EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is dated as of this 7th
day of April, 1999 among Trex Company, Inc., a Delaware corporation (the
"Company"), each of the Institutional Investors named on Schedule A hereto and
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each of the Management Holders named on Schedule B hereto.
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W I T N E S S E T H:
WHEREAS, TREX Company, LLC ("TREX LLC"), the Institutional Investors and
the Management Holders are parties to a Members' Agreement, dated as of August
29, 1996, as amended (the "Members' Agreement");
WHEREAS, the Company, TREX LLC and the members of TREX LLC have consummated
a reorganization as a result of which, among other things, (i) the Company has
issued all outstanding shares of its common stock, $.01 par value per share (the
"Common Stock"), to the Institutional Investors and the Management Holders in
exchange for all outstanding junior membership interests in TREX LLC and (ii)
TREX LLC has become a wholly owned subsidiary of the Company;
WHEREAS, the Company intends to consummate an initial public offering of
the Common Stock;
WHEREAS, the Members' Agreement will be terminated upon consummation of
such initial public offering;
WHEREAS, the parties hereto wish to provide in this Agreement for the
registration rights currently set forth in the Members' Agreement;
NOW THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto mutually agree as follows:
1. Certain Definitions.
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As used herein, the following terms shall have the meanings set forth
below:
"Business Day" means a day other than a Saturday, a Sunday or a day on
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which banks in New York City are required or permitted by law (other than
general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
"Common Stock" has the meaning set forth in the recitals herein.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
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the rules and regulations of the SEC promulgated thereunder.
"Incidental Registration" has the meaning set forth in Section 2.2 hereof.
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"Initiating Holders" means, at any time, the Institutional Investors
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holding at least fifty percent (50%) of the Registrable Securities at such time
held by all Institutional Investors.
"Initial Public Offering Date" means the first date upon which shares of
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the Common Stock shall have been issued or sold pursuant to an underwritten
public offering (whether on a firm commitment basis or a best efforts basis if
such best efforts are successful) thereof pursuant to an effective registration
statement filed with the SEC pursuant to the Securities Act.
"Institutional Investors" means those Persons named on Schedule A hereto.
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"Management Holders" means those persons named on Schedule B hereto.
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"NASDAQ" means the National Association of Securities Dealers Automated
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Quotation System.
"Person" means an individual, partnership, corporation, limited liability
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company, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
"Public Offering" means any sale of Common Stock in a transaction either
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registered under, or requiring registration under, Section 5 of the Securities
Act.
"Registrable Securities" means (i) all shares of Common Stock issued to the
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Institutional Investors on or prior to the date of this Agreement and (ii) any
Securities paid, issued or distributed in respect of any such Common Stock by
way of stock dividend or distribution or stock split or in connection with a
combination of shares, recapitalization, reorganization, merger, consolidation
or otherwise. As to any particular Registrable Securities once issued, such
Securities shall cease to be Registrable Securities: (i) when a registration
statement with respect to the sale of such Securities shall have become
effective under the Securities Act and such Securities shall have been disposed
of in accordance with such registration statement; (ii) when they shall have
been distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act; or (iii) when they shall have been otherwise
transferred and subsequent disposition of them shall not require registration or
qualification under the Securities Act or any similar state law then in force.
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"Registration" means each Required Registration and each Incidental
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Registration.
"Registration Expenses" means all expenses incident to the Company's
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performance of or compliance with Sections 2.1 through Section 2.5 hereof,
inclusive, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), expenses of printing certificates
for the Registrable Securities in a form eligible for deposit with the
Depository Trust Company, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expenses of any management review, cold comfort
letters or any special audits required by or incident to such performance and
compliance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration, fees and expenses
of other Persons retained by the Company and fees and expenses of counsel
(including local counsel) for holders of Registrable Securities, selected by the
Requisite Holders; but not including any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities or fees and
expenses of more than one counsel representing the holders of Registrable
Securities or any other selling expenses, discounts or commissions incurred in
connection with the sale of Registrable Securities.
"Required Registration" has the meaning set forth in Section 2.1 hereof.
