.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Assignment.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Assignment is being executed and delivered
pursuant to the terms and conditions of the Credit Agreement. Each Security
Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Assignor hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment is made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Assignor with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Assignor's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this
Assignment, or its taking any action in carrying out this Assignment, does not
constitute Agent's approval of the Collateral or Agent's assumption of any
obligation under or in connection with the Collateral. This Assignment does not
affect or modify Assignor's obligations with respect to the Collateral.
2
<PAGE>
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Assignment to the contrary, Assignor agrees that if, but for the application of
this SECTION 5 the Obligation or any Security Interest would constitute a
preferential transfer under 11 U.S.C. Section 547, a fraudulent conveyance under
11 U.S.C. Section 548 (or any successor section) or a fraudulent conveyance or
transfer under any state fraudulent conveyance or fraudulent transfer Law or
similar Law in effect from time to time (each a "FRAUDULENT CONVEYANCE"), then
the Obligation and each affected Security Interest will be enforceable against
Assignor to the maximum extent possible without causing the Obligation or any
Security Interest to be a Fraudulent Conveyance, and shall be deemed to have
been automatically amended to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. To the extent applicable, Assignor
hereby adopts and restates each of the representations and warranties in the
Credit Agreement and further represents and warrants to Lenders as follows:
(a) Except as provided in the relevant partnership agreement, the
assignment, pledge, or transfer of the Partnership Interests is not subject to
any restrictions other than restrictions imposed by applicable securities and
partnership laws.
(b) Except as provided in the relevant partnership agreement,
Assignor owns the Collateral free and clear of all liens.
(c) The information contained in item B in the recitals above is true
and accurate and the Collateral is accurately described in this Assignment.
7. COVENANTS. Assignor shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Assignor with respect to any of the Collateral.
(b) Promptly notify Agent of any additional partnership interest that
it acquires or owns in any domestic partnership that becomes a Subsidiary
subsequent to the execution of this Assignment.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lenders, appear in and defend, at Assignor's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
(f) At Assignor's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Assignor
3
<PAGE>
agrees that Agent's remedies at law for failure of Assignor to comply with
this provision would be inadequate and that such failure would not be
adequately compensable in damages, Assignor agrees that its covenants in this
provision may be specifically enforced).
(g) From time to time promptly execute and deliver to Agent all such
other assignments, certificates, supplemental documents, and financing
statements (if appropriate), and do all other acts or things as Agent may
reasonably request in order to more fully create, evidence, perfect, continue
and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, or applying by appropriate judicial
proceedings for appointment of a receiver for all or part of the Collateral (and
Assignor hereby consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Assignor and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF PARTNERSHIP INTERESTS. In connection with the sale of
the Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lenders shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in preparing
any of the Collateral for sale(s) or other disposition(s), in arranging for such
sale(s) or other disposition(s), and in actually selling or disposing of the
same (all of which are part of the Obligation); SECOND, toward repayment of
amounts expended by Agent under Paragraph 8; THIRD, toward payment of the
balance of the Obligation in accordance with the Credit Agreement. Any surplus
remaining shall be delivered to Assignor or as a court of competent jurisdiction
may direct. If the proceeds are insufficient to pay the Obligation in full,
Borrower, Assignor and other Guarantors shall remain jointly and severally
liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Assignor shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Assignor is
required, but has failed or refused, to take. Any sum which may be
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expended or paid by Agent under this subparagraph (including, without
limitation, court costs and attorneys' fees) shall bear interest from the
dates of expenditure or payment at the Maximum Rate (as defined in the Credit
Agreement) until paid and, together with such interest, shall be payable by
Assignor upon demand and shall be part of the Obligation.
(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Assignor
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Assignor was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Assignor is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Assignor to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Assignor on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Assignor, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Assignor to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Assignor with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lenders. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF PARTNERSHIP INTERESTS. Whether or not a
Default has occurred and is continuing and to the extent applicable, Agent at
any time may have the Collateral registered in its name, or in the name of its
nominee or nominees, as assignee; and Agent shall execute and deliver to
Assignor all such proxies, powers of attorney, dividend coupons or orders and
other documents as Assignor may reasonably request for the purpose of enabling
Assignor to exercise the voting rights and powers which it is entitled to
exercise hereunder and to receive the distributions and other payments which it
is authorized to receive and retain hereunder. Nothing in this Assignment shall
prohibit the payment of cash distributions by the Partnership if such
distribution is permitted under the Credit Agreement.
(d) PARTNERSHIP ACTION. So long as no Default has occurred, Assignor
shall be entitled to exercise all rights pertaining to the Collateral. After
the occurrence and during the continuance of a Default, the right to vote or
take action as a result of owning the Collateral shall be vested exclusively in
Agent. To this end, Assignor irrevocably appoints Agent the proxy and
attorney-in-fact of Assignor, with full power of substitution, to vote and to
act with respect to the Collateral, subject to the understanding that
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such proxy may not be exercised unless a Default has occurred and is
continuing. The proxy herein granted is coupled with an interest, is
irrevocable, and shall continue until the Obligation has been paid and
performed in full.
(e) CERTAIN PROCEEDS. Any and all distributions in property made on
or in respect of the Collateral, and any proceeds of the Collateral, whether
such distributions, or proceeds result from a subdivision, combination or
reclassification of the partnership interests of Assignor or as a result of any
merger, consolidation, acquisition or other exchange of assets to which Assignor
may be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Assignor, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of assignment
and/or stock and/or bond powers executed by Assignor in accordance with Agent's
instructions) to be held subject to the terms hereof. Any cash proceeds of
Collateral which come into the possession of Agent may, at Agent's option, be
applied in whole or in part to the Obligation (to the extent then due), be
released in whole or in part to or on the written instructions of Assignor for
any general or specific purpose, or be retained in whole or in part by Lenders
as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Assignment is one of
the "Loan Documents" referred to in the Credit Agreement, and, therefore,
this Assignment is subject to the applicable provisions of SECTION 14 of
the Credit Agreement, all of which are incorporated in this Assignment by
reference the same as if set forth in this Assignment verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Lenders' commitment to lend under the Credit Agreement
without Lenders' having exercised their rights under this Assignment, this
Assignment shall terminate; PROVIDED THAT no Obligor on any of the
Collateral shall be obligated to inquire as to the termination of this
Assignment, but shall be fully protected in making payment directly to
Lenders, which payment shall be promptly paid over to Assignor after
termination of this Assignment.
