Exhibit 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of September
30, 2001 among TREX COMPANY, LLC, a Delaware limited liability company, TREX
COMPANY, INC., a Delaware corporation, (collectively the "Borrower") and FIRST
UNION NATIONAL BANK (the "Bank"), a national banking association.
RECITALS:
WHEREAS, TREX Company, LLC, Trex Company, Inc. and the Bank entered into
an Amended and Restated Credit Agreement dated as of August 3, 1999 as amended
from time to time (the "Original Credit Agreement") pursuant to which the Bank
made available to TREX Company, LLC a revolving line of credit and a term loan
facility which revolving line of credit and term loan facility were guaranteed
by Trex Company, Inc.;
WHEREAS, this Agreement amends and restates in its entirety the Original
Credit Agreement and applies to all loan or loans (individually and collectively
the "Obligations") between Bank and Borrower as evidenced by one or more
promissory notes and other documents, as modified from time to time (the Loan
Documents as defined in the Appendix);
WHEREAS, Trex Company, Inc. has agreed to be added to the Loan Documents
as a Borrower;
WHEREAS, Borrower and Bank have agreed to restructure the Obligations;
WHEREAS, in furtherance of the foregoing the Borrower and the Bank have
agreed to amend and restate the Original Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Bank agree to amend, restate and replace the
Original Credit Agreement as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used in this Agreement or
in any Appendix, Schedule or Exhibit hereto which are not otherwise defined
herein or therein shall have the respective meanings set forth in the Appendix
attached hereto identified as the Definitions Appendix. The Definitions Appendix
is incorporated herein by reference in its entirety and is a part of this
Agreement to the same extent as if it had been set forth in this Section 1.01 in
full.
Section 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with
generally accepted accounting principles in the United States of America as in
effect from time to time, applied on a basis consistent (except for changes
concurred in by the Borrower's independent public accountants) with the most
recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Bank.
ARTICLE II
THE CREDIT
Section 2.01. Commitment To Lend.
(a) Term Loan. The Bank agrees, on the terms and conditions set
forth in this Agreement, to convert $58,000,000 of the Revolving Loans of
TREX Company, LLC made pursuant to the Original Credit Agreement to a term
loan to the Borrower ("Term Loan A").
(b) Revolving Commitment. The Bank agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Loans to the
Borrower from time to time during the Revolving Credit Period in amounts
such that the aggregate principal amount of Revolving Loans at any one
time outstanding will not exceed the lesser of (i) the available Borrowing
Base or (ii) the Revolving Commitment. Within the foregoing limit, the
Borrower may borrow, prepay and reborrow Revolving Loans at any time
during the Revolving Credit Period.
(c) Borrowing Base. Revolving loans will be subject to monthly
borrowing base reporting.
i. "Borrowing Base" means 85.00% of the net amount of Eligible
Accounts, plus 60.00% of the value of Eligible Inventory, less
the amount of any Reserves required by Bank.
ii. "Eligible Account" means an account receivable which is (a)
not more than 90 days from the date of the original invoice
and (b) not more than 60 days from the due date of the
original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility
requirements:
1. the sale of goods or service reflected in such account
is final and such goods and services have been
delivered or provided and accepted by the account
debtor and payment for such is owing:
2. the invoices comprising an account are not subject to
any claims, returns or disputes of any kind;
3. the account debtor is not insolvent;
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4. the account debtor has its principal place of business
in the United States;
5. the account debtor is not an Affiliate of Borrower and
is not a supplier to Borrower and the account is not
otherwise exposed to risk of set-off; and
6. the account is not subject to any lien prior to the
lien of Bank
iii. "Eligible Inventory" means inventory of finished goods in
Borrower's possession that is held for use or sale in the
ordinary course of Borrower's business and is not
unmerchantable or obsolete and is subject to a first priority
perfected security interest in favor of Bank. The value of the
inventory will be valued at the lower of cost or market on a
first-in, first-out basis as determined in accordance with
generally accepted accounting principles applied on a
consistent basis.
iv. "Reserves" means such amounts as may be required by Bank, at
any time and from time to time without prior notice to
Borrower, which Bank deems, in its sole but reasonable
discretion, to be adequate to reserve against outstanding
letters of credit, outstanding banker's acceptances,
Borrower's obligations to Bank or its affiliates or any
guaranties or other contingent debts of Borrower.
Section 2.02. Existing Loans
(a) Term Real Estate Term Loan 1.
(b) Real Estate Term Loan 2.
(c) Real Estate Term Loan 3.
(d) ISDA Master Agreement.
(e) Letter of Credit SM413821.
Section 2.03. Methods of Borrowing.
(a) Notice of Borrowing. Except as otherwise provided in this
Section and/or the Services Agreement, the Borrower may, with the approval
of the Bank, give the Bank notice substantially in the form of Exhibit A
hereto (a "Notice of Borrowing") not later than 12:00 p.m. (local time in
Winchester, Virginia) on the date of each requested Loan, specifying the
date of such Loan and the amount of such Loan.
(b) Cash Management Services. The Borrower subscribes to the Bank's
cash management services and such services are applicable to the Revolving
Loans. The terms of such services, as set forth in the Services Agreement,
shall control the manner in which funds are transferred between the
Operating Account and the Revolving Loans for credit or debit to the
Revolving Loans.
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(c) Overdrafts in Other Accounts. The Bank may, at its option, pay
any Item which will cause any deposit account maintained by the Borrower
with the Bank to become overdrawn; and such payment shall be deemed a
Revolving Loan hereunder.
Section 2.04. Funding of Revolving Loans. The Bank shall disburse the
proceeds of each Loan made pursuant to Section 2.01 as follows: the proceeds of
each Loan under Section 2.01 shall be made available by the Bank to the Borrower
in federal or other funds immediately available at the Bank's address referred
to in Section 9.01.
Section 2.05. Revolving Loans Note.
(a) Evidence of Loans. The Revolving Loans shall be evidenced by a
single Note payable to the order of the Bank in an amount equal to the
Revolving Commitment.
(b) Records of Amounts Due. The Bank shall record the date and
amount of each Loan made by it and the date and amount of each payment of
principal made by the Borrower with respect thereto, and may, if the Bank
so elects in connection with any transfer or enforcement of each Note,
endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding, provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under such Note. The Bank is hereby irrevocably
authorized by the Borrower so to endorse each Note and to attach to and
make a part of such Note a continuation of any such schedule as and when
required. The Bank shall send the Borrower a copy of any endorsements and
continuations so made.
Section 2.06. Interest Rate.
(a) Revolving Loans. From the date hereof until and including June
30, 2002, each Revolving Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the applicable LIBOR
Market Index-Based Rate for such day plus 300 basis points. From July 1,
2002 and continuing while the Revolving Loans remain outstanding, each
Revolving Loan shall bear interest on the outstanding principal amount
thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the applicable LIBOR Market Index-Based
Rate for such day plus 400 basis points. Such interest shall be payable
for each month in arrears on the first day of the immediately succeeding
calendar month.
(b) Term Loan A. From the date hereof until and including June 30,
2002, the first $33,000,000 of unpaid principal balance on Term Loan A
shall bear interest, payable monthly in arrears, at a rate per annum equal
to the applicable LIBOR Market Index-Based Rate for such day plus 300
basis points and any unpaid principal balance in excess of $33,000,000
shall bear interest, at a rate per annum equal to the applicable LIBOR
Market Index-Based Rate for such day plus 500 basis points. From July 1,
2002, the first $33,000,000 of unpaid principal balance on Term Loan A
shall bear interest, at a rate per annum equal to the applicable LIBOR
Market Index-Based Rate for such day
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plus 400 basis points and any unpaid principal balance in excess of
$33,000,000 shall bear interest, at a rate per annum equal to the
applicable LIBOR Market Index-Based Rate for such day plus 500 basis
points.
"LIBOR Market Index-Based Rate" shall be the rate per annum equal to
the LIBOR Market Index Rate as that rate may change from day to day.
"LIBOR Market Index Rate," for any day, is the rate for one-month U.S.
Dollar deposits as reported on Telerate page 3750 as of 11:00 a.m., London
time, on such day, or if such day is not a London business day, then the
immediately preceding London business day (or, if not so reported, then as
determined by the Bank from another recognized source or interbank
quotation).
(c) Real Estate Term Loans 1, 2 & 3. From the date hereof until and
including June 30, 2002, each of Real Estate Term Loans 1, 2 & 3 shall
bear interest on the unpaid principal balance thereof, payable monthly in
arrears at a rate per annum equal to LIBOR + 300 basis points. From July
1, 2002, each of Real Estate Term Loans 1, 2 & 3 shall bear interest on
the unpaid principal balance thereof, payable monthly in arrears at a rate
per annum equal to LIBOR + 400 basis points.
As further provided in the Real Estate Term Loan Notes, "LIBOR" is
the rate for U.S. dollar deposits with a one-month maturity, as reported
on Telerate page 3750 as of 11:00 a.m., London time, on the second London
business day before the relevant one-month interest period begins (or if
not so reported, then as determined by the Bank from another recognized
source or interbank quotation).
(d) Overdue Amounts. Any overdue principal of or interest on any
Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of
actual payment, at a rate per annum equal to the sum of 2% over the rate,
as calculated above, applicable to such Loan on such day.
Section 2.07. Unused Commitment Fee. The Borrower shall pay to the Bank an
unused commitment fee (the "Unused Commitment Fee") for each day at a rate per
annum equal to the product of (i) 15 basis points multiplied by (ii) the excess
of the Revolving Commitment over the aggregate amount of the Revolving Loans on
such day. Such unused commitment fee shall accrue from and including the
Effective Date to but excluding the Termination Date (or earlier date of
termination of the Revolving Commitment in its entirety) and shall be payable
quarterly in arrears on each Quarterly Date and on the Termination Date.
Section 2.08. Adjustments of Commitment.
