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Exhibit
10.1
TENTH AMENDMENT TO
CREDIT AGREEMENT
THIS TENTH AMENDMENT TO
CREDIT AGREEMENT (this “Amendment”) is dated and
effective as of December 21, 2007, by and between TREX
COMPANY, INC. , a Delaware corporation (sometimes hereinafter
referred to herein as “Trex Inc.”), and BRANCH
BANKING AND TRUST COMPANY , a North Carolina state banking
corporation, successor by merger to Branch Banking and Trust
Company of Virginia (hereinafter referred to herein as the
“Bank”).
Trex Inc., TREX Company, LLC,
a Delaware limited liability company (“TREX LLC”), and
the Bank are the original parties to that certain Credit Agreement
dated as of June 19, 2002, as amended by a First Amendment to
Credit Agreement dated as of August 29, 2003, as further
amended by a Second Amendment to Credit Agreement dated as of
September 30, 2004, as further amended by a Third Amendment to
Credit Agreement dated as of March 31, 2005, as further
amended by a Fourth Amendment to Credit Agreement dated as of
July 25, 2005, as further amended by a Fifth Amendment to
Credit Agreement dated as of December 31, 2005, as further
amended by a Sixth Amendment to Credit Agreement dated as of
November 9, 2006, as further amended by a Seventh Amendment to
Credit Agreement dated as of December 31, 2006, as further
amended by an Eighth Amendment to Credit Agreement dated as of
March 16, 2007, as further amended by a Ninth Amendment to
Credit Agreement dated as of June 12, 2007 and effective as of
June 18, 2007 (as so amended and as it may hereafter be
amended, restated, supplemented, replaced or otherwise modified
from time to time, the “Credit Agreement”). Subject to
the terms and conditions contained in the Credit Agreement, the
Bank agreed to extend to Trex Inc. and TREX LLC (i) a
revolving credit facility, with a letter of credit subfacility, in
the aggregate amount of $70,000,000 for working capital financing
of Trex Inc.’s and TREX LLC’s accounts receivable and
inventory, to purchase new equipment and/or for other general
corporate purposes of Trex Inc. and TREX LLC, (ii) a term loan
facility in the amount of $9,570,079.88 to refinance the Winchester
Property (as defined in the Credit Agreement), and (iii) a
term loan facility in the amount of $3,029,920.12 to finance
existing improvements to the Winchester Property. Effective
December 31, 2002, TREX LLC merged with and into Trex Inc.,
with Trex Inc. being the surviving entity. As a result of such
merger, Trex Inc. is the sole borrower under the Credit Agreement
and shall hereinafter sometimes be referred to in this Amendment as
the “Borrower.”
The Borrower has requested
that the Bank modify certain financial covenants contained in the
Credit Agreement, and the Bank is willing to do so upon the terms
and conditions contained herein.
Accordingly, the Borrower and
the Bank hereby agree as follows:
1. Capitalized terms used in
this Amendment and not otherwise defined herein shall have the
meanings assigned thereto in the Credit Agreement.
2. Section 2.01(c)iii.
of the Credit Agreement is hereby amended by deleting the sentence
at the end of such Section in its entirety and substituting the
following sentence in its place:
Notwithstanding clause
(viii) above, the value of Eligible Inventory
(A) consisting of Eligible Inventory consigned to The Home
Depot shall be equal to the lesser of (i) the actual value of
the Eligible Inventory consigned to The Home Depot and
(ii) $999,999.99, provided that if the value of the Eligible
Inventory consigned to The Home Depot is equal to or greater than
$1,000,000 and the Borrower has fully complied with and remains in
full compliance with all of the requirements set forth in Sections
4.4(d) and 5.3(a) of the Security Agreement applicable to Inventory
consigned to The Home Depot, sub-clause (ii) shall not apply
and (B) consisting of Eligible Inventory consigned to
Lowe’s Company, Inc. (“Lowe’s”) shall,
notwithstanding Section 4.4(e) of the Security Agreement and
the last sentence of Section 4.4 of the Security Agreement, be
equal to the lesser of (i) the actual value of the Eligible
Inventory consigned to Lowe’s and (ii) $-0-, provided
that if (1) the Borrower shall have executed and delivered,
and caused Lowe’s to have executed and delivered, to Branch
Banking and Trust Company, as Collateral Agent (the
“Collateral Agent”), a consignee letter in form and
substance acceptable to the Collateral Agent and (2) the
Borrower has fully complied with and remains in full compliance
with all of the requirements set forth in Section 5.3(a) of
the Security Agreement, then sub-clause (ii) shall not apply
commencing on the Business Day immediately following the Business
Day after the Collateral Agent shall have received such consignee
letter from Lowe’s.