(c) NOTICE. Any notice or communication required or permitted under
this Assignment must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
6
<PAGE>
EXECUTED as of the date set forth in the preamble.
METAL BUILDING COMPONENTS HOLDING,
INC., AS ASSIGNOR
By: /s/ Robert J. Medlock
----------------------------------
Name: Robert J. Medlock
--------------------------------
Title: Vice President and
Treasurer
-------------------------------
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
----------------------------------
Name: Richard L. Nichols, Jr.
--------------------------------
Title: Vice President
-------------------------------
7
<PAGE>
ASSIGNMENT OF PARTNERSHIP INTERESTS
THIS ASSIGNMENT OF PARTNERSHIP INTERESTS (as amended, this
"ASSIGNMENT") is executed as of May 1, 1998, by the undersigned ("ASSIGNOR") for
the benefit of NationsBank of Texas, N.A.("AGENT"), as Administrative Agent for
itself and for the Lenders (collectively, "LENDERS") now or hereafter party to
the Credit Agreement (as defined below).
RECITALS
A. NCI Building Systems, Inc., a Delaware corporation ("BORROWER"), Agent
and Lenders and other parties named therein have executed a Credit Agreement
dated March 25, 1998 (as amended, supplemented or restated, the "CREDIT
AGREEMENT"), together with certain other Loan Documents.
B. Metal Coaters Holding, Inc., a Delaware corporation and a wholly-owned
subsidiary of Borrower is a limited general partner of Metal Coaters Operating,
L.P., a Texas limited partnership.
C. It is expressly understood among Assignor, Borrower and Lenders that
the execution and delivery of this Assignment is a condition precedent to
Lenders' obligations to extend credit under the Credit Agreement and Agent's
obligation to issue LCs under the Credit Agreement.
D. Assignor's board of directors has determined that the Assignor may
benefit directly or indirectly from Borrower's execution of the Credit Agreement
as the Assignor may be the indirect recipient of funds advanced by Lenders to
Borrower under the Credit Agreement or the account party of LCs issued by Agent
pursuant to the Credit Agreement, and as such the value of the consideration
received and to be received by it under the Loan Documents is reasonably worth
at least as much as its liability and obligation under this Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS ASSIGNMENT, ANY
CAPITALIZED TERM USED IN THIS ASSIGNMENT HAS THE MEANING GIVEN THAT TERM IN THE
CREDIT AGREEMENT OR IN THE UCC. If the definition given a term in the Credit
Agreement conflicts with the definition given that term in the UCC, the Credit
Agreement definition shall control to the extent allowed by Law. If the
definition given a term in Chapter 9 of the UCC conflicts with the definition
given that term in any other chapter of the UCC, the Chapter 9 definition shall
control. As used in this Assignment:
"ASSIGNMENT" means this Assignment together with all schedules and
annexes attached to this Assignment, and all amendments and modifications to
this Assignment, the schedules and exhibits.
"ASSIGNOR" includes, without limitation, Assignor as a debtor-in-
possession, and any receiver, trustee, liquidator, conservator, custodian, or
similar party hereafter appointed for Assignor or all or substantially all of
Assignor's assets pursuant to any liquidation, conservatorship, bankruptcy,
moratorium,
<PAGE>
rearrangement, receivership, insolvency, reorganization, or similar Law from
time to time in effect affecting the rights of creditors generally.
"COLLATERAL" means Assignors's right, title and interest in and to the
Partnership Interests, including after acquired Collateral and proceeds of the
Collateral.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation"under and as defined in the Credit
Agreement.
"PARTNERSHIP INTERESTS" means all partnership interests, now or
hereafter owned by Assignor in any Subsidiary and all distributions, cash,
instruments and other property from time-to-time received, receivable or
otherwise distributed in respect of or in exchange of any Partnership Interest.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Assignment.
"UCC" means (a) generally, and with respect to the definitions above,
the Uniform Commercial Code, as adopted in Texas, as amended from time to time,
and (b) with respect to rights in states other than Texas, the Uniform
Commercial Code as enacted in the applicable state, as amended from time to
time.
2. CREDIT AGREEMENT. This Assignment is being executed and delivered
pursuant to the terms and conditions of the Credit Agreement. Each Security
Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete payment
and performance of the Obligation when due, Assignor hereby grants to Agent a
security interest in, and pledges and assigns to Agent: (a) the Collateral, and
(b) all present and future accounts, contract rights, general intangibles,
chattel paper, documents, instruments, cash and noncash proceeds and other
rights arising from or by virtue of, or from the voluntary or involuntary sale
or other disposition of, or collections with respect to, or claims against any
other person with respect to, the Collateral. Such security interest is
granted, and such pledge and assignment is made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any obligation
of Assignor with respect to any of the Collateral or any transaction involving
or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume and
shall not be liable for any of Assignor's liabilities, duties, or obligations
under or in connection with the Collateral. Agent's acceptance of this
Assignment, or its taking any action in carrying out this Assignment, does not
constitute Agent's approval of the Collateral or Agent's assumption of any
obligation under or in connection with the Collateral. This Assignment does not
affect or modify Assignor's obligations with respect to the Collateral.
2
<PAGE>
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Assignment to the contrary, Assignor agrees that if, but for the application of
this SECTION 5 the Obligation or any Security Interest would constitute a
preferential transfer under 11 U.S.C. Section 547, a fraudulent conveyance under
11 U.S.C. Section 548 (or any successor section) or a fraudulent conveyance or
transfer under any state fraudulent conveyance or fraudulent transfer Law or
similar Law in effect from time to time (each a "FRAUDULENT CONVEYANCE"), then
the Obligation and each affected Security Interest will be enforceable against
Assignor to the maximum extent possible without causing the Obligation or any
Security Interest to be a Fraudulent Conveyance, and shall be deemed to have
been automatically amended to carry out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. To the extent applicable, Assignor
hereby adopts and restates each of the representations and warranties in the
Credit Agreement and further represents and warrants to Lenders as follows:
(a) Except as provided in the relevant partnership agreement, the
assignment, pledge, or transfer of the Partnership Interests is not subject to
any restrictions other than restrictions imposed by applicable securities and
partnership laws.
