EXHIBIT 4.2
GUARANTY
GUARANTY (this "Guaranty"), dated as of September 13, 2002, made by
each of the parties listed on the signature pages hereof (collectively, the
"Guarantors", and each, a "Guarantor"), in favor of the Guarantied Parties
referred to below.
WITNESSETH:
WHEREAS, NCI Building Systems, Inc. a Delaware corporation (the
"Borrower"), has entered into a Credit Agreement, dated as of September 13,
2002, among the Lenders party thereto, Bank of America, N.A., as the
Administrative Agent, Swing Line Lender and L/C Issuer (hereinafter, the
"Administrative Agent") for the Lenders, and Wachovia Bank, N.A. as Syndication
Agent, (said Credit Agreement, as it may be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", and capitalized terms
not defined herein but defined therein being used herein as therein defined);
and
WHEREAS, the Borrower and each of the Guarantors are members of the
same consolidated group of companies and are engaged in operations which require
financing on a basis in which credit can be made available from time to time to
the Borrower and the Guarantors, and the Guarantors will derive direct and
indirect economic benefit from the Revolving Loans, Term Loans, Swing Line Loans
and Letters of Credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make Revolving Loans, Term Loans and Swing Line Loans and issue Letters of
Credit under the Credit Agreement that the Guarantors shall have executed and
delivered this Guaranty; and
WHEREAS, the Lenders, the Administrative Agent and any Affiliate of any
Lender entering into a Swap Contract (provided that such Lender was a Lender at
the time such Swap Contract was entered into) with the Borrower or any Affiliate
of the Borrower are herein referred to as the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make Revolving Loans and Term Loans, the Swing Line Lender to make
Swing Line Loans and the L/C Issuer to issue Letters of Credit, the Guarantors
hereby agree as follows:
SECTION 1. Guaranty. The Guarantors hereby jointly and severally
unconditionally and irrevocably guarantee the full and prompt payment when due,
whether at stated maturity, by acceleration or otherwise, of, and the
performance of, (a) the Obligations (excluding obligations arising under any
Swap Contract to which an Affiliate of any Lender is a party that was entered
into prior to the time such Lender became a Lender), whether now or hereafter
existing and whether for principal, interest, fees, expenses or otherwise, (b)
any and all reasonable out-of-pocket expenses (including, without limitation,
reasonable expenses and reasonable counsel fees and expenses of the
Administrative Agent and the Lenders) incurred by any of the Guarantied Parties
in enforcing any rights under this Guaranty and (c) all present and future
amounts that would become due but for the operation of any provision of Debtor
Relief Laws, and all present
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and future accrued and unpaid interest, including, without limitation, all
post-petition interest if the Borrower or any Guarantor voluntarily or
involuntarily becomes subject to any Debtor Relief Laws (the items set forth in
clauses (a), (b) and (c) immediately above being herein referred to as the
"Guarantied Obligations"). Upon failure of the Borrower to pay any of the
Guarantied Obligations when due after the giving by the Administrative Agent
and/or the Lenders of any notice and the expiration of any applicable cure
period in each case provided for in the Credit Agreement and other Loan
Documents (whether at stated maturity, by acceleration or otherwise), the
Guarantors hereby further jointly and severally agree to promptly pay the same
after the Guarantors' receipt of notice from the Administrative Agent of the
Borrower's failure to pay the same, without any other demand or notice
whatsoever, including without limitation, any notice having been given to any
Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or
the creation or incurrence of any of the Obligations. This Guaranty is an
absolute guaranty of payment and performance of the Guarantied Obligations and
not a guaranty of collection, meaning that it is not necessary for the
Guarantied Parties, in order to enforce payment by the Guarantors, first or
contemporaneously to accelerate payment of any of the Guarantied Obligations, to
institute suit or exhaust any rights against any Loan Party, or to enforce any
rights against any Collateral. Notwithstanding anything herein or in any other
Loan Document to the contrary, in any action or proceeding involving any state
corporate law, or any state or federal bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if, as a result of
applicable law relating to fraudulent conveyance or fraudulent transfer,
including Section 548 of Bankruptcy Code or any applicable provisions of
comparable state law (collectively, "Fraudulent Transfer Laws"), the obligations
of any Guarantor under this Section 1 would otherwise, after giving effect to
(a) all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under such Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Guarantor in respect of intercompany Indebtedness to the
Borrower to the extent that such Indebtedness would be discharged in an amount
equal to the amount paid by such Guarantor hereunder) and (b) to the value as
assets of such Guarantor (as determined under the applicable provisions of such
Fraudulent Transfer Laws) of any rights of subrogation, contribution,
