Exhibit 10.1
CREDIT AGREEMENT dated as of December
10, 1996 between TREX COMPANY, LLC, a Delaware limited
liability company,
and FIRST UNION NATIONAL BANK OF VIRGINIA,
a national banking association.
The parties hereto agree 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. The Bank agrees, on the terms and
------------------
conditions set forth in this Agreement, to make Loans to the Borrower from time
to time during the Revolving Credit Period in amounts such that the aggregate
principal amount of Loans at any one time outstanding will not exceed the lesser
of (i) the Commitment and (ii) the Borrowing Base. Within the foregoing limit,
the Borrower may borrow, prepay and reborrow Loans at any time during the
Revolving Credit Period.
Section 2.02 Methods of Borrowing.
--------------------
(a) Notice of Borrowing. Except as otherwise provided in this
-------------------
Section, 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 Jacksonville, Florida) on the date of each
requested Loan, specifying the date of such Loan and the amount of such Loan.
(b) Operating Account Overdrafts. If on any day Items are presented to the
----------------------------
Bank for payment against the Operating Account which Items, in the aggregate,
would, if paid in full, cause the Available Balance in the Operating Account on
such day to be less than $0, such presentation shall be deemed to be a request
by the Borrower for a Loan on the date of such presentation in an amount equal
to the amount (rounded upward to the nearest $1,000) required to cause such
Available Balance to equal $0.
(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 Loan hereunder.
Section 2.03 Funding of Loans. The Bank shall disburse the proceeds of each
----------------
Loan requested, or deemed to be requested, pursuant to Section 2.02 as follows:
(a) The proceeds of each Loan under Section 2.02(a) 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 8.01.
(b) The proceeds of each Loan under Section 2.02(b) or (c) shall be
disbursed by the Bank by way of direct payment of the relevant Item or by way of
deposit to the Operating Account of the amount set forth in Section 2.02(b), as
the case may be.
Section 2.04 Note.
----
(a) Evidence of Loans. The Loans shall be evidenced by a single Note
-----------------
payable to the order of the Bank in an amount equal to the aggregate unpaid
principal amount of the Loans.
(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 the 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 the Note. The Bank is hereby
irrevocably authorized by the Borrower so to endorse the Note and to attach to
and make a part of the 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 2.05 Interest Rate.
-------------
(a) LIBOR-based Rate. Each Loan shall bear interest on the outstanding
----------------
principal amount thereof, for each day from the date such Loan is made until it
becomes due,
-2-
at a rate per annum equal to the applicable LIBOR-based Rate for such day. Such
interest shall be payable for each month in arrears on the first day of the
immediately succeeding calendar month.
The "Adjusted London Interbank Offered Rate" means on any day a rate per
annum equal to the quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1 %) by dividing (i) the London Interbank Offered Rate for such
day by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"LIBOR-based Rate" means for any day, the sum of (i) the Adjusted London
Interbank Offered Rate for such day plus (ii) 200 basis points.
The "London Interbank Offered Rate" means the rate per annum designated as
the British Bankers' Association settlement rate as of 11:00 A.M. (London time)
for one month deposits in Dollars in the London interbank market that appears on
the display on page 3750 (under the caption "USD" of the Telerate Services,
Incorporated screen (the "Telerate Screen") (or on such other display as may
replace such page on the Telerate Screen) at such time) each Euro-Dollar
Business Day; provided that if no offered quotations appear on the Telerate
--------
Screen or if quotations are not given on the Telerate Screen for such one month
period, then the London Interbank Offered Rate shall mean the rate per annum
determined by the Bank at which United States Dollars in the amount of
$5,000,000 are being offered to leading banks in the London interbank market for
Dollar deposits at approximately 11:00 A.M. London time two Euro-Dollar Business
Days prior to such day for settlement in immediately available funds by leading
banks in the London interbank market for a one month period.
"Euro-Dollar Reserve Percentage" means for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement for a member bank of the Federal Reserve System in
New York City with deposits exceeding five billion dollars in respect of
"Euro-currency liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of the Bank to United States
residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
The LIBOR-based Rate shall change from time to time with changes to occur on
the date the London Interbank Offered Rate changes on the Telerate Screen page
3750, or if such rate is not available, by reference to the rate being offered
to leading banks.
(b) 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
-3-
due to but excluding the date of actual payment, at a rate per annum equal to
the sum of 2% plus the LIBOR-based Rate applicable to such Loan on such day.
Section 2.06 Fees.
----
(a) Unused Commitment Fee. The Borrower shall pay to the Bank an unused
---------------------
commitment fee (the "Commitment Fee") for each day at a rate per annum equal to
the product of (i) 12.5 basis points multiplied by (ii) the excess of the
Commitment over the aggregate amount of the 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 Commitment
in its entirety) and shall be payable quarterly in arrears on each Quarterly
Date and on the Termination Date.
(b) Audit Fee. The Borrower shall pay an audit fee, not to exceed $2,500.00,
---------
for each audit required to be made pursuant to Section 5.06.
Section 2.07 Adjustments of Commitment.
-------------------------
(a) Optional Termination or Reductions of Commitment. The Borrower may,
------------------------------------------------
upon at least three Business Days' notice to the Bank, (i) terminate the
Commitment at any time, if no Loans are outstanding at such time or (ii) reduce
from time to time the amount of the Commitment in excess of the aggregate
outstanding principal amount of the Loans. If the Commitment is terminated in
its entirety, all accrued fees shall be payable on the effective date of such
termination.
(b) Optional Extension of Commitment.
--------------------------------
(i) The Revolving Credit Period shall be for an initial term of two
years. The Bank may elect, by notice to the Borrower not less than 15 days and
not more than 45 days prior to the first anniversary of the Effective Date or
the first anniversary of an Extension Date (as applicable, an "Anniversary
Date"), to extend the Revolving Credit Period until the second anniversary of
such Anniversary Date (each of the first and subsequent Anniversary Dates on
which the Revolving Credit Period is extended hereunder being referred to herein
as an "Extension Date"). Failure by the Bank to notify the Borrower of such
election within the above time period shall be deemed to constitute an election
by the Bank not to extend the Revolving Credit Period.
(ii) If the Bank shall have elected to extend the Revolving Credit Period
as provided in this Section 2.07(b), the Borrower shall deliver to the Bank, on
the applicable Extension Date (and in exchange for the Note of the Borrower then
held by the Bank), a Note maturing on the second anniversary of such Extension
Date in the principal amount of the Commitment.
-4-
(iii) If the Bank shall have elected to extend the Revolving Credit
Period as provided in this Section 2.07(b), then the Revolving Credit Period
shall continue until the second anniversary of the Extension Date in effect, and
the term "Termination Date", as used herein, shall mean such second anniversary.
Section 2.08 Maturity and Repayment of Loans.
-------------------------------
(a) Maturity of Termination Date. Each Loan shall mature, and the principal
----------------------------
amount thereof shall be due and payable, on the Termination Date.
(b) Mandatory Prepayments of Loans Exceeding Borrowing Base. If on any day
-------------------------------------------------------
the aggregate outstanding principal amount of all Loans exceeds the Borrowing
Base, the Borrower shall prepay, and there shall become due and payable, on such
date the principal amount of the Loans equal to such excess, together with
interest thereon to the date of repayment.
(c) Mandatory Repayments from Operating Account.
-------------------------------------------
(i) Deposits of Proceeds to Operating Account. The Borrower shall
-----------------------------------------
instruct all Account Debtors and other Persons obligated in respect of
Accounts and other Collateral to make all payments in respect of the
Accounts or other Collateral directly to the Bank (by instructing that such
payments be remitted to a post office box which shall be in the name of the
Borrower but under the control of the Bank). Except as provided in Section
3.04 of the Security Agreement, all such payments made to the Bank shall be
deposited in the Operating Account. In addition to the foregoing, the
Borrower agrees that if the proceeds of any Collateral (including the
payments made in respect of Accounts) shall be received by it, the Borrower
shall, unless Section 3.04 of the Security Agreement shall require
otherwise, as promptly as possible deposit such proceeds to the Operating
Account. Until so deposited, all such proceeds shall be held in trust by
the Borrower for and as the property of the Bank and shall not be
commingled with any other funds or property of the Borrower. The Borrower
hereby irrevocably authorizes and empowers the Bank, its officers,
employees and authorized agents to endorse and sign its name on all checks,
drafts, money orders or other media of payment so delivered, and such
endorsements or assignments shall, for all purposes, be deemed to have been
made by the Borrower prior to any endorsement or assignment thereof by the
Bank. The Bank may use any convenient or customary means for the purpose of
collecting such checks, drafts, money orders or other media of payment.
(ii)Loans Due to Extent of Available Balance. Each Business Day, that
----------------------------------------
principal amount of the Loans equal to the then Available Balance shall
become due and payable.
-5-
(iii) Withdrawals from Operating Account to Pay Obligations. The Available
-----------------------------------------------------
Balance on deposit in the Operating Account, or so much thereof as is necessary
to pay in full the Obligations referred to in this Section 2.08(c)(iii), shall
be withdrawn by the Bank each Business Day and applied to repay the Obligations
which are then due and payable (including those which become due and payable on
such date pursuant to subsection (ii) above).