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"Requisite Holders" means, with respect to any registration or proposed
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registration of Registrable Securities pursuant to Section 2 hereof, any
Institutional Investor or Institutional Investors holding at least sixty-six and
two-thirds percent (66-2/3%) of the shares of Registrable Securities to be so
registered.
"SEC" means, at any time, the Securities and Exchange Commission or any
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other federal agency at such time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations of the SEC promulgated thereunder.
"Security" means "security" as defined by Section 2(1) of the Securities
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Act.
"Subsidiary" means, as to any Person, any corporation in which such Person
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or one or more Subsidiaries of such Person or such Person and one or more
Subsidiaries of such Person owns sufficient voting securities to enable it or
them (as
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a group) ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such corporation. The
term "Subsidiary," as used herein without reference to any Person, shall mean a
Subsidiary of the Company.
2. Registration Rights.
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2.1 Required Registration.
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(a) Filing of Registration Statement. The Company will, upon the written
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request of the Initiating Holders given at any time after the Initial Public
Offering Date requesting that the Company effect the registration under the
Securities Act of all or part of such Initiating Holders' Registrable Securities
and specifying the Registrable Securities to be sold and the intended method of
disposition thereof, promptly give written notice of such requested registration
to all holders of Registrable Securities, and thereupon will use its best
efforts to effect the registration (the "Required Registration") under the
Securities Act of:
(i) the Registrable Securities that the Company has been so requested
to register by the Initiating Holders; and
(ii) all other Registrable Securities that the Company has been
requested to register by the holders thereof by written request given to the
Company within thirty (30) days after the giving of such written notice by the
Company (which request shall specify the Registrable Securities to be sold and
the intended method of disposition of such Registrable Securities);
all to the extent required to permit the disposition (in accordance with the
intended method thereof as aforesaid) of the Registrable Securities so to be
registered; provided, however, that the Company shall be required to effect only
two (2) registrations pursuant to this Section 2.1 that are deemed effected
under Section 2.1(e) hereof.
(b) Time for Filing and Effectiveness. On or before the date which is
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ninety (90) days after the request for such registration, the Company shall file
with the SEC the Required Registration with respect to all Registrable
Securities to be so registered, and shall use its best efforts to cause such
Required Registration to become effective as promptly as practicable after the
filing thereof, and use its best efforts to cause such Required Registration to
become effective no later than the day which is one hundred eighty (180) days
after the request for such registration.
(c) Selection of Underwriters. If Registrable Securities that the Company
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has been requested to register pursuant to a Required Registration are to be
disposed of in an underwritten public offering, the underwriters of such
offering
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shall be one or more underwriting firms of recognized standing selected by the
Requisite Holders and reasonably acceptable to the Company.
(d) Priority on Required Registrations. If the managing underwriter shall
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advise the Company in writing (with a copy to each holder of Registrable
Securities requesting sale) that, in such underwriter's opinion, the number of
shares of Securities requested to be included in such Required Registration
exceeds the number that can be sold in such offering within a price range
acceptable to the Company (such writing to state the basis of such opinion and
the approximate number of shares of Securities that may be included in such
offering without such effect), the Company will include in such Required
Registration, to the extent of the number of shares of Securities that the
Company is so advised can be sold in such offering:
(i) first, Registrable Securities requested to be sold by the
Institutional Investors pursuant to this Section 2.1, pro rata among the holders
requesting sale on the basis of the number of shares of Registrable Securities
requested by each to be included in such Registration; and
(ii) second, all other Securities proposed to be registered by the
Company and the Management Holders, in such proportions as the Company and such
Management Holders shall agree.