(a) Optional Termination or Reductions of Revolving Commitment. The
Borrower may, upon at least three Business Days' notice to the Bank, (i)
terminate the Revolving Commitment at any time, if no Revolving Loans are
outstanding at such time, or (ii) reduce from time to time the amount of
the Revolving Commitment in excess of the aggregate outstanding principal
amount of the Revolving Loans. If the Revolving Commitment is terminated
in its entirety, all accrued fees shall be payable on the effective date
of such termination.
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Section 2.09. Maturity and Repayment of Loan.
(a) Maturity of Revolver on Termination Date. Each Revolving Loan
shall mature, and the principal amount thereof shall be due and payable,
on the Termination Date.
(b) Cash Management Services. The Revolving Loans shall be repaid as
set forth in the Services Agreement, and consistent with this Agreement.
(c) Term Loan A. Term Loan A shall be payable in part by five
consecutive monthly payments of $5,000,000 each beginning on March 1, 2002
and continuing through July 1, 2002. The entire unpaid principal balance
of Term Loan A and all accrued interest thereon shall be due and payable
in full on January 31, 2003.
(d) Real Estate Term Loans 1, 2 & 3. Real Estate Term Loans 1, 2 & 3
shall continue on their current amortization schedule; provided, however,
that the entire unpaid principal balance of Real Estate Term Loans 1, 2 &
3, and all accrued interest thereon shall be due and payable in full on
the earlier of (i) the date that Borrower repays in full all principal and
interest due on Revolving Loans and Term Loan A and (ii) January 31, 2003.
Provided, however, that in the event that Borrower repays in full all
principal and interest outstanding Revolving Loans and Term Loan A, and
Borrower desires to maintain Real Estate Term Loans 1, 2 & 3, Borrower may
elect to extend the maturity date of Real Estate Term Loans 1, 2 & 3 to
January 31, 2005 if it is demonstrated to the Bank's sole satisfaction,
based upon MAI appraisals performed at the time that Borrower makes such
election, that the loan to value of each Real Estate Term Loan to the real
estate, together with all improvements thereon as of the date of the
election, originally secured by such loan does not exceed 70%.
(e) Optional Prepayment of Loans. Provided that with respect to Real
Estate Terms Loans 1, 2 & 3, Borrower shall indemnify Bank against Bank's
loss or expense in employing deposits of as a consequence of Borrower's
payment, prepayment or conversion of Real Estate Term Loans 1, 2 & 3, on a
date other than the last date of the one-month interest period set forth
in the Real Estate Term Notes, the Borrower may upon at least one Business
Day's notice to the Bank, prepay Real Estate Term Loans 1, 2 & 3 and/or
Term Loan A, in whole at any time, or from time to time in part, by paying
the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment. The notice of prepayment delivered by the
Borrower to the Bank shall not be revocable by the Borrower following its
receipt by the Bank. Any prepayment of Real Estate Term Loans 1, 2 & 3
shall be applied to Real Estate Term Loans 1, 2 & 3 in the inverse order
of their maturities. Repayment of the Revolving Loans shall be governed by
the Services Agreement.
Section 2.10. General Provisions as to Payments. The Borrower shall make
each payment of principal of and interest on the Loans and fees hereunder not
later than 12:00 noon (local time in Winchester, Virginia) on the date when due,
without setoff, counterclaim or other deduction, in federal or other funds
immediately available to the Bank at its address referred to in Section 9.01 or
such other location as designated by the Bank. Whenever any payment of
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principal of, or interest on, the Loans or of fees shall be due on a day which
is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.
Section 2.11. Computation of Interest and Fees. Interest on Loans
hereunder shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
ARTICLE III
COLLATERAL
Section 3.01. Collateral. The Obligations shall be secured by a lien in
the following assets of Borrower and its Subsidiaries.
(a) First priority deed of trust on property located in the City of
Winchester and Frederick County, Virginia, as more particularly described
therein.
(b) Second priority deed of trust on property located in Lyon
County, Nevada, as more particularly described therein.
(c) First priority lien on all of the business assets of any type
and description of Borrower and its Subsidiaries, excluding Winchester
Capital, Inc. and Trex Wood Polymer Espana, S.L. including any property or
acquisitions, whether now owned of hereafter acquired and wherever located
as more particularly described in the Security Agreement; and
(d) First priority lien on all stock of Borrowers' in their
Subsidiaries, excluding the stock of Trex Wood Polymer Espana, S.L, as
more particularly described in the Security Agreement.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Closing. The obligation of the Bank to make
the first Loan hereunder is subject to the satisfaction of the following
conditions:
(a) Effectiveness. This Agreement shall have become effective as of
the date hereof.
(b) Notes. On or prior to the Closing Date, the Bank shall have
received a duly executed Revolving Note; Term Loan A Note; Real Estate
Term Loan 1 Note; Real Estate Term Loan 2 Note and Real Estate Term Loan 3
Note dated on or before the Closing Date complying with the provisions of
Section 2 hereof.
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(c) Other Loan Documents. Each of the Loan Documents to be executed
on or before the Closing Date shall be in form and substance reasonably
satisfactory to the Bank and shall have been duly executed and delivered
to the Bank by each of the parties thereto.
(d) Adverse Change, Etc. On the Closing Date, nothing shall have
occurred (and the Bank shall not have become aware of any facts or
conditions not previously known) which has, or could reasonably be
expected to have, a Material Adverse Effect.
(e) Officer's Certificate. The Bank shall have received a
certificate dated the Closing Date signed on behalf of the Borrower by the
Chairman of the Board, the President, any Vice President or the Treasurer
of the Borrower stating that (i) on the Closing Date and after giving
effect to the Loan being made on the Closing Date, and to this Agreement,
no Default or Event of Default shall have occurred and be continuing and
(ii) to the best knowledge and belief of such officer, the representations
and warranties of the Borrower contained in the Loan Documents are true
and correct on and as of the Closing Date.
(f) Opinion of Counsel. On the Closing Date, the Bank shall have
received from counsel to the Borrower an opinion addressed to the Bank,
dated the Closing Date, substantially in the form of Exhibit C hereto and
covering such additional matters incident to the transactions contemplated
hereby as the Bank may reasonably request.
(g) Borrower's Proceedings.
(i) On the Closing Date, the Bank shall have received for TREX
Company, LLC: (A) a copy of the its Certificate of Formation, as
amended, certified by the Secretary of State of Delaware and dated
as of a recent date prior to the Closing Date; (B) a certificate of
the Secretary of State of Delaware and each other state in which it
is qualified as a foreign limited liability company to do business,
dated as of a recent date prior to the Closing Date, as to the good
standing of the Borrower; (C) a copy of the its Limited Liability
Company Agreement, including all amendments thereto; and (D) a
certificate of the appropriate officer or other authorized person of
TREX Company, LLC dated the Closing Date and certifying (1) that the
documents referred to in clause (C) above have not been amended
since the date of said certificate, (2) that attached thereto is a
true, correct and complete copy of resolutions and consents adopted
by its sole member authorizing the execution, delivery and
performance of the Credit Agreement, the Notes and the Security
Agreement and each other document delivered in connection herewith
or therewith and that said resolutions have not been amended and are
in full force and effect on the date of such certificate, (3) as to
the incumbency and specimen signatures of its officer or other
authorized person executing this Agreement, the Notes and the
Security Agreement or any other document delivered in connection
herewith or therewith and (4) certifying as to the names and
respective jurisdictions of organization of all of its Subsidiaries
existing on the Closing Date.
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All company and legal proceedings and instruments and
agreements relating to the transactions contemplated by this
Agreement or in any other document delivered in connection therewith
shall be satisfactory in form and substance to the Bank and its
counsel, and the Bank shall have received all information and copies
of all documents and papers, including records of company
proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Bank reasonably may have
requested in connection therewith, such documents and papers where
appropriate to be certified by proper company or governmental
authorities.
(ii) On the Closing Date, the Bank shall have received for
Trex Company, Inc.: (A) a copy of the its Certificate of
Incorporation, as amended, certified by the Secretary of State of
Delaware and dated as of a recent date prior to the Closing Date;
(B) a certificate of the Secretary of State of Delaware and each
other state in which it is qualified as a foreign corporation to do
business, dated as of a recent date prior to the Closing Date, as to
the good standing of the Borrower; (C) a copy of the its by-laws,
including all amendments thereto; and (D) a certificate of the
appropriate officer or other authorized person of Trex Company, Inc.
dated the Closing Date and certifying (1) that the documents
referred to in clause (C) above have not been amended since the date
of said certificate, (2) that attached thereto is a true, correct
and complete copy of resolutions adopted by its directors
authorizing the execution, delivery and performance of the Credit
Agreement, the Notes, the Security Agreement, the Warrant, the
Registration Agreement and each other document delivered in
connection herewith or therewith and that said resolutions have not
been amended and are in full force and effect on the date of such
certificate, (3) as to the incumbency and specimen signatures of its
officer or other authorized person executing this Agreement, the
Notes and the Security Agreement or any other document delivered in
connection herewith or therewith and (4) certifying as to the names
and respective jurisdictions of organization of all of its
Subsidiaries existing on the Closing Date.
All corporate and legal proceedings and instruments and
agreements relating to the transactions contemplated by this
Agreement or in any other document delivered in connection therewith
shall be satisfactory in form and substance to the Bank and its
counsel, and the Bank shall have received all information and copies
of all documents and papers, including records of company
proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Bank reasonably may have
requested in connection therewith, such documents and papers where
appropriate to be certified by proper company or governmental
authorities.