(b) Except as provided in the relevant partnership agreement,
Assignor owns the Collateral free and clear of all liens.
(c) The information contained in item B in the recitals above is true
and accurate and the Collateral is accurately described in this Assignment.
7. COVENANTS. Assignor shall:
(a) Promptly notify Agent of any change in any fact or circumstances
represented or warranted by Assignor with respect to any of the Collateral.
(b) Promptly notify Agent of any additional partnership interest that
it acquires or owns in any domestic partnership that becomes a Subsidiary
subsequent to the execution of this Assignment.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made under
PARAGRAPH 3 or title to all or any of the Collateral and, at the request of
Lenders, appear in and defend, at Assignor's expense, any such action or
proceeding.
(d) Except as permitted under the Credit Agreement, not sell, assign
or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other lien upon any of
the Collateral.
(f) At Assignor's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default (as defined in the Credit Agreement) without additional consent or
approval from such tribunal (and, because Assignor
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<PAGE>
agrees that Agent's remedies at law for failure of Assignor to comply with
this provision would be inadequate and that such failure would not be
adequately compensable in damages, Assignor agrees that its covenants in this
provision may be specifically enforced).
(g) From time to time promptly execute and deliver to Agent all such
other assignments, certificates, supplemental documents, and financing
statements (if appropriate), and do all other acts or things as Agent may
reasonably request in order to more fully create, evidence, perfect, continue
and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured party
under the UCC, in addition to any and all other rights afforded by the Loan
Documents, at law, in equity, or otherwise, or applying by appropriate judicial
proceedings for appointment of a receiver for all or part of the Collateral (and
Assignor hereby consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to be
made, shall be sent to Assignor and to any other person entitled to notice under
the UCC; provided that if any of the Collateral threatens to decline speedily in
value or is of the type customarily sold on a recognized market, Agent may sell
or otherwise dispose of the Collateral without notification, advertisement, or
other notice of any kind. It is agreed that notice sent or given not less than
five Business Days prior to the taking of the action to which the notice relates
is reasonable for the purposes of this subparagraph.
(b) SALES OF PARTNERSHIP INTERESTS. In connection with the sale of
the Collateral, Agent is authorized, but not obligated, to limit prospective
purchasers to the extent deemed necessary or desirable by Agent to render such
sale exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws, and no sale so made in good
faith by Lenders shall be deemed not to be "commercially reasonable" because so
made.
(c) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of any
sale or other disposition of the Collateral under this PARAGRAPH 8 in the
following order: FIRST, to the payment of all its expenses incurred in preparing
any of the Collateral for sale(s) or other disposition(s), in arranging for such
sale(s) or other disposition(s), and in actually selling or disposing of the
same (all of which are part of the Obligation); SECOND, toward repayment of
amounts expended by Agent under Paragraph 8; THIRD, toward payment of the
balance of the Obligation in accordance with the Credit Agreement. Any surplus
remaining shall be delivered to Assignor or as a court of competent jurisdiction
may direct. If the proceeds are insufficient to pay the Obligation in full,
Borrower, Assignor and other Guarantors shall remain jointly and severally
liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Assignor shall fail to perform any of
its obligations hereunder with respect to the Collateral, then Agent may, at its
option, but without being required to do so, take such action which Assignor is
required, but has failed or refused, to take. Any sum which may be
4
<PAGE>
expended or paid by Agent under this subparagraph (including, without
limitation, court costs and attorneys' fees) shall bear interest from the
dates of expenditure or payment at the Maximum Rate (as defined in the Credit
Agreement) until paid and, together with such interest, shall be payable by
Assignor upon demand and shall be part of the Obligation.
(b) COLLECTION. Upon notice from Agent, each person or entity
obligated with respect to any of the Collateral, whether as an issuer, account
debtor or otherwise (an "OBLIGOR") is hereby authorized and directed by Assignor
to make payments on any of the Collateral (including, without limitation,
dividends and other distributions) directly to Agent, regardless of whether
Assignor was previously making collections thereon. Subject to Subparagraph (e)
hereof, until such notice is given, Assignor is authorized to retain and expend
all payments made on Collateral. Agent shall have the right in its own name or
in the name of Assignor to compromise or extend time of payment with respect to
all or any portion of the Collateral for such amounts and upon such terms as
Agent may determine; to demand, collect, receive, receipt for, sue for, compound
and give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral; to
endorse the name of Assignor on any notes, acceptances, checks, drafts, money
orders or other evidences of payment on Collateral that may come into the
possession of Agent; to send requests for verification of obligations to any
Obligor; and to do all other acts and things necessary to carry out the intent
of this agreement. If any Obligor fails or refuses to make payment on any
Collateral when due, Agent is authorized, in its sole discretion, either in its
own name or in the name of Assignor, to take such action as Agent shall deem
appropriate for the collection of any such amounts. Regardless of any other
provision hereof, however, Agent shall never be liable for its failure to
collect, or for its failure to exercise diligence in the collection of, any
amounts owed with respect to Collateral, nor shall it be under any duty whatever
to anyone except Assignor to account for funds that it shall actually receive
hereunder. Without limiting the generality of the foregoing, Agent shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges,
offers, tenders or similar matters relating to any Collateral, or for informing
Assignor with respect to any of such matters (irrespective of whether Agent
actually has, or may be deemed to have, knowledge thereof). The receipt of Agent
to any Obligor shall be a full and complete release, discharge and acquittance
to such Obligor, to the extent of any amount so paid to Lenders. The rights
granted Agent under this subparagraph may be exercised at any time, whether or
not a Default has occurred and is continuing.