(d) Optional Prepayments of Loans. The Borrower may upon at least one
-----------------------------
Business Day's notice to the Bank, prepay any Loan, in whole at any time, or
from time to time in part, without penalty, 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.
Section 2.09 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 Jacksonville, Florida) on the date when due,
without set-off, counterclaim or other deduction, in Federal or other funds
immediately available in Jacksonville, Florida, to the Bank at its address
referred to in Section 8.01. The Borrower hereby irrevocably authorizes the Bank
to deduct from the Operating Account at any time such amount as may then be
necessary to pay Obligations referred to in clause (ii)(A) of the definition of
Available Balance. Whenever any payment of 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 2.10 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
CONDITIONS
Section 3.01 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 in accordance
-------------
with Section 8.08.
(b) Note. On or prior to the Closing Date, the Bank shall have received a
----
duly executed Note dated on or before the Closing Date complying with the
provisions of Section 2.04.
-6-
(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 duty 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
(x) on the Closing Date and after giving effect to the Loan being made on the
Closing Date, no Default or Event of Default shall have occurred and be
continuing and (y) 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 Borrower's 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) Company Proceedings. On the Closing Date, the Bank shall have received
-------------------
(i) a copy of the Borrower's Certificate of Formation, as amended, certified by
the Secretary of the State of Delaware and dated as of a recent date prior to
the Closing Date; (ii) a certificate of the Secretary of the State of Delaware
and each other state in which the Borrower 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; (iii) a copy of the Borrower's
Limited Liability Company Agreement, including all amendments thereto; and (iv)
a certificate of the appropriate officer or other authorized person of the
Borrower dated the Closing Date and certifying (A) that the documents referred
to in clause (iii) above have not been amended since the date of said
certificate, (B) that attached thereto is a true, correct and complete copy of
resolutions adopted by the managers of the Borrower authorizing the execution,
delivery and performance of the Credit Agreement, the Note 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, (C) as to the incumbency and specimen
signatures of each officer or other authorized person of the Borrower executing
this Agreement, the Note and the Security Agreement or any other document
delivered in connection herewith or therewith and (D) certifying as to the names
and respective jurisdictions of organization of all Subsidiaries of the Borrower
existing on the Closing Date.
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
-7-
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;
(ii) appropriate Financing Statements (Form UCC-1 or such other
financing statements or similar notices as shall be required by local law)
fully executed 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 security interests purported to be created by the Loan
Documents;
(iii) copies of reports from Xxxxxxxx-Xxxx Financial Services or other
independent search service reasonably satisfactory to the Bank listing all
effective financing statements that name the Borrower (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 the jurisdictions referred to in clause
(i) above, together with copies of such other financing statements (none of
which shall cover the Collateral 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
(iv) 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.
(i) Closing Date Borrowing Base Certificate. On the Closing Date, the
---------------------------------------
Borrower shall have delivered to the Bank its initial Borrowing Base Certificate
meeting the requirements of Section 5.01(f).
(j) Payment of Fees. All reasonable costs, fees and expenses due to the Bank
---------------
on or before the Closing Date (including, without limitation, legal fees and
expenses) shall have been paid.
-8-
(k) Counsel Fees. The Bank shall have received payment from the Borrower of
------------
the reasonable fees and expenses of McGuire, Woods, Battle & Xxxxxx, LLP
described in Section 8.03 which are billed through the Closing Date.
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.
(l) CIGNA Agreements. The Bank shall have received a certificate of the
----------------
appropriate officer or other authorized person of the Borrower dated the Closing
Date and certifying (A) that attached thereto are true, correct and complete
copies of the CIGNA Agreements, and (B) that the documents referred to in clause
(A) above have not been amended since the date of said certificate.
Section 3.02 Conditions to All Loans. The obligation of the Bank to make each
-----------------------
Loan is subject to the satisfaction of the following conditions:
(i) the fact that the Closing Date shall have occurred;
(ii) the fact that, immediately after the making of such Loan, the
aggregate outstanding principal amount of all Loans shall not exceed the lesser
of (A) the Commitment and (B) the Borrowing Base;
(iii) the fact that, immediately before and after the making of such
Loan, no Default shall have occurred and be continuing;
(iv) 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
(v) (A) 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, (B) 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 (C) the Bank shall not reasonably suspect that one or more
Events of Default have occurred.
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 (iii) and
(iv) of this Section.
-9-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 4.01 Existence and Power. The Borrower 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. 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
of the Borrower and the Subsidiaries is duly qualified as a foreign entity,
licensed and in good standing in each jurisdiction where 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 4.02 Company and Govermmental Authorization; No Contravention.
--------------------------------------------------------
The execution, delivery and performance by the Borrower of the Loan Documents to
which it is a party are within the limited liability company powers of the
Borrower, 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 the Borrower or any Subsidiary or of any agreement,
judgment, injunction, order, decree or other instrument binding upon or
affecting the Borrower or any Subsidiary or result in the creation or imposition
of any Lien on any asset of the Borrower or any of its Subsidiaries.
Section 4.03 Binding Effect. Each Loan Document other than the Note to
--------------
which the Borrower is a party constitutes a valid and binding agreement of the
Borrower and the 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 4.04 Financial Condition.
-------------------
(a) [Intentionally Deleted]
---------------------
-10-
(b) Interim Financial Statements. The unaudited consolidated balance
----------------------------
sheet of the Borrower and its Consolidated Subsidiaries as of September, 1996
and the related unaudited consolidated income statements for the month 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 financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Borrower and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and changes in financial position for such twelve-month period
(subject to normal year-end audit adjustments).
(c) Material Adverse Change. Since September, 1996 there has been no
-----------------------
material adverse change in condition (financial or otherwise), results of
operations, properties, assets, business or prospects of the Borrower or of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 4.05 Litigation. Except as set forth on Schedule 4.05, ther 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 any
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 Note, and there is no
basis known to the Borrower or any of its Subsidiaries for any such action,
suit, proceeding or investigation.
Section 4.06 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 5.16 hereof.
Section 4.07 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 4.08 Subsidiaries. Part I of Schedule 4.08 (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 1 of such
Schedule 4.08, 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
-11-
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted. Except as listed on Part 2
of Schedule 4.08 (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 is engaged in any joint venture or
partnership with any other Person.
Section 4.09 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 the Borrower and its Consolidated Subsidiaries, taken as a whole,
or the ability of the Borrower to perform its obligations under this Agreement.
Section 4.10 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 4.11 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 (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) 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 (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
-12-
Section 4.12 Intellectual Property. Each of the Borrower and its
---------------------
Subsidiaries owns or possesses or holds under valid non-cancelable 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 is 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
xxxx, copyright, trade secret or any other intellectual property right of others
and there is no infringement or, except as set forth on Schedule 4.12, claim of
infringement by others of any material license, patent, trademark, trade name,
service xxxx, copyright, trade secret or other intellectual property right of
the Borrower and its Subsidiaries.
Section 4.13 No Burdensome Restrictions. No contract, lease, agreement
--------------------------
or other instrument to which the Borrower or any of its Subsidiaries is a party
or by which any of its property is bound or affected, no charge, corporate
restriction, judgment, decree or order and no provision of applicable law or
governmental regulation has had or is reasonably expected to have a Material
Adverse Effect.
Section 4.14 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 clean-up 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 the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 4.15 Accounts. With respect to each Account, all records,
--------
papers and documents relating thereto (if any) are genuine and in all respects
what they purport to be, and all papers and documents (if any) relating thereto:
(i) represent legal, valid and binding obligations of the respective Account
Debtor, subject to adjustments customary in the business of the Borrower, with
respect to unpaid indebtedness incurred by such Account Debtor in respect of the
performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) are the only original writings
evidencing and embodying such obligation of the Account Debtor named therein
(other than copies created for general accounting
-13-
purposes) and are in compliance with all applicable federal, state and local
laws and applicable laws of any relevant foreign jurisdiction.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has any Commitment
hereunder or any Obligation remains unpaid:
Section 5.01 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 the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income, changes in members' 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 the Borrower 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 on a consistent basis (except for changes in the
application of which such accountants concur) and shall not contain any "going
concern" or like qualification or exception or qualification arising out of the
scope of the audit.
(b) Monthly Financial Statements. As soon as available and in any
----------------------------
event within 15 days after the end of each of the first eleven months of each
fiscal year of the Borrower a consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal month (with all
supporting schedules) and the related consolidated statements of income, changes
in members' equity and cash flows of the Borrower and its Consolidated
Subsidiaries for such month, setting forth in each case in comparative form the
figures for the corresponding month of the Borrower's 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 the Borrower.
(c) Officer's Certificate. Simultaneously with the delivery of
---------------------
each set of financial statements referred to in subsections (a) and (b) above, a
certificate of the chief financial officer or chief accounting officer of the
Borrower, (i) if applicable, setting forth in reasonable detail the calculations
required to establish whether the Borrower was in compliance
-14-
with the requirements of Sections 5.18 through 5.20, on the date of such
financial statements, (ii) setting forth in reasonable detail the business
outlook and performance of the Borrower 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 the Borrower or of the Borrower and its Consolidated Subsidiaries,
considered as a whole, and, if so, the nature of such material adverse change.
