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
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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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.
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EXECUTED as of the date set forth in the preamble.
NCI OPERATING CORP,
AS ASSIGNOR
By: /s/ Robert J. Medlock
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Name: Robert J. Medlock
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Title: Vice President and Chief Financial Officer
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NATIONSBANK OF TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND A LENDER
By: /s/ Richard L. Nichols, Jr.
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Name: Richard L. Nichols, Jr.
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Title: Vice President
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