(e) When Required Registration Is Deemed Effected. A Required
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Registration pursuant to this Section 2.1 shall not be deemed to have been
effected for purposes of the proviso to Section 2.1(a) hereof if:
(i) the registration does not become effective and remain effective
for a period of at least one hundred eighty (180) days, without interference by
the issuance by the SEC of any stop order with respect thereto;
(ii) in the case of any underwritten offering undertaken on a firm
commitment basis, all the Registrable Securities requested to be registered in
connection therewith were not sold;
(iii) the Requisite Holders withdraw their request for registration in
its entirety at any time because the Requisite Holders reasonably believed that
the registration statement or any prospectus related thereto contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein (in the case of
any prospectus, in light of the circumstances under which they were made) not
misleading, notified the Company of such fact and requested that the Company
correct such alleged misstatement or omission, and the Company has refused to
correct such alleged misstatement or omission; or
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(iv) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
Required Registration are not satisfied, other than by reason of some act or
omission by the holders of the Registrable Securities that were to have been
registered and sold.
2.2 Incidental Registration.
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(a) Filing of Registration Statement. If the Company at any time
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proposes to register any shares of Common Stock (an "Incidental Registration")
under the Securities Act (other than pursuant to a registration statement on
Form S-4 or Form S-8 or any successor forms thereto, in connection with an offer
made solely to existing Security holders or employees of the Company), for sale
to the public in a public offering, it will each such time giv prompt written
notice to all holders of Registrable Securities of its intention to do so, which
notice shall be given to all such holders at least thirty (30) Business Days
prior to the date that a registration statement relating to such registration is
proposed to be filed with the SEC. Upon the written request of any such holder
to include its shares under such registration statement (which request shall be
made within fifteen (15) Business Days after the receipt of any such notice and
shall specify the Registrable Securities intended to be disposed of by such
holder), the Company will use its best efforts to effect the registration of all
Registrable Securities that the Company has been so requested to register by
such holder; provided, however, that if, at any time after giving written notice
of its intention to register any Securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not register such shares of Common Stock,
the Company may, at its election, give written notice of such determination to
each such holder and, thereupon, shall be relieved of its obligation to register
any Registrable Securities of such Persons in connection with such registration.
(b) Selection of Underwriters. Notice of the Company's intention to
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register such shares of Common Stock shall designate the proposed underwriters
of such offering (which shall be one or more underwriting firms of recognized
standing) and shall contain the Company's agreement to use its best efforts, if
requested to do so, to arrange for such underwriters to include in such
underwriting the Registrable Securities that the Company has been so requested
to sell pursuant to this Section 2.2, it being understood that the holders of
Registrable Securities shall have no right to select different underwriters for
the disposition of their Registrable Securities.
(c) Priority on Incidental Registrations. If the managing underwriter
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shall advise the Company in writing (with a copy to each holder of Registrable
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Securities requesting sale) that, in such underwriter's opinion, the number of
shares of Common Stock requested to be included in such Incidental Registration
exceeds the number that can be sold in such offering within a price range
acceptable to the Company (such writing to state the basis of such opinion and
the approximate number of shares of Common Stock that may be included in such
offering without such effect), the Company will include in such Incidental
Registration, to the extent of the number of shares of Common Stock that the
Company is so advised can be sold in such offering:
(i) in the case of any registration initiated by the Company for
the purpose of selling securities for its own account:
(A) first, the number of shares of Common Stock that the
Company proposes to issue and sell for its own account; and
(B) second, Registrable Securities requested to be sold by
the Institutional Investors pursuant to this Section 2.2 and all shares of
Common Stock proposed to be registered by the Management Holders, pro rata among
such holders on the basis of the number of shares of Common Stock requested by
each to be included in such Registration; and
(ii) in the case of a registration initiated by any Management
Holder pursuant to demand or required registration rights in favor of such
Management Holder:
(A) first, Securities requested to be sold by the Management
Holders requesting such registration and Registrable Securities requested to be
sold by the Institutional Investors pursuant to this Section 2.2, pro rata among
such holders on the basis of the number of shares of Common Stock requested to
be so registered by such holders; and
(B) second, the number of shares of Common Stock that the
Company proposes to issue and sell for its own account.