(d) 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 (x) whether anything has come to their attention to cause them to
believe that any Default existed on the date of such statements and (y)
confirming the calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to subsection (d) above.
(e) Borrowing Base Certificate. Upon receipt of a notice from the
--------------------------
Bank that a Loan has been made, a Borrowing Base Certificate executed by the
chief financial officer or chief accounting officer of the Borrower setting
forth the Borrowing Base as of the date of receipt of said notice. Once a Loan
has been made, the Borrower shall submit a Borrowing Base Certificate at least
monthly, within 10 days after the end of each calendar month, until such time as
the outstanding principal balance of the Loans has been reduced to Zero Dollars
($0.00) and such balance has been maintained for thirty (30) consecutive days,
and shall resume in accordance herewith upon the next following Loan.
(f) Accounts Receivables Agings. As soon as available and in any
---------------------------
event within 15 days after the end of each calendar month:
(A) a report listing all Accounts of the Borrower as of
the last Business Day of such month, which report shall include the
amount and age of each Account, the name and mailing address of each
Account Debtor and such other information as the Bank may reasonably
require in order to verify the Eligible Accounts, all in reasonable
detail and in form reasonably satisfactory to the Bank;
(B) a report listing all Inventory of the Borrower as of
the last Business Day of such month, which shall include the cost and
location thereof and such other information as the Bank may reasonably
require in order to verify the Eligible Inventory, all in reasonable
detail and in form reasonably satisfactory to the Bank; and
-15-
(C) a report listing all accounts payable of the Borrower
in reasonable detail and in form reasonably satisfactory to the Bank.
(g) 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.
(h) 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.
(i) Auditors' Management Letters. Promptly upon receipt thereof,
----------------------------
copies of each report submitted to the Borrower or any of its Consolidated
Subsidiaries by independent public accountants in connection with any annual,
interim or special audit made by them of the books of the Borrower or any of its
Consolidated Subsidiaries including, without limitation, each report submitted
to the Borrower or any of 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 the Borrower
and its Consolidated Subsidiaries.
(j) Tax Returns. Within 10 days after filing, copies of all
-----------
federal, state and local income tax returns filed by the Borrower or any
Subsidiary.
(k) 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
-16-
information filed with the PBGC; (vi) gives notice of withdrawal from any Plan
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.
(l) 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, (A) 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, (B) any release on such property or
any part thereof in a quantity that is reportable under any applicable
Environmental Law and (C) any pending or threatened proceeding for the
termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, in each case in which there is a reasonable
likelihood of an adverse decision or determination which could result in a
Material Adverse Effect.
(m) 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 any
of its Subsidiaries as the Bank may reasonably request.
Section 5.02 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, (i) 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 (ii) 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 (i) or (ii) of this Section 5.02 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 5.03 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.
-17-
(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 Borrower and its Subsidiaries operate. The Borrower
will deliver to the Bank upon request from time to time full information as to
the insurance carried.
Section 5.04 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; provided that nothing in this Section 5.04 shall prohibit (i) the
--------
merger of a Subsidiary into the Borrower or the merger or consolidation of a
Subsidiary with or into another Person if the corporation surviving such
consolidation or merger is a Subsidiary and if, in each case, after giving
effect thereto, no Default shall have occurred; or (ii) the change in the
Borrower's form of business entity to a corporation taxed in accordance with
Subchapter C of the Internal Revenue Code, provided that (A) such successor
corporation shall expressly assume in a manner satisfactory to the Bank the due
and punctual performance and observance of each covenant and obligation of the
Borrower under this Agreement, the Note, and the other Loan Documents to which
it is a party; and (B) the Loan Documents are modified accordingly to the
satisfaction of the Bank.
Section 5.05 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 (i) where the necessity of compliance therewith is contested
in good faith by appropriate proceedings or (ii) where noncompliance could not
reasonably be expected to have a Material Adverse Effect.
Section 5.06 Accounting: Inspection of Property, Books and Records.
-----------------------------------------------------
The Borrower will keep, and will cause each of its 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 its Subsidiaries to maintain,
their respective fiscal reporting periods on the present basis and will permit,
and will cause each of its 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, all at such reasonable times and as often as may
reasonably be desired, but not more frequently than annually unless a Default
has occurred. Notwithstanding the above, the Borrower shall be permitted to make
adjustments to its books of record and
-18-
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 5.07 Collection of Accounts. The Borrower shall use its best
----------------------
efforts to cause to be collected from each Account Debtor, as and when due, any
and all amounts owing under or on account of each Account (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and shall apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding balance
of such Account. The Borrower may rescind or cancel any indebtedness or
obligation evidenced by any Account, modify, make adjustments to, extend, renew,
compromise or settle any material dispute, claim, suit or legal proceeding
relating to or sell or assign any Account, or interest therein, provided that
--------
the Borrower obtains the written consent of the Bank prior to doing any of the
foregoing (which consent shall not be unreasonably or untimely withheld or
delayed) Notwithstanding the foregoing, subject to the rights of the Bank under
the Loan Documents, unless a Default or an Event of Default shall have occurred
and be continuing, the Borrower may allow in the ordinary course of business as
adjustments to amounts owing under its Accounts (i) an extension or renewal of
the time or times of payment, or settlement for less than the total unpaid
balance, which the Borrower finds appropriate in accordance with sound business
judgment and (ii) a refund or credit due as a result of discounts, over-xxxxxxxx
and miscellaneous credits, all in accordance with the Borrower's ordinary course
of business consistent with its historical collection practices. The reasonable
costs and expenses (including, without limitation, reasonable attorneys' fees)
of collection, whether incurred by the Borrower or the Bank, shall be borne by
the Borrower. Upon the sale or assignment of any Account as allowed by this
Section 5.07, the Bank will (as soon as reasonably practicable after receipt of
notice from the Borrower requesting the same but at the expense of the Borrower)
send the Borrower, for each jurisdiction in which a UCC financing statement is
on file to perfect the security interests granted to the Bank hereunder, a
termination statement to the effect that the Bank no longer claims a security
interest under such financing statement.
Section 5.08 Notification to Account Debtors. Upon the effectiveness of
-------------------------------
this Agreement, the Borrower will promptly notify each Account Debtor in respect
of any Account or Instrument that any payments due or to become due in respect
of such Collateral are to be made in the name of the Borrower to such address
and post office box as shall be specified by the Bank. Except as set forth in
Section 3.04 of the Security Agreement, each such payment shall, upon receipt by
the Bank, be deposited in the Operating Account in accordance with Section
2.08(c). In the event the Borrower, in good faith, fails to notify any Account
Debtor as required hereby, the Borrower shall have 30 days from the earlier of
(i) becoming aware of such failure, or (ii) being made aware of such failure, to
comply with this Section. Upon the occurrence of a Default or an Event of
Default, the Borrower will promptly notify (and the Borrower hereby authorizes
the Bank so to notify) each Account Debtor in respect of any Account or
Instrument that such Collateral has been assigned to the Bank and that any
payments
-19-
due or to become due in respect of such Collateral are to be made directly to
the Bank in accordance with Section 3.04 of the Security Agreement.
Section 5.09 Restriction on Liens. The Borrower will not, and will not
--------------------
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any Collateral, or sell any Collateral subject to
an understanding or agreement, contingent or otherwise, to repurchase such
Collateral (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 5.09 shall not prevent the creation, incurrence,
assumption or existence of the following (with such Liens described below being
herein referred to as "Permitted Liens"):
(i) Liens created by the Loan Documents;
(ii) 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; and
(iii) 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 (A) 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 (B) 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.
Section 5.10 Limitation on Guarantees. Neither the Borrower nor any of
------------------------
its Subsidiaries shall Guarantee any Debt of any Person or Persons in excess of
$100,000.00 in the aggregate at any time.
Section 5.11 [Intentionally Deleted]
-----------------------
Section 5.12 Consolidations, Mergers and Sales of Assets. The Borrower
-------------------------------------------
will not (i) consolidate or merge with or into any other Person or (ii) sell,
lease or otherwise transfer, directly or indirectly, all or substantially all of
the assets of the Borrower to any other Person or Persons; provided that the
--------
Borrower may merge with another Person if (A) the Borrower is the entity
surviving such merger and (B) after giving effect thereto, no Default shall have
occurred.
-20-
Section 5.13 Investments: Line of Business.
-----------------------------
(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 suppliers arising in the ordinary course of business;
(iv) the Borrower may make loans and advances to any
employees in the ordinary course of business, provided such loans and
advances do not exceed at any time, in the aggregate, $50,000.00;
(b) Asset Acquisitions. The Borrower will not, and will
------------------
not permit any of its Subsidiaries to, make any acquisition of assets outside
the ordinary course of business.
(c) Joint Ventures and Similar Arrangements. The Borrower
---------------------------------------
will not, and will not permit any of its Subsidiaries to, enter into any joint
venture or partnership agreement or arrangement or any other agreement or
arrangement with any Person involving the sharing of profits or joint or
coordinated purchasing or distribution.
