PLEDGE AND SECURITY
AGREEMENT
THIS PLEDGE AND
SECURITY AGREEMENT (“Pledge Agreement”), dated October
20, 2009, is by NCI Building Systems, Inc., a Delaware corporation
(the “Company”), NCI Group, Inc., a Nevada corporation
(“NCI”) and Robertson-Ceco II Corporation, a Delaware
corporation (“Ceco”) to and in favor of Wells Fargo
Foothill, LLC, a Delaware limited liability company, in its
capacity as administrative agent and collateral agent pursuant to
the Loan Agreement (as hereinafter defined) acting for and on
behalf of the parties thereto as lenders and as otherwise provided
therein (in such capacity, “Pledgee”). The Company,
NCI, Ceco and any Subsidiary of the Company that becomes party
hereto after the date hereof in accordance with Section 10
hereof are sometimes hereinafter referred to hereunder individually
each, as a “Pledgor” and collectively, as
“Pledgors”.
WHEREAS, the
Pledgors are the direct and beneficial owners of Pledged Securities
(as defined below) of the issuers identified on Exhibit A
annexed hereto (each, an “Issuer” and collectively
“Issuers”);
WHEREAS, Pledgee
and the parties to the Loan Agreement as lenders (individually,
each a “Lender” and collectively,
“Lenders”) have entered financing arrangements pursuant
to which Lenders (or Pledgee on behalf of Lenders) may make loans
and advances and provide other financial accommodations to NCI and
Ceco as set forth in the Loan and Security Agreement, dated of even
date herewith, by and among the Company, NCI, Ceco, the Pledgee and
Lenders (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced,
the “Loan Agreement”) and the other Financing
Agreements;
WHEREAS, in order
to induce Pledgee and Lenders to enter into the Loan Agreement and
the other Financing Agreements and to make loans and advances and
provide other financial accommodations to NCI and Ceco pursuant
thereto, the each Pledgor has agreed to secure the payment and
performance of its Obligations (as defined herein) and to
accomplish same by (i) executing and delivering to Pledgee
this Pledge Agreement and (ii) subject to the terms of the
Intercreditor Agreement, delivering to Pledgee the certificates (if
any) representing the Pledged Securities which are registered in
the name of such Pledgor, together if required with appropriate
stock powers duly executed in blank by such Pledgor.
NOW, THEREFORE, in
consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby agrees as follows:
1.
Definitions . Capitalized terms used but not defined herein
shall have the meaning ascribed thereto in the Loan Agreement. The
terms “Additional Agent” and “Control
Agent” shall have the meaning ascribed thereto in the
Intercreditor Agreement. The term “Obligations” as to
any Pledgor means all Obligations (as defined in the Loan
Agreement) of such Pledgor and
all of such
Pledgor’s obligations under the Guaranty Agreement. The term
“Pledged Securities” means, with respect to any
Pledgor, the issued and outstanding shares of capital stock
described on Exhibit A annexed hereto as being held by such
Pledgor, together with any other shares, stock certificates,
options or rights of any nature whatsoever in respect of the
Capital Stock of any Issuer that may be issued or granted to, or
held by, a Pledgor while this Agreement is in effect,
provided that in no event shall Pledged Securities include
any asset or property excluded from the Pledged Property (as
defined below) pursuant to the proviso to
Section 2.
2. Grant
of Security Interest . To secure payment and performance when
due of all of its Obligations, each Pledgor hereby pledges to
Pledgee, and grants to Pledgee, for itself and the benefit of the
other Secured Parties, a continuing security interest in and Lien
upon: (a) the Pledged Securities of such Pledgor and
(b) the proceeds (as defined in the UCC) of all of the
foregoing (all of the foregoing being collectively referred to
herein as the “Pledged Property” provided that
in no event shall Pledged Property include (i) any Excluded
Property, (ii) more than 65% of any series of the outstanding
Equity Interests of any Foreign Subsidiary, (iii) any of the Equity
Interests of a Subsidiary of a Foreign Subsidiary or (iv)
de minimis shares of a Foreign Subsidiary held by any
Pledgor as a nominee or in a similar capacity, pursuant to this
Agreement).
