Exhibit 10.9
REGISTRATION RIGHTS AGREEMENT
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This Registration Rights Agreement (this "Agreement") is made as of
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November 13, 2001 among Trex Company, Inc., a Delaware corporation (the
"Company"), First Union National Bank, a national banking association (together
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with its successors, "First Union"), and any other Holders from time to time
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hereunder.
W I T N E S S E T H:
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WHEREAS, the Company, Trex Company, LLC and First Union are parties to that
certain Second Amended and Restated Credit Agreement, dated as of September 30,
2001 (the "Credit Agreement"), in connection with which the Company issued to
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First Union a common stock purchase warrant, dated as of the date hereof (such
common stock purchase warrant and each other common stock purchase warrant
issued by the Company in exchange, replacement or substitution therefor or for
any such subsequently issued common stock purchase warrant in accordance with
its terms, a "Warrant"), to purchase 707,557 shares of the Common Stock, par
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value $0.01, of the Company (the "Common Stock");
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WHEREAS, to induce First Union to execute and deliver the Credit Agreement,
the Company has agreed to provide the Holders (as hereinafter defined) with
certain registration rights under the Securities Act of 1933, as amended, with
respect to the shares of Common Stock issued and issuable upon exercise of any
Warrant; and
WHEREAS, unless otherwise provided in this Agreement, capitalized terms
used in this Agreement shall have the meanings set forth in Section 9;
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
1. Demand Registration.
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1.1 (a) During the Effective Period, upon the written request of
Holders of at least a majority of the Registrable Securities (the "Demand
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Holders") that the Company effect the registration under the Securities Act of
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all or part of such Demand Holders' Registrable Securities (which written
request shall specify the aggregate number of shares of Registrable Securities
requested to be registered and the proposed means of distribution), the Company
shall (i) within 30 Business Days after its receipt of such request, file with
the Securities and Exchange Commission (the "SEC") a Registration Statement with
respect to the requested registration and (ii) within five Business Days after
its receipt of such request, notify in writing any other Holders (the "Other
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Holders") of such request and indicate in such notice the planned initial filing
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date of such Registration Statement. Such Registration Statement shall cover the
Registrable Securities requested by the Demand Holders to be registered and any
Registrable Securities that the Other Holders request, by written notice to the
Company no later than five Business Days prior to such planned initial filing
date, to be registered. Notwithstanding
the foregoing provisions of this Section 1.1(a), the Company shall not be
required to take any action pursuant to this Section 1.1(a):
(i) if the Company has previously effected one
registration pursuant to this Section 1.1(a);
(ii) if the Company shall not be eligible under the
Securities Act and the rules and regulations thereunder to effect the requested
registration on Form S-3 or any successor form ("Form S-3");
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(iii) if the Registrable Securities which the Company shall
have been requested by the Demand Holders to register shall have a then-current
market value of less than $5,000,000, unless such registration request is for
all remaining Registrable Securities held by all Holders (in which event such
market value condition shall not apply);
(iv) if the Company has effected a registration within the
180-day period immediately preceding such request which permitted Holders to
include Registrable Securities in such registration, and the Company has agreed
with the underwriters in connection with such prior registration not to offer
its securities publicly at any time during such 180-day period; or
(v) during the pendency of any Blackout Period;
provided, however, that the Company shall be permitted to satisfy its
obligations under this Section 1.1(a) to effect a demand registration by
amending (to the extent permitted by applicable law), within 30 Business Days
after a written request for registration, any registration statement previously
filed by the Company under the Securities Act so that such registration
statement (as amended) shall permit the disposition (in accordance with the
intended methods of disposition specified as aforesaid) of all of the
Registrable Securities for which a demand for registration has been made under
this Section 1.1(a) (including, without limitation, any Registrable Securities
requested by the Other Holders to be included in such registration). If the
Company shall so amend a previously filed registration statement, it shall be
deemed to have effected a registration for purposes of this Section 1.1.
(b) The Holders delivering a request pursuant to this
Section 1.1(a) may distribute the Registrable Securities covered by such request
by means of an Underwritten Offering or any other means, as determined by the
Demand Holders holding a majority of the Demand Holders' Registrable Securities
so requested to be registered.
