EXHIBIT 10.3
TREX COMPANY, INC.
AMENDED AND RESTATED
1999 INCENTIVE PLAN
FOR OUTSIDE DIRECTORS
Amended and Restated as of
January 1, 2001
TABLE OF CONTENTS
Page
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1. DEFINITIONS....................................................... 1
2. PURPOSE........................................................... 2
3. SHARES SUBJECT TO THE PLAN........................................ 2
4. ANNUAL DIRECTOR FEES.............................................. 2
4.1. General..................................................... 2
4.2. Form of Annual Fee.......................................... 3
4.3. Valuation of Options........................................ 3
5. GRANT DATE........................................................ 3
6. OPTION PRICE...................................................... 3
7. TERM OF OPTIONS................................................... 3
8. VESTING OF OPTIONS................................................ 3
9. SERVICE TERMINATION............................................... 4
10. RIGHTS IN THE EVENT OF DEATH OR DISABILITY........................ 4
10.1. Death...................................................... 4
10.2. Disability................................................. 4
11. ELECTION TO RECEIVE ADDITIONAL OPTIONS............................ 5
11.1. Election Form.............................................. 5
11.2. Time for Filing Election Form.............................. 5
11.3. Modification of the Election Form.......................... 5
12. ADMINISTRATION.................................................... 5
12.1. Committee.................................................. 5
12.2. Rules for Administration................................... 5
12.3. Committee Action........................................... 6
12.4. Delegation................................................. 6
12.5. Services................................................... 6
12.6. Indemnification............................................ 6
13. AMENDMENT AND TERMINATION......................................... 6
14. GENERAL PROVISIONS................................................ 6
14.1. Limitation of Rights....................................... 6
14.2. No Rights as Stockholders.................................. 7
14.3. Rights as a Non-Employee Director.......................... 7
14.4. Assignment, Pledge or Encumbrance.......................... 7
14.5. Binding Provisions......................................... 7
14.6. Notices.................................................... 7
14.7. Governing Law.............................................. 7
14.8. Withholding................................................ 7
14.9. Effective Date............................................. 8
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1. DEFINITIONS
To the extent any capitalized words used in this Plan are not defined,
they shall have the definitions stated for them in the Trex Company, Inc. 1999
Stock Option and Incentive Plan
1.1 "Annual Director Fee" means an annual fee earned by an Eligible Director
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for service on the Board of Directors.
1.2 "Board of Directors" or "Board" means the Board of Directors of the
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Company.
1.3 "Committee" means the Administrative Committee which administers the Plan.
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1.4 "Common Stock" means the common stock, par value $0.01 per share, of the
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Company.
1.5 "Company" means Trex Company, Inc., a Delaware corporation, or any
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successor thereto.
1.6 "Election Form" means the form used by an Eligible Director to elect to
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receive all or a portion of his Annual Director Fee for a Plan Year in the
form of Options.
1.7 "Eligible Director" for each Plan Year means a member of the Board of
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Directors who is not an employee of the Company or any Subsidiary.
1.8 "Fair Market Value" means the closing price of a share of Common Stock
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reported on the New York Stock Exchange (the "NYSE") on the date Fair
Market Value is being determined, provided that if there is no closing
price reported on such date, the Fair Market Value of a share of Common
Stock on such date shall be deemed equal to the closing price as reported
by the NYSE for the last preceding date on which sales of shares of Common
Stock were reported. Notwithstanding the foregoing, in the event that the
shares of Common Stock are listed upon more than one established stock
exchange, "Fair Market Value" means the closing price of the shares of
Common Stock reported on the exchange that trades the largest volume of
shares of Common Stock on the date Fair Market Value is being determined.
If the Common Stock is not at the time listed or admitted to trading on a
stock exchange, Fair Market Value means the mean between the lowest
reported bid price and highest reported asked price of the Common Stock on
the date in question in the over-the-counter market, as such prices are
reported in a publication of general circulation selected by the Board and
regularly reporting the market price of Common Stock in such market. If
the Common Stock is not listed or admitted to trading on any stock exchange
or traded in
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the over-the-counter market, Fair Market Value shall be as determined in
good faith by the Board.
1.9 "Grant Date" has the meaning set forth in Section 5 hereof.
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1.10 "Option" means a non-qualified Option granted pursuant to the Trex Company,
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Inc. 1999 Stock Option and Incentive Plan.
1.11 "Option Agreement" means the written agreement between the Company and the
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Participant that evidences and sets out the terms and conditions of the
Option.
1.12 "Option Price" has the meaning set forth in Section 6 hereof.
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1.13 "Participant" for any Plan Year means an Eligible Director who participates
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in the Plan for that Plan Year in accordance with Section 11.1 hereof.
1.14 "Plan" means the Trex Company, Inc. Amended and Restated 1999 Incentive
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Plan for Outside Directors as set forth herein and as amended from time to
time.