reimbursement, indemnity or similar rights held by such Guarantor pursuant to
(i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other
contractual obligations providing for an equitable allocation among such
Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations
arising under this Guaranty or other guaranties of the Obligations by such
parties, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under this Section 1, then the amount of such liability shall,
without any further action by such Guarantor, any Lender, the Administrative
Agent or any other Person, be automatically limited and reduced to the highest
amount that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the
Guarantied Obligations will be paid strictly in accordance with the terms of the
Credit Agreement, the Notes and the other Loan Documents, without set-off or
counterclaim, and regardless of any Applicable Law now or hereafter in effect in
any jurisdiction affecting any of such terms or the rights of the Guarantied
Parties with respect thereto. The liability of each Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
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(a) any lack of validity or enforceability of any provision of any
other Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Guarantied Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, or any increase in the amount of, all or any of the Guarantied
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement, the Notes or any of the
other Loan Documents;
(c) any exchange, release or non-perfection of any Lien on any
Collateral for, or any release of any other Loan Party or amendment or waiver of
any term of any other guaranty of, or any consent to departure from any
requirement of any other guaranty of, all or any of the Guarantied Obligations;
(d) the absence of any attempt to collect any of the Guarantied
Obligations from the Borrower or from any other Loan Party or any other action
to enforce the same or the election of any remedy by any of the Guarantied
Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guarantied Parties with respect to any provision of any
other Loan Document;
(f) the election by any of the Guarantied Parties in any proceeding
under any Debtor Relief Law;
(g) any borrowing or grant of a security interest by the Borrower, as
debtor-in-possession, under any Debtor Relief Law; or
(h) any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of the Borrower or any Guarantor other than
payment or performance of the Obligations.
SECTION 3. Waiver.
(a) Each Guarantor hereby (i) waives (A) promptness, diligence, and,
except as otherwise provided herein, notice of acceptance and any and all other
notices, including, without limitation, notice of intent to accelerate and
notice of acceleration, with respect to any of the Obligations or this Guaranty,
(B) any requirement that any of the Guarantied Parties protect, secure, perfect
or insure any security interest in or other Lien on any property subject thereto
or exhaust any right or take any action against the Borrower or any other Person
or any collateral, (C) the filing of any claim with a court in the event of
receivership or bankruptcy of the Borrower or any other Person, (D) except as
otherwise provided herein, protest or notice with respect to nonpayment of all
or any of the Guarantied Obligations, (E) the benefit of any statute of
limitation except as applicable directly to the obligations of such Guarantor
under this Guaranty, (F) except as otherwise provided herein, all demands
whatsoever (and any requirement that demand be made on the Borrower or any other
Person as a condition precedent to such Guarantor's obligations hereunder), (G)
all rights by which any Guarantor might be entitled to require suit on an
accrued right of action in respect of any of the Guarantied Obligations or
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require suit against the Borrower or any other Guarantor or Person, whether
arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as
amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as
amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or
otherwise, (H) any defense based upon an election of remedies by any Guarantied
Party, or (I) notice of any events or circumstances set forth in clauses (a)
through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as
otherwise agreed by the parties, this Guaranty will not be discharged except (i)
by complete payment and performance of the Guarantied Obligations and any other
obligations of such Guarantor contained herein or (ii) as to any Guarantor, upon
the sale or other disposition of all of the Stock of such Guarantor as permitted
under the Credit Agreement.
(b) If, in the exercise of any of its rights and remedies in accordance
with the provisions of applicable Law, any of the Guarantied Parties shall
forfeit any of its rights or remedies, including, without limitation, its right
to enter a deficiency judgment against the Borrower or any other Person, whether
because of any Applicable Law pertaining to "election of remedies" or the like,
each Guarantor hereby consents to such action by such Guarantied Party and
waives any claim based upon such action. Any election of remedies which, by
reason of such election, results in the denial or impairment of the right of
such Guarantied Party to seek a deficiency judgment against the Borrower shall
not impair the obligation of such Guarantor to pay the full amount of the
Guarantied Obligations or any other obligation of such Guarantor contained
herein.