(c) Subject to Section 1.1(d), a registration requested pursuant
to this Section 1.1 shall not be deemed to be effected for purposes of this
Section 1.1 if it has not been declared effective by the SEC or become effective
in accordance with the Securities Act and the rules and regulations thereunder.
(d) Holders holding a majority of the Registrable Securities to
be included in a Registration Statement pursuant to this Section 1.1 may, at any
time prior to the effective date of the Registration Statement relating to such
registration, revoke such request by providing a
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written notice to the Company revoking such request. If a Registration Statement
is so revoked, the Demand Holders and Other Holders which requested that
Registrable Securities be included in such Registration Statement shall
reimburse the Company for all of its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration Statement, unless the
Registration Statement is revoked at the request of such Holders because there
has occurred after the date of the initial request for registration by the
Demand Holders a material adverse change in the condition, business or prospects
of the Company or because such Holders learn after the date of such initial
request that such a material adverse change had occurred prior to such date. In
the case of any such revocation other than the first such revocation, the
Company shall be deemed to have effected a registration pursuant to this
Section 1.1.
(e) In the event the Company wishes, or any holder of Common
Stock has the right, to include shares of Common Stock in a Registration
Statement pursuant to this Section 1.1, there shall be included in such
Registration Statement only that number of shares of Common Stock, if any, that
the lead managing underwriter (if the offering covered by such Registration
Statement is an Underwritten Offering) or the Company (if the offering covered
by such Registration Statement is not an Underwritten Offering) reasonably
believes will not adversely affect the offering of all of the Registrable
Securities that the Holders desire to sell for their own account. In such event,
the shares of Common Stock to be included in such offering shall consist of (i)
first, the Registrable Securities that the Holders propose to sell, (ii) second,
the shares of Common Stock the Company proposes to sell for its own account and
(iii) third, the number, if any, of other shares of Common Stock requested to be
included in such registration that, in the reasonable opinion of such lead
managing underwriter or the Company, as applicable, can be sold without
jeopardizing the success of the offering of all the shares of Common Stock that
each Holder or the Company, as the case may be, desires to sell for its own
account, such shares to be allocated among the holders thereof who have
requested that their shares be so included in accordance with the piggyback
registration provisions of their agreements with the Company.
1.2 In connection with any Underwritten Offering pursuant to Section
1.1, the Company shall have the right to select a lead managing underwriter or
underwriters to administer the offering, which lead managing underwriter or
underwriters shall be reasonably satisfactory to the Demand Holders holding a
majority of the Demand Holders' Registrable Securities to be included in the
Registration Statement; provided, however, that the Demand Holders holding a
majority of the Demand Holders' Registrable Securities to be included in the
Registration Statement shall have the right to select a co-managing underwriter
or underwriters for the offering, which co-managing underwriter or underwriters
shall be reasonably satisfactory to the Company.
1.3 (a) If the Company determines in good faith that the
registration and distribution of Registrable Securities (i) would materially
impede, delay, interfere with or otherwise materially adversely affect any
pending financing, registration of securities, acquisition, corporate
reorganization or other significant transaction involving the Company or (ii)
would require disclosure of non-public material information that the Company has
a bona fide business purpose for preserving as confidential, as determined by
its Board of Directors in good faith, the Company shall promptly give the
Holders notice of such determination and shall be entitled to postpone the
filing or effectiveness of a Registration Statement for the shortest
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period of time reasonably required, but in any event not to exceed 120 days with
respect to matters covered by clause (i) above, and not to exceed 90 days with
respect to matters covered by clause (ii) above (a "Blackout Period"); provided,
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that a Blackout Period pursuant to clause (i) above with respect to an
Underwritten Offering proposed by the Company may, at the election of the
Company, commence on the date that is 30 days prior to the date the Company in
good faith estimates will be the date of filing of the Registration Statement
with respect to such Underwritten Offering and end no later than the date,
following the effective date of such Registration Statement, specified in the
form of underwriting agreement relating to such Underwritten Offering during
which the Company shall be prohibited from selling, offering or otherwise
disposing of Common Stock, but in no event to exceed 90 days; provided, further,
that the Company shall not obtain any deferrals under this Section 1.3(a)
aggregating in excess of 180 days in any twelve-month period. The Company shall
promptly notify each Holder of the expiration or earlier termination of a
Blackout Period.