(c) RECORD OWNERSHIP OF PARTNERSHIP INTERESTS. Whether or not a
Default has occurred and is continuing and to the extent applicable, Agent at
any time may have the Collateral registered in its name, or in the name of its
nominee or nominees, as assignee; and Agent shall execute and deliver to
Assignor all such proxies, powers of attorney, dividend coupons or orders and
other documents as Assignor may reasonably request for the purpose of enabling
Assignor to exercise the voting rights and powers which it is entitled to
exercise hereunder and to receive the distributions and other payments which it
is authorized to receive and retain hereunder. Nothing in this Assignment shall
prohibit the payment of cash distributions by the Partnership if such
distribution is permitted under the Credit Agreement.
(d) PARTNERSHIP ACTION. So long as no Default has occurred, Assignor
shall be entitled to exercise all rights pertaining to the Collateral. After
the occurrence and during the continuance of a Default, the right to vote or
take action as a result of owning the Collateral shall be vested exclusively in
Agent. To this end, Assignor irrevocably appoints Agent the proxy and attorney-
in-fact of Assignor, with full power of substitution, to vote and to act with
respect to the Collateral, subject to the understanding that
5
<PAGE>
such proxy may not be exercised unless a Default has occurred and is
continuing. The proxy herein granted is coupled with an interest, is
irrevocable, and shall continue until the Obligation has been paid and
performed in full.
(e) CERTAIN PROCEEDS. Any and all distributions in property made on
or in respect of the Collateral, and any proceeds of the Collateral, whether
such distributions, or proceeds result from a subdivision, combination or
reclassification of the partnership interests of Assignor or as a result of any
merger, consolidation, acquisition or other exchange of assets to which Assignor
may be a party, or otherwise, shall be part of the Collateral hereunder, shall,
if received by Assignor, be held in trust for the benefit of Agent, and shall
forthwith be delivered to Agent (accompanied by proper instruments of assignment
and/or stock and/or bond powers executed by Assignor in accordance with Agent's
instructions) to be held subject to the terms hereof. Any cash proceeds of
Collateral which come into the possession of Agent may, at Agent's option, be
applied in whole or in part to the Obligation (to the extent then due), be
released in whole or in part to or on the written instructions of Assignor for
any general or specific purpose, or be retained in whole or in part by Lenders
as additional Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Assignment is one of
the "Loan Documents" referred to in the Credit Agreement, and, therefore,
this Assignment is subject to the applicable provisions of SECTION 14 of
the Credit Agreement, all of which are incorporated in this Assignment by
reference the same as if set forth in this Assignment verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Lenders' commitment to lend under the Credit Agreement
without Lenders' having exercised their rights under this Assignment, this
Assignment shall terminate; PROVIDED THAT no Obligor on any of the
Collateral shall be obligated to inquire as to the termination of this
Assignment, but shall be fully protected in making payment directly to
Lenders, which payment shall be promptly paid over to Assignor after
termination of this Assignment.
(c) NOTICE. Any notice or communication required or permitted under
this Assignment must be given as prescribed in the Credit Agreement.
(d) GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED--AND ITS
PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or inconsistency
between the terms hereof and the Credit Agreement, the terms of the Credit
Agreement shall be controlling.
6
<PAGE>
EXECUTED as of the date set forth in the preamble.
METAL COATERS HOLDING, INC.
AS ASSIGNOR
By: /s/ Robert J. Medlock
----------------------------------------------
Name: Robert J. Medlock
--------------------------------------------
Title: Vice President and Treasurer
-------------------------------------------
NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
----------------------------------------------
Name: Richard L. Nichols, Jr.
--------------------------------------------
Title: Vice President
-------------------------------------------
7
<PAGE>
NCI HOLDING CORP.
PROMISSORY NOTE
Wilmington, Delaware May 5, 1998
NCI Holding Corp., a Delaware corporation (the "COMPANY"), for value
received, hereby promises to pay to the order of NCI Building Systems, Inc., a
Delaware corporation and the sole owner of all of the issued and outstanding
capital stock of the Company ("PAYEE"), the principal sum of FIVE HUNDRED FIFTY
MILLION AND NO/100 DOLLARS ($550,000,000) subject to adjustment as herein
provided (the "PRINCIPAL AMOUNT"), and to pay interest on the unpaid balance of
the Principal Amount at the rate herein provided.
1. ADJUSTMENT TO PRINCIPAL AMOUNT. The Company and Payee agree that
(i) this Note is being given by the Company to Payee in consideration of the
transfer by Payee to the Company of all of the issued and outstanding capital
stock of Amatek Holdings, Inc., a Texas corporation ("AMATEK"), acquired by
Payee pursuant to that certain Stock Purchase Agreement, dated March 25, 1998,
as amended by letter agreement dated May 4, 1998 (the "PURCHASE AGREEMENT"), by
and between Payee and BTR Australia Limited, a corporation organized under the
laws of Australia ("BTR"), and joined therein for certain limited purposes by
BTR plc and (ii) the Principal Amount of this Note is based on the Purchase
Price (as defined in the Purchase Agreement) paid by Payee for the capital stock
of Amatek. The Company and Payee acknowledge and agree that if the Purchase
Price is adjusted in accordance with the terms and provisions of the Purchase
Agreement that the Principal Amount of this Note shall be adjusted AB INITIO to
reflect such adjusted Purchase Price for the capital stock of Amatek as if such
adjusted Purchase Price had constituted the Principal Amount on the date of this
Note. The Principal Amount shall also be increased for any acquisition costs
paid to parties other than BTR that are capitalized by Payee for federal income
tax purposes into the purchase price of the capital stock of Amatek.
2. PAYMENT.
(a) Interest shall accrue on the Principal Amount from the date
hereof. For each Interest Period (as defined in that certain Credit Agreement,
dated March 25, 1998, by and among Payee, NationsBank of Texas, N.A.,
NationsBanc Montgomery Securities LLC, Swiss Bank Corporation and the several
Lenders named therein, or any commercial credit agreement entered into by Payee
in replacement, refinancing or substitution thereof (as amended, supplemented,
restated, replaced or substituted, the "CREDIT AGREEMENT"), or as its equivalent
period is defined in any amended, supplemented, restated, replaced or
substituted Credit Agreement), interest shall accrue at a per annum rate of two
percent over the highest applicable interest rate being paid at any time during
the Interest Period by Payee to (i) its principal commercial lenders pursuant to
the Credit Agreement or (ii) the holders of any senior or subordinated notes of
the Payee, if any, issued by Payee from time to time for money borrowed.