(h) Perfection of Security Interests; Search Reports. On or prior to
the Closing Date, the Bank shall have received:
(i) a Perfection Certificate of the Borrower, substantially in
the form of Exhibit A to the Security Agreement;
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(ii) appropriate Financing Statements (Form UCC-l or such
other financing statements or similar notices as shall be required
by local law) appropriately completed for filing under the Uniform
Commercial Code or other applicable local law of each jurisdiction
in which the filing of a financing statement or giving of notice may
be required, or reasonably requested by the Bank, to perfect the
Liens purported to be created by the Loan Documents;
(iii) appropriate filings for the perfection of the lien on
intellectual property purported to be created by the Loan Documents;
(iv) appropriate Deeds of Trust fully executed for filing
under applicable local law of each jurisdiction in which the filing
of a Deed of Trust is required by the Bank to perfect the liens
purported to be created thereby;
(v) copies of reports from Prentice-Hall Financial Services or
other independent search service reasonably satisfactory to the Bank
listing all effective financing statements that name the Borrower or
any of its Subsidiaries (under its present name and any previous
name and, if requested by the Bank, under any trade names) as debtor
or seller that are filed in Delaware, Nevada and Virginia, together
with copies of such other financing statements filed in Delaware,
Nevada and Virginia (none of which shall cover the Collateral (as
that term is defined in the Security Agreement) except to the extent
evidencing Permitted Liens or for which the Bank shall have received
termination statements (Form UCC-3) or such other termination
statements as shall be required by local law) fully executed for
filing; and
(vi) evidence of the completion of all other filings and
recordings of, or with respect to, the Loan Documents as may be
necessary or, in the opinion of the Bank, desirable to perfect the
security interests intended to be created by the Loan Documents.
(After the aforementioned filings and recordings have been effected,
the Bank shall execute all termination statements submitted by the
Borrower effecting the termination of all filings and recordings
pertaining to previous terminated or superseded agreements between
the parties.)
(i) Payment of Fees. All reasonable costs, fees and expenses due to
the Bank on or before the Closing Date (including, without limitation,
that portion of the Commitment Fee then due and owing, legal fees and
expenses) shall have been paid.
(j) Counsel Fees. The Bank shall have received payment from the
Borrower of the reasonable fees and expenses of Kutak Rock LLP described
in Section 8.03 which are billed through the Closing Date.
(k) Warrants. The Bank shall have received the fully-executed
Warrant and Registration Agreement.
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The Bank shall promptly notify the Borrower of the Closing Date, and
such notice shall be conclusive and binding on all parties hereto. The
documents referred to in this Section shall be delivered to the Bank no
later than the Closing Date. The certificates and opinion referred to in
this Section shall be dated the Closing Date.
Section 4.02. Conditions to All Loans. The obligation of the Bank to make
each Loan is subject to the satisfaction of the following conditions:
(a) the fact that the Closing Date shall have occurred;
(b) with respect to each Revolving Loan, the fact that, immediately
after the making of such Loan, the aggregate outstanding principal amount
of all Revolving Loans will not exceed the Revolving Commitment;
(c) the fact that, immediately before and after the making of such
Loan, no Default shall have occurred and be continuing;
(d) the fact that the representations and warranties of the Borrower
contained in this Agreement shall be true on and as of the date of such
Loan; and
(e) (i) the Bank shall in good faith have determined that its
prospect of receiving payment in full of the Obligations then outstanding
or its ability to exercise its rights and remedies hereunder and under the
other Loan Documents have not been impaired, (ii) no event or condition
shall have occurred since the Effective Date which has or could reasonably
be expected to have a Material Adverse Effect or (iii) the Bank shall not
reasonably suspect that one or more Events of Default have occurred and
are continuing.
Each Loan hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Loan as to the facts specified in clauses (c)
and (d) of this Section.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 5.01. Existence and Power. TREX Company, LLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Trex Company, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each of the Subsidiaries is duly organized, validly existing and in
good standing under the laws of the state of its organization and has all powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Each Borrower and the
Subsidiaries is duly qualified as a foreign entity, licensed and in good
standing in each jurisdiction where
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qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a Material Adverse Effect.
Section 5.02. Company and Governmental Authorization; No Contravention.
(a) The execution, delivery and performance by TREX Company, LLC of
the Loan Documents to which it is a party are within its limited liability
company powers, have been duly authorized by all necessary company action,
require no action by or in respect of, or filing with, any governmental
body, agency or official (except for any such action or filing as shall
have been taken or made and that is in full force and effect from and
after the Closing Date) and do not contravene, or constitute (with or
without the giving of notice or lapse of time or both) a default under,
any provision of applicable law or of the organizational documents of TREX
Company, LLC or any Subsidiary or of any agreement, judgment, injunction,
order, decree or other instrument binding upon or affecting TREX Company,
LLC or any Subsidiary or result in the creation or imposition of any Lien
on any asset of TREX Company, LLC or any of its Subsidiaries except as
stated therein.
(b) The execution, delivery and performance by Trex Company, Inc. of
the Loan Documents to which it is a party are within its corporate powers
have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency
or official (except for any such action or filing as shall have been taken
or made and that is in full force and effect from and after the Closing
Date) and do not contravene, or constitute (with or without the giving of
notice or lapse of time or both) a default under, any provision of
applicable law or of the organizational documents of Trex Company, Inc. or
any Subsidiary or of any agreement, judgment, injunction, order, decree or
other instrument binding upon or affecting Trex Company, Inc. or any
Subsidiary or result in the creation or imposition of any Lien on any
asset of Trex Company, Inc. or any of its Subsidiaries, except as stated
therein.
Section 5.03. Binding Effect. Each Loan Document other than the Notes to
which the Borrower is a party constitutes a valid and binding agreement of the
Borrower and each Note, when executed and delivered in accordance with this
Agreement, will constitute a valid and binding obligation of the Borrower, in
each case enforceable against the Borrower in accordance with its terms except
in each case as such enforceability may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by equitable principles
of general applicability (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 5.04. Financial Condition.
(a) Interim Financial Statements. The unaudited consolidated balance
sheet of Trex Company, Inc. and its Consolidated Subsidiaries as of
September 30, 2001 and the related unaudited consolidated income
statements for the fiscal quarter then ended, copies of which have been
delivered to the Bank, fairly present, in conformity with generally
accepted accounting principles applied on a basis consistent with the
audited
12
financial statements for the fiscal year ended December 31, 2000, the
consolidated financial position of Trex Company, Inc. and its Consolidated
Subsidiaries as of such date and their consolidated results of operations
and changes in financial position for such 12-month period (subject to
normal year-end audit adjustments).
(b) Material Adverse Change. Since September 30, 2001, there has
been no material adverse change in condition (financial or otherwise),
results of operations, properties, assets, business or prospects of Trex
Company, Inc. or Trex Company, Inc. and its Consolidated Subsidiaries,
considered as a whole.
Section 5.05. Litigation. Except as set forth on Schedule 5.05, there is
no material action, suit, proceeding or investigation pending against, or to the
knowledge of the Borrower threatened against, contemplated or affecting, the
Borrower or any of its Subsidiaries before any court, arbitrator or governmental
body, agency or official which has, or could reasonably be expected to have, a
Material Adverse Effect, or which in any manner draws into question the validity
or enforceability of this Agreement or the Notes, and there is no basis known to
the Borrower or any of its Subsidiaries for any such action, suit, proceeding or
investigation.
Section 5.06. Regulation U; Use of Proceeds. The Borrower and its
Subsidiaries do not own any "margin stock" as such term is defined in Regulation
U. The proceeds of the Loans will be used by the Borrower only for the purposes
set forth in Section 6.15 hereof.
Section 5.07. Regulatory Restrictions on Borrowing. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, or
otherwise subject to any regulatory scheme which restricts its ability to incur
debt.
Section 5.08. Subsidiaries. Part I of Schedule 5.08 (as such Schedule may
be supplemented by a writing delivered by the Borrower to the Bank from time to
time after the Effective Date) hereto lists each Subsidiary of the Borrower (and
the direct and indirect ownership interests of the Borrower therein), in each
case existing on the Effective Date. Except as set forth on Part I of such
Schedule 5.08, each such Subsidiary existing on the date hereof is, and in the
case of any additional corporate Subsidiaries formed after the Effective Date
each of such additional corporate Subsidiaries will be at each time that this
representation is made or deemed to be made after the Effective Date, a wholly
owned Subsidiary that is a corporation duly incorporated, validly existing and,
to the extent relevant in such jurisdiction, in good standing under the laws of
its jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Except as listed on Part II of Schedule 5.08
(as such Schedule may be supplemented by a writing delivered by the Borrower to
the Bank from time to time after the Effective Date), neither the Borrower nor
any of its Subsidiaries are engaged in any joint venture or partnership with any
other Person.
13
Section 5.09. Full Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Borrower or any of its Subsidiaries in writing
to the Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is true and accurate in all material respects on
the date as of which such information is dated or certified and is not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time in light of the
circumstances under which such information was provided. Except for economic
trends generally known to the public affecting generally the industry in which
the Borrower and its Subsidiaries conduct their business, the Borrower has
disclosed to the Bank in writing any and all facts which materially and
adversely affect or may materially and adversely affect (to the extent the
Borrower can now reasonably foresee) the business, operations or financial
condition of Trex Company, Inc. and its Consolidated Subsidiaries taken as a
whole or the ability of the Borrower to perform its obligations under this
Agreement.
Section 5.10. Tax Returns and Payments. Each of the Borrower and its
Subsidiaries has filed all United States federal income tax returns and all
other material tax returns, domestic and foreign, required to be filed by it and
has paid all taxes and assessments payable by it which have become due pursuant
to such returns or pursuant to any assessment received by the Borrower or any
Subsidiary, other than those not yet delinquent and except for those contested
in good faith. Each of the Borrower and its Subsidiaries has paid, or has
provided adequate reserves (in good-faith judgment of the management of the
Borrower) for the payment of, all federal, state and foreign income taxes
applicable for all prior fiscal years and for the current fiscal year to the
date hereof.