(b) If requested by the managing underwriter of an Underwritten
Offering, each Holder shall not, and shall use its reasonable best efforts to
ensure that its Affiliates do not, directly or indirectly, sell, offer, pledge,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, warrant or right to purchase, or
otherwise dispose of or transfer, or enter into any swap or other agreement or
any arrangement that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership in, any Registrable Securities or Related
Securities held by the Holder or its Affiliates during the 180 days following
the effective date of a registration statement of the Company filed under the
Securities Act in connection with such Underwritten Offering, except for
Registrable Securities included in such registration, provided, however, that,
in each case, substantially all executive officers and directors of the Company
and substantially all holders of 5% or more of the outstanding shares of Common
Stock are similarly obligated. If so requested, each Holder shall enter, and
shall use its reasonable best efforts to ensure that all of its Affiliates
holding Related Securities enter, into a lock-up agreement with the applicable
underwriters that is consistent with the agreement in the preceding sentence.
2. Piggyback Registration Rights.
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(a) If, during the Effective Period, the Company shall propose to file
a registration statement under the Securities Act relating to the public
offering of Common Stock (other than in connection with an Excluded
Registration) for the Company's own account or for the account of any holder or
holders of Common Stock (the "Initiating Holder") and on a form and in a manner
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that would permit the registration of Registrable Securities for sale to the
public under the Securities Act, the Company shall (i) give written notice at
least 15 Business Days prior to the filing thereof to each Holder, specifying
the approximate date on which the Company proposes to file such registration
statement and advising such Holder of its right to have any or all of the
Registrable Securities included among the securities to be covered thereby, and
(ii) at the written request of any such Holder given to the Company within 15
days after the Holder's receipt of written notice from the Company, include
among the securities covered by such registration statement the number of
Registrable Securities which such Holder (a "Requesting Holder") shall have
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requested be so included (subject, however, to reduction in accordance with
Section 2(b)).
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(b) Each Holder wishing to participate in an offering pursuant to
Section 2(a) may include Registrable Securities in any Registration Statement
relating to an offering pursuant to Section 2(a) only to the extent that the
inclusion of such Registrable Securities shall not reduce (i) the number of
shares of Common Stock to be offered and sold by the Company or any Initiating
Holder pursuant thereto or (ii) the number of shares of Common Stock that any
Institutional Investor or Management Holder elects to offer and sell pursuant
thereto in accordance with the Existing Registration Rights Agreement. If the
lead managing underwriter for an Underwritten Offering pursuant to Section 2(a)
determines that marketing factors require a limitation on the number of
Registrable Securities to be offered and sold by Requesting Holders in such
offering, there shall be included in such offering only that number of
Registrable Securities, if any, that such lead managing underwriter reasonably
believes will not adversely affect the offering of all of the shares of Common
Stock that the Company wishes to sell for its own account, that any Initiating
Holder wishes to sell for its own account, or that any Institutional Investor or
Management Holder wishes to sell for its own account in accordance with the
Existing Registration Rights Agreement. In such event, or otherwise in
connection with any offering other than an Underwritten Offering in which the
inclusion of Registrable Securities could adversely affect the offering of all
of the shares of Common Stock that the Company or the Initiating Holder wishes
to sell for its own account or that the Institutional Investors or Management
Holders wish to sell for their own account in accordance with the Existing
Registration Rights Agreement, as reasonably determined by the Company, the
securities to be included in such offering shall consist of (i) first, the
securities the Company or the Initiating Holder, as the case may be, proposes to
sell, (ii) second, the number, if any, of securities that are proposed to be
sold pursuant to the Existing Registration Rights Agreement, (iii) third, the
number, if any, of Registrable Securities that are requested to be included in
such registration that, (a) in an Underwritten Offering, in the opinion of the
lead managing underwriter of such Underwritten Offering, can be sold without
adversely affecting the offering of all of the securities that the Company and
any Initiating Holder wish to sell for their own account and that any
Institutional Investors and Management Holders wish to sell for their own
account in accordance with the Existing Registration Rights Agreement, or (b) in
an offering other than an Underwritten Offering, can be sold without adversely
affecting the offering of all of the securities that the Company and any
Initiating Holder wish to sell for their own account and that any Institutional
Investors and Management Holders wish to sell for their own account in
accordance with the Existing Registration Rights Agreement, as reasonably
determined by the Company, such amount of Registrable Securities to be allocated
on a pro rata basis among the Holders of Registrable Securities who have
requested that their securities be so included based on the number of
Registrable Securities that each Holder thereof has requested to be so included,
and (iv) fourth, any other securities which, after the date hereof, become
subject to registration rights with respect to such registration.