Section 5.14 Payments, etc. The Borrower will not, and will
-------------
not permit any of its Subsidiaries to, make any distribution, dividend, payment
or delivery of property or cash to its members as such, or 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 for or options or stock appreciation
rights in respect of any of such shares), 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 membership interest in the Borrower or any shares
of capital stock or other interest in any other Subsidiary, as the case may be,
now or hereafter outstanding (or any options or warrants or stock appreciation
rights issued by such Person with respect to its capital stock), except that:
(i) any Subsidiary of the Borrower may pay Dividends
to the Borrower; and
-21-
(ii) the Borrower may make any payments not prohibited
by the CIGNA Agreements.
Section 5.15 Use of Proceeds. The proceeds of the Loans made
---------------
under this Agreement will be used by the Borrower for permanent working capital
financing of the Borrower's accounts receivable and inventory. 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 5.16 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 5.17 Limitations on Debt. The Borrower will not at any
-------------------
time permit the ratio of Total Consolidated Debt to Total Consolidated
Capitalization, as a percentage, to exceed the correlative percentage set forth
below for the period indicated:
Maximum
Period Percentage
------ ----------
Closing Date through December 31, 1996 90%
January 1, 1997 through September 30, 1997 85%
October 1, 1997 through March 31, 1998 75%
April 1, 1998 through September 30, 1998 70%
October 1, 1998 through March 31, 1999 65%
April 1, 1999 through September 30, 1999 55%
October 1, 1999 and thereafter 50%
Section 5.18 Fixed Charge Coverage Ratio. The Borrower will
---------------------------
not, as of the end of any fiscal quarter on or after the end of the fiscal
quarter ending March 31, 1997, permit the Fixed Charge Coverage Ratio to be less
than 2.0:1.0.
Section 5.19 Limitation on Operating Leases. The Borrower will
------------------------------
not, and will not cause any Subsidiary to, enter into any operating lease at any
time if the pro forma Fixed Charge Coverage Ratio giving effect to such
operating lease during the most recent period used to determine compliance under
Section 5.18 would be less than 2.0:1.0.
-22-
Section 5.20 Working Capital. [Intentionally Deleted]
----------------------------------------
Section 5.21 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 VI
DEFAULTS
Section 6.01 Events of Default. If one or more of the
-----------------
following events ("Events of Default") shall have occurred and be continuing:
(i) the Borrower shall fail to pay, within 5 days
after the date when due, any principal, interest, fee, or any other
amount payable hereunder or under the Note;
(ii) the Borrower shall fail to observe or perform any
covenant contained in Article V (other than those contained in Sections
5.01 through 5.03);
(iii) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those
covered by clauses (i) or (ii) above) for 30 days after notice thereof
has been given to the Borrower by the Bank;
(iv) 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;
(v) 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;
(vi) 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;
(vii) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to
-23-
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;
(viii) 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;
(ix) 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 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;
(x) 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
(xi) a Change of Control shall have occurred;
then, and in every such event, while such event is continuing, the Bank may (A)
by notice to the Borrower terminate the Commitment and it shall thereupon
terminate, and (B) by notice to the Borrower declare the Loans (together with
accrued interest thereon) to be, and the Loans shall thereupon become,
immediately due and payable without presentment, demand, protest or other notice
of any kind (except as set forth in clause (A) above), all of which are hereby
waived
-24-
by the Borrower; provided that in the case of any Default or any Event of
--------
Default specified in clause 6.1(vii) or 6.1(viii) above with respect to the
Borrower, without any notice to the Borrower or any other act by the Bank, the
Commitment shall thereupon terminate and the Loans (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.
ARTICLE VII
CHANGE IN CIRCUMSTANCES
Section 7.01 [Intentionally deleted]
-----------------------
Section 7.02 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 the LIBOR-based Rate shall be converted
immediately to a Base Rate Loan and all new Loans shall be Base Rate Loans.
Section 7.03 Increased Cost and Reduced Return.
---------------------------------
(a) Increased Costs. If on or after the date hereof, 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:
(i) shall subject the Bank to any tax, duty or other
charge with respect to its Loans, the Note or its obligation to make
Loans, or shall change the basis of taxation of payments to the Bank of
the principal of or interest on its Loans or any other amounts due under
this Agreement in respect of its Loans or its obligation to make Loans
(except for changes in the rate of tax on the overall net income of the
Bank imposed by the jurisdiction in which the Bank's principal executive
office is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any such requirement imposed by
the Board of Governors of the
-25-
Federal Reserve System, but excluding any such requirement included in an
applicable Euro-Dollar Reserve Percentage, special deposit, insurance
assessment or similar requirement against assets of, deposits with or for
the account of, letters of credit issued or participated in by, or other
credit extended by, the Bank or shall impose on the Bank or on the United
States market for certificates of deposit or the London interbank market
any other condition affecting its Loans, the Note or its obligation to
make Loans;
and the result of any of the foregoing is to increase the cost to the Bank of
making or maintaining any Loan, or to reduce the amount of any sum received or
receivable by the Bank under this Agreement or under the Note with respect
thereto, by an amount deemed by the Bank to be material, then, until the Bank
notifies the Borrower that the circumstances giving rise to such increased costs
no longer exist, each Loan then outstanding which bears interest at the
LIBOR-based Rate shall be converted immediately to a Base Rate Loan and all new
Loans shall be Base Rate Loans.
(b) Capital Adequacy. If the Bank shall have determined
----------------
that, after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such 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 any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of the Bank (or its Parent) as a consequence of the
Bank's obligations hereunder to a level below that which the Bank could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by the Bank to be material, then, until the Bank notifies the Borrower that the
circumstances giving rise to such law, rule, regulation no longer exist, each
Loan then outstanding which bears interest at the LIBOR-based Rate shall be
converted immediately to a Base Rate Loan and all new Loans shall be Base Rate
Loans.
(c) Notices. The Bank will promptly notify the Borrower
-------
of any event of which it has knowledge, occurring after the date hereof, that
will entitle the Bank to convert the Loans pursuant to this Section. A
certificate of the Bank asserting its right to do so under this Section and
setting forth in reasonable detail the circumstances giving rise to such action
hereunder shall be conclusive in the absence of manifest error.
Section 7.04 Base Rate Loans Substituted for Affected LIBOR-
----------------------------------------------------
based Loans. Upon the occurrence of any event or condition set forth in Section
-----------
7.02 or 7.03, each Loan then outstanding which bears interest at the LIBOR-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 2.05(a).
-26-
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices. Unless otherwise specified herein, all
-------
notices, requests and other communications to a party hereunder shall be in
writing (including bank wire, telex, facsimile transmission or similar writing)
and shall be given to such party: (i) at its address, facsimile number or telex
number set forth on the signature pages hereof, or (ii) 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
telex, when such telex is transmitted to the telex number specified in this
Section and the appropriate answer back is received, (ii) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (iii) 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 (iv) if given by any other means, when delivered at the
address specified in this Section 8.01. 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 8.02 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 Note 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.
Section 8.03 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 8.04 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 8.05 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
-27-
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.
Section 8.06 Governing Law. This Agreement and the Note shall
-------------
be governed by and construed in accordance with the laws of the Commonwealth of
Virginia.
Section 8.07 Arbitration: Submission to Jurisdiction.
------------
(a) Upon demand of any party hereto, whether made before
or after institution of any judicial proceeding, any dispute, claim or
controversy arising out of, connected with or relating to this Agreement, the
Note or any other Loan Document ("Disputes") between parties to this Agreement
shall be resolved by binding arbitration as provided herein. Institution of a
judicial proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from loan documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the
American Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in the city in which is located the
office of the Bank identified in Section 8.01 as the place where notices are to
be sent to the Bank. 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. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to
Derivatives Obligations.
(b) Notwithstanding the preceding binding arbitration
provisions, the Bank and the Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. The Bank and the Borrower 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 granted under any Loan Document or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
-28-
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
The Borrowers and the Bank agree that they shall not have a
remedy of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they have now
or which may arise in the future in connection with any Dispute whether the
Dispute is resolved by arbitration or judicially.
(c) Any legal action or proceeding with respect to this
Agreement, the Note or any other Loan Document or any document related hereto or
thereto may be brought in the courts of the Commonwealth of Virginia or of the
United States of America for the Western District of Virginia, and by execution
and delivery of this Agreement the Borrower hereby accepts for itself and in
respect of its property, generally and unconditionally, the nonexclusive
jurisdiction of the aforesaid courts. The Borrower hereby irrevocably and
unconditionally waives any objection, including without limitation, any
objection to the laying of venue or based on the grounds of the forum non
---------
conveniens which it now or hereafter may have to the bringing of any action or
----------
proceeding in such respective jurisdictions. Service of process in any such case
may be had against the Borrower by delivery in accordance with the notice
provisions herein or as otherwise permitted by law, and the Borrower agrees that
such service shall be valid in all respects for establishing personal
jurisdiction over it.
