Exhibit 10.8
[FIRST UNION LOGO]
PROMISSORY NOTE
$58,000,000.00
September 30, 2001
TREX Company, LLC
160 Exeter Drive
Winchester, Virginia 22603-8605
Trex Company, Inc.
160 Exeter Drive
Winchester, Virginia 22603-8605
(Individually and collectively "Borrower")
First Union National Bank
301 South College Street, DC-5
One First Union -- 5th Floor
Charlotte, NC 28288-0760
(Hereinafter referred to as "Bank")
Borrower promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of Fifty-Eight Million and No/100 Dollars ($58,000,000.00) or
such sum as may be advanced and outstanding from time to time, with interest on
the unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").
LOAN AGREEMENT. This Note is subject to the provisions of that certain Second
Amended and Restated Credit Agreement of even date herewith between Bank and
Borrower as modified from time to time (the "Credit Agreement"). Borrower
represents and warrants that the provisions of Article V of the Credit Agreement
are true and correct as of the date of the Note; and at all times, Borrower
shall comply with all of the provisions of the Credit Agreement. Borrower's
obligation to comply with such provisions shall continue notwithstanding the
satisfaction in full of all Obligations referred to in the Credit Agreement.
RENEWAL/MODIFICATION. This Note modifies a portion of the debt evidenced by that
certain Revolving Note dated August 3, 1999. This Note is not a novation.
SECURITY. Borrower has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, real property
collateral described in that certain Modified Deed of Trust of even date
herewith for certain real property in the City of Winchester and Frederick
County, Virginia; Deed of Trust of even date herewith for certain real property
in Lyon County, Nevada; and personal property collateral described in that
certain Security Agreement of even date herewith.
INTEREST RATE. Interest shall accrue (i) on the unpaid principal balance of the
first $33,000,000 of this Note (x) from the date hereof through June 30, 2002 at
LIBOR Market Index-Based Rate (as defined in the Credit Agreement) plus 3.00%;
and (y) from and after July 1, 2002 at LIBOR Market Index-Based Rate plus 4.00%;
and (ii) on the remaining unpaid principal balance of this Note from the date
hereof at LIBOR Market Index-Based Rate plus 5.00% (collectively, the "Interest
Rate").
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations shall bear interest at the Interest Rate plus 2%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective yield by taking the stated (nominal) rate for a
year's period and then dividing said rate by 360 to determine the daily periodic
rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective interest rate exceeding
the nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing the date hereof, and continuing on
the same day of each month thereafter until the principal of this Note and all
accrued interest have been fully paid. There shall be additional consecutive
monthly principal payments in the amount of $5,000,000.00 due and payable
commencing on March 1, 2002, and continuing on the same day of each month
thereafter until and including July 1, 2002 thereby reducing the outstanding
principal amount to $33,000,000.00 by July 1, 2002. In any event, all principal
and accrued interest shall be due and payable on January 31, 2003.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. Loan Documents. The term "Loan Documents" used in this Note and the
other Loan Documents refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, the Credit
Agreement, guaranty agreements, security agreements, security instruments,
financing statements, mortgage instruments, any renewals or modifications,
whenever any of the foregoing are executed (as defined in 11 U.S.C. ss. 101).
Obligations. The term "Obligations" used in this Note refers to any and all
indebtedness and other obligations under this Note, all other obligations under
any other Loan Document(s), and all obligations under any swap agreements (as
defined in 11 U.S.C. ss. 101) between Borrower and Bank whenever executed.
Certain Other Terms. All terms that are used but not otherwise defined in any of
the Loan Documents shall have the definitions provided in the Uniform Commercial
Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 8 or more days.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses incurred to enforce or collect any of the Obligations
including, without limitation, reasonable arbitration, paralegals', attorneys'
and experts' fees and expenses, whether incurred without the commencement of a
suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
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DEFAULT. If an Event of Default exists under the Credit Agreement, a default
shall exist under this Note ("Default").
REMEDIES UPON DEFAULT. If a Default occurs under this Note, the Credit Agreement
or any Loan Documents, Bank may at any time thereafter, take the following
actions: Bank Lien. Foreclose its security interest or lien against Borrower's
accounts without notice. Acceleration Upon Default. Accelerate the maturity of
this Note and, at Bank's option, any or all other Obligations, whereupon this
Note and the accelerated Obligations shall be immediately due and payable.
Cumulative. Exercise any rights and remedies as provided under the Note, the
Credit Agreement and other Loan Documents, or as provided by law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Each Borrower or any person liable under this Note waives presentment, protest,
notice of dishonor, demand for payment, notice of intention to accelerate
maturity, notice of acceleration of maturity, notice of sale and all other
notices of any kind. Further, each agrees that Bank may extend, modify or renew
this Note or make a novation of the loan evidenced by this Note for any period,
and grant any releases, compromises or indulgences with respect to any
collateral securing this Note, or with respect to any other Borrower or any
other person liable under this Note or other Loan Documents, all without notice
to or consent of each Borrower or each person who may be liable under this Note
or any other Loan Document and without affecting the liability of Borrower or
any person who may be liable under this Note or any other Loan Document.
MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Borrower
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. Applicable Law; Conflict
Between Documents. This Note and the other Loan Documents shall be governed by
and construed under the laws of the Commonwealth of Virginia without regard to
that state's conflict of laws principles. If the terms of this Note should
conflict with the terms of the Credit Agreement or any commitment letter that
survives closing, the terms of this Note shall control. Borrower's Accounts.
Except as prohibited by law, Borrower grants Bank a security interest in all of
Borrower's accounts with Bank and any of its affiliates. Jurisdiction. Borrower
irrevocably agrees to non-exclusive personal jurisdiction in the Commonwealth of
Virginia. Severability. If any provision of this Note or of the other Loan
Documents shall be prohibited or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note or other such document. Notices. Any notices to Borrower shall be
sufficiently given, if in writing and mailed or delivered to the Borrower's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Bank's office address shown above or such
other address as Bank may specify in writing from time to time. In the event
that Borrower changes Borrower's address at any time prior to the date the
Obligations are paid in full, Borrower agrees to promptly give written notice of
said change of address
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by registered or certified mail, return receipt requested, all charges prepaid.
Plural; Captions. All references in the Loan Documents to Borrower, guarantor,
person, document or other nouns of reference mean both the singular and plural
form, as the case may be, and the term "person" shall mean any individual,
person or entity. The captions contained in the Loan Documents are inserted for
convenience only and shall not affect the meaning or interpretation of the Loan
Documents. Advances. Bank may, in its sole discretion, make other advances which
shall be deemed to be advances under this Note, even though the stated principal
amount of this Note may be exceeded as a result thereof. Posting of Payments.
All payments received during normal banking hours after 2:00 p.m. local time at
the office of Bank first shown above shall be deemed received at the opening of
the next banking day. Joint and Several Obligations. Each person who signs this
Note as a Borrower (as defined herein) is jointly and severally obligated. Fees
and Taxes. Borrower shall promptly pay all documentary, intangible recordation
and/or similar taxes on this transaction whether assessed at closing or arising
from time to time.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any claim or controversy arising out of
or relating to the Loan Documents between parties hereto (a "Dispute") shall be
resolved by binding arbitration conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and the Federal Arbitration Act. Disputes
may include, without limitation, tort claims, counterclaims, a dispute as to
whether a matter is subject to arbitration, claims brought as class actions, or
claims arising from documents executed in the future. A judgment upon the award
may be entered in any court having jurisdiction. Special Rules. All arbitration
hearings shall be conducted in the city named in the address of Bank first
stated above. A hearing shall begin within 90 days of demand for arbitration and
all hearings shall conclude within 120 days of demand for arbitration. These
time limitations may not be extended unless a party shows cause for extension
and then for no more than a total of 60 days. The expedited procedures set forth
in Rule 51 et seq. of the Arbitration Rules shall be applicable to claims of
less than $1,000,000.00. Arbitrators shall be licensed attorneys selected from
the Commercial Financial Dispute Arbitration Panel of the AAA. The parties do
not waive applicable Federal or state substantive law except as provided herein.
Preservation and Limitation of Remedies. Notwithstanding the preceding binding
arbitration provisions, the parties agree to preserve, without diminution,
certain remedies that any party may exercise before or after an arbitration
proceeding is brought. The parties shall have the right to proceed in any court
of proper jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable: (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale or under
applicable law by judicial foreclosure including a proceeding to confirm the
sale; (ii) all rights of self-help including peaceful occupation of real
property and collection of rents, set-off, and peaceful possession of personal
property; and (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment of
receiver and filing an involuntary bankruptcy proceeding. Any claim or
controversy with regard to any party's entitlement to such remedies is a
Dispute. Waiver of Exemplary Damages. The parties agree that they shall not have
a remedy of punitive or exemplary damages against other parties in any Dispute
and hereby waive any right or claim to punitive or exemplary damages they have
now or which may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially. Waiver of Jury Trial. THE
PARTIES ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A
DISPUTE.
IN WITNESS WHEREOF, Borrower, on the day and year first above written, has
caused this Note to be executed under seal.
PLACE OF EXECUTION AND DELIVERY. Borrower hereby certifies that this Note, the
Credit Agreement and the other Loan Documents were executed in the Commonwealth
of Virginia and delivered to Bank in the Commonwealth of Virginia.
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TREX Company, LLC
Taxpayer Identification Number:
54-1810859
By /s/ Anthony J. Cavanna (SEAL)
---------------------------------------
Anthony J. Cavanna, Executive Vice President;
Chief Financial Officer; Treasurer
Trex Company, Inc.
Taxpayer Identification Number:
54-1910453
By: /s/ Robert G. Matheny (SEAL)
--------------------------------------
Robert G. Matheny, President
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