1.15 "Plan Year" means each fiscal year of the Company.
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1.16 "Subsidiary" means any "subsidiary corporation" of the Company within the
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meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended.
2. PURPOSE
The purpose of the Plan is to provide an incentive for Eligible
Directors to increase their equity holdings in the Company so that the financial
interests of the Eligible Directors shall be more closely aligned with the
financial interests of the Company's stockholders.
3. SHARES SUBJECT TO THE PLAN
The shares of Common Stock issuable under the Plan shall be issued
pursuant to the Trex Company, Inc. 1999 Stock Option and Incentive Plan.
4. ANNUAL DIRECTOR FEES
4.1. General
Each Eligible Director shall be entitled to an Annual Director Fee
which is equal in value to forty thousand dollars ($40,000); provided, however,
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that such Annual Director Fee may be adjusted by the Board. The Cash Portion of
the
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Annual Director Fee as defined in Section 4.2 hereof (after reduction pursuant
to Section 4.2 hereof) shall be paid to an Eligible Director in four equal
quarterly installments in arrears on the first business day of each quarter of
the Plan Year in which the Eligible Director is providing services to the
Company.
4.2. Form of Annual Fee
The Annual Director Fee shall be paid in the form of: (i) an Option
representing fifty percent (50%) of the value of the Annual Director Fee and
(ii) cash representing fifty percent (50%) of the value of the Annual Director
Fee (the "Cash Portion of the Annual Director's Fee"); provided, however, that
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pursuant to Section 11 hereof, the Eligible Director may elect to receive all or
a portion of the Cash Portion of the Annual Director's Fee in the form of an
Option of equal value.
4.3. Valuation of Options
The value of all Options to be issued under the Plan shall be
determined pursuant to the Black-Scholes stock option valuation model.
5. GRANT DATE
The date of grant for Options granted under the Plan (the "Grant
Date") shall be the first day of the Plan Year.
6. OPTION PRICE
The Option Price of the Common Stock covered by each Option granted
under the Plan shall be the Fair Market Value of such Common Stock on the Grant
Date.
7. TERM OF OPTIONS
Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Common Stock thereunder shall cease, upon the expiration of
ten years from the date such Option is granted.
8. VESTING OF OPTIONS
The Eligible Director may exercise the Option at any time and from
time to time after the Grant Date and prior to termination of the Option in
installments as follows: on the first anniversary of the Grant Date, the Option
shall be exercisable in respect of twenty five percent (25%) of the number of
shares covered by the grant, and on each of the next three anniversaries of the
Grant Date, the Option shall be exercisable in respect of an additional twenty
five percent (25%) of the number of shares covered by the grant. Any limitation
on the exercise of an Option contained in any Option Agreement may be rescinded,
modified or waived by the Committee, in its sole discretion, at any time and
from time to time after the
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date of grant of such Option. The foregoing installments, to the extent not
exercised, shall accumulate and be exercisable, in whole or in part, at any time
and from time to time, after becoming exercisable and prior to the termination
of the Option; provided, that no single exercise of the Option shall be for less
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than 100 shares, unless the number of shares purchased is the total number at
the time available for purchase under the Option.
9. SERVICE TERMINATION
Except as otherwise provided in the Option Agreement, upon the
termination of service (a "Service Termination") of the Participant as a
director of the Company, other than by reason of the death or permanent and
total disability of such Participant, any Option granted to a Participant
pursuant to the Plan shall terminate to the extent unvested and the vested
portion of the Option shall terminate ninety (90) days after such Service
Termination, and such Participant shall have no further right to purchase shares
of Common Stock pursuant to such Option.
10. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
10.1. Death
If a Participant dies while in service as a director of the Company,
the executors or administrators or legatees or distributees of such
Participant's estate shall have the right at any time within one year after the
date of such Participant's death and prior to termination of the Option pursuant
to Section 7 hereof, to exercise any Option held by such Participant at the date
of such Participant's death whether or not such Option was exercisable
immediately prior to such Optionee's death.
10.2. Disability
If there is a Service Termination by reason of the permanent and total
disability of the Participant, then such Participant shall have the right at any
time within one year after such Service Termination and prior to termination of
the Option pursuant to Section 7 hereof, to exercise, in whole or in part, any
Option held by such Participant at the date of such Service Termination whether
or not such Option was exercisable immediately prior to such Optionee's Service
Termination. Whether a Service Termination is to be considered by reason of
permanent and total disability for purposes of this Plan shall be determined by
the Committee, which determination shall be final and conclusive.
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11. ELECTION TO RECEIVE ADDITIONAL OPTIONS
11.1. Election Form
A Participant who wishes to receive all or part of the Cash Portion of
the Annual Director Fee in the form of Options shall file an Election Form with
the Company, in the form and manner prescribed by the Committee. Filing of a
completed Election Form will authorize the Company to issue Options to the
Participant in lieu of all or part of the Cash Portion of the Annual Director
Fee, in accordance with the Participant's instructions on the Election Form.