Section 5.11. Compliance With ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (a) sought a waiver of the minimum funding standard wider Section 412 of the
Internal Revenue Code in respect of any Plan, (b) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (c)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
Section 5.12. Intellectual Property. Each of the Borrower and its
Subsidiaries owns or possesses or holds under valid noncancelable licenses all
patents, trademarks, service marks, trade names, copyrights, licenses and other
intellectual property rights that are necessary for the operation of their
respective properties and businesses, and neither the Borrower nor any of its
Subsidiaries are in violation of any provision thereof. The Borrower and its
Subsidiaries conduct their business without infringement or claim of
infringement of any material license, patent, trademark, trade name, service
mark, copyright, trade secret or any other intellectual property right of others
and there is no infringement or, except as set forth on Schedule 5.12, claim of
infringement by others of any material license, patent, trademark, trade name,
service mark, copyright, trade secret or other intellectual property right of
the Borrower and its Subsidiaries.
14
Section 5.13. No Burdensome Restrictions. No contract, lease, agreement or
other instrument to which the Borrower or any of its Subsidiaries are a party or
by which any of their property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation have had or are reasonably expected to have a Material
Adverse Effect.
Section 5.14. Environmental Matters. In the ordinary course of its
business, the Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for cleanup or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted at any such facility, any costs or liabilities in connection with
off-site disposal of wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Borrower has reasonably concluded
that such associated liabilities and costs, including the costs of compliance
with Environmental Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects of Trex
Company, Inc. and its Consolidated Subsidiaries, considered as a whole.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as the Bank has any commitment to make
Revolving Loans or Term Loans hereunder or any Obligation remains unpaid:
Section 6.01. Information. The Borrower will deliver or cause to be
delivered to the Bank:
(a) Annual Financial Statements. As soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower, a
consolidated and consolidating balance sheet of Trex Company, Inc. and its
Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated and consolidating statements of income, changes in
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by an opinion thereon by Ernst & Young,
LLP or other independent public accountants reasonably satisfactory to the
Bank, which opinion shall not be qualified as to the scope of the audit
and which shall state that such consolidated financial statements present
fairly the consolidated financial position of Trex Company, Inc. and its
Consolidated Subsidiaries as of the date of such financial statements and
the results of their operations for the period covered by such financial
statements in conformity with generally accepted accounting principles
applied an a consistent basis (except for changes in the application of
which such accountants concur) and shall not contain any "going
15
concern" or like qualification or exception or qualification arising out
of the scope of the audit. In addition, within 30 days after the end of
each fiscal year, Borrower shall provide to Bank a copy of its annual plan
for the next succeeding fiscal year. Within 10 days of any change to such
annual plan, Borrower shall provide Bank with a copy of such change.
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each of the first three fiscal
quarters of each fiscal year of Trex Company, Inc., a consolidated and
consolidating balance sheet of Trex Company, Inc. and its Consolidated
Subsidiaries as of the end of such fiscal quarter (with all supporting
schedules) and the related consolidated and consolidating statements of
income, changes in equity and cash flows of Trex Company, Inc. and its
Consolidated Subsidiaries for such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter of the previous
fiscal year, all certified (subject to normal year-end audit adjustments)
as to fairness of presentation, generally accepted accounting principles
and consistency by the chief financial officer or chief accounting officer
of Trex Company, Inc.
(c) Monthly Financial Statements. As soon as available and in any
event within 15 days after (i) the end of each month: (A) a Borrowing Base
report and (B) a financial report of accounts receivable, inventory and
production; and (ii) the end of the first two months of each fiscal
quarter, a consolidated and consolidating balance sheet of Trex Company,
Inc. and its Consolidated Subsidiaries and the related consolidated and
consolidating statements of income, changes in equity and cash flows of
Trex Company, Inc. and its Consolidated Subsidiaries for such month all
certified (subject to normal year-end audit adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by
the chief financial officer or chief accounting officer of Trex Company,
Inc.
(d) Officer's Certificate. Simultaneously with the delivery of each
set of financial statements referred to in subsections (a), (b) and (c)
above, a certificate of the chief financial officer or chief accounting
officer of Trex Company, Inc., (i) if applicable, setting forth in
reasonable detail the calculations required to establish whether the
Borrower was in compliance with the requirements of Sections 6.07, 6.11,
6.17 and 6.18, on the date of such financial statements, (ii) including a
copy of the monthly internal memorandum setting forth in reasonable detail
the business of Trex Company, Inc. and its Consolidated Subsidiaries as of
the date of such certificate, (iii) stating whether there exists on the
date of such certificate any Default and, if any Default then exists,
setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto, and (iv) stating whether,
since the date of the most recent previous delivery of financial
statements pursuant to subsections (a) and (b) of this Section, there has
been any material adverse change in the condition (financial or
otherwise), results of operations, properties, assets, business or
prospects of Trex Company, Inc. or of Trex Company, Inc. and its
Consolidated Subsidiaries, considered as a whole, and, if so, the nature
of such material adverse change.
16
(e) Accountant's Certificate. Simultaneously with the delivery of
each set of financial statements referred to in subsection (a) above, a
statement of the firm of independent public accountants which reported on
such statements (i) whether anything has come to its attention to cause it
to believe that any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to subsection (c) above.
(f) Default. Forthwith upon the occurrence of any Default, a
certificate of the chief financial officer or chief accounting officer of
the Borrower setting forth the details thereof and the action which the
Borrower is taking or proposes to take with respect thereto.
(g) Litigation. As soon as reasonably practicable after obtaining
knowledge of the commencement of, or of a material threat of the
commencement of, an action, suit, proceeding or investigation against the
Borrower or any of its Subsidiaries which could materially adversely
affect the condition (financial or otherwise), results of operations,
properties, assets, business or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole, or could otherwise have
a Material Adverse Effect or which in any manner questions the validity of
this Agreement or any of the other transactions contemplated hereby or
thereby, an explanation of the nature of such pending or threatened
action, suit, proceeding or investigation and such additional information
as may be reasonably requested by the Bank.
(h) Auditors' Management Letters. Promptly upon receipt thereof,
copies of each report submitted to Trex Company, Inc. or its Consolidated
Subsidiaries by independent public accountants in connection with any
annual interim or special audit made by them of the books of Trex Company,
Inc. or its Consolidated Subsidiaries, including, without limitation, each
report submitted to Trex Company, Inc. or its Consolidated Subsidiaries
concerning its accounting practices and systems and any final comment
letter submitted by such accountants to management in connection with the
annual audit of Trex Company, Inc. or its Consolidated Subsidiaries.
(i) ERISA Matters. If and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required
to give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent
or has been terminated, a copy of such notice; (iii) receives notice from
the PBGC under Title IV of ERISA of an intent to terminate; impose
liability (other than for premiums under Section 4007 of ERISA) in respect
of, or appoint a trustee to administer any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard under Section
412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a
copy of such notice and other information filed with the PBGC; (vi) gives
notice of withdrawal from any Plan
17
pursuant to Section 4063 of ERISA, a copy of such notice; or (vii) fails
to make any payment or contribution to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement or makes any amendment to any Plan
or Benefit Arrangement which has resulted or could reasonably be expected
to result in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth details as to such
occurrence and action, if any, which the Borrower or applicable member of
the ERISA Group is required or proposes to take.
(j) Environmental Matters. Promptly, upon receipt of any complaint,
order, citation, notice or other written communication from any Person
with respect to, or upon the Borrower's obtaining knowledge of, (i) the
existence or alleged existence of a violation of any applicable
Environmental Law in connection with any property now or previously owned,
leased or operated by the Borrower or any of its Subsidiaries, (ii) any
release on such property or any part thereof in a quantity that is
reportable under any applicable Environmental Law and (iii) any pending or
threatened proceeding for the termination, suspension or nonrenewal of any
permit required under any applicable Environmental Law, in each such case
under clause (i), (ii) or (iii) in which there is a reasonable likelihood
of an adverse decision or determination which could result in a Material
Adverse Effect.
(k) Other Information. From time to time such additional financial
or other information regarding the condition (financial or otherwise),
results of operations, properties, assets, business or prospects of the
Borrower or its Consolidated Subsidiaries as the Bank may reasonably
request.
Section 6.02. Payment of Obligations. The Borrower will pay and discharge,
and will cause each of its Subsidiaries to pay and discharge, as the same shall
become due and payable, (a) all their respective obligations and liabilities,
including all claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like persons which, in any such case, if
unpaid, might by law give rise to a Lien upon any of their properties or assets
and (b) all lawful taxes, assessments and charges or levies made upon their
properties or assets, by any governmental body, agency or official, except where
any of the items in clause (a) or (b) of this Section 6.02 may be diligently
contested in good faith by appropriate proceedings and the Borrower or such
Subsidiary shall have set aside on its books, if required under generally
accepted accounting principles, appropriate reserves for the accrual of any such
items.
Section 6.03. Maintenance of Property; Insurance.
(a) Maintenance of Properties. The Borrower will keep, and will
cause each of its Subsidiaries to keep, all property useful and necessary
in their respective businesses in good working order and condition,
subject to ordinary wear and tear.
(b) Insurance. The Borrower will maintain, and will cause each of
its Subsidiaries to maintain, insurance with financially sound and
responsible companies in such amounts (and with such risk retentions) and
against such risks as is usually carried by owners of similar businesses
and properties in the same general areas in which the
18
Borrower and its Subsidiaries operate. The Bank shall be named as loss
payee and additional insured on such insurance policies. The Borrower will
deliver to the Bank certificates evidencing that they are named as loss
payee and additional insured and such other information as the Bank shall
reasonably request from time to time.
Section 6.04. Conduct of Business and Maintenance of Existence. The
Borrower will continue, and will cause each of its Subsidiaries to continue, to
engage in business of the same general type as now conducted by the Borrower and
its Subsidiaries, and will preserve, renew and keep in full force and effect,
and will cause each of its Subsidiaries to preserve, renew and keep in full
force and effect, their respective corporate existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business.
Section 6.05. Compliance With Laws. The Borrower will comply, and will
cause each of its Subsidiaries to comply, with all applicable laws, ordinances,
rules, regulations and requirements of governmental authorities (including,
without limitation, Environmental Laws, ERISA and the rules and regulations
thereunder) except (a) where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or (b) where noncompliance could not
reasonably be expected to have a Material Adverse Effect.