Accrued interest shall be due and payable by the
<PAGE>
Company to Payee on the last day of each Interest Period until the
outstanding principal sum of this Note is paid in full. If no commercial
credit facility or indebtedness for money borrowed is outstanding, interest
shall accrue at a rate of ten percent (10%) per annum.
(b) The Principal Amount is due and payable, in one or more
installments, on demand on such dates and in such amounts as specified by Payee,
together with the accrued interest, if any, specified in such demand; PROVIDED,
HOWEVER, that in no event shall the date on which a payment is due be earlier
than ten (10) days from the date a demand is made; PROVIDED FURTHER that if
Payee is not the holder of this Note (after the negotiation of this Note to a
holder in due course) the Principal Amount is payable on demand. If no demand
is earlier made, the entire outstanding Principal Amount, plus any accrued but
unpaid interest thereon, shall be due and payable in full on May 5, 2018.
(c) Payments pursuant to the terms of this Note shall be
credited first to the payment of all costs and expenses of collection of this
Note incurred by the holder of this Note, second to accrued but unpaid interest
to the extent thereof, and thereafter to unpaid principal.
(d) Any payments made by any of the Guarantors (as defined
therein) of the Credit Agreement to discharge obligations of Payee thereunder
shall also be deemed to discharge the obligations of the Company under this Note
in an amount not to exceed the Company's right to such funds (via distributions
of partnership earnings or corporate dividend contributions) due to its direct
or indirect ownership percentage in the relevant Guarantor entity. Any such
deemed payments made by the Guarantors shall be applied first to the payment of
all costs and expenses of collection of this Note incurred by the holder of this
Note, second as a credit to accrued but unpaid interest hereunder, and
thereafter to unpaid principal.
3. PREPAYMENT. This Note may be prepaid in whole or in part at any
time or from time to time at the option of the Company, without premium or
penalty.
4. DEFAULT. A default shall occur hereunder if any payment under
this Note is not made when due. In the event of a default, the entire principal
balance and accrued but unpaid interest thereon shall, at the option of the
holder of this Note, at once become due and payable without further notice.
5. ATTORNEYS' FEES. If this Note is placed in the hands of an
attorney for collection pursuant to a suit or legal proceedings or through
bankruptcy proceedings, the Company agrees to pay in addition to all sums then
due hereunder, including principal and interest, and all expenses of collection,
including reasonable attorneys' fees.
6. WAIVER. To the extent permitted by applicable law, the Company
hereby waives presentment and demand for payment, protest, and notice of
protest, notice of intention to accelerate, notice of acceleration, dishonor and
nonpayment.
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7. INTEREST ON PAST DUE AMOUNTS. All past due principal and
interest shall bear interest at the highest rate permitted by applicable law.
8. USURY SAVINGS CLAUSE. Notwithstanding any provisions to the
contrary in this Note, or in any other documents securing payment hereof or
otherwise relating hereto, in no event shall this Note require the payment or
permit the collection of interest, as defined under the applicable usury laws,
in excess of the maximum amount permitted by such laws. If any such excess
interest is contracted for, charged, taken, reserved or received under this Note
or under the terms of any other documents securing payment hereof or otherwise
relating hereto, or in the event applicable law shall be judicially interpreted
so as to render usurious any amount called for under this Note or under the
terms of any other documents relating hereto, or in the event the maturity of
the indebtedness evidenced by the Note is accelerated in whole or in part, or in
the event that all or part of the principal or interest of the Note shall be
prepaid, so that under any such circumstances the amount of interest contracted
for, charged, taken, reserved or received under this Note or any other documents
securing payment hereof or otherwise relating hereto, on the amount of principal
actually outstanding from time to time under the Note shall exceed the maximum
amount of interest permitted by applicable usury laws, then in any such event:
(a) the provisions of this paragraph shall govern and control, (b) to the extent
permissible under applicable laws, the excess amount of interest which may have
been charged, taken, reserved, received or collected shall be applied (i) as a
credit against the then unpaid principal amount on the Note or (ii) refunded to
the person paying the same, at the holder's option, (c) the effective rate of
interest shall be automatically reduced to the maximum lawful rate reserved or
received from the party obligated thereon under applicable laws as now or
hereafter construed by the courts having jurisdiction thereof, and (d) the
provisions of this Note shall be deemed reformed and the amounts thereafter
collectible hereunder reduced, without the necessity of executing any new
document, so as to comply with the applicable law, but also so as to permit the
recovery of the fullest amount otherwise called for hereunder. It is further
agreed that without limitation of the foregoing, all calculations of the rate of
interest contracted for, charged, taken, reserved or received under this Note
which are made for the purpose of determining whether such rate exceeds the
maximum lawful rate of interest, shall be made, to the extent permitted by
applicable usury laws, by amortizing, prorating, allocating and spreading during
the period of the full term of the Note, all interest at any time contracted
for, charged, taken, reserved or received from the party obligated thereon or
otherwise by the holder or holders thereof in connection with the Note so that
the rate or amount of interest on account of such indebtedness does not exceed
the usury ceiling from time to time in effect and applicable to such debt.
9. GOVERNING LAW. This Note shall be governed by, construed and
enforced in accordance with, the laws of the State of Texas and applicable laws
of the United States of America.
10. MISCELLANEOUS. All references to the Company herein shall
include its successors and assigns, and all covenants, stipulations, promises
and agreements contained herein by or on behalf of the Company shall be binding
upon its successors and assigns, whether so
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expressed or not and shall inure to the benefit of and be enforceable by the
successors and assigns of any other holder hereof.
11. SECURITY. This Note is an unsecured obligation of the Company.
12. INVALID PROVISIONS. Any provision in this Note held to be
illegal, invalid or unenforceable is fully severable; this Note shall be
construed and enforced as if that provision had never been included; and the
remaining provisions shall remain in full force and effect and shall not be
affected by the severed provision. The Company agrees to negotiate with the
holder hereof, in good faith, the terms of a replacement provision as similar to
the severed provision as may be possible and be legal, valid and enforceable.