(c) In the event any of the Guarantied Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Loan Documents, to the extent not prohibited by Applicable Law, such
Guarantied Party may bid all or less than the amount of the Guarantied
Obligations and the amount of such bid, if successful, need not be paid by such
Guarantied Party but shall be credited against the Guarantied Obligations.
(d) Each Guarantor agrees that notwithstanding the foregoing and
without limiting the generality of the foregoing if, after the occurrence and
during the continuance of an Event of Default, the Guarantied Parties are
prevented by Applicable Law from exercising their respective rights to
accelerate the maturity of the Guarantied Obligations, to collect interest on
the Guarantied Obligations, or to enforce or exercise any other right or remedy
with respect to the Guarantied Obligations, or the Administrative Agent is
prevented from taking any action to realize on the Collateral, such Guarantor
agrees to pay to the Administrative Agent for the account of the Guarantied
Parties, upon demand therefor, for application to the Guarantied Obligations,
the amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by the Guarantied Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Borrower and of each other Loan
Party, and of all other circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations or any part thereof, that diligent inquiry would reveal.
Each Guarantor hereby agrees that the Guarantied Parties shall have no duty to
advise any Guarantor of information known to any of the Guarantied Parties
regarding such condition or any such circumstance. In the event that any of the
Guarantied Parties in its sole discretion undertakes at any time or from time to
time to provide any such
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information to any Guarantor, such Guarantied Party shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which, pursuant to accepted or reasonable
banking or commercial finance practices, such Guarantied Party wishes to
maintain as confidential, or (iii) to make any other or future disclosures of
such information or any other information to such Guarantor.
(f) Each Guarantor consents and agrees that the Guarantied Parties
shall be under no obligation to marshal any assets in favor of any Guarantor or
otherwise in connection with obtaining payment of any or all of the Guarantied
Obligations from any Person or source.
SECTION 4. Representations and Warranties. Each Guarantor hereby
represents and warrants to the Guarantied Parties that the representations and
warranties set forth in Article 5 of the Credit Agreement as they relate to such
Guarantor or to the Loan Documents to which such Guarantor is a party are true
and correct in all material respects in the manner specified in the Credit
Agreement and the Guarantied Parties shall be entitled to rely on each of them
as if they were fully set forth herein.
SECTION 5. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor herefrom shall in
any event be effective unless the same shall be in writing, approved by the
Required Lenders (or by all the Lenders where the approval of each Lender is
required under the Credit Agreement) and signed by the Administrative Agent, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other communications
provided for hereunder shall be effectuated in the manner provided for in
Section 10.02 of the Credit Agreement, provided that if a notice or
communication hereunder is sent to a Guarantor, said notice shall be addressed
to such Guarantor, in care of the Borrower at the Borrower's then current
address (or facsimile number) for notice under the Credit Agreement.
SECTION 7. No Waiver; Remedies.
(a) No failure on the part of any Guarantied Party to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
Applicable Law or any of the other Loan Documents.
(b) No waiver by the Guarantied Parties of any default shall operate as
a waiver of any other default or the same default on a future occasion, and no
action by any of the Guarantied Parties permitted hereunder shall in way affect
or impair any of the rights of the Guarantied Parties or the obligations of any
Guarantor under this Guaranty or under any of the other Loan Documents, except
as specifically set forth in any such waiver. Any determination by a court of
competent jurisdiction of the amount of any principal and/or interest or other
amount constituting any of the Guarantied Obligations shall be conclusive and
binding on each
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Guarantor irrespective of whether such Guarantor was a party to the suit or
action in which such determination was made provided that the Borrower was so a
party.
SECTION 8. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default under the Credit Agreement, each of the
Guarantied Parties is hereby authorized at any time and from time to time, to
the fullest extent permitted by Applicable Law, to set-off and apply any and all
deposits (general or special (except trust and escrow accounts), time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by such Guarantied Party to or for the credit or the account of each Guarantor
against any and all of the obligations of such Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not such Guarantied
Party shall have made any demand under this Guaranty and although such
obligations may be contingent and unmatured; provided, however, such Guarantied
Party shall promptly notify such Guarantor and the Borrower after such set-off
and the application made by such Guarantied Party. The rights of each Guarantied
Party under this Section 8 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Guarantied
Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. This Guaranty is a
continuing guaranty and shall remain in full force and effect until the Release
Date, (ii) be binding upon each Guarantor, its permitted successors and assigns,
and (iii) inure to the benefit of and be enforceable by the Guarantied Parties
and their respective successors, permitted transferees, and permitted assigns.