Section 8.08 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 Note 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 8.09 Confidentiality. The Bank agrees to hold all non-
---------------
public 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 any Bank from disclosing such information
(i) to any other Person if reasonably incidental to the administration of the
Loans, (ii) upon the order of any court or administrative agency, (iii) upon the
request or demand of any regulatory agency or authority, (iv) which had been
publicly disclosed other than as a result of a disclosure by the Bank prohibited
by this Agreement, (v) in connection with any litigation to which the Bank or
its subsidiaries or parent may be a party, (vi) to the extent necessary in
connection with the exercise of any remedy hereunder and (vii) to the Bank's
legal counsel and independent auditors.
-29-
Section 8.10 Severability; Modification. If any provision
--------------------------
hereof is invalid or unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall remain in full
force and effect in such jurisdiction; and (ii) 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. If,
in accordance with an opinion of counsel to the Borrower reasonably satisfactory
to the Bank (and obtained at the Borrower's expense), compliance with any
provision hereof or of any other Loan Document would constitute a "Default" as
defined under the CIGNA Agreements, then said provision of this Agreement shall
be amended to the extent necessary, as set forth in said opinion, to remove said
Default, and the other provisions hereof shall remain in full force and effect
and shall be liberally construed in favor of the Bank in order to carry out the
intentions of the parties hereto as nearly as may be possible.
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
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.:
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive Officer
FIRST UNION NATIONAL BANK OF VIRGINIA
Commercial Banking
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
By: /s/ Xxxxxx X. Xxxx
--------------------------------------------
Xxxxxx X. Xxxx, III, Vice President
-30-
EXHIBIT B
Form of Note
Roanoke, Virginia
_______________, 1996
For value received, TREX COMPANY, LLC, a Delaware limited liability
company (the "Borrower"), promises to pay to the order of FIRST UNION NATIONAL
BANK OF VIRGINIA (the "Bank") the unpaid principal amount of each Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below on
the maturity date provided for in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in accordance with the provisions of the
Credit Agreement.
All Loans made by the Bank and all repayments of the principal thereof
shall be recorded by the Bank and, if the Bank so elects in connection with any
transfer or enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each Loan then outstanding shall be endorsed by the
Bank on the schedule attached to and made a part hereof, 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 the Credit Agreement.
This note is the Note referred to in the Credit Agreement dated as of
between the Borrower and the Bank (as the same may be amended from time to time,
the "Credit Agreement"). Terms defined in the Credit Agreement are used herein
with the same meanings. Reference is made to the Credit Agreement for provisions
for the mandatory and optional prepayment hereof and the acceleration of the
maturity hereof.
TREX COMPANY, LLC
By:
------------------------------
Name:
Title:
Definitions Appendix
--------------------
The definitions set forth in this Definitions Appendix are incorporated
by reference into Section 1.01 of the Credit Agreement dated as of December 10,
1996 between Trex Company, LLC and First Union National Bank of Virginia (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
-----------
"A/R Turnover" means, as of the last day of any calendar month, the
aggregate Net Unpaid Balance of all Eligible Accounts as of said day, divided by
the Net Monthly Sales for said month, multiplied by 30, the result to be
expressed as a number of days.
"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, reclamation and rights to stoppage in transit)
and all monies 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.
"Account Debtor" means, with respect to any Account, any Person
obligated to make payment thereunder, including, without limitation, any account
debtor thereon.
"Adjusted Consolidated Net Income" means, with reference to any period,
the net income (or loss) of the Borrower and its Subsidiaries for such period
(taken as a cumulative whole), as determined in accordance with GAAP, 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, provided that there shall be excluded:
--------
(i) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Borrower or a
Subsidiary, and the income (or loss) of any Person, substantially off of the
assets of which have been acquired in any manner, realized by such other Person
prior to the date of acquisition,
(ii) the income (or loss) of any Person (other than a Subsidiary) in
which the Borrower or any Subsidiary has an ownership interest, except to the
extent that any such income has been actually received by the Borrower or such
Subsidiary in the form of cash dividends or similar cash distributions,
(iii) the undistributed earnings of any Subsidiary to the extent that
the declaration or payment of dividends of similar distributions by such
Subsidiary is not at the time permitted by the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Subsidiary,
(iv) any restoration to income of any contingency reserve, except to
the extent that provision for such reserve was made out of income accrued during
such period,
(v) any aggregate net gain (but not any aggregate net loss) during
such period arising from the sale, conversion, exchange or other disposition of
capital assets (such term to include, without limitation, (A) all non-current
assets and, without duplication, (B) the following, whether or not current: all
fixed assets, whether tangible or intangible, all inventory sold in conjunction
with the disposition of fixed assets, and all securities),
(vi) any gains resulting from any write-up of any assets (but not any
loss resulting from any write-down of any assets),
(vii) any net gain from the collection of the proceeds of life
insurance policies,
(viii) any gain arising from the acquisition of any security, or the
extinguishment, under GAAP, of any Debt, of the Borrower or any Subsidiary,
(ix) any net income or gain (but not any loss) during such period
from (A) any change in accounting principles in accordance with GAAP, (B) any
prior period adjustments resulting from any change in accounting principles in
accordance with GAAP, (C) any extraordinary items, or (D) any discontinued
operation or the disposition thereof,
(x) any deferred credit representing the excess of equity in any
Subsidiary at the date of acquisition over the cost of the investment in such
Subsidiary,
-2-
(xi) in the case of a successor to the Borrower by consolidation or
merger or as a transferee of its assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets, and
(xii) any portion of such net income that cannot be freely converted
into United States Dollars.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.05(a).
"Advance Rate Percentage" means, for any calendar month, (i) 90%, if
the A/R Turnover for the immediately preceding calendar month was 25 days or
less and (ii) 80%, if the A/R Turnover for the immediately preceding calendar
month was more than 25 days.
"Affiliate" means (i) any Person that directly, or indirectly through
one or more intermediaries, controls the Borrower (a "Controlling Person") or
(ii) 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 Credit Agreement, as it may be amended, modified
or supplemented from time to time.
"Available Balance" means at any time, (i) without duplication, all
funds on deposit in the Operating Account on such day which the Bank, in
accordance with its standard practices for posting of debits and credits to
demand deposit accounts of a type similar to the Operating Account, deems to be
collected funds, including, without limitation, all wire transfers credited to
the Operating Account at such time and all other Federal or other immediately
available funds on deposit in or deposited into the Operating Account at such
time less (ii) the sum of (A) all interest, fees and other Obligations not
constituting principal of the Loans which Obligations are due and payable at
such time and (B) all Items deducted from the Operating Account at such time.
"Bank" means First Union National Bank of Virginia, a national banking
association, and its successors and assigns.
"Base Rate" means for any day, the Prime Rate for such day.
"Base Rate Loan" means a Loan which bears interest at the Base Rate
plus the Variance.
-3-
"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, and its successors.
"Borrowing Base" means at any date the sum of (i) the Advance Rate
Percentage multiplied by the aggregate Net Unpaid Balance of all Eligible
Accounts and (ii) the lesser of (A) $1,500,000.00 or (B) 50% of the value of all
Eligible Inventory.
"Borrowing Base Certificate" means a certificate of the Borrower in a
form satisfactory to the Bank containing a computation of the Borrowing Base.
"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.
"Capital Lease Obligations" means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
"Cash Equivalents" means (i) direct obligations of the United States or
any agency thereof, or obligations guaranteed by the United States of any agency
thereof, (ii) commercial paper rated in the highest grade by a nationally
recognized credit rating agency or (iii) 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 Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X.
Ferrari cease, as a group, to own beneficially (i) less than (A) a majority of
the outstanding Class A Units or (B) 40% of the issued Class A Units and Class B
Units of the Borrower on a fully diluted basis; or (ii) after the change of the
Borrower's form of business entity to a corporation taxed in accordance with
Subchapter C of the Internal Revenue Code, less than (A) a majority of the
voting common stock of the Borrower or (B) 40% of the voting common stock of the
Borrower (whether voting or non-voting) on a fully diluted basis.
-4-
"CIGNA Agreements" means (i) that certain Members' Agreement dated as
of August 29, 1996 among the Borrower and each of the "Purchasers" and
"Management Holders" (as defined therein); (ii) that certain Limited Liability
Company Agreement dated August 29, 1996 among the members of the Borrower; and
(iii) that certain Securities Purchase Agreement dated as of August 29, 1996
between the Borrower and each of the "Purchasers" (as defined therein); as said
agreements exist on the Effective Date and which have been delivered to the Bank
at least five days prior to the Effective Date.
"Class A Units" has the meaning set forth in the Operating Agreement.
"Class B Units" has the meaning set forth in the Operating Agreement.
"Closing Date" means the date, not later than December 10, 1996, on
which the Bank determines that the conditions specified in or pursuant to
Section 3.01 have been satisfied.
"Collateral" means all right, title and interest of the Borrower in the
following, whether now owned or existing or hereafter acquired, created or
arising, whether tangible or intangible, and regardless of where located:
(i) Accounts;
(ii) Inventory;
(iii) the Collateral Accounts, all cash deposited
therein from time to time, the Liquid Investments made pursuant to
Section 3.04 of the Security Agreement and other monies and property
(including deposit accounts) of any kind of the Borrower maintained
with or in the possession or under the control of the Bank;
(iv) all books and records (including, without
limitation, customer lists, credit files, computer programs, printouts
and other computer materials and records) of the Borrower pertaining to
any of the Collateral; and
(v) all Proceeds of all or any of the Collateral
described in clauses (i) through (iii), above.