2.3 Registration Procedures. The Company will use its best efforts to
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effect each Required Registration pursuant to Section 2.1 hereof and any
Incidental Registration of any Registrable Securities as provided in Section 2.2
hereof, and to cooperate with the sale of such Registrable Securities in
accordance with the intended method of disposition thereof as quickly as
practicable, and the Company will as expeditiously as possible:
(a) subject, in the case of an Incidental Registration, to the
proviso to Section 2.2(a), prepare and file with the SEC the registration
statement and use its best efforts to cause the Registration to become
effective; provided, however, that
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before filing any registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the holders of the Registrable
Securities covered by such registration statement, their counsel, and the
underwriters, if any, and their counsel, copies of each original registration
statement proposed to be filed at least fifteen (15) days prior thereto and
copies of each amendment, prospectus and supplement at least three (3) Business
Days prior thereto, which documents will be subject to the reasonable review,
within such period, of such holders, their counsel and the underwriters; and the
Company will not file any registration statement or amendment thereto or any
prospectus or any supplement thereto (including such documents incorporated by
reference) to which the Requisite Holders shall reasonably object within such
period;
(b) subject, in the case of an Incidental Registration, to the proviso to
Section 2.2(a), prepare and file with the SEC such amendments and post-effective
amendments to any registration statement and any prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration statement
until such time as all of such Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof set
forth in such registration statement and cause the prospectus to be supplemented
by any required prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Securities Act, provided that if the Company is
not then eligible to use a registration statement on Form S-3 under the
Securities Act, the Company shall not be obligated to keep such registration
statement effective for more than two (2) years after the original effective
date of such registration statement;
(c) furnish to each holder of Registrable Securities included in such
Registration and the underwriter or underwriters, if any, without charge, at
least one signed copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of conformed copies thereof and
such number of copies of the prospectus (including each preliminary prospectus
and each prospectus filed under Rule 424 under the Securities Act), any
amendments or supplements thereto and any documents incorporated by reference
therein, as such holder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities being sold by such
holder (it being understood that the Company consents to the use of the
prospectus and any amendment or supplement thereto by each holder of Registrable
Securities covered by such registration statement and the underwriter or
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto);
(d) notify each holder of the Registrable Securities of any stop order or
other order suspending the effectiveness of any registration statement, issued
or
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threatened by the SEC in connection therewith, and take all reasonable actions
required to prevent the entry of such stop order or to remove it or obtain
withdrawal of it at the earliest possible moment if entered;
(e) if requested by the managing underwriter or underwriters or any holder
of Registrable Securities in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
posteffective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a Registration is declared effective,
use its best efforts to register or qualify, and cooperate with the holders of
Registrable Securities included in such Registration, the underwriter or
underwriters, if any, and their counsel, in connection with the registration or
qualification of the Registrable Securities covered by such Registration for
offer and sale under the securities or "blue sky" laws of each state and other
jurisdiction of the United States as any such holder or underwriter reasonably
requests in writing; use its best efforts to keep each such registration or
qualification effective, including through new filings, or amendments or
renewals, during the period such registration statement is required to be kept
effective; and do any and all other acts or things necessary or advisable to
enable the disposition in all such jurisdictions reasonably requested of the
Registrable Securities covered by such Registration; provided, however, that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
(g) in connection with any sale pursuant to a Registration, cooperate with
the holders of Registrable Securities and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Securities to be
sold under such Registration, and enable such Securities to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or such holders may request;
(h) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over the Company or any
Subsidiary as may reasonably be necessary to enable the seller or sellers
thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Securities;
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(i) make available for inspection by any holder of Registrable Securities
included in any Registration, any underwriter participating in any disposition
pursuant to any Registration, and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Person in connection
with such Registration;
(j) use its best efforts to obtain:
(i) at the time of effectiveness of each Registration, a "comfort
letter" from the Company's independent certified public accountants covering
such matters of the type customarily covered by "cold comfort letters" as the
Requisite Holders and the underwriters reasonably request; and
(ii) at the time of any underwritten sale pursuant to the
registration statement, a "bring-down comfort letter," dated as of the date of
such sale, from the Company's independent certified public accountants covering
such matters of the type customarily covered by comfort letters as the Requisite
Holders and the underwriters reasonably request;
(k) use its best efforts to obtain, at the time of effectiveness of each
Incidental Registration and at the time of any sale pursuant to each
Registration, an opinion or opinions, favorable to the Requisite Holders in form
and scope, from counsel for the Company in customary form;
(l) notify each seller of Registrable Securities covered by such
Registration, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such Registration, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and promptly prepare, file with the SEC and furnish to
such seller or holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers or prospective purchasers of such Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they are made;
(m) otherwise comply with all applicable rules and regulations of the SEC,
and make generally available to its security holders (as contemplated by Section
11(a) under the Securities Act) an earnings statement satisfying the
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provisions of Rule 158 under the Securities Act not later than ninety (90) days
after the end of the twelve (12) month period beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of the
registration statement, which statement shall cover said twelve (12) month
period;
(n) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by each Registration from and after a
date not later than the effective date of such Registration;
(o) use its best efforts to cause all Registrable Securities covered
by each Registration to be listed subject to notice of issuance, prior to the
date of first sale of such Registrable Securities pursuant to such Registration,
on each securities exchange on which the Common Stock issued by the Company is
then listed, and admitted to trading on NASDAQ, if the Common Stock or any such
other Securities are then admitted to trading on NASDAQ; and
(p) enter into such agreements (including underwriting agreements in
customary form) and take such other actions as the Requisite Holders shall
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities.