Without limiting the generality of the foregoing clause (iii), each of the
Guarantied Parties may assign or otherwise transfer any Note held by it or the
Guarantied Obligations owed to it to any other Person, and such other Person
shall thereupon become vested with all the rights in respect thereof granted to
such Guarantied Party herein or otherwise with respect to such of the Notes and
the Guarantied Obligations so transferred or assigned, subject, however, to
compliance with the provisions of Section 10.07 of the Credit Agreement in
respect of assignments. Except as the result of the consummation of a
transaction permitted under Section 7.04(a) of the Credit Agreement, no
Guarantor may assign any of its obligations under this Guaranty without first
obtaining the written consent of the Lenders as set forth in the Credit
Agreement.
SECTION 10. Reimbursement. To the extent that any Guarantor shall be
required hereunder to pay a portion of the Guarantied Obligations exceeding the
greater of (a) the amount of the economic benefit actually received by such
Guarantor from the Loans and the Letters of Credit and (b) the amount such
Guarantor would otherwise have paid if such Guarantor had paid the aggregate
amount of the Guarantied Obligations (excluding the amount thereof repaid by the
Borrower) in the same proportion as such Guarantor's net worth at the date
enforcement is sought hereunder bears to the aggregate net worth of all the
Guarantors at the date enforcement is sought hereunder, then such Guarantor
shall be reimbursed by such other Guarantors for the amount of such excess, pro
rata, based on the respective net worths of such other Guarantors at the date
enforcement hereunder is sought. Notwithstanding anything to the contrary, each
Guarantor agrees that the Guarantied Obligations may at any time and from time
to time exceed the amount of the liability of such Guarantor hereunder without
impairing its guaranty herein or effecting the rights and remedies of the
Guarantied Parties hereunder. This Section 10 is intended only to define the
relative rights of the Guarantors, and nothing set forth in this Section 10 is
intended to
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or shall impair the obligations of the Guarantors, jointly and severally, to pay
to the Guarantied Parties the Guarantied Obligations as and when the same shall
become due and payable in accordance with the terms hereof.
SECTION 11. Reinstatement. This Guaranty shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Loan Party for liquidation or reorganization, should any Loan Party become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Loan
Party's assets, and shall, to the fullest extent permitted by Applicable Law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
Applicable Law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligees of the Obligations or such part thereof, whether as a
"voidable preference," "fraudulent transfer," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Guarantied
Obligations shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 12. GOVERNING LAW.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) The parties hereto agree that Chapter 346 (other than 346.004) of
the Texas Finance Code (which regulates certain revolving credit accounts and
revolving tri-party accounts) shall not apply to Loans under this Guaranty.
(c) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS SITTING
IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS (DALLAS DIVISION), AND BY EXECUTION AND DELIVERY OF THIS
GUARANTY, THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE
AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.
THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES
PERSONAL SERVICE OF
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ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.
SECTION 13. Waiver of Jury Trial. EACH GUARANTOR, THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER HEREBY (OR BY ACCEPTANCE HEREOF) EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF ANY ONE OR MORE OF EACH GUARANTOR, THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WITH RESPECT TO ANY LOAN
DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING
OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND
EACH OF THE GUARANTORS, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY OF THE
GUARANTORS, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF EACH GUARANTOR, THE BORROWER, THE ADMINISTRATIVE
AGENT AND EACH LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 14. Section Titles. The Section titles contained in this
Guaranty are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty.
SECTION 15. Execution in Counterparts. This Guaranty may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
Guaranty.
SECTION 16. Miscellaneous. All references herein to the Borrower or to
any Guarantor shall include their respective successors and assigns, including,
without limitation, a receiver, trustee or debtor-in-possession of or for the
Borrower or such Guarantor. All references to the singular shall be deemed to
include the plural where the context so requires.
