Preferred Units Exchange Agreement - Trex Co. Inc., Trex Co. LLC and Mobil Oil Corp.
PREFERRED UNITS EXCHANGE AGREEMENT
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THIS PREFERRED UNITS EXCHANGE AGREEMENT (this "Agreement") is made as
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of this 19th day of March 1999 among Trex Company, Inc., a Delaware corporation
(the "Corporation"), TREX Company, LLC, a Delaware limited liability company
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(the "Company"), and Mobil Oil Corporation, a New York corporation ("Mobil").
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RECITALS
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A. Mobil owns all of the 1,000 outstanding preferred limited
liability company interests in the Company (the "Preferred Units").
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B. In connection with the capitalization of the Company on August
29, 1996, the Company, the members of the Company (the "Members") and the
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beneficial owners of limited liability company interests in the Company (the
"Class B Beneficial Owners") entered into certain agreements, including (i) the
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Limited Liability Company Agreement dated as of August 29, 1996, as amended (the
"LLC Agreement") among the Members other than Mobil (the "Junior Members"),
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Mobil and the Class B Beneficial Owners, (ii) the Members' Agreement dated as of
August 29, 1996, as amended (the "Members' Agreement"), among the Company, the
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Junior Members and the Class B Beneficial Owners, and (iii) the Securities
Purchase Agreements dated as of August 29, 1996, as amended (collectively, the
"Securities Purchase Agreement"), among the Company and certain of the Junior
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Members and Class B Beneficial Owners.
C. 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 the
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Corporation.
D. The Corporation has filed a registration statement (file no. 333-
63287) (the "Registration Statement") with the Securities and Exchange
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Commission (the "SEC") covering the initial public offering of the Common Stock
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by the Corporation and certain of its stockholders (the "IPO") under the
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Securities Act of 1933, as amended (the "Securities Act").
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E. On the Reorganization Closing Date (as defined in Section 1.1
hereof), in accordance with the terms and conditions of the LLC Agreement, the
Members' Agreement and a Contribution and Exchange Agreement of even date
herewith among the Corporation, the Company, the Junior Members and the Class B
Beneficial Owners (the "Exchange Agreement"), the Company, the Corporation and
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the Junior Members will complete certain transactions as a result of which,
among other things, the Junior Members will acquire all of the Common Stock
issued and outstanding prior to the IPO and the Corporation will acquire
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from the Junior Members all of the issued and outstanding junior limited
liability company interests in the Company held by the Junior Members.
F. Concurrently with the consummation of such transactions, pursuant
to this Agreement, Mobil will deliver to the Corporation, in exchange for a
promissory note issued by the Corporation, all of the Preferred Units (such
exchange of the Preferred Units together with the transactions referred to in
recital "E," the "Reorganization").
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G. Following the Reorganization, the Corporation will consummate the
IPO.
H. The Company, the Corporation and Mobil wish to set forth herein
their agreement concerning Mobil's exchange of the Preferred Units and related
matters.
AGREEMENT
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ARTICLE I
EXCHANGE OF PREFERRED UNITS
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1.1 Closing Date and Location. The exchange of the Preferred Units
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hereunder shall be consummated on the date (the "Reorganization Closing Date")
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on which, and immediately following the time at which, the Corporation, the
stockholders offering Common Stock in the IPO and the managing underwriters of
the IPO have determined the initial public offering price of the Common Stock
(such determination, the "IPO Pricing") and have executed an underwriting
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agreement for the purchase and sale of Common Stock in the IPO (the
"Underwriting Agreement"). The Reorganization Closing Date shall occur on the
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business day immediately preceding the business day on which the SEC issues an
order of effectiveness under the Securities Act with respect to the Registration
Statement. The closing of the exchange of the Preferred Units and the other
Reorganization transactions (the "Reorganization Closing") shall occur at the
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offices of Hogan & Hartson L.L.P. located at 555 Thirteenth Street, N.W.,
Washington, D.C. 20004-1190, or at such other location as the parties shall
designate by mutual agreement.
1.2 Exchange of Preferred Units. Subject to the terms and conditions
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of this Agreement, Mobil shall deliver to the Corporation, in exchange for a
promissory note of the Corporation (the "Note"), all of the Preferred Units.
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1.3 Note Terms. The original principal amount of the Note shall be
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an amount equal to the redemption price of the Preferred Units that would be
payable by the Company upon a redemption of the Preferred Units pursuant to
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Section 4.3(2) of the LLC Agreement. The Note shall be substantially in the form
attached hereto as Exhibit A and shall be payable in full on the earlier of the
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closing date of the IPO or the 90th day after the Reorganization Closing Date
(or, if such 90th day is not a business day, the next preceding business day).