(c) Nothing in this Section 2 shall create any liability on the part
of the Company to any Holder if for any reason the Company shall decide not to
file a registration statement proposed to be filed under Section 2(a) or to
withdraw such registration statement subsequent to its filing, regardless of any
action whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
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3. Procedures. In connection with the registration obligations of the
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Company under Sections 1 and 2, the Company shall:
(a) (i) prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities on Form S-3 in the event of a
registration pursuant to Section 1 (if the Company shall then be eligible to
effect the requested registration on Form S-3) or on Form S-3 or such other form
which counsel to the Company shall deem appropriate in the event of a
registration pursuant to Section 2 and (ii) use its reasonable best efforts to
cause such Registration Statement to become effective and to remain effective
for the applicable period specified in Section 3(b);
(b) prepare and file with the SEC amendments and post-effective
amendments to such Registration Statement and such amendments and supplements to
the Prospectus used in connection therewith as may be necessary to maintain the
effectiveness of such registration or as may be required by the rules,
regulations or instructions applicable to the registration form utilized by the
Company or by the Securities Act or rules and regulations thereunder necessary
to keep such Registration Statement effective (i) in the case of an Underwritten
Offering, until each underwriter has completed the distribution of all
securities purchased by it and (ii) in the case of any other registration, for
up to 120 days (or longer period in the event of a Section 3(e) Period or a
Section 3(f) Period during such offering, as specified in Section 3(e) or 3(f))
and cause the Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act, and otherwise to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement until the earlier of (A) such 120th day (or such longer
period) and (B) such time as all Registrable Securities covered by such
Registration Statement have ceased to be Registrable Securities;
(c) furnish to each Holder of such Registrable Securities such number
of copies of such Registration Statement and of each amendment and post-
effective amendment thereto, any Prospectus or Prospectus supplement and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holder (the Company hereby
consenting to the use (subject to the limitations set forth in Section 4(b)) of
the Prospectus or any amendment or supplement thereto in connection with such
disposition);
(d) use its reasonable best efforts to register or qualify such
Registrable Securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request, and to do any and all other acts and things which may be
reasonably necessary to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder, except that
the Company shall not be required for any such purpose to qualify generally to
do business as a foreign corporation in any jurisdiction where, but for the
requirements of this Section 3(d), it would not be obligated to be so qualified,
to subject itself to taxation in any such jurisdiction, or to consent to general
service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable Securities covered by
such Registration Statement, at any time when a Prospectus relating to such
Registration Statement is required to be delivered under the Securities Act
within the applicable period referred to in
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Section 3(b), that the Company has become aware that the Prospectus included in
such Registration Statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing (the period during which the Holders are required in
such case pursuant to Section 4(b) to refrain from effecting public sales or
distributions of Registrable Securities being referred to as a "Section 3(e)
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Period"), and prepare and furnish to such Holder, as soon as reasonably
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practicable, a reasonable number of copies of an amendment to such Registration
Statement or supplement to such related Prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and the period for which such Registration Statement shall be kept
effective shall be extended by the number of days in the Section 3(e) Period;
(f) in the event of the issuance of any stop order of which the
Company is aware suspending the effectiveness of such Registration Statement, or
of any order suspending or preventing the use of any related Prospectus or
suspending the qualification of any Registrable Securities included in such
Registration Statement for sale in any jurisdiction, notify each Holder of any
Registrable Securities covered by such Registration Statement of such issuance
and use its reasonable best efforts promptly to obtain the withdrawal of such
stop order or other order, and the period for which such Registration Statement
shall be kept effective shall be extended by a number of days equal to the
number of days between the issuance of any stop order or other order and such
Holder's receipt of notice from the Company of the withdrawal thereof (a
"Section 3(f) Period"); and
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(g) use its reasonable best efforts to comply, and to cause its
Affiliates to comply, with Regulation M under the Exchange Act in connection
with any distribution of Registrable Securities by any Holder pursuant to such
Registration Statement.