"Collateral Accounts" means the Cash Proceeds Account, the Operating
Account and the Insurance Account.
"Commitment" means $3,000,000.00, as such amount may be increased or
decreased pursuant to this Agreement.
"Consolidated Debt" means at any date the Debt of the Borrower and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date.
-5-
"Consolidated Income Available for Fixed Charges" means, with respect
to any period, Adjusted Consolidated Net Income for such period plus all amounts
deducted in the computation thereof on account of (i) Fixed Charges, (ii)
charges for depreciation and amortization for such period, (iii) charges for
management fees paid during such period and (iv) taxes imposed on or measured by
income or excess profits.
"Consolidated Net Worth" means, as of the date of determination with
respect to the Borrower,
(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 generally
accepted accounting principles.
"Debt" of any Person means, at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
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), (iv) all obligations of such Person as lessee under Capital Leases,
(v) 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, (vi) all non-contingent obligations (and, for
purposes of Section 5.09 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, (vii) 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 (viii) all obligations of others Guaranteed by such
Person.
"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,
-6-
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate 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 the date this Agreement becomes effective in
accordance with Section 8.08.
"Eligible Accounts" means all billed Accounts for goods delivered or
services rendered owing to the Borrower as the Bank, in its reasonable
discretion, shall from time to time elect to consider Eligible Accounts for
purposes of the Credit Agreement. Without limiting the discretion of the Bank to
consider any such accounts not to be Eligible Accounts, and by way of example
only of the types of accounts that the Bank may consider not to be Eligible
Accounts, the Bank may consider the following classes of accounts not to be
Eligible Accounts:
(i) Accounts arising out of sales that are not in the ordinary
course of the business of the Borrower;
(ii) Accounts on terms other than those normal or customary in
the business of the Borrower;
(iii) Accounts owing from any person that is an Affiliate of the
Borrower;
(iv) Accounts which are outstanding more than 70 days past the
original invoice date with respect thereto;
(v) Accounts of any Account Debtor if 50% or more of the
Accounts of such Account Debtor are more than 70 days past original invoice
date;
(vi) Accounts the liability for which has been disputed by the
Account Debtor;
(vii) Accounts owing from any Person that shall take or be the
subject of any action or proceeding of the type described in Section
6.01(vii) or (viii) hereof;
(viii) Accounts owing from any Person that is also a supplier to
or creditor of the Borrower;
(ix) Accounts arising out of sales to Account Debtors outside
the United States, unless the account is (A) fully backed by an irrevocable
letter of credit containing
-7-
terms acceptable to the Bank issued by a financial institution satisfactory
to the Bank or (B)on terms acceptable to the Bank;
(x) Accounts arising out of sales on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment basis or
subject to any right of return, set-off or charge-back;
(xi) Accounts owing from an Account Debtor that is an agency,
department or instrumentality of the United States or any state governmental
authority in the United States unless the Borrower shall have satisfied the
requirements of the Assignment of Claims Act of 1940, as amended, and any
similar state legislation in respect thereof and the Bank is satisfied as to
the absence of set-offs, counterclaims and other defenses to payment on the
part of the United States or such state governmental authority;
(xii) Accounts representing xxxxxxxx in excess of costs and
earnings and retainage;
(xiii) Accounts in respect of which the Security Agreement does
not or has ceased to create a valid and perfected first priority Lien in
favor of the Bank, subject only to Permitted Liens; and
(xiv) any other Accounts, the validity, collectibility or amount
of which is determined in good faith by the Borrower or the Bank to be
doubtful.
"Eligible Inventory" means all Inventory of the Borrower consisting of
finished goods, to be valued at the lower of cost or fair market value, as to
which the Bank has a first priority perfected security interest subject only to
Permitted Liens, of a kind usually and customarily sold by the Borrower and
which is not, because of damage, age, unmerchantability, obsolescence or any
other condition or circumstance, materially impaired in condition, value or
marketability in the good faith opinion of the Bank or the Borrower.
"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,
ground water, 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 clean-up or other
remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
-8-
"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.
"Euro-Dollar Business Day" means any Business Day on which commercial
banks are open for international business (including dealings in Dollar
deposits) in London.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.05(a).
"Event of Default" has the meaning set forth in Section 6.01.
"Fixed Charge Coverage Ratio" means, at any time, the ratio of (i)
Consolidated Income Available for Fixed Charges for the period of four
consecutive fiscal quarters ending on, or most recently ended prior to, such
time to (ii) Fixed Charges for such period; provided that with respect to the
fiscal quarters ending March 31, 1997, June 30, 1997 and September 30, 1997,
such period shall be one, two and three fiscal quarters, respectively.
"Fixed Charges" means, with respect to any period and without
duplication, the sum of (i) Interest Charges for such period and (ii) Lease
Rentals for such period.
"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 (i) 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 (ii) 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.
"Indemnitee" has the meaning set forth in Section 8.03(b).
-9-
"Interest Charges" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating all offsetting debits
and credits between the Borrower and its Subsidiaries and all other items
require to be eliminated in the course of the preparation of consolidated
financial statements of the Borrower and its Subsidiaries in accordance with
GAAP); (i) all interest in respect of Debt of the Borrower and its Subsidiaries
(including imputed interest on Capital Lease Obligations) deducted in
determining Adjusted Consolidated Net Income for such period, together with all
interest capitalized or deferred during such period, and (ii) all debt discount
and expense (other than in respect of the Note) amortized or required to be
amortized in the determination of Adjusted Consolidated Net Income for such
period.
"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.
"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.
"Lease Rentals" means, with respect to any period, the sum of the
rental and other obligations required to be paid during such period by the
Borrower or any Subsidiary as lessee under all leases of real or personal
property (other than Capital Leases), excluding any amount required to be paid
by the lessee (whether or not therein designated as rental or additional rental)
on account of maintenance or repairs, insurance, taxes, assessments, water rates
and similar charges, provided that, if at the date of determination, any such
--------
rental or other obligations (or portion thereof) are contingent or not otherwise
definitely determinable by the terms of the related lease, the amount of such
obligations (or such portion thereof) (i) shall be assumed to be equal to the
amount of such obligations for the period of 12 consecutive calendar months
immediately preceding the date of determination or (ii) if the related lease was
not in effect during such preceding 12-month period, shall be the amount
estimated by the chief financial officer or chief accounting officer of the
Borrower on a reasonable basis and in good faith.
"LIBOR-based Rate" has the meaning set forth in Section 2.05(a).
"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
-10-
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" means a loan made pursuant to Section 2.01.
"Loan Documents" means the Credit Agreement, the Note, the Security
Agreement and the Subordination Agreement, collectively, and "Loan Document"
means any of them.
"London Interbank Offered Rate" has the meaning set forth in Section
2.05(a).
"Material Adverse Effect" means (i) 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; (ii) a material adverse effect on
the ability of the Borrower to consummate the transactions contemplated hereby
to occur on the Closing Date; (iii) a material adverse effect on the ability of
the Borrower to perform its obligations under this Agreement and the Note or
(iv) a material adverse effect on the rights and remedies of the Bank under this
Agreement and the Note.
"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
$100,000.
"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 $100,000.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000.
"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.
"Net Monthly Sales" means, for any calendar month, the Borrower's gross
sales for said month, less returns, allowances and discounts, and other
adjustments.
"Net Unpaid Balance" means at any date the unpaid balance of an
Eligible Account at such date not including any unearned finance charges, late
payment charges or other charges, or any extension, service or collection fees
in respect thereof.
-11-
"Note" means a promissory note of the Borrower, substantially in the
form of Exhibit B hereto, evidencing the obligation of the Borrower to repay the
Loans.
"Notice of Borrowing" means a Notice of Borrowing (as defined in
Section 2.02(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 loan, 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 indirect, fixed
or contingent, liquidated or unliquidated, due or to become due, secured
or unsecured, joint, several or joint and several, related or unrelated
to the Loans, similar or dissimilar to the indebtedness arising out of or
in connection with the Credit Agreement or of the same or a different
class of indebtedness as the indebtedness arising out of or in connection
with the Credit Agreement, including, without limitation, any overdrafts
in any deposit accounts maintained by the Borrower with the Bank, all
obligations of the Borrower with respect to letters of credit, if any,
issued by the Bank for the account of the Borrower any indebtedness of
the Borrower that is purchased by or assigned to the Bank;
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.
-12-
"Operating Agreement" means that certain Limited Liability Company
Agreement of the Borrower dated August 29, 1996, among all of the members of the
Borrower as of such date.
"Parent" means, with respect to the Bank, any Person controlling the
Bank.
"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, 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 and the chief legal officer of
the Borrower.
"Permitted Liens" means the Security Interests and the other Liens on
the Collateral permitted to be created, to be assumed or to exist pursuant to
Section 5.09.