1.4 Compliance With Agreements. Mobil hereby consents to the
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consummation of the Reorganization. The Company and Mobil agree that the
exchange of the Preferred Units and the other Reorganization transactions shall
be consummated in accordance with the terms of this Agreement and the Exchange
Agreement, including the terms of the LLC Agreement, the Members' Agreement and
the Securities Purchase Agreement expressly incorporated by reference therein or
herein, and that compliance with this Agreement and the Exchange Agreement shall
constitute compliance with the LLC Agreement, the Members' Agreement and the
Securities Purchase Agreement in respect of the transactions constituting the
Reorganization.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
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The Corporation hereby represents and warrants to Mobil as follows:
2.1 Organization, Qualifications and Corporate Power. The
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Corporation is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified to transact business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of the business transacted by it or the
character of the properties owned or leased by it requires such licensing or
qualification, except where the failure to be so qualified or licensed would not
have a material adverse effect on the operating results, financial condition or
business of the Corporation and the Company considered as a single enterprise (a
"Material Adverse Effect"). The Corporation has the corporate power and
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authority (i) to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted and (ii) to execute, deliver and
perform this Agreement.
2.2 Validity. The execution, delivery and performance by the
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Corporation of this Agreement and the Note, and the consummation or performance
by the Corporation of the transactions contemplated by this Agreement,
including, without limitation, the issuance of the Note in exchange for the
Preferred Units, the Reorganization and the IPO (such transactions, the
Reorganization and the IPO collectively, the "Transactions") have been duly
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authorized by all necessary corporate action on the part of the Corporation.
This Agreement and the Note constitute legal, valid and binding obligations of
the Corporation, enforceable against the Corporation in accordance with their
respective terms, except as such
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enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights and (ii) laws relating to the availability of
specific performance, injunctive relief or other equitable remedies.
2.3 Noncontravention; Consents.
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(a) Neither the execution and delivery by the Corporation of this
Agreement, nor the consummation or performance by the Corporation of any of the
Transactions to be consummated or performed by it, shall directly or indirectly
(i) violate any provision of the Corporation's certificate of incorporation or
bylaws, (ii) contravene, result in any breach of, or constitute a default under,
or result in the creation of any mortgage, lien, pledge, charge, security
interest or other encumbrance (a "Lien") in respect of any property of the
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Corporation under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease or any other agreement or instrument to which the
Corporation is a party or by which the Corporation or any of its properties or
assets may be bound or affected, (iii) conflict with or result in a breach of
any of the terms, conditions or provisions of any order, judgment, decree or
ruling of any court, arbitrator or federal, state or municipal entity properly
exercising executive, legislative, judicial, regulatory or administrative
functions of government (a "Governmental Authority") applicable to the
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Corporation or (iv) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Corporation, except
for any such violation, contravention, breach, default, creation of Liens or
conflict which would not have a Material Adverse Effect.
(b) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority or otherwise on the part of the Corporation is required in connection
with the consummation of the Transactions, except such consents of third parties
as shall be obtained on or before the Reorganization Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Mobil as follows:
3.1 Organization, Qualifications and Power. The Company is a limited
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liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware and is duly licensed or qualified to transact
business as a foreign limited liability company and is in good standing in each
jurisdiction in which the nature of the business transacted by it or the
character of the properties owned or leased by it requires such licensing or
qualification, except
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where the failure to be so qualified or licensed would not have a Material
Adverse Effect. The Company has the power and authority as a limited liability
company (i) to own and hold its properties and to carry on its business as now
conducted and as proposed to be conducted and (ii) to execute, deliver and
perform this Agreement.
3.2 Validity. The execution, delivery and performance by the Company
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of this Agreement, and the consummation or performance by the Company of the
Transactions, have been duly authorized by all necessary action of the Company
as a limited liability company. This Agreement constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights and (ii) laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies.
3.3 Noncontravention; Consents.
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(a) Neither the execution and delivery by the Company of this
Agreement, nor the consummation or performance by the Company of any of the
Transactions to be consummated or performed by it, shall directly or indirectly
(i) violate any provision of the Company's certificate of formation or the LLC
Agreement, (ii) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease or any other agreement or instrument to which the Company is a
party or by which the Company or any of its properties or assets may be bound or
affected, (iii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or (iv) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Company, except for any such violation,
contravention, breach, default, creation of Liens or conflict which would not
have a Material Adverse Effect.
(b) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority or otherwise on the part of the Company is required in connection with
the consummation of the Transactions, except such consents of third parties as
shall be obtained on or before the Reorganization Closing Date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MOBIL
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Mobil hereby represents and warrants to the Corporation and the
Company as follows:
4.1 Validity.
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(a) Mobil has the legal power and authority to execute, deliver and
perform this Agreement.
(b) The execution, delivery and performance by Mobil of this
Agreement, and the consummation or performance by Mobil of the transactions
hereunder to be consummated or performed by Mobil, have been duly authorized by
all necessary corporate action on the part of Mobil.