4. Conditions of Obligation to Register Shares. The obligations of
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the Company under this Agreement are subject to the conditions set forth in this
Section 4.
(a) As a condition to the Company's obligation under this Agreement to
cause Registrable Securities of any Holder to be included in a Registration
Statement, such Holder shall timely provide the Company with all of the
information required to be provided in the Registration Statement with respect
to such Holder pursuant to Items 507 and 508 of Regulation S-K under the
Securities Act (or any successor Items) or as otherwise may reasonably be
required by the Company in connection with the Registration Statement.
(b) Each Holder shall comply with the prospectus delivery requirements
of the Securities Act in connection with the offer and sale of Registrable
Securities made by such Holder pursuant to any Registration Statement. Upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 3(e) or Section 3(f), each Holder shall forthwith
discontinue the disposition of Registrable Securities pursuant to the Prospectus
or Registration Statement covering such Registrable Securities until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(e) or such
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Holder's receipt of notice from the Company of the withdrawal of any stop order
or other order referred to in Section 3(f), and, if so directed by the Company,
shall deliver to the Company all copies, other than permanent files copies then
in such Holder's possession, of the Prospectus covering such Registrable
Securities at the time of receipt of such notice.
(c) To the extent required by the Securities Act or the rules or
regulations thereunder, as reasonably determined by the Company, a Holder shall
consent to disclosure in any Registration Statement to the effect that such
Holder is or may be deemed to be an underwriter for purposes of the Securities
Act in connection with the offering of Registrable Securities included in such
Registration Statement.
(d) Each Holder shall comply, and shall cause its Affiliates to
comply, with Regulation M under the Exchange Act in connection with the offer
and sale of Registrable Securities made by such Holder pursuant to any
Registration Statement. Each Holder shall use its reasonable best efforts to
provide the Company with such information about such Holder's offer and sale of
Registrable Securities pursuant to any Registration Statement as the Company
shall reasonably require to enable the Company and its Affiliates to comply with
Regulation M under the Exchange Act in connection with any such offer and sale.
5. Non-Subordination. From and after the date of this Agreement, the
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Company shall not grant any piggyback registration rights to any other Person
which are superior to the piggyback registration rights granted to the Holders
pursuant to Section 2.
6. Registration Expenses. Except as otherwise provided in this
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Agreement, the Company shall bear all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses
of the Company, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (if any) (excluding
discounts and commissions) and other Persons retained by the Company. Each
Holder shall pay all underwriting discounts and commissions, if any, all
transfer taxes, if any, and all documentary stamp taxes, if any, relating to the
sale or disposition of such Holder's Registrable Securities pursuant to a
Registration Statement, and all fees and expenses of counsel to such Holder.
7. Indemnification; Contribution.
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(a) The Company shall indemnify and hold harmless each Holder and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) against all losses,
claims, damages, liabilities and expenses (including reasonable attorneys' fees,
disbursements and expenses, as incurred) (collectively, "Losses") incurred by
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such party pursuant to any actual or threatened action, suit, proceeding or
investigation arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in, or any omission or alleged omission
of a material fact required to be stated in, the Registration Statement,
Prospectus or preliminary Prospectus or any amendment or supplement to any of
the foregoing or necessary to make the statements therein (in the case of a
Prospectus or a preliminary Prospectus, in the light of the circumstances then
existing) not
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misleading, except in each case insofar as such statements or omissions arise
out of or are based upon (i) any such untrue statement or alleged untrue
statement or omission or alleged omission made in reliance on and in conformity
with information with respect to such Holder furnished in writing to the Company
by such Holder or its counsel expressly for use therein, (ii) the use of any
Prospectus after such time as the obligation of the Company to keep effective
the Registration Statement of which such Prospectus forms a part has expired or
(iii) the use of any Prospectus after such time as the Company has advised such
Holder that the filing of an amendment or supplement thereto is required, except
such Prospectus as so amended or supplemented. Notwithstanding the foregoing
provisions of this Section 7(a), the Company shall not be liable to any Holder
or to any Person who controls such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) under the indemnity
agreement in this Section 7(a) for any Losses that arise out of or are based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Prospectus if either (i) (A) such Holder failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Securities by such Holder to the Person
asserting the claim from which such Losses arise and (B) the Prospectus would
have corrected such untrue statement or alleged untrue statement or such
omission or alleged omission, or (ii) (x) such untrue statement or alleged
untrue statement or omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and (y) having previously been furnished by or on
behalf of the Company with copies of the Prospectus as so amended or
supplemented, such Holder thereafter fails to deliver such Prospectus, as so
amended or supplemented, with or prior to the delivery of written confirmation
of the sale of Registrable Securities by such Holder to the Person asserting the
claim from which such Losses arise.