The Company may require each holder of Registrable Securities that will be
included in such Registration to furnish the Company with such information in
respect of such holder of its Registrable Securities that will be included in
such Registration as the Company may reasonably request in writing and as is
required by applicable laws or regulations.
2.4 Preparation; Reasonable Investigation. In connection with the
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preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, the Company will give the holders of such
Registrable Securities so registered, their underwriters, if any, and their
respective counsel and accountants the opportunity to participate in the
preparation of such registration statement (other than reports and proxy
statements incorporated therein by reference and lawfully and properly filed
with the SEC) and each prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss the business
of the Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders or such underwriters to conduct a reasonable investigation within the
meaning of the Section 11 (b)(3) of the Securities Act.
2.5 Rights of Requesting Holders. Each holder of Registrable Securities
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which makes a written request therefor within thirty (30) days after the
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notice to such holders provided for in Section 2.1 or Section 2.2 hereof, as the
case may be, hereof, shall have the right to receive the copies of the
information, notices and other documents described in Section 2.3(c), Section
2.3(l) and Section 2.3(m) hereof in connection with any proposed Registration by
the Company under the Securities Act.
2.6 Registration Expenses. The Company will pay all Registration Expenses
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in connection with each registration of Registrable Securities, including,
without limitation, any such registration not effected by the Company.
2.7 Indemnification; Contribution.
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(a) Indemnification by the Company. The Company shall indemnify, to
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the fullest extent permitted by law, each holder of Registrable Securities, its
officers, directors and agents, if any, and each Person, if any, who controls
such holder within the meaning of Section 15 of the Securities Act, against all
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses (under the Securities Act or common law or otherwise), joint or
several, resulting from any violation by the Company of the provisions of the
Securities Act or any untrue statement or alleged untrue statement of a material
fact contained in any registration statement or prospectus (and as amended or
supplemented if amended or supplemented) or any preliminary prospectus or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of
any prospectus, in light of the circumstances under which they were made) not
misleading, except to the extent that such losses, claims, damages, liabilities
(or proceedings in respect thereof) or expenses are caused by any untrue
statement or alleged untrue statement contained in or by any omission or alleged
omission from information concerning any holder furnished in writing to the
Company by such holder expressly for use therein. If the offering pursuant to
any registration statement provided for under this Section 2 is made through
underwriters, no action or failure to act on the part of such underwriters
(whether or not such underwriter is an affiliate of any holder of Registrable
Securities) shall affect the obligations of the Company to indemnify any holder
of Registrable Securities or any other Person pursuant to the preceding
sentence. If the offering pursuant to any registration statement provided for
under this Section 2 is made through underwriters, the Company agrees, to the
extent required by such underwriters, to enter into an underwriting agreement in
customary form with such underwriters and to indemnify such underwriters, their
officers, directors and agents, if any, and each Person, if any, who controls
such underwriters within the meaning
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of Section 15 of the Securities Act to the same extent as hereinbefore provided
with respect to the indemnification of the holders of Registrable Securities;
provided that the Company shall not be required to indemnify any such
underwriter, or any officer or director of such underwriter or any Person who
controls such underwriter within the meaning of Section 15 of the Securities
Act, to the extent that the loss, claim, damage, liability (or proceedings in
respect thereof) or expense for which indemnification is claimed results from
such underwriter's failure to send or give a copy of an amended or supplemented
final prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.