(c) This Agreement constitutes the legal, valid and binding
obligation of Mobil, enforceable against Mobil in accordance with its terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (ii) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
4.2 Noncontravention; Consents.
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(a) Neither the execution and delivery by Mobil of this Agreement,
nor the consummation or performance by Mobil of any of the transactions
hereunder to be consummated or performed by Mobil, shall directly or indirectly
(i) violate any provision of the organizational documents of Mobil, (ii)
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of Mobil under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease or
any other agreement or instrument to which Mobil is a party or by which Mobil or
any of Mobil's properties or assets may be bound or affected, (iii) conflict
with or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority applicable to Mobil or (iv) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to Mobil.
(b) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental
Authority on the part of Mobil is required in connection with the consummation
of the transactions hereunder to be consummated or performed by Mobil.
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4.3 Title to Preferred Units. Mobil is the beneficial and record
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owner of the Preferred Units. Mobil has as of the date of this Agreement, and
on the Reorganization Closing Date shall have and shall convey to the
Corporation, free and clear of all Liens, valid title to the Preferred Units.
ARTICLE V
REORGANIZATION CLOSING
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5.1 Conditions to the Obligations of the Parties. Each party's
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obligations to take the actions required to be taken by such party at the
Reorganization Closing is subject to the satisfaction, at or prior to the
Reorganization Closing Date, of each of the following conditions (any of which
may be waived by such party, in whole or in part):
(a) The representations and warranties of each other party contained
in this Agreement shall be true on and as of the Reorganization Closing Date
with the same effect as though such representations and warranties had been made
by such party on and as of the Reorganization Closing Date.
(b) There shall be no injunction, writ, preliminary restraining order
or other order in effect of any nature issued by a court or governmental agency
of competent jurisdiction directing that the Transactions not be consummated in
the manner provided for in this Agreement. No action or proceeding shall have
been instituted and remain pending before a court or other governmental body of
competent jurisdiction to restrain, prohibit or otherwise challenge any of the
Transactions (or seeking material damages from any party as a result thereof),
other than any such action or proceeding which would not have a Material Adverse
Effect or prevent any party from performing its obligations hereunder.
(c) The IPO Pricing shall have occurred and the Underwriting
Agreement shall have been executed.
(d) The Corporation shall concurrently have consummated the
transactions contemplated by the Exchange Agreement.
(e) The parties shall have delivered the documents described in
Section 5.2 hereof.
5.2 Documents Delivered at Reorganization Closing.
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5.2.1 Documents Delivered by the Corporation. The Corporation
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shall deliver copies of the following documents to Mobil at the Reorganization
Closing:
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(a) resolutions of the Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement, including the
issuance of the Note, and the other documents relating to the transactions
hereunder, certified as of the Reorganization Closing Date by the Secretary or
an Assistant Secretary of the Corporation as being in full force and effect
without modification or amendment;
(b) a signature and incumbency certificate of the officers of the
Corporation executing this Agreement or other documents in connection with this
Agreement;
(c) the Note, duly executed on behalf of the Corporation;
(d) a cross-receipt executed by the Corporation acknowledging receipt
from Mobil of the certificate or certificates representing the Preferred Units;
(e) a certificate of the Chief Financial Officer of the Corporation
dated the Reorganization Closing Date, certifying that the Corporation has
fulfilled the condition specified in Section 5.1(a) hereof to be fulfilled by
the Corporation;
(f) an opinion of Hogan & Hartson L.L.P. in substantially the form of
Exhibit B hereto; and
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(g) such other documents as Mobil may reasonably request.
5.2.2 Documents Delivered by the Company. The Company shall deliver
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copies of the following documents to Mobil at the Reorganization Closing:
(a) resolutions of the Board of Managers approving and authorizing
the execution, delivery and performance of this Agreement, certified as of the
date of the Reorganization Closing Date by the Chief Financial Officer of the
Company as being in full force and effect without modification or amendment;
(b) a signature and incumbency certificate of the officers of the
Company executing this Agreement or other documents in connection with this
Agreement;
(c) a certificate of the Chief Financial Officer of the Company dated
the Reorganization Closing Date, certifying that the Company has fulfilled the
condition specified in Section 5.1(a) hereof to be fulfilled by the Company;
(d) an opinion of Hogan & Hartson L.L.P. in substantially the form of
Exhibit B hereto; and
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(e) such other documents as Mobil may reasonably request.