However, if the provision held to be illegal, invalid or unenforceable is a
material part of this Note, such invalid, illegal or unenforceable provision
shall be, to the extent permitted by applicable law, replaced by a clause or
provision judicially construed and interpreted to be as similar in substance and
content to the original terms of such illegal, invalid or unenforceable clause
or provision as the context thereof would reasonably allow, so that such clause
or provision would thereafter be legal, valid and enforceable.
13. COURSE OF DEALING. The acceptance by Payee or any subsequent
holder of this Note of any partial payment on the Note shall not be deemed to be
a waiver of any default then existing. No waiver by Payee or any subsequent
holder of this Note of any default shall be deemed to be a waiver of any other
then-existing or subsequent default. No delay or omission by Payee or any
subsequent holder of this Note in exercising any right, remedy, power, privilege
or benefit hereunder will impair that right, remedy, power, privilege or benefit
or be construed as a waiver thereof or any acquiescence therein, nor will any
single or partial exercise of any right, remedy, power, privilege or benefit
preclude other or further exercise thereof or the exercise of any other right,
remedy, power, privilege or benefit under this Note or otherwise.
14. VENUE; SERVICE OF PROCESS; JURY TRIAL. THE COMPANY, ITS
SUCCESSORS AND ASSIGNS (a) IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS OF THE STATE OF TEXAS, (b) IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN
CONNECTION WITH THIS NOTE BROUGHT IN DISTRICT COURTS OF DALLAS OR HARRIS COUNTY,
TEXAS, OR IN THE U.S. DISTRICT COURT FOR THE NORTHERN OR SOUTHERN DISTRICT OF
TEXAS, DALLAS OR HOUSTON DIVISION, (c) IRREVOCABLY WAIVES ANY CLAIMS THAT ANY
LITIGATION BROUGHT IN ANY OF THE AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM, (d) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR
BY DELIVERY BY A NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE
DEEMED COMPLETE UPON DELIVERY OF THE
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LEGAL PROCESS AT ITS PRINCIPAL EXECUTIVE OFFICE, (e) IRREVOCABLY AGREES THAT
ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR
IN CONNECTION WITH THIS NOTE MAY BE BROUGHT IN ONE OF THE AFOREMENTIONED
COURTS, AND (f) IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW,
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS NOTE. The scope of each of the foregoing waivers
is intended to be all-encompassing of any and all disputes that may be filed
in any court and that relate to the subject matter of this transaction,
including, without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. The Company
acknowledges that these waivers are a material inducement to Payee's
agreement to engage in the transaction contemplated hereby, and that Payee
and each subsequent holder of this Note will continue to rely on each of
these waivers. The Company further warrants and represents that it has
reviewed these waivers with its legal counsel, and that it knowingly and
voluntarily agrees to each waiver following consultation with legal counsel.
THE WAIVERS IN THIS SECTION 14 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, SUPPLEMENTS, OR REPLACEMENTS TO THIS NOTE. In the
event of Litigation, this Note may be filed as a written consent to a trial
by the court.
15. FINAL AGREEMENT. THIS NOTE (AS MODIFIED IN WRITING FROM TIME TO
TIME) REPRESENTS THE FINAL AGREEMENT AMONG THE COMPANY AND PAYEE AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name and in its behalf.
NCI HOLDING CORP.
By: /s/ Robert J. Medlock
-----------------------------------
Robert J. Medlock, Vice President
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NOTE PLEDGE AGREEMENT
THIS NOTE PLEDGE AGREEMENT (as hereinafter amended from time to time,
this "PLEDGE AGREEMENT") is executed as of May 5, 1998, by NCI Building
Systems, Inc., a Delaware corporation ("PLEDGOR") for the benefit of
NationsBank, N.A. (successor by merger with NationsBank of Texas, N.A.,
"AGENT"), as Administrative Agent for itself and for the Lenders
(collectively, "LENDERS") now or hereafter party to the Credit Agreement (as
defined below).
RECITALS
A. Pledgor (as Borrower therein), Agent and Lenders and other parties
named therein have executed a Credit Agreement dated March 25, 1998 (as
amended by that certain First Amendment dated as of May 1, 1998 and by that
certain Second Amendment of even date herewith, and as hereinafter amended,
supplemented or restated, the "CREDIT AGREEMENT"), together with certain
other Loan Documents.
B. Pledgor is the sole owner and holder of that certain Pledged Note
(as hereinafter defined).
C. It is expressly understood among Pledgor, Agent and Lenders that
the execution and delivery of this Pledge Agreement is a condition precedent
to Lenders' obligations to extend Loans under the Credit Agreement and
Agent's obligation to issue LCs under the Credit Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. CERTAIN DEFINITIONS. UNLESS OTHERWISE DEFINED IN THIS PLEDGE
AGREEMENT, ANY CAPITALIZED TERM USED IN THIS PLEDGE AGREEMENT HAS THE MEANING
GIVEN THAT TERM IN THE CREDIT AGREEMENT OR IN THE UCC. If the definition
given a term in the Credit Agreement conflicts with the definition given that
term in the UCC, the Credit Agreement definition shall control to the extent
allowed by Law. If the definition given a term in Chapter 9 of the UCC
conflicts with the definition given that term in any other chapter of the
UCC, the Chapter 9 definition shall control. As used in this Pledge
Agreement:
"COLLATERAL" means Pledgor's right, title and interest in and to
the Pledged Note, including all present and future contract rights, chattel
paper, documents, instruments, cash and noncash proceeds, substitutes and
replacements for, and other rights arising from or by virtue of, or
collections with respect to, or claims against any other Person with respect
to the Pledged Note.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEFAULT" means a "Default" under and as defined in the Credit
Agreement.
"OBLIGATION" means the "Obligation" under and as defined in the
Credit Agreement.
<PAGE>
"PLEDGE AGREEMENT" means this Pledge Agreement together with all
exhibits attached to this Pledge Agreement, and all amendments and
modifications to this Agreement and the exhibits.
"PLEDGED NOTE" means that certain promissory note of even date
herewith in the principal amount of US$550,000,000, a copy of which is
attached as EXHIBIT "A", made by NCI Holding Corp., a Delaware corporation
and a wholly owned subsidiary of Pledgor, in favor of Pledgor.