SECTION 17. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation contained
herein to the contrary, until the Release Date, each Guarantor hereby
irrevocably waives any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment, performance
or enforcement of such Guarantor's obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of any Lender against the Borrower or any collateral which any Lender now has or
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statutes or common law,
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including without limitation, the right to take or receive from the Borrower,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to any Guarantor in violation of the preceding sentence and
the Guarantied Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders, and shall forthwith be paid to the
Administrative Agent to be credited and applied upon the Guarantied Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit Agreement
and that the waiver set forth in this Section 17 is knowingly made in
contemplation of such benefits.
(b) Subordination. All debt and other liabilities of the Borrower to
any Guarantor ("Borrower Debt") are expressly subordinate and junior to the
Guarantied Obligations and any instruments evidencing the Borrower Debt to the
extent provided below.
(i) Until the Release Date, each Guarantor agrees that it will
not request, demand, accept, or receive (by set-off or other manner)
any payment amount, credit or reduction of all or any part of the
amounts owing under the Borrower Debt or any security therefor, except
as specifically allowed pursuant to clause (ii) below;
(ii) Notwithstanding the provisions of clause (i) above, the
Borrower may pay to the Guarantors and the Guarantors may request,
demand, accept and receive and retain from the Borrower payments,
credits or reductions of all or any part of the amounts owing under the
Borrower Debt or any security therefor on the Borrower Debt, provided
that the Borrower's right to pay and the Guarantors' right to receive
any such amount shall automatically and be immediately suspended and
cease (A) upon the occurrence and during the continuance of an Event of
Default or (B) if, after taking into account the effect of such
payment, an Event of Default would occur and be continuing. The
Guarantors' right to receive amounts under this clause (ii) (including
any amounts which theretofore may have been suspended) shall
automatically be reinstated at such time as the Event of Default which
was the basis of such suspension has been cured or waived (provided
that no subsequent Event of Default has occurred) or such earlier date,
if any, as the Administrative Agent gives notice to the Guarantors of
reinstatement by the Required Lenders, in the Required Lenders' sole
discretion;
(iii) If any Guarantor receives any payment on the Borrower
Debt in violation of this Guaranty, such Guarantor will hold such
payment in trust for the Lenders and will immediately deliver such
payment to the Administrative Agent; and
(iv) In the event of the commencement or joinder of any suit,
action or proceeding of any type (judicial or otherwise) or proceeding
under any Debtor Relief Law against the Borrower (an "Insolvency
Proceeding") and subject to court orders issued pursuant to the
Bankruptcy Code, the Guarantied Obligations shall first be paid,
discharged and performed in full before any payment or performance is
made upon the Borrower Debt notwithstanding any other provisions which
may be made in such Insolvency Proceeding. In the event of any
Insolvency Proceeding, each Guarantor will
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at any time prior to the Release Date (A) file, at the request of any
Guarantied Party, any claim, proof of claim or similar instrument
necessary to enforce the Borrower's obligation to pay the Borrower
Debt, and (B) hold in trust for and pay to the Guarantied Parties any
and all monies, obligations, property, stock dividends or other assets
received in any such proceeding on account of the Borrower Debt in
order that the Guarantied Parties may apply such monies or the cash
proceeds of such other assets to the Obligations.
SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily
seek, consent to, or acquiesce in the 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 any Guarantied Party granted hereunder,
then, the obligations of such Guarantor under this Guaranty shall be, as between
such Guarantor and such Guarantied Party, a fully-matured, due, and payable
obligation of such Guarantor to such Guarantied Party (without regard to whether
the Borrower is then in default under the Credit Agreement or whether any part
of the Guarantied Obligations is then due and owing by the Borrower to such
Guarantied Party), payable in full by such Guarantor to such Guarantied Party
upon demand, which shall be the estimated amount owing in respect of the
contingent claim created hereunder.