Options issued pursuant to an election made under this Section 11 shall vest in
accordance with the schedule set forth in Section 8 hereof.
11.2. Time for Filing Election Form
An Election Form shall be completed and filed by each newly elected
Eligible Director within thirty (30) days after the Participant's election to
the Board, and elections under the Plan made by newly elected Eligible Directors
shall apply to the Participant's Annual Director Fee for the remainder of the
Plan Year. Continuing Directors shall complete an Election Form prior to the
last day of the Plan Year for an Annual Director Fee earned in the next
succeeding Plan Year.
11.3. Modification of the Election Form
An election made by an Eligible Director pursuant to Section 111
hereof shall be irrevocable for the Plan Year for which such election is made.
12. ADMINISTRATION
12.1. Committee
The general administration of the Plan and the responsibility for
carrying out its provisions shall be placed in an Administrative Committee. The
Committee shall consist of at least two members appointed from time to time by
the Board of Directors to serve at the pleasure thereof. The initial
Administrative Committee shall consist of the President and the Chief Financial
Officer of the Company. Any member of the Committee may resign by delivering a
written resignation to the Company, and may be removed at any time by action of
the Board of Directors.
12.2. Rules for Administration
Subject to the limitations of the Plan, the Committee may from time to
time establish such rules and procedures for the administration and
interpretation of the Plan and the transaction of its business as the Committee
may deem necessary or appropriate. The determination of the Committee as to any
disputed
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question relating to the administration and interpretation of the Plan shall be
conclusive.
12.3. Committee Action
Any act which the Plan authorizes or requires the Committee to do may
be done by a majority of its members. The action of such majority, expressed
from time to time by a vote at a meeting (i) in person, (ii) by telephone or
other means by which all members can hear one another or (iii) in writing
without a meeting shall constitute the action of the Committee and shall have
the same effect for all purposes as if assented to by all members of the
Committee at the time in office.
12.4. Delegation
The members of the Committee may authorize one or more of their number
to execute or deliver any instrument, make any payment or perform any other act
which the Plan authorizes or requires the Committee to do.
12.5. Services
The Committee may employ or retain agents to perform such clerical,
accounting and other services as it may require in carrying out the provisions
of the Plan.
12.6. Indemnification
The Company shall indemnify and save harmless each member of the
Committee against all expenses and liabilities arising out of membership on the
Committee, other than expenses and liabilities arising from the such member's
own gross negligence or willful misconduct, as determined by the Board of
Directors.
13. AMENDMENT AND TERMINATION
The Company, by action of the Board of Directors or the Administrative
Committee, may at any time or from time to time modify or amend any or all of
the provisions of the Plan, or may at any time terminate the Plan. No such
action shall adversely affect the accrued rights of any Participant hereunder
without the Participant's consent thereto.
14. GENERAL PROVISIONS
14.1. Limitation of Rights
No Participant shall have any right to any payment or benefit
hereunder except to the extent provided in the Plan.
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14.2 No Rights as Stockholders
Nothing contained in this Plan shall be construed as giving any
Participant rights as a stockholder of the Company.
14.3. Rights as a Non-Employee Director
Nothing contained in this Plan shall be construed as giving any
Participant a right to be retained as a non-employee director of the Company.
14.4. Assignment, Pledge or Encumbrance
No assignment, pledge or other encumbrance of any payments or benefits
under the Plan shall be permitted or recognized and, to the extent permitted by
law, no such payments or benefits shall be subject to legal process or
attachment for the payment of any claim of any person entitled to receive the
same, except to the extent such assignment, pledge or other encumbrance is in
favor of the Company to secure a loan or other extension of credit from the
Company to the Participant.
14.5. Binding Provisions
The provisions of this Plan shall be binding upon each Participant as
a consequence of the Participant's election to participate in the Plan, upon the
Company, upon the Participant's heirs, executors and administrators and upon the
successors and assigns of the Participant and the Company.
14.6. Notices
Any election made or notice given by a Participant pursuant to the
Plan shall be in writing to the Committee or to such representative thereof as
may be designated by the Committee for such purpose and shall be deemed to have
been made or given on the date received by the Committee or its representative.
14.7. Governing Law
The validity and interpretation of the Plan and of any of its
provisions shall be construed under the laws of the State of Delaware without
giving effect to the choice of law provisions thereof.
14.8. Withholding
The Company shall have the right to deduct from the amounts
distributable hereunder any federal, state or local taxes required by law to be
withheld with respect to such distributions, and such additional amounts of
withholding as are reasonably requested by the Participant.
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14.9. Effective Date
This Plan shall be effective as of March 12, 1999.
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