5.2.3 Documents Delivered by Mobil. Mobil shall deliver copies of
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the following documents to the Corporation at the Reorganization Closing:
(a) resolutions of the governing body of Mobil approving and
authorizing the execution, delivery and performance of this Agreement, certified
as of the Reorganization Closing Date by a duly authorized officer of Mobil as
being in full force and effect without modification or amendment;
(b) a signature and incumbency certificate of the officers executing
this Agreement or other documents in connection with this Agreement;
(c) the certificate or certificates representing the Preferred Units,
accompanied by appropriate instruments of transfer endorsed to the Corporation,
or other documentation reasonably satisfactory to the Corporation;
(d) a cross-receipt executed by Mobil acknowledging receipt of the
Note from the Corporation;
(e) a certificate of a duly authorized officer of Mobil dated the
Reorganization Closing Date, certifying that Mobil has fulfilled the condition
specified in Section 5.1(a) hereof to be fulfilled by Mobil; and
(f) such other documents as the Corporation may reasonably request.
ARTICLE VI
MISCELLANEOUS PROVISIONS
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6.1 Further Assurances. Each party shall execute and deliver such
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additional instruments, documents or other writings as may be reasonably
requested by any other party, before or after the Reorganization Closing Date,
in order to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
6.2 No Third Party Beneficiaries. This Agreement shall not confer any
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rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
6.3 Entire Agreement. This Agreement, including the Exhibits hereto,
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the other documents delivered expressly hereby and the Members' Agreement, the
LLC Agreement, the Securities Purchase Agreement and the Exchange Agreement to
the extent specifically incorporated by reference herein constitute the
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entire agreement among the parties with respect to the subject matter hereof and
supersede any prior understandings, agreements or representations, written or
oral, by or among the parties hereto that may have related in any way to the
subject matter hereof.
6.4 Succession and Assignment. This Agreement shall be binding upon
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and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party hereto may assign either this
Agreement or any of such party's rights, interests or obligations hereunder
without the prior written consent of the other parties hereto.
6.5 Facsimile Execution; Counterparts. This Agreement may be
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executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. A
facsimile, telecopy or other reproduction of this Agreement may be executed by
one or more parties hereto, and an executed copy of this Agreement may be
delivered by one or more parties hereto by facsimile or similar instantaneous
electronic transmission device pursuant to which the signature of or on behalf
of such party can be seen, and such execution and delivery shall be considered
valid, binding and effective for all purposes. At the request of any party
hereto, all parties hereto agree to execute an original of this Agreement as
well as any facsimile, telecopy or other reproduction hereof.
6.6 Notices. All notices required or permitted hereunder shall be in
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writing and shall be deemed effectively given as follows: (i) upon personal
delivery to the party to be notified; (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient hereto to the
other parties or, if not sent during normal business hours, then on the next
business day; (iii) five days after having been sent by registered or certified
mail, return receipt requested, postage prepaid; or (iv) one day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
parties hereto at the respective addresses set forth below, or as notified by
any party or, from time to time at least ten days prior to the effectiveness of
such notice:
If to the Corporation:
Trex Company, Inc.
20 South Cameron Street
Winchester, VA 22601
Attn.: Anthony J. Cavanna
Fax: (540) 678-0886
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If to the Company:
Trex Company, LLC
20 South Cameron Street
Winchester, VA 22601
Attn.: Anthony J. Cavanna
Fax: (540) 678-0886
If to Mobil:
Mobil Oil Corporation
3225 Gallows Road
Fairfax, VA 22037
Attn: C. Dan Ruff
Fax: (703) 846-2315
with a copy to:
James H. Breed
Senior Counsel
Mobil Business Resources Corporation
3225 Gallows Road
Fairfax, VA 22037
Fax: (703) 846-4672
6.7 Governing Law. All questions concerning the construction,
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validity and interpretation of this Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of the
Commonwealth of Virginia or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Virginia.
6.8 Amendments and Waivers. No amendment of any provision of this
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Agreement shall be valid unless such amendment shall be in writing and signed by
all of the parties hereto. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence. No such waiver shall be effective unless in a writing duly executed
by the party from whom the waiver is sought.
6.9 Severability. Each term and provision of this Agreement shall be
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construed to be valid and enforceable to the full extent permitted by law.
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any
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jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
6.10 Interpretation. The language used in this Agreement shall be
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deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. The
various Article and Section headings are inserted for purposes of reference only
and shall not affect the meaning or interpretation of this Agreement or any
provision hereof.
6.11 Specific Performance. Each party hereto acknowledges and agrees
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that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each party hereto
agrees that the other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which the other parties may be entitled at law or in equity.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
CORPORATION:
TREX COMPANY, INC.
By: /s/ Robert G. Matheny
____________________________
Name: Robert G. Matheny
Title: President
COMPANY:
TREX COMPANY, LLC
By: /s/ Robert G. Matheny
___________________________
Name: Robert G. Matheny
Title: President
MOBIL OIL CORPORATION:
By: /s/ James Harrington Breed
___________________________
Name: James Harrington Breed
Title: Attorny-in-Fact
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