3.
Obligations Secured . The security interest and Lien granted
to Pledgee, for itself and the benefit of the other Secured
Parties, pursuant to this Pledge Agreement by each Pledgee shall
secure the prompt payment and performance when due of all of the
Obligations of such Pledgee.
4.
Representations and Warranties . Each Pledgor hereby
represents and warrants to Pledgee the following:
(a) The
Pledged Securities pledged by it are duly and validly issued, fully
paid and non-assessable capital stock (or the equivalent, if any,
under applicable law) of the applicable Issuer and constitute
(except as provided in the proviso to Section 2) (i) in
the case of any Issuer that is a Subsidiary other than a Foreign
Subsidiary, all of the issued and outstanding shares of capital
stock of such Issuer owned by such Pledgor and (ii) in the
case of an Issuer that is a Foreign Subsidiary, such percentage
(not more than 65%) as is specified in Exhibit A of all of the
issued and outstanding shares of all classes of the Capital Stock
of such Foreign Subsidiary owned by such Pledgor, and are not
registered, nor has any Pledgor authorized the registration
thereof, in the name of any person or entity other than such
Pledgor or Pledgee or in respect of other Permitted Liens under the
Loan Agreement.
(b) Its
Pledged Securities are directly, legally and beneficially owned by
such Pledgor, free and clear of all Liens, except for the pledge
and security interest in favor of Pledgee, for itself and the
benefit of the Secured Parties, and the Permitted Liens under the
Loan Agreement.
5.
Covenants . Each Pledgor covenants to the Pledgee the
following:
(a) If such
Pledgor shall become entitled to receive or acquire, or shall
receive or acquire any stock certificate, or option or right with
respect to the stock of any Issuer (including without limitation,
any certificate representing a dividend or a distribution or
exchange of or in connection with reclassification of the Pledged
Securities) whether as an addition to, in
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substitution
of, or in exchange for any of the Pledged Property or otherwise,
such Pledgor agrees, subject to the terms of the Intercreditor
Agreement, to accept same as Pledgee’s agent, to hold same in
trust for Pledgee and to deliver same forthwith to Pledgee or
Pledgee’s agent or bailee, or the Term Loan Agent, any
Additional Agent or the Control Agent, as applicable, in accordance
with the Intercreditor Agreement, in the form received, with the
endorsement(s) of Pledgor where necessary and/or appropriate stock
powers duly executed to be held by Pledgee or Pledgee’s agent
or bailee subject to the terms hereof, or by the Term Loan Agent,
any Additional Agent or the Control Agent, as applicable, in
accordance with the Intercreditor Agreement and subject to the
terms thereof, as further security for the Obligations.
(b) So long
as no Event of Default has occurred and is continuing, or, if an
Event of Default shall have occurred and be continuing and the
Pledgee shall not have given notice to the Pledgors of the
Pledgee’s intent to exercise its rights under Section 6,
each Pledgor shall have the right to vote and otherwise exercise
all corporate and stockholder rights with respect to its Pledged
Property, except as expressly prohibited herein, and to receive any
cash dividends or distributions payable in respect of its Pledged
Property.
(c) Subject
to the terms of the Intercreditor Agreement, if an Event of Default
has occurred and is continuing, Pledgee may notify any Issuer or
the appropriate transfer agent of the Pledged Securities to
register the security interest and pledge granted herein and honor
the rights of Pledgee under this Pledge Agreement.