"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, 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.
-13-
"Quarterly Date" means the first Business Day of each January, April,
July and October.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Revolving Credit Period" means the period from and including the
Closing Date to but not including the Termination Date.
"Subordinated Debt" of any Person means all Debt which (i) bears
interest at rates not greater than such Person shall reasonably determine to be
the prevailing market rate, at the time such Subordinated Debt is issued, for
interest on comparable subordinated debt issued by comparable issuers, (ii) is
subordinated in right of payment to such Person's indebtedness, obligations and
liabilities to the Bank under the Loan Documents pursuant to payment and
subordination provisions satisfactory in form and substance to the Bank and
(iii) is issued pursuant to loan documents having covenants and events of
default that are satisfactory in form and substance to the Bank but that in no
event are less favorable, including with respect to rights of acceleration, to
the Borrower than the terms hereof.
"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 other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Termination Date" means that date which is two years from the Closing
Date, as said date may be extended pursuant to Section 2.07(b).
"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.
"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.
"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 non-perfection of the Security Interest in any Collateral 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 non-perfection.
-14-
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) 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 (ii) 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 LIBOR-based Rate in effect on the date the interest rate on
the Loans is converted in accordance with Section 7.04 of the Credit Agreement
which the Bank, in its sole discretion, determines is appropriate to adjust the
Base Rate in effect on such day in order that the interest rate on the Loans as
of such date will be in comparable to said LIBOR-based Rate.
"Working Capital" means the Borrower's current assets minus its
current liabilities.
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
-15-
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.
-16-
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement (this "Amendment") is dated as of
March 1, 1997 and is between Trex Company, LLC, a Delaware limited liability
company (the "Borrower"), and First Union National Bank of Virginia, a national
banking association (the "Bank").
RECITALS
R-1. The Bank and the Borrower entered into a Credit Agreement dated as of
December 10, 1996 (the "Credit Agreement").
R-2. The Bank and the Borrower have agreed to amend Section 5.17 of the
Credit Agreement.
NOW, THEREFORE, for $10.00 and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Bank agree as follows:
1. Section 5.17 of the Credit Agreement is hereby amended by deleting
such Section and substituting in its place the following new Section:
Section 5.17 Limitations on Debt. The Borrower will not at any time
-------------------
permit the ratio of Total Consolidated Debt to Total Consolidated
Capitalization, as a percentage, to exceed the correlative percentage set
forth below for the period indicated:
Maximum
Period Percentage
------ ----------
Closing Date through July 31, 1997 90%
August 1, 1997 through December 31, 1998 80%
January 1, 1999 through March 31, 1999 65%
April 1, 1999 through September 30, 1999 55%
October 1, 1999 and thereafter 50%
2. Except as expressly provided in this Amendment, the Credit Agreement
shall otherwise be unchanged and shall remain in full force and effect.
WITNESS the following signatures and seals.
Trex Company, LLC
By: /s/ X. X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
---------------------
Title: C. E. O.
--------------------
First Union National Bank of Virginia
By: /s/ Xxxxxx X. Xxxx III
------------------------
Name: Xxxxxx X. Xxxx III
Title: Vice President
SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment") is dated
as of January 26, 1998 and is between Trex Company, LLC, a Delaware limited
liability company (the "Borrower"), and First Union National Bank, a national
banking association, successor by merger to First Union National Bank of
Virginia (the "Bank"). Capitalized terms used herein, unless otherwise defined
herein, shall have the meanings provided in the Credit Agreement.
RECITALS
R-1. The Bank and the Borrower entered into a Credit Agreement dated as
of December 10, 1996, as amended by the First Amendment to Credit Agreement
dated as of March 1, 1997 (the "Credit Agreement").
R-2. The Bank and the Borrower have agreed to increase the amount of
the Commitment and to amend the Credit Agreement in certain other respects.
NOW, THEREFORE, for $10.00 and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower and
the Bank agree as follows:
1. The definition of "Borrowing Base" in the Definitions
Appendix, incorporated by reference in Section 1.01 of the Credit Agreement, is
hereby deleted and the following new definition is substituted in its place:
"Borrowing Base" means at any date the sum of (i) the Advance
Rate Percentage multiplied by the aggregate Net Unpaid Balance of all
Eligible Accounts and (ii) the lesser of (A) $3,000,000 or (B) 50% of
the value of all Eligible Inventory.
2. The definition of "Commitment" in the Definitions Appendix,
incorporated by reference in Section 1.01 of the Credit Agreement, is hereby
deleted and the following new definition is substituted in its place:
"Commitment" means, as of January 26, 1998 until December 10,
1998, $6,000,000, as such amount may be increased or decreased pursuant
to this Agreement.
3. Section 2.08(b) of the Credit Agreement is hereby amended by
deleting such Section and substituting in its place the following new Section:
Section 2.08. Maturity and Repayment of Loans.
-------------------------------
****
(b) Mandatory Prepayments of Loans. If on any day the
------------------------------
aggregate outstanding principal amount of all Loans exceeds the lesser
of (i) the Commitment and (ii) the Borrowing Base, the Borrower shall
prepay, and there shall become due and payable, on
such date the principal amount of the Loans equal to such excess,
together with interest thereon to the date of repayment.
4. Section 5.17 of the Credit Agreement is hereby amended by
deleting such Section and substituting in it place the following new Section:
Section 5.17 Limitations on Debt. The Borrower will not at any
-------------------
time permit the ratio of Total Consolidated Debt to Total Consolidated
Capitalization, as a percentage, to exceed the correlative percentage
set forth below for the period indicated:
Period Maximum Percentage
------ ------------------
Date of Closing
through July 31, 1997 90%
August 1, 1997
through October 31, 1997 80%
November 1, 1997
through August 31, 1998 85%
September 1, 1998
through May 31, 1999 80%
June 1, 1999
through November 30, 1999 70%
December 1, 1999
through August 31, 2000 60%
September 1, 2000
and thereafter 50%
5. This Amendment shall be and become effective as of the date
hereof when all of the conditions set forth below in this paragraph 5 shall have
been satisfied:
(a) The Bank shall have received this Amendment, which shall
have been duly executed on behalf of the Borrower.
(b) The Bank shall have received evidence satisfactory to it
that the CIGNA Agreements have been amended to permit the execution, delivery
and performance of this Amendment.
(c) The Bank shall have received evidence satisfactory to it
that the execution,
2
delivery and performance of this Amendment have been duly authorized by the
Borrower.
(d) No material adverse change shall have occurred since
November 30, 1997 in the condition (financial or otherwise), business or
management of the Borrower.
6. The Borrower hereby represents and warrants to the Bank that,
after giving effect to this Amendment, (a) no Default or Event of Default exits
under the Credit Agreement or any of the Loan Documents and (b) the
representations and warranties set forth in Article IV of the Credit Agreement
are, subject to the limitations set forth therein, true and correct in all
material respects as of the date hereof (except for those which expressly relate
to an earlier date).
7. The Borrower shall pay all of the Bank's reasonable expenses,
including attorneys' fees, in connection with the preparation of this Amendment.
8. Except as expressly provided in this Amendment, the Credit
Agreement shall otherwise be unchanged and shall remain in full force and
effect.
WITNESS the following signatures and seals.
Trex Company, LLC
By: /s/ X. X. Xxxxxxx (Seal)
--------------------------------
Name: Xxxxxxx Xxxxxxx
---------------------------
Title: CFO/CEO
--------------------------
First Union National Bank
By: /s/ B. Xxxxx Xxxxxx (Seal)
--------------------------------
Name: B. Xxxxx Xxxxxx
---------------------------
Title: Vice President
--------------------------
3
THIRD AMENDMENT
TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is dated as of
---------
December 4, 1998 by and among TREX COMPANY, LLC, a Delaware limited liability
company ("Borrower"); and FIRST UNION NATIONAL BANK, successor in interest to
--------
First Union National Bank of Virginia, a national banking association ("Bank").
----
R E C I T A L S
A. Borrower and Bank are parties to that certain Credit Agreement dated as
of December 10, 1996; as amended by that certain First Amendment to Credit
Agreement dated as of March 1, 1997; and as further amended by that certain
Second Amendment to Credit Agreement dated as of January 26, 1998 (the "Credit
------
Agreement") and that certain Commercial Note dated as of December 10, 1996 (the
---------
"Note").
----
B. Pursuant to the Credit Agreement, Bank agreed, among other things, to
make revolving credit loans to Borrower until the Termination Date on the terms
and conditions set forth in the Credit Agreement.
C. Bank has agreed to extend the Termination Date of the Note contained in
the Credit Agreement on certain terms and conditions. Therefore Bank and
Borrower desire to modify the Credit Agreement as provided herein.
A G R E E M E N T
NOW THEREFORE, in consideration of the mutual covenants herein and for Ten
Dollars and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are
-------------------------
incorporated herein by this reference as if fully set forth in the text of this
Amendment.
2. Definitions. Capitalized terms used in this Amendment and not
-----------
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
3. Balance. Borrower, Bank and Guarantor affirm and agree that the unpaid
-------
principal balance of the Note as of the date hereof is $ , with accrued,
unpaid interest as of the date hereof of $ .