"PLEDGOR" includes, without limitation, Pledgor as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian, or similar party hereafter appointed for Pledgor or all or
substantially all of Pledgor's assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Law from time to time in effect
affecting the rights of creditors generally.
"SECURITY INTEREST" means the security interests granted and the
transfers, pledges and collateral assignments made under SECTION 3 of this
Pledge Agreement.
"UCC" means (a) generally, and with respect to the definitions
above, the Uniform Commercial Code, as adopted in Texas, as amended from time
to time, and (b) with respect to rights in states other than Texas, the
Uniform Commercial Code as enacted in the applicable state, as amended from
time to time.
2. CREDIT AGREEMENT. This Pledge Agreement is being executed and
delivered pursuant to the terms and conditions of the Credit Agreement. Each
Security Interest is a "Lien" referred to in the Credit Agreement.
3. SECURITY INTEREST. In order to secure the full and complete
payment and performance of the Obligation when due, Pledgor hereby grants to
Agent a security interest in, and pledges and assigns the Collateral to Agent
for the ratable benefit of the Lenders. Such security interest is granted,
and such pledge and assignment are made, as security only and shall not
subject Lenders to, or transfer or in any way affect or modify, any
obligation of Pledgor with respect to any of the Collateral or any
transaction involving or giving rise thereto.
4. NO ASSUMPTION OR MODIFICATION. The Security Interest is given to
secure the prompt, unconditional and complete payment and performance of the
Obligation when due, and is given as security only. Agent does not assume
and shall not be liable for any of Pledgor's liabilities, duties, or
obligations under or in connection with the Collateral. Agent's acceptance
of this Pledge Agreement, or its taking any action in carrying out this
Pledge Agreement, does not constitute Agent's approval of the Collateral or
Agent's assumption of any obligation under or in connection with the
Collateral. This Pledge Agreement does not affect or modify Pledgor's
obligations with respect to the Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding anything contained in this
Pledge Agreement to the contrary, Pledgor agrees that if, but for the
application of this SECTION 5, the Obligation or any Security Interest would
constitute a preferential transfer under 11 U.S.C. Section 547, a fraudulent
conveyance under 11 U.S.C. Section 548 (or any successor section) or a
fraudulent conveyance or transfer under any state fraudulent conveyance or
fraudulent transfer Law or similar Law in effect from time to time (each a
"FRAUDULENT CONVEYANCE"), then the Obligation and each affected Security
Interest will be enforceable against Pledgor to the maximum extent possible
without causing the Obligation or any Security Interest to be a Fraudulent
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Conveyance, and shall be deemed to have been automatically amended to carry
out the intent of this SECTION 5.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby confirms and
restates each of the representations and warranties in the Credit Agreement
and further represents and warrants to Agent and Lenders as follows:
(a) Pledgor is the legal owner and holder of the Collateral with
full right, power and authority to assign the Collateral to Agent;
(b) the unpaid principal balance of the Pledged Note is
US$550,000,000;
(c) no default exists under the Pledged Note;
(d) Pledgor has not previously assigned the Pledged Note and the
Collateral is free and clear of all Liens:
(e) there are no modifications or amendments to the Pledged Note;
(f) the maker of the Pledged Note does not have any defenses,
offsets or counterclaims in respect of the Collateral; and
(g) the pledge of the Collateral to Agent will not constitute a
default under the Pledged Note.
7. COVENANTS. Pledgor shall:
(a) Promptly notify Agent of any change in any fact or
circumstances represented or warranted by Pledgor with respect to any of the
Collateral.
(b) Promptly notify Agent of any default under the Pledged Note.
(c) Promptly notify Agent of any claim, action or proceeding
affecting the security interest granted and the pledge and assignment made
under SECTION 3 hereof or title to all or any of the Collateral and, at the
request of Lender, appear in and defend, at Pledgor's expense, any such
action or proceeding.
(d) Except as permitted under the Credit Agreement, not sell,
assign or otherwise dispose of any Collateral.
(e) Not create, incur or suffer to exist any other Lien upon any
of the Collateral.
(f) At Pledgor's expense and Agent's request, file or cause to be
filed such applications and take such other actions as Agent may request to
obtain the consent or approval of any Tribunal to Agent's rights hereunder,
including, without limitation, the right to sell all the Collateral upon a
Default without additional consent or approval from such Tribunal (and,
because Pledgor agrees that Agent's remedies at law for failure of Pledgor to
comply with this provision would be inadequate and that such
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<PAGE>
failure would not be adequately compensable in damages, Pledgor agrees that
its covenants in this provision may be specifically enforced).
(g) From time to time promptly execute and deliver to Agent all
such other pledges, assignments, certificates, supplemental documents, and
financing statements (if appropriate), and do all other acts or things as
Agent may reasonably request in order to more fully create, evidence,
perfect, continue and preserve the priority of the Security Interest.
8. DEFAULT; REMEDIES. Should a Default occur and be continuing, Agent
may, at its election, exercise any and all rights available to a secured
party under the UCC, in addition to any and all other rights afforded by the
Loan Documents, at law, in equity, or otherwise, including, without
limitation (i) collecting amounts due under the Collateral from the maker
until the Obligation is paid in full; and (ii) applying by appropriate
judicial proceedings for appointment of a receiver for all or part of the
Collateral (and Pledgor hereby consents to any such appointment).
(a) NOTICE. Reasonable notification of the time and place of any
public sale of the Collateral, or reasonable notification of the time after
which any private sale or other intended disposition of the Collateral is to
be made, shall be sent to Pledgor and to any other person entitled to notice
under the UCC; provided that if any of the Collateral threatens to decline
speedily in value or is of the type customarily sold on a recognized market,
Agent may sell or otherwise dispose of the Collateral without notification,
advertisement, or other notice of any kind, and no sale so made in good faith
by Lender shall be deemed not to be "commercially reasonable" because so
made. It is agreed that notice sent or given not less than five Business
Days prior to the taking of the action to which the notice relates is
reasonable for the purposes of this subparagraph.