(b) In connection with any Registration Statement filed pursuant
hereto, each Holder of Registrable Securities to be covered thereby shall
indemnify and hold harmless the Company, its directors and officers, and each
Person, if any, who controls the Company (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and all other Holders
against all Losses incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in, or any
omission or alleged omission of a material fact required to be stated in, the
Registration Statement, Prospectus or preliminary Prospectus or any amendment or
supplement to any of the foregoing or necessary to make the statements therein
(in case of a Prospectus or preliminary Prospectus, in the light of the
circumstances then existing) not misleading, but only to the extent that any
such untrue statement or omission is made in reliance on and in conformity with
information with respect to such Holder furnished in writing to the Company by
such Holder or its counsel specifically for use therein; provided, however, that
the liability of each Holder hereunder shall be limited to the proportion of any
such Losses that is equal to the proportion that the net proceeds from the sale
of Registrable Securities sold by such Holder under such Registration Statement
bears to the total net proceeds from the sale of all securities sold thereunder,
but not in any event to exceed the net proceeds received by such Holder from the
sale of Registrable Securities covered by such Registration Statement.
(c) Any Person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying party after the receipt by such
indemnified party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat
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thereof made in writing for which such indemnified party may claim
indemnification or contribution pursuant to this Agreement, provided that
failure to give such notification shall not affect the obligations of the
indemnifying party pursuant to this Section 7 except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation, unless in the reasonable judgment of any
indemnified party, based on the written opinion of counsel, a conflict of
interest is likely to exist between the indemnifying party and such indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall not be liable for the fees and expenses
of (i) more than one counsel for all Holders of Registrable Securities who are
indemnified parties, selected by the Holders of a majority of the Registrable
Securities who are indemnified parties (which selection shall be reasonably
satisfactory to the Company), (ii) more than one counsel for the underwriters in
an Underwritten Offering or (iii) more than one counsel for the Company, in each
case in connection with any one action or separate but similar or related
actions. An indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim shall not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party, based on the written opinion of counsel, a conflict of interest is likely
to exist between an indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel, provided that
the indemnifying party shall not be liable for the fees and expenses of (i) more
than one counsel for all Holders of Registrable Securities who are indemnified
parties, selected by the Holders of a majority of the Registrable Securities who
are indemnified parties (which selection shall be reasonably satisfactory to the
Company), (ii) more than one counsel for the underwriters in an Underwritten
Offering or (iii) more than one counsel for the Company, in each case in
connection with any one action or separate but similar or related actions. No
indemnifying party, in defense of any such action, suit, proceeding or
investigation, shall, except with the consent of each indemnified party, consent
to the entry of any judgment or entry into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such action,
suit, proceeding or investigation to the extent such liability is covered by the
indemnity obligations set forth in this Section 7. No indemnified party shall
consent to entry of any judgment or entry into any settlement without the
consent of each indemnifying party.
(d) If the indemnification from the indemnifying party provided for in
this Section 7 is unavailable to an indemnified party hereunder in respect to
any Losses, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in
10
connection with the actions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that the liability of each
Holder hereunder shall be limited to the proportion of any such Losses that is
equal to the proportion that the net proceeds from the sale of Registrable
Securities sold by such Holder under a Registration Statement bears to the total
net proceeds from the sale of all securities sold thereunder, but not in any
event to exceed the net proceeds received by such Holder from the sale of
Registrable Securities covered by such Registration Statement. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question, including any
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Section 7(c), any legal or other fees and expenses
reasonably incurred by such indemnified party in connection with any
investigation or proceeding. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the consideration referred to in this Section 7(d). If indemnification is
available under this Section 7, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Section 7(a) or 7(b), as the
case may be, without regard to the relative fault of such indemnifying parties
or indemnified party or any other equitable consideration provided for in this
Section 7(d).