(a) At any
time an Event of Default has occurred and is continuing, in
addition to all other rights and remedies of Pledgee or any of the
other Secured Parties, whether provided under this Pledge
Agreement, the Loan Agreement, the other Financing Agreements,
applicable law or otherwise, Pledgee shall have, in each case to
the extent permitted under applicable law and subject to the terms
of the Intercreditor Agreement, the following rights and remedies
which to the extent permitted by applicable law may be exercised
without notice to, or consent by, Pledgor except as such notice or
consent is expressly provided for hereunder: (i) Pledgee, at
its option, shall be empowered to instruct any Issuer (or the
appropriate transfer agent of the Pledged Securities) to register
any or all of the Pledged Securities issued by such Issuer in the
name of Pledgee or in the name of Pledgee’s nominee
(including, without limitation, any Lender) and Pledgee may
complete, in any manner Pledgee may deem reasonable, any and all
stock powers, assignments or other documents heretofore or
hereafter executed in blank by any Pledgor and delivered to
Pledgee; (ii) after said instruction, and without further
notice Pledgee shall have the exclusive right to exercise all
voting and corporate rights with respect to the applicable Pledged
Securities and other Pledged Property, and exercise any and all
rights of conversion, redemption, exchange, subscription or any
other rights, privileges, or options pertaining to any shares of
the applicable Pledged Securities or the other Pledged Property as
if Pledgee were the absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all
of such Pledged Securities and other Pledged Property upon any
merger, consolidation, reorganization, recapitalization or other
readjustment with respect thereto; and (iii) upon the exercise
of any such rights, privileges or options by Pledgee, Pledgee shall
have the right to deposit and deliver any and all of the Pledged
Securities and the other Pledged Property to any committee,
depository, transfer agent, registrar or other designated agency
upon
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such terms and
conditions as Pledgee may reasonably determine, all without
liability, except to account for property actually received by
Pledgee; however, Pledgee shall have no duty to exercise any of the
aforesaid rights, privileges or options (all of which are
exercisable in the sole discretion of Pledgee) and shall not be
responsible for any failure to do so or delay in doing so,
provided , that , the Pledgee, or Term Loan Agent,
any Additional Agent or the Control Agent, as applicable, in
accordance with the Intercreditor Agreement, shall not exercise any
voting or other consensual rights pertaining to the Pledged
Securities in any way that would constitute an exercise of the
remedies described in this Section 6 other than in accordance
with this Section 6..
(b) In
addition to all the rights and remedies of a secured party under
the UCC or other applicable law, at any time an Event of Default
has occurred and is continuing, Pledgee shall have, to the extent
permitted under applicable law and subject to the terms of the
Intercreditor Agreement, the right, at any time and without demand
of performance or other demand, advertisement or notice of any kind
(except any notice required under the Loan Agreement and the notice
specified below of time and place of public or private sale) to or
upon Pledgor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived to the
extent permitted by applicable law), to proceed forthwith to
collect, redeem, recover, receive, appropriate, realize, sell, or
otherwise dispose of and deliver any of the Pledged Property or any
part thereof in one or more lots at public or private sale or sales
at any exchange, broker’s board or at any of Pledgee’s
offices or elsewhere at such prices and on such terms as Pledgee
may deem reasonable. To the extent permitted by applicable law, the
foregoing disposition(s) may be for cash or on credit or for future
delivery without assumption of any credit risk, with Pledgee having
the right to purchase all or any part of the Pledged Property so
sold at any such sale or sales, public or private, free of any
right or equity of redemption in any Pledgor, which right or equity
is hereby expressly waived or released by the Pledgors to the
extent permitted by applicable law. The proceeds of any such
collection, redemption, recovery, receipt, appropriation,
realization, sale or other disposition, shall be applied in
accordance with the Intercreditor Agreement, with the Pledgors to
remain liable for any deficiency. To the extent permitted by
applicable law, the Pledgors agree that ten (10) days prior
written notice by Pledgee designating the place and time of any
public sale or of the time after which any private sale or other
intended disposition of any or all of the Pledged Property is to be
made, is reasonable notification of such matters.
(c) The
Pledgors recognize that Pledgee may be unable to effect a public
sale of all or part of the Pledged Securities by reason of certain
prohibitions contained in the Securities Act of 1933, as amended,
as now or hereafter in effect or in applicable Blue S
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