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EXHIBIT 4.27
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.
"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.
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"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
Conveyance, and shall be deemed to have been automatically amended to carry out
the intent of this SECTION 5.
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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 failure would not be
adequately compensable in damages, Pledgor 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 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
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
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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, xxx 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.
(d) Governing Law. THIS PLEDGE AGREEMENT SHALL BE CONSTRUED- -
AND ITS PERFORMANCE ENFORCED--UNDER TEXAS LAW.
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(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/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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/ Xxxxxxx X. Xxxxxxx, Xx.
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Xxxxxxx X. Xxxxxxx, Xx.
Vice President
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