1
4. Amended Definitions. The definition of "Termination Date" contained in
------------------- ----------------
the Definitions Appendix incorporated by reference into Section 1.01 of the
------------
Credit Agreement is hereby deleted and the following definition is substituted
therefor:
"Termination Date" shall mean February 10, 1999, as said date may be
----------------
extended pursuant to Section 2.07(b).
5. Representations and Warranties. Borrower hereby confirms to Bank that
------------------------------
all representations and warranties of Borrower contained in the Credit Agreement
are true and correct as of the date hereof.
6. Full Force and Effect. Except as specifically set forth herein, all
---------------------
terms and conditions of the Credit Agreement and the other Loan Documents shall
remain unchanged and in full force and effect.
7. Binding Effect. Borrower hereby reaffirms its covenant and agreement
--------------
to perform, comply with and be bound by each and every one of the terms and
provisions of the Credit Agreement, as modified by this Amendment.
8. Acknowledgment; No Novation. Borrower and Bank agree that this
---------------------------
Amendment shall not constitute a novation of the indebtedness evidenced by the
Note.
9. Successors and Assigns. This Amendment shall be binding upon and shall
----------------------
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
10. Severability. In case any one or more of the provisions contained in
------------
this Amendment shall be invalid, illegal or unenforceable, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
[Remainder of this page is intentionally left blank.]
2
The undersigned have caused this Amendment to be executed in the names and
under the seals of the undersigned, with the intent that this be a sealed
instrument.
BORROWER:
TREX COMPANY, LLC, a Delaware limited
liability company
(SEAL) By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
BANK:
FIRST UNION NATIONAL BANK, a national
banking association
(SEAL) By: /s/ B. Xxxxx Xxxxxx
--------------------------------
Name: B. Xxxxx Xxxxxx
------------------------------
Title: Vice President
-----------------------------
3
FOURTH AMENDMENT
TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is dated as
---------
of January 29, 1999 by and among TREX COMPANY, LLC, a Delaware limited liability
company ("Borrower"); and FIRST UNION NATIONAL BANK, successor in interest to
--------
First Union National Bank of Virginia, a national banking association ("Bank").
----
R E C I T A L S
A. Borrower and Bank are parties to that certain Credit Agreement dated as
of December 10, 1996, as amended by that certain First Amendment to Credit
Agreement dated as of March 1, 1997, that certain Second Amendment to Credit
Agreement dated as of January 26, 1998 and that certain Third Amendment to
Credit Agreement dated as of December 4, 1998 (the "Credit Agreement") and that
----------------
certain Commercial Note dated as of December 10, 1996 (the "Note").
----
B. Pursuant to the Credit Agreement, Bank agreed, among other things, to
make revolving credit loans to Borrower until the Termination Date on the terms
and conditions set forth in the Credit Agreement.
C. Bank has agreed to extend the Termination Date of the Note contained in
the Credit Agreement on certain terms and conditions. Therefore Bank and
Borrower desire to modify the Credit Agreement as provided herein.
A G R E E M E N T
NOW THEREFORE, in consideration of the mutual covenants herein and for Ten
Dollars and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are
-------------------------
incorporated herein by this reference as if fully set forth in the text of this
Amendment.
2. Definitions. Capitalized terms used in this Amendment and not
-----------
otherwise defined herein shall have the meanings set forth in the Credit
Agreement.
3. Amended Definitions. The definition of "Termination Date" contained in
-------------------
Section 1.1 of the Credit Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:
1
"Termination Date" shall mean April 10, 1999, or such later date as may
be agreed by Bank, in writing.
4. Representations and Warranties. Borrower hereby confirms to Bank that
------------------------------
all representations and warranties of Borrower contained in the Credit Agreement
are true and correct as if made on the date hereof.
5. Full Force and Effect. Except as specifically set forth herein, all
---------------------
terms and conditions of the Credit Agreement and the other Loan Documents shall
remain unchanged and in full force and effect.
6. Binding Effect. Borrower hereby reaffirms its covenant and agreement
--------------
to perform, comply with and be bound by each and every one of the terms and
provisions of the Credit Agreement, as modified by this Amendment.
7. Acknowledgment; No Novation. Borrower and Bank agree that this
---------------------------
Amendment shall not constitute a novation of the indebtedness evidenced by the
Note.
8. Successors and Assigns. This Amendment shall be binding upon and shall
----------------------
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
9. Severability. In case any one or more of the provisions contained in
------------
this Amendment shall be invalid, illegal or unenforceable, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
[The remainder of this page is intentionally left blank.]
2
The undersigned have caused this Amendment to be executed in the names and
under the seals of the undersigned, with the intent that this be a sealed
instrument.
BORROWER:
TREX COMPANY, LLC, a Delaware
limited liability company
(SEAL) By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
BANK:
FIRST UNION NATIONAL BANK, a national
banking association
(SEAL) By: /s/ B. Xxxxx Xxxxxx
--------------------------------
Name: B. Xxxxx Xxxxxx
------------------------------
Title: Vice President
-----------------------------
3
FIFTH AMENDMENT
TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), is dated as of
---------
February 4, 1999 by and among TREX COMPANY, LLC, a Delaware limited liability
company ("Borrower"); and FIRST UNION NATIONAL BANK, successor in interest to
--------
First Union National Bank of Virginia, a national banking association ("Bank").
----
R E C I T A L S
A. Borrower and Bank are parties to that certain Credit Agreement dated as
of December 10, 1996, as amended by that certain First Amendment to Credit
Agreement dated as of March 1, 1997, that certain Second Amendment to Credit
Agreement dated as of January 26, 1998, that certain Third Amendment to Credit
Agreement dated as of December 4, 1998 and that certain Fourth Amendment to
Credit Agreement dated as of January 29, 1999 (the "Credit Agreement") and that
----------------
certain Commercial Note dated as of December 10, 1996 (the "Note").
----
B. Pursuant to the Credit Agreement, the parties agreed, among other
things, to limit Borrower's right to pay dividends.
C. Bank and Borrower have agreed to amend the limitation contained in the
Credit Agreement with respect to Borrower's right to pay dividends.
A G R E E M E N T
NOW THEREFORE, in consideration of the mutual covenants herein and for Ten
Dollars and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Incorporation of Recitals. The Recitals set forth above are incorporated
-------------------------
herein by this reference as if fully set forth in the text of this Amendment.
2.
3. Definitions. Capitalized terms used in this Amendment and not otherwise
-----------
defined herein shall have the meanings set forth in the Credit Agreement.
4.
5. 3. Amendment. Section 5.14 of the Credit Agreement is hereby deleted in
---------
its entirety and the following new Section 5.14 is substituted therefor:
6.
Section 5.14 Payments, etc. The Borrower will not, and will not
--------------
permit any of its Subsidiaries to, make any distribution, dividend,
payment or delivery of property or cash to its members as such, or
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 for or options or stock appreciation rights in respect of
any of such shares), 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 membership interest in the Borrower or
any shares of capital stock or other interest in any other Subsidiary,
as the case may be, now or hereafter outstanding (or any options or
warrants or stock appreciation rights issued by such Person with
respect to its capital stock), except that:
(i) any Subsidiary of Borrower may pay dividends to Borrower; and
(ii) Borrower may pay dividends if, after giving effect on a pro
forma basis to such payment (A) no Default would exist, and (B) the
ratio of Total Consolidated Debt to Total Consolidated Capitalization,
as a percentage, would not exceed 50%.
4. Representations and Warranties. Borrower hereby confirms to Bank that
------------------------------
all representations and warranties of Borrower contained in the Credit Agreement
are true and correct as if made on the date hereof.
5. Full Force and Effect. Except as specifically set forth herein, all
---------------------
terms and conditions of the Credit Agreement and the other Loan Documents shall
remain unchanged and in full force and effect.
6. Binding Effect. Borrower hereby reaffirms its covenant and agreement
--------------
to perform, comply with and be bound by each and every one of the terms and
provisions of the Credit Agreement, as modified by this Amendment.
7. Acknowledgment; No Novation. Borrower and Bank agree that this
---------------------------
Amendment shall not constitute a novation of the indebtedness evidenced by the
Note.
8. Successors and Assigns. This Amendment shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns.
9. Severability. In case any one or more of the provisions contained in
------------
this Amendment shall be invalid, illegal or unenforceable, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
10. Counterparts. This Amendment may be executed by the parties hereto in
------------
two counterparts, each of which shall be deemed an original and both of which
shall constitute together but one and the same agreement. To facilitate
execution, facsimile signatures shall be considered binding on the parties
hereto.
2
The undersigned have caused this Amendment to be executed in the names and
under the seals of the undersigned, with the intent that this be a sealed
instrument.
BORROWER:
TREX COMPANY, LLC, a Delaware
limited liability company
By: /s/ Xxxxxxx X. Xxxxxxx (SEAL)
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
BANK:
FIRST UNION NATIONAL BANK, a national
banking association
By: /s/ B. Xxxxx Xxxxxx (SEAL)
-----------------------------------
Name: B. Xxxxx Xxxxxx
Title: Vice President
3