SECTION 19. Rate Provision. It is not the intention of any Guarantied
Party to make an agreement violative of the laws of any applicable jurisdiction
relating to usury. Regardless of any provision in this Guaranty, no Guarantied
Party shall ever be entitled to contract, charge, receive, collect or apply, as
interest on the Guarantied Obligations, any amount in excess of the Highest
Lawful Rate. In no event shall any Guarantor be obligated to pay any amount in
excess of the Highest Lawful Rate. If from any circumstance the Administrative
Agent or any Guarantied Party shall ever receive, collect or apply anything of
value deemed excess interest under Applicable Law, an amount equal to such
excess shall be applied to the reduction of the principal amount of outstanding
Revolving Loans, Term Loans, Swing Line Loans, L/C Borrowings and any remainder
shall be promptly refunded to the payor. In determining whether or not interest
paid or payable with respect to the Guarantied Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, the Guarantors and the Guarantied
Parties shall, to the maximum extent permitted by Applicable Law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such Obligations so that the interest paid
on account of such Guarantied Obligations does not exceed the Highest Lawful
Rate and/or (c) allocate interest between portions of such Guarantied
Obligations; provided that if the Guarantied Obligations are paid and performed
in full prior to the end of the full contemplated term thereof, and if the
interest received for the actual period of existence thereof exceeds the Highest
Lawful Rate, the Guarantied Parties shall refund to the payor the amount of such
excess or credit the amount of such excess against the total principal amount
owing, and, in such event, no Guarantied Party shall be subject to any penalties
provided by any laws for contracting for, charging or receiving interest in
excess of the Highest Lawful Rate.
SECTION 20. Severability. Any provision of this Guaranty which is for
any reason prohibited or found or held invalid or unenforceable by any court or
governmental agency shall be ineffective to the extent of such prohibition or
invalidity or unenforceability, without
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invalidating the remaining provisions hereof in such jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
SECTION 21. ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE
SUBJECT MATTER HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 22. Conflicts. If in the event of a conflict between the terms
and conditions of this Guaranty and the terms and conditions of the Credit
Agreement, the terms and conditions of the Credit Agreement shall control.
SECTION 23. Taxes.
(a) Except as provided below in this Section 23, any and all
payments by each Guarantor to or for the account of the Administrative
Agent or any Lender under this Guaranty or any other Loan Document
shall be made free and clear of and without deduction for any and all
present or future stamp or other taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, now or
hereafter imposed, and all liabilities with respect thereto, excluding,
in the case of the Administrative Agent and any Lender, or its
applicable lending office, or any branch or affiliate thereof, taxes
imposed on or measured by its net income (including net income taxes
imposed by means of a backup withholding tax) franchise taxes, branch
taxes, taxes on doing business or taxes measured by or imposed upon the
overall capital or net worth of any Lender or its applicable lending
office, or any branch or affiliate thereof, in each case imposed: (i)
by the jurisdiction (or political subdivision thereof) under the laws
of which the Administrative Agent, or such Lender, applicable lending
office, branch or affiliate is organized or is located, or in which the
principal executive office of the Administrative Agent or any Lender is
located, or any nation within which such jurisdiction is located or any
political subdivision thereof; or (ii) by reason of any present or
former connection between the jurisdiction imposing such tax and the
Administrative Agent or such Lender, applicable lending office, branch
or affiliate other than a connection arising solely from the
Administrative Agent or such Lender having executed, delivered or
performed its obligation under, or received payment under or enforced
this Agreement (all such non-excluded taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as "Taxes"). If any Guarantor
shall be required by any Laws to deduct any Taxes from or in respect of
any sum payable under this Guaranty or any other Loan Document to the
Administrative Agent or any Lender, then, except as provided below in
this Section 23, (i) the sum payable shall be increased as necessary to
yield to the Administrative Agent and such Lender an amount equal to
the sum it would have received had no such deductions been made, (ii)
such Guarantor shall make such deductions, (iii) such Guarantor shall
pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable Laws, and (iv) promptly
(but in no event later than 30 days) after the date of
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such payment, such Guarantor shall furnish to the Administrative Agent
(which shall forward the same to such Lender) the original or a
certified copy of a receipt evidencing payment thereof; provided,
however, that such Guarantor shall be entitled to deduct and withhold
any Taxes and shall not be required to increase any such amounts
payable to any Lender with respect to Taxes (i) that are directly
attributable to such Lender's failure to comply with the requirements
of Section 10.15 of the Credit Agreement or (ii) that are U.S.
withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to the Credit Agreement.