(b) Indemnification by the Holders. In connection with any registration
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statement in which a holder of Registrable Securities is participating, each
such holder, severally and not jointly, shall indemnify, to the fullest extent
permitted by law, the Company, each underwriter and their respective officers,
directors and agents, if any, and each Person, if any, who controls the Company
or such underwriter within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages, liabilities (or proceedings in respect
thereof) and expenses resulting from any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material
fact required to be stated in the registration statement or prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, but only
to the extent that such untrue statement is contained in or such omission is
from information so concerning a holder furnished in writing by such holder
expressly for use therein; provided, however, that such holder's obligations
hereunder shall be limited to an amount equal to the proceeds to such holder of
the Registrable Securities sold pursuant to such registration statement.
(c) Control of Defense. Any Person entitled to indemnification under the
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provisions of this Section 2.7 shall give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and unless in
such indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, permit
such indemnifying party to assume the defense of such claim, with counsel
reasonably satisfactory to the indemnified party; and if such defense is so
assumed, such indemnifying party shall not enter into any settlement without the
consent of the indemnified party if such settlement attributes liability to the
indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for under this Section 2 shall so
provide. In the event an indemnifying party shall not be entitled, or elects
not, to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses
13
of more than one counsel or firm of counsel for all parties indemnified by such
indemnifying party in respect of such claim, unless in the reasonable judgment
of any such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties in respect to such
claim.
(d) Contribution. If for any reason the foregoing indemnity is
-------------
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other; or
(ii) if the allocation provided by clause (i) above is not permitted
by applicable law or provides a lesser sum to the indemnified party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnifying party on the one
hand and the indemnified party on the other but also the relative fault of the
indemnifying party and the indemnified party as well as any other relevant
equitable considerations.
Notwithstanding the foregoing, no holder of Registrable Securities shall be
required to contribute any amount in excess of the amount such holder would have
been required to pay to an indemnified party if the indemnity under Section
2.7(b) hereof was available. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The obligation of any Person to contribute pursuant to this
Section 2.7 shall be several and not joint.
(e) Timing of Payments. An indemnifying party shall make payments of all
-------------------
amounts required to be made pursuant to the foregoing provisions of this Section
2.7 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.
(f) Survival. The indemnity and contribution agreements contained in this
---------
Section 2.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of Registrable
Securities, its officers, directors, agents or any Person, if any, who controls
such holder as aforesaid, and shall survive the transfer of such Securities by
such holder.
14
2.8 Holdback Agreements; Registration Rights to Others.
---------------------------------------------------
(a) In connection with each underwritten sale of Registrable
Securities, the Company agrees, and each holder of Registrable Securities by
acquisition of such Registrable Securities agrees, to enter into customary
holdback agreements concerning sale or distribution of Registrable Securities
and other equity Securities of the Company, except, in the case of any holder of
Registrable Securities, to the extent that such holder is prohibited by
applicable law or exercise of fiduciary duties from agreeing to withhold
Registrable Securities from sale or is acting in its capacity as a fiduciary or
investment adviser. Without limiting the scope of the term "fiduciary," a holder
shall be deemed to be acting as a fiduciary or an investment adviser if its
actions or the Registrable Securities proposed to be sold are subject to the
Employee Retirement Income Security Act of 1974, as amended, or the Investment
Company Act of 1940, as amended, or if such Registrable Securities are held in a
separate account under applicable insurance law or regulation.