(e) The provisions of this Section 7 shall be in addition to any
liability which any indemnifying party may have to any indemnified party and
shall survive the termination of this Agreement.
8. Participation in Underwritten Offerings. No Holder may participate in
---------------------------------------
any Underwritten Offering pursuant to this Agreement unless such Holder (i)
agrees to sell Registrable Securities on the basis provided in any underwriting
arrangements approved by the Company and (ii) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
9. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following meanings:
"Affiliate" means, with respect to any Person, at any time, any other
----------
Person that, alone or together with any other Person, directly or indirectly
controls, or is controlled by, or is under common control with such Person,
provided that no stockholder of the Company shall be deemed an Affiliate of any
other stockholder solely by reason of any investment in the Company. For
purposes of this definition, the term "control" (including with correlative
-------
meanings, the terms "controlling," "controlled by" and "under common control
----------- ------------- --------------------
with"), as used with respect to any Person, shall mean the possession, directly
----
or indirectly, of the power to direct or cause the
11
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Business Day" means a day on which the principal offices of the SEC
------------
in Washington, D.C. are open to accept filings or, in the case of determining a
date on which any payment is due, any day which shall not be a legal holiday or
a day on which banking institutions in New York City, New York or the
Commonwealth of Virginia generally are authorized or required by law or other
governmental actions to close.
"Effective Period" means the period commencing (i) on April 1, 2002
----------------
and (ii) ending on January 31, 2005.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor federal statute, as the same shall be in effect from time to
time. Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of any
such successor federal statute.
"Excluded Registration" means a registration of Common Stock under the
---------------------
Securities Act pursuant to a registration statement filed (i) on Form S-4 or
Form S-8 or any successor forms, (ii) in connection with an exchange offer or an
offering of securities solely to existing stockholders of the Company or
employees of the Company or its subsidiaries or (iii) in connection with an
offering of Common Stock issuable upon the conversion or exercise of other
securities.
"Existing Registration Rights Agreement" mean that certain Registration
--------------------------------------
Rights Agreement, dated as of April 7, 1999, as amended from time to time, among
the Company, each of the Institutional Investors named on Schedule A thereto and
each of the Management Holders named on Schedule B thereto.
"Holder" means First Union and, subject to Section 10(b), any wholly
------
owned subsidiary of First Union to which First Union has transferred any Warrant
or Registrable Securities and which has agreed to become bound by the provisions
of this Agreement in accordance with Section 10(b), but only so long as First
Union or such other wholly owned subsidiary of First Union holds Registrable
Securities.
"Institutional Investor" means each of the Institutional Investors
----------------------
named on Schedule A to the Existing Registration Rights Agreement that is
entitled to registration rights thereunder.
"Management Holder" each of the Management Holders named on Schedule B
-----------------
to the Existing Registration Rights Agreement that is entitled to registration
rights thereunder.
"Person" means any individual, corporation, partnership, limited
------
liability company, limited liability partnership, firm, joint venture,
association, joint-stock company, trust or unincorporated organization.
12
"Prospectus" means the prospectus included in any Registration
----------
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by any Registration Statement, and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
"Registrable Securities" means (i) any shares of Common Stock issued
----------------------
or issuable upon exercise of any Warrant and (ii) any shares of Common Stock
issued or issuable with respect to the shares of Common Stock referred to in
clause (i) above by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization. For the purposes of this Agreement, any particular Registrable
Securities shall cease to be Registrable Securities on the date and to the
extent that (i) a Registration Statement covering such Registrable Securities
has been declared effective under the Securities Act and such Registrable
Securities have been disposed of pursuant to such effective Registration
Statement, (ii) such Registrable Securities have been distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) such Registrable Securities have been otherwise issued,
transferred or disposed of, certificates therefor not bearing a legend
restricting further transfer shall have been delivered by the Company and, at
such time, subsequent transfer or disposition of such securities shall not
require registration of such securities under the Securities Act, (iv) all such
Registrable Securities held by any Holder may be sold by such Holder without any
time, volume or manner limitations pursuant to Rule 144(k) (or any similar
provision then in force) under the Securities Act or (v) such Registrable
Securities have ceased to be outstanding.