(b) In addition, each Guarantor agrees to pay any and all
present or future stamp, court or documentary taxes and any other
excise or property taxes or charges or similar levies which arise from
any payment made under this Guaranty or any other Loan Document or from
the execution, delivery, performance, enforcement or registration of,
or otherwise with respect to, this Guaranty or any other Loan Document
(hereinafter referred to as "Other Taxes") provided, that the term
"Other Taxes," as used in this Guaranty, shall not include or be deemed
to mean, and the Guarantors shall not be obligated to pay any such
taxes, charges or similar levies that are incurred or payable by any
Person in connection with any assignment referred to in Section
10.07(b) of the Credit Agreement, any participation referred to in
Section 10.07(d) of the Credit Agreement or any pledge or security
interest referred to in Section 10.07(f) of the Credit Agreement.
(c) If any Guarantor shall be required to deduct or pay any
Taxes or Other Taxes from or in respect of any sum payable under this
Guaranty or any other Loan Document to the Administrative Agent or any
Lender, such Guarantor shall also pay to the Administrative Agent (for
the account of such Lender) or to such Lender, at the time interest on
the Guarantied Obligations is paid, such additional amount that such
Lender specifies as necessary to preserve the after-tax yield (after
factoring in all taxes, including taxes imposed on or measured by net
income) such Lender would have received if such Taxes or Other Taxes
had not been imposed.
(d) Each Guarantor agrees to indemnify the Administrative
Agent and each Lender for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section) paid by the
Administrative Agent and such Lender, (ii) amounts payable under
Section 23(c) and (iii) any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. Payment
under this subsection (d) shall be made within 30 days after the date
the Lender or the Administrative Agent makes a demand therefor.
(e) Any Lender claiming any additional amounts payable
pursuant to this Section 23 shall use its reasonable best efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its lending office, if the
making of such a change would avoid the need for, or reduce the amount
of, any such
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additional amounts which may thereafter accrue and would not, in the
reasonable judgment of such Lender, be disadvantageous to such Lender.
(f) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that
(i) it will take all reasonable actions by all usual means to maintain
all exemptions, if any, available to it from United States withholding
taxes (whether available by treaty, existing administrative waiver, by
virtue of the location of any Lender's lending office) and (ii)
otherwise cooperate with the Borrower to minimize amounts payable by
each Guarantor under this Section 23; provided, however, the Lenders
and the Administrative Agent shall not be obligated by reason of this
Section 23(f) to contest the payment of any Taxes or Other Taxes or to
disclose any information regarding its tax affairs or tax computations
or reorder its tax or other affairs or tax or other planning. Subject
to the foregoing, to the extent any Guarantor pays sums pursuant to
this Section 23 and any Lender or the Administrative Agent receives a
refund of any or all of such sums, such refund shall be applied to
reduce any amounts then due and owing under this Guaranty or, to the
extent that no amounts are due and owing under this Guaranty at the
time such refunds are received, the party receiving such refund shall
promptly pay over all such refunded sums to such Guarantor, provided
that no Default is in existence at such time.
(g) The obligations of each Guarantor and each Lender or
Participant under this Section 23 shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable
hereunder and under the other Loan Documents.
(h) Notwithstanding anything in this Section 23 to the
contrary, the demand by the Administrative Agent or any Lender for the
payment of Taxes or Other Taxes under this Section 23 shall not include
any Taxes or Other Taxes that occurred 180 days prior to the date that
the Administrative Agent or such Lender had knowledge or should have
had knowledge of such Taxes or Other Taxes unless the Administrative
Agent or such Lender notifies the Borrower of such Taxes or Other Taxes
no later than 180 days after the date that the Administrative Agent or
such Lender had knowledge or should have had knowledge of such Taxes or
Other Taxes.
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
NCI HOLDING CORP.
NCI OPERATING CORP.
METAL COATERS OF CALIFORNIA, INC.
By: /s/ ROBERT J. MEDLOCK
--------------------------------
Robert J. Medlock
Executive Vice President and
Chief Financial Officer
A & S BUILDING SYSTEMS, L.P.
NCI BUILDING SYSTEMS, L.P.
METAL BUILDING COMPONENTS, L.P.
METAL COATERS OPERATING, L.P.
By: NCI OPERATING CORP.,
as General Partner
By: /s/ ROBERT J. MEDLOCK
--------------------------------
Robert J. Medlock
Executive Vice President and
Chief Financial Officer