3. Section 6.11 of the
Credit Agreement is hereby deleted in its entirety and the
following Section is substituted in its place:
Section 6.11. Total
Consolidated Senior Debt to Consolidated EBITDA Ratio . The
Borrower will not, as of the end of any fiscal quarter, permit the
ratio of the Total Consolidated Senior Debt to Consolidated EBITDA
(the “Total Consolidated Senior Debt to Consolidated EBITDA
Ratio”) for the four-quarter period ended as of the end of
such fiscal quarter to exceed the following amounts for the
following periods: (i) 9.0 to 1 for the period commencing on
October 1, 2007 to and including December 31, 2007,
(ii) 11.0 to 1 for the period commencing on January 1,
2008 to and including March 31, 2008, and
(iii) thereafter (A) 2.5 to 1 for each period commencing
on April 1 of a calendar year to and including
September 30 of such calendar year and (B) 3.0 to 1 for
each period commencing on October 1 of a calendar year to and
including March 31 of the immediately succeeding calendar
year.
4. Section 6.12 of the
Credit Agreement is hereby deleted in its entirety and the
following Section is substituted in its place:
Section 6.12. Fixed
Charge Coverage Ratio . The Borrower will not, as of the end of
any fiscal quarter, permit the Fixed Charge Coverage Ratio for the
four-quarter period ended as of the end of such fiscal quarter to
be less than the following amounts for the following periods:
(i) 1.0 to 1 for the period commencing on October 1, 2007
to and including March 31, 2008, and (ii) 1.4 to 1
thereafter.
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5.
Section 6.15(b)(ii)(D) of the Credit Agreement is hereby
deleted in its entirety and the following Section is substituted in
its place:
(D) (1) the Total
Consolidated Debt to Total Consolidated Capitalization Ratio both
immediately prior to such proposed Acquisition and immediately
after and giving effect to such proposed Acquisition shall be at
least three percentage points lower than the maximum Total
Consolidated Debt to Total Consolidated Capitalization Ratio
required by Section 6.10 on the date of such proposed
Acquisition ( e.g. , if the proposed Acquisition occurs
during the period commencing on April 1, 2007 to and including
March 31, 2008, the Total Consolidated Debt to Total
Consolidated Capitalization Ratio both immediately prior to such
proposed Acquisition and immediately after and giving effect to
such proposed Acquisition shall not exceed 57%) and (2) the
Pro Forma Total Consolidated Senior Debt to Consolidated EBITDA
Ratio shall be at least 0.5 lower than the maximum ratio of the
Total Consolidated Senior Debt to Consolidated EBITDA required by
Section 6.11 on the date of the proposed Acquisition (
e.g. , if the proposed Acquisition occurs during the period
commencing on October 1, 2007 to and including
December 31, 2007, the Pro Forma Total Consolidated Senior
Debt to Consolidated EBITDA Ratio shall not exceed 8.5 to
1);
6. The definition of the
term, “Applicable Real Estate Term Loan Margin,”
contained in the Definitions Appendix to the Credit Agreement is
hereby deleted in its entirety and the following definition is
inserted in its place:
“Applicable Real Estate
Term Loan Margin” means (i) 2.75% for the period from
December 21, 2007 through and including the first day of the
month
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