Section 6.06. Accounting; Inspection of Property, Books and Records. The
Borrower will keep, and will cause each of the Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to their respective businesses and
activities, will maintain, and will cause each of the Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of their respective Subsidiaries to permit, representatives
of the Bank to visit and inspect any of their respective properties, to examine
and make copies from any of their respective books and records and to discuss
their respective affairs, finances and accounts with their officers, employees
and independent public accountants, including field audits of Accounts
Receivable and Inventory, all at such reasonable times and as often as may
reasonably be desired, and further, if requested, Borrower and each of its
Subsidiaries shall provide equipment and real estate appraisals to the Bank for
the Collateral. The costs of all field audits, inspections and appraisals will
be borne by the Borrower; provided, however, that unless an Event of Default has
occurred and is continuing, the Borrower shall only be responsible for the
payment of one such audit, inspection or appraisal prior to December 31, 2001
and one such audit, inspection or appraisal in any twelve month period
thereafter. Notwithstanding the above, the Borrower shall be permitted to make
adjustments to its books of record and accounts as may be required or as may be
requested by an audit or outside review, so long as the purpose of such
adjustment is to bring said books or accounts into conformity with generally
accepted accounting principles.
Section 6.07. Minimum EBITDA. Beginning with the month ended September 30,
2001, Borrower, and its Subsidiaries, shall earn a minimum Consolidated EBITDA
of $25,000,000 measured on a rolling twelve-month basis, except that
Consolidated EBITDA shall not fall below (i) $22,000,000 for the twelve months
ending on each of October 31, 2001, November 30, 2001 and December 31, 2001 and
(ii) $20,000,000 for the twelve months ending on each of January 31, 2002,
February 28, 2002 and March 31, 2002.
19
Section 6.08. Financial Advisors. On or before December 31, 2001, Borrower
must hire a financial advisor acceptable to Bank in its sole but reasonable
discretion.
Section 6.09. Restriction on Indebtedness and Liens. The Borrower will
not, and will not permit any of its Subsidiaries to, without the written
permission of Bank, incur any Debt or create, incur, assume or suffer to exist
any Lien upon or with respect to any Collateral, or other accounts, or ownership
interests in its Subsidiaries, or proceeds thereof, or sell any Collateral, or
other accounts or ownership interests in its Subsidiaries, or proceeds thereof
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Collateral, or other accounts, or ownership interests in its Subsidiaries,
or proceeds thereof (including sales of accounts receivable or notes with
recourse to the Borrower or any of its Subsidiaries) or assign any right to
receive income, or file or permit the filing of any financing statement under
the Uniform Commercial Code as in effect in any applicable jurisdiction or any
other similar notice of Lien under any similar recording or notice statute,
provided that the provisions of this Section 6.09 shall not prevent the
creation, incurrence, assumption or existence of the following (with such Liens
described below being herein referred to as "Permitted Liens"):
(a) Lien in favor of Bank of America encumbering Borrower's real
property located in Lyon County, Nevada, which lien is evidenced by that
certain Deed of Trust, Assignment of Rents and Leases, Security Agreement
and Fixture Filing dated September 28, 1999 and recorded on September 30,
1999 in the Official Records of Lyon County, Nevada as Document No.
239622. Provided, that Borrower shall not be permitted to amend or modify
the loan secured by such lien.
(b) Liens created by or permitted under the Loan Documents;
(c) Liens for taxes not yet due or Liens for taxes being contested
in good faith and by appropriate proceedings for which adequate reserves
(in the good-faith judgment of the management of the Borrower) have been
established;
(d) Liens imposed by law securing the charges, claims, demands or
levies of carriers, warehousemen, mechanics and other like persons which
were incurred in the ordinary course of business which (i) do not in the
aggregate materially detract from the value of the property or assets
subject to such Lien or materially impair the use thereof in the operation
of the business of the Borrower or any Subsidiary or (ii) are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or assets
subject to such lien; and
(e) Liens on unearned insurance premiums held by Persons financing
the payment thereof.
Section 6.10. Limitation on Guarantees. Neither the Borrower nor any of
its Subsidiaries shall Guarantee any Debt of any Person or Persons in excess of
$250,000 in the aggregate at any time.
20
Section 6.11. Limitations on Capital Expenditures. Without the prior
written permission of the Bank, the Borrower and its Subsidiaries shall not make
capital expenditures of more than $3,000,000, in the aggregate, in the fiscal
quarter ending December 31, 2001 and will not make capital expenditures of more
than $2,000,000 plus any unspent monies from prior fiscal quarters, in the
aggregate in any fiscal quarter thereafter; provided, that in no event shall
aggregate capital expenditures exceed $10,500,000 between October 1, 2001 and
January 31, 2003.
Section 6.12. Consolidations, Mergers and Sales of Assets. Neither the
Borrower nor any Subsidiary will, without the prior written permission of the
Bank, (a) consolidate or merge with or into any other Person or (b) sell, lease
or otherwise transfer, directly or indirectly, all or substantially all of the
assets of the Borrower or such Subsidiary to any other Person or Persons,
provided that so long as no Default shall have occurred after giving effect
thereto, (i) a Subsidiary may merge into the Borrower if the Borrower is the
surviving entity, and (ii) the Borrower or any Subsidiary may merge into or
consolidate with another Person if the Borrower or such Subsidiary, as the case
may be, is the entity surviving such merger or consolidation. Notwithstanding
the foregoing, or any other provision of this Agreement or in any of the other
Loan Documents, upon thirty (30) days prior written notice to the Bank (a) TREX
Company, LLC may merge into or consolidate with Trex Company, Inc., and (b) TREX
Company, LLC or Trex Company, Inc. may create a wholly-owned Subsidiary (the "IP
Subsidiary") and transfer thereto all patents, trademarks, copyrights and other
intellectual property of the Borrower the ("IP"); provided, however, that the IP
Subsidiary shall execute and deliver to the Bank a written agreement or
agreements in form and substance satisfactory to the Bank, in its sole but
reasonable discretion, pursuant to which the IP Subsidiary shall grant to the
Bank a Lien on the IP to secure payment and performance of the Obligations.
Section 6.13. Investments; Asset Acquisitions.
(a) Investments. Neither the Borrower nor any Subsidiary will hold,
make or acquire any Investment in any Person, except:
(i) the Borrower and any Subsidiary may invest in cash and
Cash Equivalents;
(ii) the Borrower and any Subsidiary may acquire and hold
receivables owing to them, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms;
(iii) the Borrower and any Subsidiary may acquire and own
investments (including Debt obligations) received in connection with
the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with
customers and supplies arising in the ordinary course of business;
21
(iv) the Borrower and any Subsidiary may make loans and
advances to any employees, current and/or prospective customers
and/or vendors in the ordinary course of business, provided such
loans and advances do not exceed at any time, in the aggregate,
$500,000;
(v) any Acquisition permitted by Section 6.13(b);
(vi) Trex Company, Inc. may invest up to $300,000 in addition
to its existing investment in Winchester Capital, Inc.;
(vii) Trex Company, Inc. or TREX Company, LLC may invest up to
$500,000 in the aggregate, in addition to the value of the
intellectual property to be contributed thereto, in the IP
Subsidiary;
(viii) Trex Company, Inc. and TREX Company, LLC may invest in
Trex Wood Polymer Espana, S.L. and one additional to-be-formed
foreign sales subsidiary, provided that the total investment,
exclusive of Trex Company, Inc. and TREX Company, LLC's existing
investment in Trex Wood Polymer Espana, S.L., in these two
Subsidiaries shall not exceed $500,000;
(ix) any Subsidiary may invest in the Borrower;
(x) Trex Company, Inc. may invest in TREX Company, LLC (and
vice versa);
(xi) Trex Wood Polymer Espana, S.L. may maintain its existing
investment in DENPLAX, S.A.
(b) Acquisitions. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any Acquisition transaction except that
the Borrower and any Subsidiary may acquire assets in the ordinary course
of business for fair consideration;
Section 6.14. Payments, Etc. Except as permitted below, the Borrower will
not, and will not permit any of its Subsidiaries to, make any distribution,
dividend, payment or delivery of property or cash on or with respect to its
capital stock or its membership interests, or issue, redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any membership
or other interests or shares of any class of its capital stock now or hereafter
outstanding (or any warrants exercisable for, or options or stock appreciation
rights in respect of, any of such shares of capital stock or membership
interests), or set aside any funds for any of the foregoing purposes, or permit
any of its Subsidiaries to purchase or otherwise acquire for consideration any
shares of capital stock or any membership interest in the Borrower or any shares
of capital stock or other equity interest in any other Subsidiary, as the case
may be, now or hereafter outstanding (or any options or warrants exercisable for
or stock appreciation rights issued by the Borrower or any Subsidiary with
respect to its capital stock or membership interests).
The foregoing provisions of this Section 6.14 shall not limit or prohibit
any of the following transactions:
22
(a) the payment of any distribution or dividend by any Subsidiary to
Trex Company, Inc. or to TREX Company, LLC;
(b) the payment by Trex Company, Inc. of a dividend on its common
stock solely in shares of its common stock in connection with a split of
such common stock;
(c) the issuance of any Warrant and any transaction contemplated by
any Warrant, including the retirement and cancellation of any existing
Warrant and the issuance of new Warrants in exchange, replacement or
substitution therefor and payment of cash in lieu of fractional shares of
common stock of Trex Company, Inc. upon any exercise of any Warrant;
(d) the issuance by Trex Company, Inc. of shares of its common stock
and options to purchase its common stock pursuant to its employee stock
purchase plan and stock option and incentive plan for up to the number of
shares of common stock authorized by such plans as of the date hereof; or
(e) any transaction which is expressly permitted by Section 6.12 or
Section 6.13.