(b) If the Company shall at any time after the date hereof provide to
any holder of any Securities of the Company rights with respect to the
registration of such Securities under the Securities Act:
(i) such rights shall not be in conflict with or adversely
affect any of the rights provided in this Section 2 to the holders of
Registrable Securities; and
(ii) if such rights are provided on terms or conditions more
favorable to such holder than the terms and conditions provided in this Section
2, the Company will provide (by way of amendment to this Agreement or otherwise)
such more favorable terms or conditions to the holders of Registrable
Securities.
2.9 Availability of Information. The Company will comply with the
----------------------------
reporting requirements of Sections 13 and 15(d) of the Exchange Act and will
comply with all other public information reporting requirements of the SEC as
from time to time in effect, and cooperate with the holders of Registrable
Securities, so as to permit disposition of the Registrable Securities pursuant
to an exemption from the Securities Act for the sale of any Registrable
Securities (including, without limitation, the current public information
requirements of Rule 144(c) and Rule 144A under the Securities Act). The
Company will also cooperate with each holder of any Registrable Securities in
supplying such information as may be necessary for such holder to complete and
file any information reporting forms presently or hereafter required by the SEC
as a condition to the availability of an exemption from the Securities Act for
the sale of any Registrable Securities.
15
3. Miscellaneous.
-------------
3.1 Binding Effect. The provisions of this Agreement shall be
---------------
binding upon and inure to the benefit of parties hereto and their respective
successors and assigns.
3.2 Notices. All written communications provided for hereunder shall
-------
be binding overnight delivery service (with charges prepaid), or by facsimile,
delivery confirmed with a copy by first class mail or overnight courier (with
charges prepaid), and:
(a) if to the Company:
Trex Company, Inc.
20 South Cameron Street
Winchester, VA 22601
Fax: (540) 678-0886
Attention: Anthony J. Cavanna
with a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
555 13th Street, NW
Washington, D.C. 20004
Fax: 202-637-5910
Attention: Richard J. Parrino, Esq.
or such other address as the Company shall designate to each Institutional
Investor in writing;
(b) if to any Institutional Investor, at the address set forth on
Schedule A hereto for each such Institutional Investor or such other address as
- -------- -
an Institutional Investor shall designate to the Company in writing; and
(c) if to any Management Holder, at the address set forth on
Schedule B hereto for each such Management Holder or such other address as a
- -------- -
Management Holder shall designate to the Company in writing.
3.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may be amended, modified or
supplemented only by a writing duly executed by or on behalf of the
Institutional Investors holding at least sixty-six and two-thirds percent (66-
2/3%) of the Registrable Securities held by the Institutional Investors at such
time and the Company; provided, however, that compliance by the Company with the
provisions
16
of this Agreement, with respect to any particular registration, may be waived by
such Institutional Investors holding at least sixty-six and two-thirds percent
(66-2/3%) of the Registrable Securities held by the Institutional Investors at
such time; and provided, further, that no amendment, modification or supplement
of the provisions of Section 2.1(d) or 2.2(c) hereof which adversely affects the
rights of any Management Holder shall be made without the consent of such
Management Holder.
3.4 Availability of Information. At any time that any class of the Common
----------------------------
Stock is registered under section 12(b) or section 12(g) of the Exchange Act,
the Company will comply with the reporting requirements of Sections 13 and 15(d)
of the Exchange Act (whether or not it shall be required to do so pursuant to
such sections) and will comply with all other public information reporting
requirements of the SEC from time to time in effect. In addition, the Company
shall file such reports and information, and shall make available to the public
and to the Institutional Investors such information, as shall be necessary to
permit such holders to offer and sell shares of Common Stock pursuant to the
provisions of Rules 144 and 144A promulgated under the Securities Act. The
Company will also cooperate with each such holder in supplying such information
as may be necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the SEC as a condition to the
availability of an exemption from the registration provisions of the Securities
Act in connection with the sale of any shares of Common Stock. The Company will
furnish to each such holder, promptly upon their becoming available, copies of
all financial statements, reports, notices and proxy statements sent or made
available generally by the Company to its holders of equity securities, and
copies of all regular and periodic reports and all registration statements and
prospectuses filed by the Company with any securities exchange or with the SEC.
3.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
--------------
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE
INTERNAL LAW OF THE STATE OF NEW YORK.
