Exhibit 10.13
CONSENT
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AND
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AMENDMENT TO
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MEMBERS' AGREEMENT
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THIS CONSENT AND AMENDMENT TO MEMBERS' AGREEMENT (this "Amendment") is
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made as of the 19th day of March, 1999, by and among TREX Company, LLC (the
"Company"), those persons identified on the signature pages hereof as members
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(hereinafter referred to individually as a "Member," and collectively as the
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"Members") and those persons identified on the signature pages hereof as
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beneficial owners (hereinafter referred to individually as a "Class B Beneficial
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Owner" and collectively as the "Class B Beneficial Owners").
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Recitals
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A. In connection with the capitalization of the Company on August 29,
1996, the Company, the Members and the Class B Beneficial Owners entered into
certain agreements, including (i) the Members' Agreement dated as of August 29,
1996 among the Company, the Members and the Class B Beneficial Owners (as
amended as of June 15, 1998, the "Agreement"); (ii) the Limited Liability
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Company Agreement dated as of August 29, 1996 among the Members, the Class B
Beneficial Owners and Mobil Oil Corporation (the "Preferred Member") (as
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amended as of the date hereof, the "LLC Agreement"); and (iii) the Securities
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Purchase Agreements dated as of August 29, 1996 between the Company and certain
of the Members and the Class B Beneficial Owners (as amended as of March 1,
1997, as of December 15, 1997 and as of the date hereof, the "Securities
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Purchase Agreements").
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B. As of the date hereof, the Company owns all of the issued and
outstanding common stock, $.01 par value per share (the "Common Stock"), of Trex
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Company, Inc. (the "Corporation").
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C. The Corporation has filed a registration statement with the
Securities and Exchange Commission covering the initial public offering of the
Common Stock by the Corporation and certain of its stockholders (the "IPO")
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under the Securities Act of 1933, as amended.
D. In order to facilitate the IPO, the Corporation, the Company, the
Members and the Class B Beneficial Owners have entered into a Contribution and
Exchange Agreement dated as of the date hereof (the "Exchange Agreement")
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pursuant to which they intend to complete the following series of transactions
(collectively, the "Reorganization") prior to the IPO in accordance with the
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Agreement as amended hereby, the LLC Agreement and the Securities Purchase
Agreements: (i) the Company will make a special cash distribution to the
Members, which distribution will consist in part of a return of capital of the
Members and in part of an
amount equal to the previously recognized and undistributed taxable income of
the Members on which the Members have paid or will pay income tax; (ii) the
Members of the Company holding of record Class B Units of the Company will
convert all issued and outstanding Class B Units into the same number of a new
issue of Class A Units of the Company and will be admitted to the Company as
Class A Members of the Company (the "Class A Members"); (iii) the Company will
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exercise an option granted to the Company in Section 8 of the Agreement to
repurchase a portion of such newly issued Class A Units from such Class A
Members; (iv) the Class A Members will contribute all of the issued and
outstanding Class A Units to the Corporation in exchange for Common Stock,
such Class A Members will cease to be members of the Company and the
Corporation will be admitted to the Company as a Class A Member; and (v) the
Company will pay, or will cause the Corporation on its behalf to pay, all
amounts owing under the Securities Purchase Agreements, including all amounts
owing under all outstanding senior notes and subordinated notes issued pursuant
to the Securities Purchase Agreements.
E. Concurrently with the consummation of the Reorganization, the
Preferred Member will exchange all of the outstanding Preferred Units of the
Company for a promissory note of the Corporation (the "Preferred Units
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Exchange") pursuant to a Preferred Units Exchange Agreement dated as of the date
hereof among the Corporation, the Company and the Preferred Member (the
"Preferred Units Exchange Agreement"), the Preferred Member will cease to be a
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member of the Company and the Corporation will be admitted to the Company as a
preferred member.
F. In connection with the Reorganization, the Common Stock held by
the Company will be canceled.
G. Upon consummation of the Reorganization and the Preferred Units
Exchange, the Corporation will own 100% of the limited liability company
interests of the Company and will operate the Company as its wholly-owned
subsidiary.
H. Following the Reorganization and the Preferred Units Exchange, the
Corporation will consummate the IPO.
I. The Company, the Members and the Class B Beneficial Owners wish to
amend the Agreement to set forth herein their agreement concerning the
Reorganization, the Preferred Units Exchange and related matters and to consent
to the consummation of the Reorganization and the Preferred Units Exchange and
to the taking of other actions hereinafter set forth.
Agreement
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1. Defined Terms. Capitalized terms used but not defined in this
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Amendment, including the recitals hereof, shall have the meanings given to such
terms in the Agreement.
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2. Amendment of Section 10. The definition of "Public Market Date"
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in Section 10 of the Agreement is hereby amended by deleting such definition in
its entirety and replacing it with the following:
"Public Market Date -- means the first day upon which Common Units of
the Company have been sold by the Company and for the Company's own
account in one or more public offerings specified in either clause (i)
or clause (ii): (i) a public offering pursuant to registration
statement no. 333-63287 filed with the SEC in which the offering price
per Common Unit equals or exceeds $9.41, provided that the gross cash
proceeds received by the Company and for the Company's own account as
a result of such sale pursuant to this clause (i) equals or exceeds
$30,582,500; or (ii) one or more public offerings pursuant to a
registration statement or registration statements filed with the SEC
pursuant to the provisions of the Securities Act, in which the
aggregate gross cash proceeds received by the Company and for the
Company's own account as a result of such sale or sales pursuant to
this clause (ii) equals or exceeds $40,000,000. For purposes of
clarification, the reference to "Company" for purposes of clause (i)
shall mean Trex Company, Inc. and the reference to "Common Units" for
purposes of clause (i) shall mean common stock of Trex Company, Inc."