Section 6.15. Use of Proceeds. The proceeds of the Revolving Loans made
under this Agreement will be used by the Borrower for permanent working capital
financing of the Borrower's accounts receivable and inventory, to purchase
equipment and/or other general corporate purposes. The proceeds of Term Loan A
made under this Agreement were used by the Borrower to purchase equipment and/or
other general corporate purposes. No such use of the proceeds for general
corporate purposes will be, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
Section 6.16. Transactions With Other Persons. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any agreement with any
Person whereby any of them shall agree to any restriction on the right of the
Borrower or any of its Subsidiaries to amend or waive any of the provisions of
this Agreement or any other Loan Document.
Section 6.17. Limitations on Debt. The Borrower will not as of the end of
any month permit the ratio of Total Consolidated Debt to Total Consolidated
Capitalization, as a percentage, to exceed 55%.
Section 6.18. Funded Debt Coverage Ratio. The Borrower will not, as of the
end of any fiscal quarter, permit the ratio of the Total Consolidated Debt to
Consolidated EBITDA for the four quarter period ended as of the end of such
fiscal quarter to exceed 4.0:1.0 through June 30, 2002 and 3.0:1.0 for all
testing periods thereafter.
Section 6.19. Location of Finished Goods Inventory. The Borrower will
store all finished goods Inventory at a location owned by Borrower or its
Subsidiaries. In the event that Borrower wishes to store any finished goods
Inventory at a location not owned by Borrower or its Subsidiaries, Borrower will
obtain a waiver from each landlord of such a location, in form and
23
substance satisfactory to the Bank in its sole but reasonable discretion, by
which such landlord waives its rights, if any, in the finished goods Inventory
stored at such location.
Section 6.20. Deposit Accounts. To facilitate the administration of the
Loans, the Borrower and its Subsidiaries shall maintain all of their operating
deposit accounts with the Bank and if requested by the Bank will establish and
maintain a lock box cash management system in an assignee account at the Bank.
Notwithstanding the foregoing, Borrower or its Subsidiaries may maintain one
general operating depository account in each of Fernley, Nevada and Almeria,
Spain; provided that, if at any time the balance in the operating depository
account in Fernley, Nevada exceeds $100,000 the Bank shall be entitled to a
first priority security interest therein and Borrower shall take such actions as
are necessary to perfect such security interest.
Section 6.21. Warrants. On or before the Closing Date, Trex Company, Inc.
shall issue to the Bank a warrant for the purchase of up to 707,557 shares of
the common stock of Trex Company, Inc. at a price per share based on the average
market price (as defined in such warrant) of the common stock for the 20
consecutive trading days beginning on October 30, 2001. Notwithstanding the
foregoing, and as provided for in the warrant, if the Obligations, exclusive of
the ISDA Master Agreement and Real Estate Term Loans 1, 2 & 3, are paid in full
on or before June 30, 2002, such warrant shall be exercisable for a maximum of
353,779 shares of common stock of Trex Company, Inc. Trex Company, Inc. shall
also agree in the Registration Agreement to provide the Bank with registration
rights with respect to Bank's resale of any common stock issued upon exercise of
such warrant. This agreement shall be further evidenced by the Warrant and
Registration Agreement to be delivered on the Closing Date. By its acceptance of
the Warrant, the Bank shall be deemed to have made the representations and
warranties contained in Section 3 thereof.
Section 6.22. Commitment Fee. Borrower hereby agrees to pay the Commitment
Fee to the Bank.
Section 6.23. Independence of Covenants. All covenants contained herein
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that such action or condition
would be permitted by an exception to, or otherwise be within the limitations
of, another covenant shall not avoid the occurrence of a Default if such action
is taken or condition exists.
ARTICLE VII
DEFAULTS
Section 7.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay, within five days after the date
when due, any principal, interest, fee or any other amount payable
hereunder or under the Notes, the ISDA Master Agreement or the Letters of
Credit;
(b) the Borrower shall fail to pay the Commitment Fee or the Unused
Commitment Fee when due;
24
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement, except those covenants or
agreements contained in Sections 6.01, 6.02, 6.03, 6.05, 6.13, 6.16 and
6.20 hereof;
(d) the Borrower shall fail, after fifteen (15) days written notice
thereof from Bank to observe or perform the covenants and agreements
contained in Sections 6.01, 6.02, 6.03, 6.05, 6.13, 6.16 and 6.20 hereof;
(e) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement
or other document delivered pursuant hereto or thereto shall prove to have
been incorrect in any material respect when made;
(f) the Borrower or any Subsidiary shall fail to make any payment or
perform any collateralization obligation in respect of any Material
Financial Obligations when due or within any applicable grace period;
(g) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt of the Borrower or any
Subsidiary or enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such Material Debt or any Person acting
on such holder's behalf to accelerate the maturity thereof;
(h) the Borrower or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(j) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $25,000 which it shall have
become liable to pay under Title IV of ERISA or notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other than for premiums under
Section 4007 of
25
ERISA) in respect of, or to cause a trustee to be appointed to administer
any Material Plan; or a condition shall exist by reason of which the PBGC
would be entitled to obtain a decree adjudicating that any Material Plan
must be terminated; or there shall occur a complete or partial withdrawal
from, or default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to one or more Multiemployer Plans which could reasonably be
expected to cause one or more members of the ERISA Group to incur a
current payment obligation in excess of $25,000;
(k) one or more judgments or orders for the payment of money in
excess of $25,000 in the aggregate shall be rendered against the Borrower
or any Subsidiary of the Borrower and such judgments or orders shall
continue unsatisfied and unstayed for a period of 30 days; or
(l) a Change of Control shall have occurred;
then, and in every such event, while such event is continuing, the Bank may (i)
by notice to the Borrower terminate the Commitment and it shall thereupon
terminate, and (ii) by notice to the Borrower declare the Obligations (together
with accrued interest thereon) to be, and the Obligations shall thereupon
become, immediately due and payable without presentment, demand, protest or
other notice of any kind (except as set forth in clause (i) above), all of which
are hereby waived by the Borrower, provided that in the case of any Default or
any Event of Default specified in Section 7.01(h) or (i) above with respect to
the Borrower, without any notice to the Borrower or any other act by the Bank,
the commitment to make Revolving Loans and Term Loans shall thereupon terminate
and the Obligations (together with accrued interest and accrued and unpaid fees
thereon) shall become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower. In addition to any rights now or hereafter granted under applicable
law or otherwise, and not by way of limitation of any such rights, upon the
occurrence of an Event of Default, the Bank is authorized at any time and from
time to time, without presentment, demand, protest or other notice of any kind
(all of which rights being hereby expressly waived), to set off and to
appropriate and apply any and all deposits and any other indebtedness at any
time held or owing by the Bank to or for the credit or the account of the
Borrower against obligations and liabilities of the Borrower to the Bank
hereunder, under the Notes, or the other Loan Documents.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Section 8.01. Illegality. If, on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for the Bank to make, maintain or fund Loans and the Bank
shall so notify the Borrower, until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, each Loan then
outstanding which bears interest at LIBOR or the LIBOR Market Index-Based
26
Rate shall be converted immediately to a Base Rate Loan and all new Loans shall
be Base Rate Loans.
Section 8.02. Base Rate Loans Substituted for Affected LIBOR Market
Index-Based Loans. Upon the occurrence of any event or condition set forth in
Section 8.01, each Loan then outstanding which bears interest at LIBOR or the
LIBOR Market Index-Based Rate shall be converted immediately to a Base Rate Loan
and all new Loans shall be Base Rate Loans. If the Bank notifies the Borrower
that the circumstances giving rise to such change in interest rate no longer
apply, the principal amount of each such Base Rate Loan shall cease immediately
to constitute a Base Rate Loan and shall thereafter bear interest in accordance
with Section 2.06.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to a party hereunder shall be in writing
(including bank wire, facsimile transmission or similar writing) and shall be
given to such party: (a) at its address or facsimile number set forth on the
signature pages hereof, or (b) at such other address, facsimile number or telex
number as such party may hereafter specify for the purpose of communication
hereunder by notice to the other party hereto. Each such notice, request or
other communication shall be effective (i) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails, certified mail, return receipt
requested, with appropriate first-class postage prepaid, addressed as specified
in this Section, or (iii) if given by any other means, when delivered at the
address specified in this Section 9.01. Rejection or refusal to accept or the
inability to deliver because of a changed address of which no notice was given
shall not affect the validity of notice given in accordance with this Section.
Section 9.02. Release and Waiver. Borrower hereby releases the Bank and
its officers, employees and agents from any and all liability, claims, known or
unknown related to this Agreement or otherwise. In the event any Borrower is the
subject of any insolvency, bankruptcy, receivership, dissolution, reorganization
or similar proceeding, Federal or State, voluntary or involuntary, under any
present or future law or act, Borrower hereby agrees that in consideration for
the restructuring of the Loan Documents being made herein, Bank shall be and
hereby is entitled to the automatic and absolute lifting of any automatic stay
or other form of injunction so as to allow for the immediate enforcement of its
remedies under the Loan Documents and any applicable law, including without
limitation, the automatic and absolute lifting of the automatic stay imposed by
ss. 362 of the United States Bankruptcy Code.
Section 9.03. No Waivers. No failure by either party to exercise, no
course of dealing with respect to, and no delay in exercising any right, power
or privilege hereunder or under the Notes shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided herein shall be cumulative and not exclusive of any
rights or remedies provided by law.
27
Section 9.04. Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses of the Bank, including reasonable fees and disbursements
of special and local counsel for the Bank, in connection with the preparation
and administration of this Agreement and the other Loan Documents, any waiver or
consent thereunder or any amendment thereof or any Default or alleged Default
thereunder and (ii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Bank, including (without duplication) the reasonable
fees and disbursements of outside counsel, in connection with such Event of
Default and collection, bankruptcy, insolvency and other enforcement proceedings
resulting therefrom.
Section 9.05. Amendments and Waivers. Any provision of this Agreement or
the Notes may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Borrower and the Bank.
Section 9.06. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior
written consent of the Bank, except as may be permitted pursuant to Section 6.12
hereof. The Bank shall have the right to assign or otherwise transfer any of its
rights under this Agreement or the Loan Documents; provided, however, that
transfer of any of Bank's rights with respect to the Revolving Loans shall
require the prior written consent of Borrower which consent shall not be
unreasonably withheld or delayed.