"Registration Statement" means any registration statement of the
----------------------
Company referred to in Section 1 or 2, including any Prospectus, amendments and
supplements to any such registration statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in any
such registration statement.
"Related Securities" means any securities of the Company similar or
------------------
identical to any of the Registrable Securities, including, without limitation,
Common Stock and all options, warrants, rights and other securities convertible
into, or exchangeable or exercisable for, Common Stock.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, as the same shall be in effect from time to time.
Reference to a particular section of the Securities Act of 1933, as amended,
shall include reference to the comparable section, if any, of any such successor
federal statute.
"Underwritten Offering" shall mean an underwritten offering in which
---------------------
securities of the Company are sold to an underwriter for reoffering to the
public.
10. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or
13
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent thereto of Holders of a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders whose securities are requested to be
registered pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities requested to be registered by
such Holders pursuant to such Registration Statement; provided that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 10(a), whether or not any notice, writing or marking indicating
such amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(b) Successors and Assigns; Binding Effect. The right to have
--------------------------------------
Registrable Securities registered pursuant to Sections 1 and 2 may be only
assigned (but only with all related obligations hereunder) by First Union in
connection with a transfer of any Warrant or any Registrable Securities to a
wholly owned subsidiary of First Union which, after such transfer, holds at
least 20% of the Registrable Securities, provided that such assignment of rights
under this Agreement shall be effective only if (i) immediately thereafter the
further disposition of such securities by such transferee is restricted under
the Securities Act and (ii) such transferee agrees in writing to become a Holder
under this Agreement and to be bound by the provisions hereof. Except as set
forth above, this Agreement and the respective rights and obligations hereunder
shall not be assigned by any party except with the prior written consent of the
non-assigning party, which consent shall be subject to the sole discretion of
the non-assigning party. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and any successor and permitted assign thereof.
Except to the extent provided in Section 7, nothing in this Agreement, expressed
or implied, is intended to confer on any Person other than the parties hereto
and their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(c) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(d) Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
(e) Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
14
(f) Notices. All notices and other communications given or made
-------
pursuant hereto, unless otherwise specified, shall be in writing and shall be
deemed to be effectively given as follows: (i) upon personal delivery to the
party to be notified; (ii) when delivered by facsimile, if delivered on or
before 5:00 p.m., New York City time, and, if not, then on the next Business Day
(with hard copy (which shall not constitute notice) sent for next Business Day
delivery by a nationally recognized overnight courier); (iii) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) one Business Day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All notices and communications shall be sent to the
parties hereto at the respective addresses set forth below, or as notified by
such party from time to time at least ten days prior to the effectiveness of
such notice:
If to the Company:
Trex Company, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Holder:
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ ▇▇▇▇ LLP
Suite 800
Bank of America Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Fiona Tower, Esquire
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15
Any Person other than First Union that becomes a Holder hereunder
shall provide its address and facsimile transmission number to the Company,
which shall promptly provide such information to each other Holder.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT GIVING
EFFECT TO ITS PRINCIPLES OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH
PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
(h) Termination. This Agreement shall terminate when there are no
-----------
Registrable Securities remaining, except that any liabilities or obligations
under Sections 6 and 7 shall remain in effect in accordance with their terms.
No termination of any provision of this Agreement shall relieve any party of any
liability for any breach of such provision occurring prior to such termination.
(i) Entire Agreement. This Agreement is intended by the parties to
----------------
be a complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein, with respect to the
registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and undertakings
among the parties with respect to such registration rights. No party hereto
shall have any rights, duties or obligations other than those specifically set
forth in this Agreement.
[signature page follows]
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
First Union National Bank, Trex Company, Inc.
a national banking association
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------ -------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------- -----------------------------
Title: Senior Vice President/Director Title: President
--------------------------------- ----------------------------
17