(b) APPLICATION OF PROCEEDS. Agent shall apply the proceeds of
any sale or other disposition of the Collateral under this SECTION 8 in the
following order: FIRST, to the payment of all its expenses incurred in
retaking, holding and preparing any of the Collateral for sale(s) or other
disposition, in arranging for such sale(s) or other disposition, and in
actually selling or disposing of the same (all of which are part of the
Obligation); SECOND, toward repayment of amounts expended by Agent under this
SECTION 8; THIRD, toward payment of the balance of the Obligation in
accordance with the Credit Agreement. Any surplus remaining shall be
delivered to Pledgor or as a court of competent jurisdiction may direct. If
the proceeds are insufficient to pay the Obligation in full, Pledgor shall
remain liable for any deficiency.
9. OTHER RIGHTS OF AGENT AND LENDERS.
(a) PERFORMANCE. In the event Pledgor shall fail to perform any
of its obligations hereunder with respect to the Collateral, then Agent may,
at its option, but without being required to do so, take such action which
Pledgor is required, but has failed or refused, to take. Any sum which may
be expended or paid by Agent under this subparagraph (including, without
limitation, court costs and attorneys' fees) shall bear interest from the
dates of expenditure or payment at the Maximum Rate (as defined in the Credit
Agreement) until paid and, together with such interest, shall be payable by
Pledgor upon demand and shall be part of the Obligation.
(b) COLLECTION. Upon notice from Agent, the maker or each person
or entity obligated with respect to any of the Collateral, whether as a
maker, co-maker, endorser, accommodation party or otherwise (an "OBLIGOR") is
hereby authorized and directed by Pledgor to make payments on any of the
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<PAGE>
Collateral (including, without limitation, principal and interest payments(
directly to Agent, regardless of whether Pledgor was previously making
collections thereon. Subject to SECTION 9(C) hereof, until such notice is
given, Pledgor is authorized to retain and expend all payments made on
Collateral. Agent shall have the right in its own name or in the name of
Pledgor to compromise or extend time of payment with respect to all or any
portion of the Collateral for such amounts and upon such terms as Agent may
determine; to demand, collect, receive, receipt for, sue for, compound and
give acquittances for any and all amounts due or to become due with respect
to Collateral; to take control of cash and other proceeds of any Collateral;
to endorse the name of Pledgor substantially in the form of EXHIBIT "B"
hereto on the Pledged Note, on any other notes, acceptances, checks, drafts,
money orders or other evidences of payment on Collateral that may come into
the possession of Agent; to send requests for verification of obligations to
any Obligor; and to do all other acts and things necessary to carry out the
intent of this agreement. If any Obligor fails or refuses to make payment on
any Collateral when due, Agent is authorized, in its sole discretion, either
in its own name or in the name of Pledgor, to take such action as Agent shall
deem appropriate for the collection of any such amounts. Regardless of any
other provision hereof, however, Agent shall never be liable for its failure
to collect, or for its failure to exercise diligence in the collection of,
any amounts owed with respect to Collateral, nor shall it be under any duty
whatever to anyone except Pledgor to account for funds that it shall actually
receive hereunder. Without limiting the generality of the foregoing, Agent
shall have no responsibility for ascertaining any maturities, calls,
conversions, exchanges, offers, tenders or similar matters relating to any
Collateral, or for informing Pledgor with respect to any of such matters
(irrespective of whether Agent actually has, or may be deemed to have,
knowledge thereof). The receipt of Agent to any Obligor shall be a release,
discharge and acquittance to such Obligor, to the extent of any amount so
paid to Lender. The rights granted Agent under this subparagraph may be
exercised at any time, whether or not a Default has occurred and is
continuing.
(c) CERTAIN PROCEEDS. Any cash proceeds of Collateral which come
into the possession of Agent may, at Agent's option, be applied in whole or
in part to the Obligation (to the extent then due), be released in whole or
in part to or on the written instructions of Pledgor for any general or
specific purpose, or be retained in whole or in part by Lender as additional
Collateral.
10. MISCELLANEOUS.
(a) REFERENCE TO MISCELLANEOUS PROVISIONS. This Pledge Agreement
is one of the "Loan Documents" referred to in the Credit Agreement, and
therefore, this Pledge Agreement is subject to the applicable provisions of
SECTION 14 of the Credit Agreement, all of which are incorporated in this
Pledge Agreement by reference the same as if set forth in this Pledge
Agreement verbatim.
(b) TERM. Upon full and final payment of the Obligation and final
termination of the Lenders' commitment to lend under the Credit Agreement
without Agent having exercised its rights under this Pledge Agreement, this
Pledge Agreement shall terminate, PROVIDED THAT no Obligor on any of the
Collateral shall be obligated to inquire as to the termination of this Pledge
Agreement, but shall be fully protected in making payment directly to Agent,
which payment shall be promptly paid over to Pledgor after termination of
this Pledge Agreement.
(c) NOTICE. Any notice or communication required or permitted
under this Pledge Agreement must be given as prescribed in the Credit
Agreement.
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<PAGE>
(d) GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED--
AND ITS PERFORMANCE ENFORCED--UNDER TEXAS LAW.
(e) CREDIT AGREEMENT. In the event of any conflict or
inconsistency between the terms hereof and the Credit Agreement, the terms of
the Credit Agreement shall be controlling.
EXECUTED as of the date set forth in the preamble.
NCI BUILDING SYSTEMS, INC.,
AS PLEDGOR
By: /s/ Robert J. Medlock
------------------------------
Robert J. Medlock
Vice President and Chief Financial Officer
NATIONSBANK, N.A. (SUCCESSOR BY
MERGER WITH NATIONSBANK OF TEXAS, N.A),
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
------------------------------
Richard L. Nichols, Jr.
Vice President
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<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of NCI Building
Systems, Inc. for the registration of 3,800,000 shares of its common stock and
to the use of our report dated December 8, 1997, except for Note 9, as to
which the date is July 31, 1998, with respect to the consolidated financial
statements of NCI Building Systems, Inc. included in the Registration Statement
on Form S-3, and of our report dated August 5, 1998, with respect to the
consolidated financial statements of Amatek Holdings, Inc. included in the
Registration Statement on Form S-3.
/s/ ERNST & YOUNG LLP
-----------------------------
ERNST & YOUNG LLP
Houston, Texas
August 6, 1998