3.6 JURISDICTION; JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
-------------------------
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND INSTRUMENTS CONTEMPLATED HEREBY AND
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT.
NONE OF THE PARTIES HERETO SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR OTHER LITIGATION ARISING OUT OF OR OTHERWISE RELATED TO THIS
AGREEMENT AND EACH OF THE PARTIES HERETO WAIVES ANY AND ALL RIGHT TO ANY SUCH
JURY TRIAL AND ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
CONVENIENS OR TO OBJECT TO
17
VENUE TO THE EXTENT ANY SUCH PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 3.6.
3.7 Counterparts. This Agreement may be executed in any number of
-------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
3.8 Descriptive Headings. Descriptive headings of the several sections of
---------------------
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
3.9 Severability. The fact that any given provisions of this Agreement is
-------------
found to be unenforceable, void or voidable under applicable laws of any
jurisdiction shall not affect the validity of the remaining provisions of this
Agreement in such jurisdiction, and shall not affect the enforceability of the
entire Agreement under the laws of any other jurisdiction.
3.10 Effective Date. This Agreement shall be effective as of the date of
--------------
termination of the Members' Agreement.
[Remainder of page intentionally left blank]
18
IN WITNESS WHEREOF, the parties, each by its duly authorized signatory, have
executed this Agreement as of the date first above written.
TREX COMPANY, INC.
By /s/ Robert G. Matheny
---------------------
Name: Robert G. Matheny
Title: President
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of
one or more separate accounts
By: CIGNA Investments, Inc., authorized agent
By /s/ James R. Kuzemchak
----------------------
Name: James R. Kuzemchak
Title: Managing Director
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc., authorized agent
By /s/ James R. Kuzemchak
----------------------
Name: James R. Kuzemchak
Title: Managing Director
LIFE INSURANCE COMPANY OF NORTH AMERICA
By: CIGNA Investments, Inc., authorized agent
By /s/ James R. Kuzemchak
----------------------
Name: James R. Kuzemchak
Title: Managing Director
19
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
By Lincoln Investment Management Company, its Attorney-
in-Fact
By /s/ R. Scott Krafft
-------------------
Name: R. Scott Krafft
Title: Second Vice President
/s/ Anthony J. Cavanna
----------------------
Anthony J. Cavanna
/s/ Roger A. Wittenberg
-----------------------
Roger A. Wittenberg
/s/ Robert G. Matheny
---------------------
Robert G. Matheny
/s/ Andrew U. Ferrari
---------------------
Andrew U. Ferrari
20
CIG & CO.
By /s/ James R. Kuzemchak
----------------------
Name: James R. Kuzemchak
Title: Partner
21
SCHEDULE A
NAMES AND ADDRESSES OF INSTITUTIONAL INVESTORS
CIG & CO.
Address: c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division S-307
Fax: 860-726-7203
CONNECTICUT GENERAL LIFE INSURANCE COMPANY:
Address: 900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division S-307
Fax: 860-726-7203
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, on behalf of one or more separate
accounts:
Address: c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division S-307
Fax: 860-726-7203
LIFE INSURANCE COMPANY OF NORTH AMERICA:
Address: c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division S-307
Fax: 860-726-7203
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY:
Address: 200 East Berry Street
Renaissance Square
Fort Wayne, Indiana 46802
SCHEDULE B
NAMES AND ADDRESSES OF MANAGEMENT HOLDERS
ANTHONY J. CAVANNA
Address: c/o Trex Company, Inc.
20 South Cameron Street
Winchester, Virginia 22601
Fax: 540-678-0886
ROGER A. WITTENBERG
Address: c/o Trex Company, Inc.
20 South Cameron Street
Winchester, Virginia 22601
Fax: 540-678-0886
ROBERT G. MATHENY
Address: c/o Trex Company, Inc.
20 South Cameron Street
Winchester, Virginia 22601
Fax: 540-678-0886
ANDREW U. FERRARI
Address: c/o Trex Company, Inc.
20 South Cameron Street
Winchester, Virginia 22601
Fax: 540-678-0886