3. Amendment of Section 10. The following definition is hereby added
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to Section 10 of the Agreement:
"holder -- means, at any time, the record holder at such time."
4. Amendment of Section 11. Section 11 of the Agreement is hereby
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amended by adding the provisions set forth below as new Section 11.12, new
Section 11.13 and new Section 11.14:
11.12 Ratification of Transfers of Issuable Units. Notwithstanding
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any provision of this Agreement to the contrary, including, without
limitation, Sections 3.1, 7.1 and 7.2, the transfer of record
ownership of Class B Units from the Class B Beneficial Owners (as
defined in the Limited Liability Company Agreement, as amended) to CIG
& Co. (to the extent that such transactions were transfers covered by
this Agreement), the transfer of record and beneficial ownership of
333 Class B Units from CIG & Co., as record holder of Class B Units
for the benefit of Connecticut General Life Insurance Company, to The
Lincoln National Life Insurance Company occurring on May 8, 1998, and
all other transfers of record and/or beneficial ownership of Class
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B Units among the Class B Members (as defined in the Limited Liability
Company Agreement, as amended) and/or the Class B Beneficial Owners
are hereby consented to, approved and ratified in all respects. CIG &
Co. and The Lincoln National Life Insurance Company hereby agree to be
bound by the provisions of this Agreement.
11.13 Reorganization and Related Transactions.
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Notwithstanding any provision of this Agreement to the contrary,
including, without limitation, Sections 3.1, 5.5, 7.1 and 7.2, and
except as provided in the next sentence of this Section 11.13, the
Company, the Members (as defined in the Limited Liability Company
Agreement, as amended) and the Class B Beneficial Owners may adopt,
enter into, and execute, deliver, acknowledge and perform, (i) the
Contribution and Exchange Agreement dated as of March 19, 1999 among
the Company, the Members and the Class B Beneficial Owners (the
"Exchange Agreement"), (ii) the Preferred Units Exchange Agreement
dated as of March 19, 1999 among the Company, Trex Company, Inc. and
Mobil Oil Corporation, (iii) the Agreement to Terminate Employment
Agreement dated as of March 19, 1999 between the Company and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, (iv) the Agreement to Terminate Employment Agreement dated
as of March 19, 1999 between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, (v)
the Agreement to Terminate Employment Agreement dated as of March 19,
1999 between the Company and ▇▇▇▇▇▇ ▇. Ferrari, (vi) the Agreement to
Terminate Employment Agreement dated as of March 19, 1999 between the
Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, (vii) any amendments to the
agreements referred to in clauses (i) through (vi) above and (viii)
any and all agreements, instruments or other documents necessary or
desirable to effectuate the transactions contemplated by the
agreements referred to in clauses (i) through (vi) above, as such
agreements may be further amended, all without any further act, vote
or approval of the Members or any other person and without complying
with the terms of this Agreement. Except as expressly provided
otherwise in the Exchange Agreement, the Company shall comply with the
terms of Section 8 in connection with the Company's repurchase of
Bundled Securities pursuant to the Exchange Agreement.
11.14 Termination of Agreement. Notwithstanding any provision of
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this Agreement to the contrary, this Agreement shall terminate in its
entirety on the Public Market Date
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and shall have no further force or effect from and after the
Public Market Date.
5. Consent and Approval. To the extent required by the Agreement,
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the parties hereto hereby consent to and approve (i) the Exchange Agreement and
the Preferred Units Exchange Agreement and the transactions contemplated by the
Exchange Agreement and the Preferred Units Exchange Agreement, including,
without limitation, the Reorganization and the Preferred Units Exchange, (ii)
the termination as of the Reorganization closing date of the Class A Members'
Agreement dated as of August 29, 1996 among the Class A Members, (iii) the
termination as of the IPO closing date of the employment agreements dated as of
August 29, 1996 between the Company and each of the Class A Members, (iv) the
formation and initial capitalization of the Corporation, (v) the activity and
business of the Corporation through the date hereof and (vi) the IPO.
6. No Other Amendment. Except as expressly set forth in this
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Amendment, the Agreement shall remain unchanged and in full force and effect in
accordance with its terms.
7. Governing Law. It is the intent of the parties hereto that all
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questions with respect to the construction of this Amendment and the rights and
liabilities of the parties shall be determined in accordance with the provisions
of the laws of the State of New York, without giving effect to the choice of law
rules thereof.
8. Amendment in Counterparts. This Amendment may be executed in
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several counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument. In addition, this Amendment
may contain more than one counterpart of the signature page and this Amendment
may be executed by the affixing of the signatures of each of the Company, the
Members and the Class B Beneficial Owners to one of such counterpart signature
pages; all of such signature pages shall be read as though one, and they shall
have the same force and effect as though all of the signers had signed a single
signature page.
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TREX COMPANY, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
MEMBERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. Ferrari
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▇▇▇▇▇▇ ▇. Ferrari
CIG & Co.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Partner
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The Lincoln National Life Insurance
Company
By: Lincoln Investment Management
Company, its Attorney-in-Fact
By: /s/ R. ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: R. ▇▇▇▇▇▇ ▇▇▇▇▇
Its: Vice President
CLASS B BENEFICIAL OWNERS:
Connecticut General Life Insurance Company
(on behalf of one or more separate accounts)
By: CIGNA Investments, Inc., authorized agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
Connecticut General Life Insurance
Company
By: CIGNA Investments, Inc., authorized agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
Life Insurance Company of North
America
By: CIGNA Investments, Inc., authorized agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Managing Director
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