Section 9.07. Governing Law. This Agreement and the Notes shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia.
Section 9.08. Arbitration; Submission to Jurisdiction.
(a) 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 the 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, disputes 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. Notwithstanding the foregoing, this
arbitration provision does not apply to disputes under or related to swap
agreements.
(b) All arbitration hearings shall be conducted in the city in which
the office of the Bank set forth on the signature page hereof is located.
A hearing shall begin within 90 days of demand for arbitration and all
hearings shall be concluded 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. Arbitrators shall be
licensed attorneys selected from the
28
Commercial Financial Dispute Arbitration Panel of the AAA. The parties do
not waive applicable federal or state substantive law except as provided
herein.
(c) 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, setoff and peaceful possession of
personal property; (iii) obtaining provisional or ancillary remedies,
including injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy proceeding;
and (iv) when applicable, a judgment by confession of judgment. Any claim
or controversy with regard to the parties' entitlement to such remedies is
a Dispute.
(d) Each party agrees that it shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waives any
right or claim to punitive or exemplary damages it may have now or which
may arise in the future in connection with any Dispute, whether the
Dispute is resolved by arbitration or judicially.
(e) The parties acknowledge that by agreeing to binding arbitration
they have irrevocably waived any right they may have to a jury trial with
regard to a Dispute.
Section 9.09. Counterparts; Integration; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. Each of this Agreement, the Notes and the other Loan Documents shall
be deemed to incorporate the other of said documents by reference and all of
said documents shall constitute the entire agreement and understanding among the
parties hereto and supersede any and all prior agreements and understandings,
oral or written, relating to the subject matter hereof. This Agreement shall
become effective upon receipt by the Bank of counterparts hereof signed by each
of the parties hereto.
Section 9.10. Confidentiality. The Bank agrees to hold all nonpublic
information obtained pursuant to the requirements of this Agreement in
accordance with its customary procedure for handling confidential information of
this nature and in accordance with safe and sound banking practices, provided
that nothing herein shall prevent the Bank from disclosing such information (a)
to any other Person if reasonably incidental to the administration of the Loans,
(b) upon the order of any court or administrative agency, (c) upon the request
or demand of any regulatory agency or authority, (d) which had been publicly
disclosed other than as a result of a disclosure by the Bank prohibited by this
Agreement, (e) in connection with any litigation to which the Bank or its
subsidiaries or parent may be a party, (f) to the extent necessary in connection
with the exercise of any remedy hereunder and (g) to the Bank's legal counsel
and independent auditors.
29
Section 9.11. Severability; Modification. If any provision hereof is
invalid or unenforceable in any jurisdictions, then, to the fullest extent
permitted by law, (a) the other provisions hereof shall remain in full force and
effect in such jurisdiction; and (b) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provisions in any other jurisdiction.
[Signatures on Following Page]
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
TREX COMPANY, LLC
160 Exeter Drive
Winchester, VA 22603-8605
Facsimile: (540) 542-6889
By /s/ Anthony J. Cavanna
---------------------------------------
Anthony J. Cavanna, Executive Vice
President; Chief Financial Officer;
Treasurer
TREX COMPANY, INC.
160 Exeter Drive
Winchester, VA 22603-8605
Facsimile: (540) 542-6889
By /s/ Robert G. Matheny
---------------------------------------
Robert G. Matheny, President
FIRST UNION NATIONAL BANK
301 South College Street, DC-5
One First Union -- 5th Floor
Charlotte, NC 28288-0760
Facsimile: (704) 374-6319 By /s/ Barbara Gell Carroll
---------------------------------------
Name/Title Barbara Gell Carroll,
------------------------------
Senior Vice President/Director
------------------------------------------
31
DEFINITIONS APPENDIX
The definitions set forth in this Definitions Appendix are incorporated by
reference into Section 1.01 of the Second Amended and Restated Credit Agreement
dated as of September 30, 2001 among TREX Company, LLC, Trex Company, Inc. and
First Union National Bank (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement"). Reference in this Definitions
Appendix to "this Agreement," "herein," "hereof," "hereunder" and to any Article
or Section shall be interpreted to mean the Credit Agreement and the referenced
Article or Section, including this Definitions Appendix.
DEFINITIONS
"Accounts" means all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Borrower, and shall also mean and include all accounts
receivable, contract rights, book debts, notes, drafts and other obligations or
indebtedness owing to the Borrower arising from the sale, lease or exchange of
goods or other property by it and/or the performance of services by it
(including, without limitation, any such obligation which might be characterized
as an account, contract right or general intangible under the Uniform Commercial
Code in effect in any jurisdiction) and all of the Borrower's rights in, to and
under all purchase orders for goods, services or other property, and all of the
Borrower's rights to any goods, services or other property represented by any of
the foregoing (including returned or repossessed goods and unpaid seller's
rights of rescission, replevin and reclamation and rights to stoppage in
transit) and all moneys due to or to become due to the Borrower under all
contracts for the sale, lease or exchange of goods or other property and/or the
performance of services by it (whether or not yet earned by performance on the
part of the Borrower), in each case whether now in existence or hereafter
arising or acquired, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts and all collateral security and
guarantees of any kind given by any Person with respect to any of the foregoing.
"Acquisition," by any Person (herein called the "Acquiror"), means any
transaction involving the purchase, lease or other acquisition by such Acquiror
of any or all of the capital stock or assets of another Person that, for
purposes of preparing a statement of cash flows for such Acquiror prepared in
accordance with GAAP, would be considered "investing activity."
"Affiliate" means (a) any Person that directly, or indirectly through one
or more intermediaries, controls the Borrower (a "Controlling Person") or (b)
any Person (other than the Borrower or a Subsidiary) which is controlled by or
is under common control with a Controlling Person. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Agreement" means this Second Amended and Restated Credit Agreement, as it
may be amended, modified or supplemented from time to time.
"Bank" means First Union National Bank, a national banking association,
and its successors and assigns.
32
"Base Rate" means, for any day, the Prime Rate for such day plus 1% as
adjusted by the Variance.
"Base Rate Loan" means a Loan which bears interest at the Base Rate.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means TREX Company, LLC, a Delaware limited liability company,
Trex Company, Inc., a Delaware corporation and their successors.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the Commonwealth of Virginia are authorized by law to
close.
"Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"Cash Equivalents" means (a) direct obligations of the United States or
any agency thereof, or obligations guaranteed by the United States of any agency
thereof, (b) commercial paper rated in the highest grade by a nationally
recognized credit rating agency or (c) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any state thereof and has capital, surplus and undivided profits aggregating
at least $250,000,000, provided in each case that such investment matures within
one year from the date of acquisition thereof by the Borrower.
"Change of Control" means any event or condition a result of which is that
(a) Anthony J. Cavanna, Roger A. Wittenberg, Robert G. Matheny and Andrew U.
Ferrari (or any of their current or former spouses, lineal descendents, current
or former spouses of any such lineal descendents, or any trust or other Person
controlled by any of the foregoing) cease, as a group, to own beneficially at
least 25% of the voting common stock of Trex Company, Inc.; or (b) TREX Company,
Inc. ceases to own beneficially all of the membership interests in TREX Company,
LLC.
"Closing Date" means the date, not later than November 9, 2001, on which
the Bank determines that the conditions specified in or pursuant to Section 4.01
have been satisfied.
"Collateral" means the real estate, and improvements thereon, of the
Borrower as more particularly described in those certain Deeds of Trust dated as
of the date hereof and all other collateral described in the Security Agreement.
"Commitment Fee" means the $100,000 fee due upon the execution of this
Agreement and the $200,000 fee due to the Bank if the Obligations, exclusive of
the ISDA Master Agreement and Real Estate Term Loans 1, 2 & 3, are not paid in
full on or before June 30, 2002.
33
"Consolidated EBITDA" means as of the date of determination, the total
earnings before interest and taxes plus depreciation and amortization of the
Borrower and its Consolidated Subsidiaries determined on a consolidated basis as
of such date.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
"Consolidated Net Worth" means, as of the date of determination:
(i) the total assets of the Borrower and its Subsidiaries which
would be shown as assets on a consolidated balance sheet of the Borrower
and its Subsidiaries as of such time prepared in accordance with GAAP,
after eliminating all amounts properly attributable to minority interests,
if any, in the stock and surplus of Subsidiaries; minus
(ii) the total liabilities of the Borrower and its Subsidiaries
which would be shown as liabilities on a consolidated balance sheet of the
Borrower and its Subsidiaries as of such time prepared in accordance with
GAAP.
"Consolidated Subsidiary" means with respect to any Person at any date any
Subsidiary of such Person or other entity the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date in accordance with GAAP.
"Debt" of any Person means, at any date, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable arising in the ordinary course of
business), (d) all obligations of such Person as lessee under Capital Leases,
(e) all obligations of such Person to purchase securities or other property
which arise out of or in connection with the sale of the same or substantially
similar securities or property, (f) all noncontingent obligations (and, for
purposes of Section 6.09 and the definitions of Material Debt and Material
Financial Obligations, all contingent obligations) of such Person to reimburse
any bank or other person in respect of amounts paid under a letter of credit,
bankers' acceptance or similar instrument, (g) all obligations of others secured
by a Lien on any asset of such Person, whether or not such obligation is assumed
by such Person, and (h) all obligations of others Guaranteed by such Person;
provided, however, that Debt shall not include (i) indebtedness incurred in
connection with the financing of insurance premiums, (ii) obligations of TREX
Company, LLC as borrower and Trex Company, Inc. as guarantor with respect to the
indebtedness secured by the Permitted Lien identified in Section 6.09(a) of the
Credit Agreement, and (iii) Guarantees of obligations of TREX Company, LLC or
Trex Company, Inc.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate
34
option, foreign exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap transaction,
currency option or any other similar transaction (including any option with
respect to any of the foregoing transactions) or any combination of the
foregoing transactions.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"Effective Date" means September 30, 2001.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the cleanup or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 7.01.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics.
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"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Inventory" means all "inventory" (as defined in the UCC) now owned or
hereafter acquired by the Borrower, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and supplies,
work-in-process and finished goods and any products made or processed therefrom
and all substances, if any, commingled therewith or added thereto.
"Investment" means any investment in any Person, whether by means of share
purchase capital contribution, loan, time deposit or otherwise.
"ISDA Master Agreement" means that certain agreement between Trex Company,
LLC and Bank dated as of March 20, 1998, and all amendments thereto and
transactions thereunder.
"Item" means any "item" as defined in Section 4-104 of the UCC and shall
also mean and include checks, drafts, money orders or other media of payment.
"Letter of Credit SM413821" means that certain irrevocable standby letter
of credit for the benefit of Treasurer, County of Frederick, Virginia with in
the amount of $108,756.
"LIBOR" has the meaning set forth in Section 2.06(c).
"LIBOR Market Index-Based Rate" has the meaning set forth in Section
2.06(b).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Agreement, the Borrower or any Subsidiary shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"Loan Documents" means the Credit Agreement, the Mortgage the Notes and
the Security Agreement, collectively, and "Loan Document" means any of them.
"Loans" means the Revolving Loans, Term Loan A and Real Estate Term Loans
1, 2 & 3 made or existing pursuant to Section 2.01 and Section 2.02.
"Material Adverse Effect" means (a) any material adverse effect upon the
condition (financial or otherwise), results of operations, properties, assets,
business or prospects of the Borrower or of the Borrower and its Consolidated
Subsidiaries, taken as a whole; (b) a material adverse effect on the ability of
the Borrower to consummate the transactions contemplated hereby to occur on the
Closing Date; (c) a material adverse effect on the ability of the Borrower to
perform its obligations under this Agreement and the Notes; or (d) a material
adverse effect on the rights and remedies of the Bank under this Agreement and
the Notes.
"Material Debt" means Debt (other than the Notes) of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or unrelated
transactions, in an aggregate principal or face amount exceeding $250,000.
36
"Material Financial Obligations" means a principal or face amount of Debt
and/or payment obligations in respect of Derivatives Obligations of the Borrower
and/or one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, exceeding in the aggregate $250,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000.
"Mortgage" means those certain Deed Of Trusts, Security Agreement, And
Absolute Assignment Of Leases to be filed in Virginia and Nevada pursuant to
Section 3 hereof.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five-year period.
"Notes" means the Revolving Note, Term Loan A Note, Real Estate Term Loan
1 Note, Real Estate Term Loan 2 Note, and Real Estate Term Loan 3 Note.
"Notice of Borrowing" means a Notice of Borrowing (as defined in Section
2.03(a)).
"Obligations" means:
(i) all principal of and interest (including, without limitation,
any interest which accrues after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization
of the Borrower, whether or not allowed or allowable as a claim in any
such proceeding) on any Real Estate Term Loan, Term Loan A, Revolving
Loan, ISDA Master Agreement, Letter of Credit SM413821, fees payable or
reimbursement obligation under, or any note issued pursuant to, this
Agreement or any other Loan Document;
(ii) all other amounts now or hereafter payable by the Borrower and
all other obligations or liabilities now existing or hereafter arising or
incurred (including, without limitation, any amounts which accrue after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower, whether or not
allowed or allowable as a claim in any such proceeding) on the part of the
Borrower pursuant to this Agreement or any other Loan Document;
(iii) all Derivatives Obligations (including, without limitation,
any amounts which accrue after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency or reorganization of
the Borrower, whether or not allowed or allowable as a claim in any such
proceeding) of the Borrower to the Bank;
(iv) all other indebtedness, obligations and liabilities of the
Borrower to the Bank, now existing or hereafter arising or incurred,
whether or not evidenced by notes or other instruments, and whether such
indebtedness, obligations and liabilities are direct or
37
indirect, fixed or contingent, liquidated or unliquidated, due or to
become due, secured or unsecured, joint, several or joint and several,
related to the Loans;
together in each case with all renewals, modifications, consolidations or
extensions thereof.
"Operating Account" means the demand deposit account maintained with the
Bank by the Borrower on which the Borrower draws checks to pay its operating
expenses, which account is linked to the cash management services provided by
the Bank to the Borrower pursuant to the Services Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Perfection Certificate" means a certificate of the Borrower,
substantially in the form of Exhibit A to the Security Agreement, completed and
supplemented with the schedules and attachments contemplated thereby to the
satisfaction of the Bank, and duly executed by the chief executive officer,
president or chief financial officer of the Borrower.
"Permitted Liens" has the meaning set forth in Section 6.09.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means the rate announced by the Bank from time to time, as
its Prime Rate, as such rate may change from time to time with changes to occur
on the date the Bank's Prime Rate changes. The Bank's Prime Rate is one of
several interest rate bases used by the Bank. The Bank lends at rates above and
below the Bank's Prime Rate, and the Borrower acknowledges that the Bank's Prime
Rate is not represented or intended to be the lowest or most favorable rate of
interest offered by the Bank.
"Proceeds" means all proceeds of, and all other profits, products, rents
or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of or other realization
upon or payment for the use of, Collateral (as that term is defined in the
Security Agreement, including (without limitation) all claims of the Borrower
against third parties for loss of, damage to or destruction of or for proceeds
payable under, or unearned premiums with respect to, policies of insurance in
respect of, any Collateral, and any condemnation or requisition payments with
respect to any Collateral, in each case whether now existing or hereafter
arising.
38
"Quarterly Date" means the first Business Day of each January, April, July
and October.
"Real Estate Term Loan 1 " means the $3,780,000 loan made by Bank to
Borrower on June 15, 1998.
"Real Estate Term Loan 2" means the $1,035,000 loan made by Bank to
Borrower on November 20, 1998.
"Real Estate Term Loan 3" means the $5,940,000 loan made by Bank to
Borrower on August 15, 2000.
"Real Estate Term Loan 1 Note" means the amended and restated promissory
note of the Borrower evidencing the obligation of the Borrower to repay Real
Estate Term Loan 1.
"Real Estate Term Loan 2 Note" means the amended and restated promissory
note of the Borrower evidencing the obligation of the Borrower to repay Real
Estate Term Loan 2.
"Real Estate Term Loan 3 Note" means the amended and restated promissory
note of the Borrower evidencing the obligation of the Borrower to repay Real
Estate Term Loan 3.
"Registration Agreement" means the Registration Rights Agreement between
Trex Company, Inc. and the Bank dated as of November 13, 2001 requiring Trex
Company, Inc. to register the common stock acquired by the Bank pursuant to any
Warrants.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
"Revolving Commitment" means $17,000,000.00.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including January 31, 2003.
"Revolving Loan" means a loan made pursuant to Section 2.01(b).
"Revolving Note" means a promissory note of the Borrower substantially in
the form of Exhibit B-1 hereto, evidencing the obligation of the Borrower to
repay the Revolving Loans.
"Security Agreement" means the Security Agreement between the Borrower and
the Bank, dated as of the date hereof, as it may be amended, modified or
supplemented from time to time.
"Services Agreement" means the description of the Sweep Plus Service
provided by the Bank to the Borrower, the terms of which are hereby incorporated
in this Agreement by reference.
"Subsidiary" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or
39
other persons performing similar functions are at the time directly or
indirectly owned by Trex Company, Inc.
"Term Loan A " means the $58,000,000 loan made by Bank to Borrower as of
the Effective Date.
"Term Loan A Period" means the period from and including the Closing Date
to but not including January 31, 2003.
"Term Loan A Note" means the promissory note of the Borrower evidencing
the obligation of the Borrower to repay Term Loan A.
"Termination Date" means January 31, 2003, as said date may be extended
pursuant to Section 2.07(b).
"Total Consolidated Capitalization" means, as of any date of determination
with respect to the Borrower, the sum of Total Consolidated Debt and
Consolidated Net Worth.
"Total Consolidated Debt" means, as of the date of determination, the
total of all Debt of the Borrower and its Subsidiaries outstanding on such date,
after eliminating all offsetting debits and credits between the Borrower and its
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Borrower and its
Subsidiaries in accordance with GAAP.
"UCC" means the Uniform Commercial Code as in effect on the date hereof in
the Commonwealth of Virginia, provided that if by reason of mandatory provisions
of law, for matters pertaining only to the perfection or the effect of
perfection or nonperfection of the Security Interest in any Collateral (as that
term is defined in the Security Agreement) is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than Virginia, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
nonperfection.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (a) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (b) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan but only to the extent that such excess
represents a potential liability of a member of the ERISA Group to the PBGC or
any other Person under Title IV of ERISA.
"United States" means the United States of America, including the states
and the District of Columbia, but excluding its territories and possessions.
"Variance" means a rate per annum (which may be a negative number) above
or below the Base Rate which the Bank, in its sole discretion, determines is
appropriate to adjust the Base Rate in order that the interest rate on the Loans
converted to Base Rate Loans in accordance with
40
Section 8.02 of this Agreement will be comparable to the applicable LIBOR or
LIBOR Market Index-Based Rate plus the basis points over those rates set forth
in Section 2.06.
"Warrant" means the common stock purchase warrant referred to in Section
6.21, dated as of November 13, 2001, and any common stock purchase warrant
subsequently issued in exchange, replacement or substitution therefor or any
subsequently issued warrant.
41
USAGE
The following rules of construction and usage shall be applicable to any
instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein.
(b) The words "hereof," "herein," "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and
not to any particular provision or subdivision thereof; references in any
instrument to "Article," "Section" or another subdivision or to an
attachment are, unless the context otherwise requires, to an article,
section or subdivision of or an attachment to such instrument; and the
term "including" means "including, without limitation."
(c) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(d) Any agreement, instrument or statute defined or referred to
below or in any agreement or instrument that is governed by this Appendix
means such agreement or instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by
succession of comparable successor statutes and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
42