EXHIBIT 10.7

 

[EXECUTION COPY]

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of this
25th day of July, 2005, by and between TREX COMPANY, INC., a Delaware
corporation (sometimes hereinafter referred to herein as “Trex Inc.”), and
BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, a Virginia state banking
corporation (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 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 $20,000,000 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 6.09 of the Credit Agreement is hereby deleted in its entirety and
the following Section is substituted in its place:

 

Section 6.09 Limitations on Capital Expenditures. Without the prior written
consent of the Bank, the Borrower and its Subsidiaries shall not make capital
expenditures, including payments due under Capital Leases, of more than the
following aggregate amounts in each of its fiscal years: $50,000,000 for fiscal
year 2005; and $25,000,000 for each fiscal year thereafter. Notwithstanding the
immediately preceding sentence, for fiscal years of the Borrower beginning with
fiscal year 2006, (a) the Borrower may expend an amount equal to the unspent
portion of monies from the immediately preceding fiscal year of the Borrower in

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the succeeding fiscal year of the Borrower and (b) the Borrower may make capital
expenditures in excess of the amounts set forth in the immediately preceding
sentence if, in a particular fiscal year of the Borrower, [the difference
between the figure equal to clause (i) of the definition of the Fixed Charge
Coverage Ratio for such fiscal year minus non-Maintenance Capital Expenditures
for such fiscal year] divided by [the figure equal to clause (ii) of the
definition of the Fixed Charge Coverage Ratio for such fiscal year] is equal to
or greater than 1.0 to 1

 

3. 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 (a) as of the
end of any fiscal quarter of the Borrower during fiscal year 2005, permit the
Fixed Charge Coverage Ratio of the four-quarter period ending as of the end of
such fiscal quarter to be less than 1.3 to 1 and (b) as of the end of any fiscal
quarter of the Borrower after fiscal year 2005, permit the Fixed Charge Coverage
Ratio for the four-quarter period ending as of the end of such fiscal quarter to
be less than 1.5 to 1.

 

4. The Borrower hereby represents and warrants to the Bank (which
representations and warranties shall survive the execution and delivery of this
Amendment) that:

 

(a) It is in compliance with all of the terms, covenants and conditions of the
Credit Agreement, as amended by this Amendment, and each of the other Loan
Documents.

 

(b) There exists no Default or Event of Default under the Credit Agreement, as
amended by this Amendment, and no event has occurred or condition exists which,
with the giving of notice or lapse of time, or both, would constitute such a
Default or Event of Default.

 

(c) The representations and warranties contained in Article V of the Credit
Agreement are, except to the extent that they relate solely to an earlier date
or except to the extent that they relate solely to TREX LLC, true in all
material respects with the same effect as though such representations and
warranties had been made on the date of this Amendment.

 

(d) The execution, delivery and performance by the Borrower of this Amendment
are within its corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene or constitute (with
or without the giving of notice or lapse of time or both) a default under any
provision of applicable law or of the organizational documents of the Borrower
or any Subsidiary or of any agreement, judgment, injunction, order, decree or
other instrument binding upon or affecting the Borrower or any Subsidiary or
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Subsidiaries.

 

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(e) This Amendment constitutes the valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and by equitable principles of general
applicability (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

 

(f) Except as set forth on Schedule 5.05 to the Credit Agreement, there is no
material action, suit, proceeding or investigation pending against, or to the
knowledge of the Borrower threatened against, contemplated or affecting, the
Borrower or any of its Subsidiaries before any court, arbitrator or governmental
body, agency or official which has, or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or which in any
manner draws into question the validity or enforceability of this Amendment or
any of the Loan Documents, and there is no basis known to the Borrower or any of
its Subsidiaries for any such action, suit, proceeding or investigation.

 

5. The Bank’s agreement to enter into this Amendment is subject to the following
conditions precedent:

 

(a) The Borrower shall have executed and delivered to the Bank this Amendment.

 

(b) The Borrower shall have executed and delivered, or caused to be executed and
delivered, to the Bank such other and further documents, certificates, opinions
and other papers as the Bank shall reasonably request.

 

(c) The Borrower, JPMorgan Chase Bank, N.A., as issuing bank (the “Issuing
Bank”) and JPMorgan Chase Bank, N.A., as administrative agent (the
“Administrative Agent”) shall have executed and delivered an amendment to the
Reimbursement and Credit Agreement dated as of December 1, 2004 by and between
the Borrower, the Issuing Bank and the Administrative Agent (the “Chase Credit
Agreement”) that amends the fixed charge coverage ratio and the capital
expenditures covenants in a manner similar in all material respects to the
amendments to those covenants contained in this Amendment.

 

6. Except as expressly amended hereby, the terms of the Credit Agreement shall
remain in full force and effect in all respects, and the Borrower hereby
reaffirms its obligations under the Credit Agreement, as amended by this
Amendment, and each of the other Loan Documents. The Borrower hereby waives any
claim, cause of action, defense, counterclaim, setoff or recoupment of any kind
or nature that it may assert against the Bank arising from or in connection with
the Credit Agreement, as amended by this Amendment, any of the Loan Documents,
or the transactions contemplated thereby or hereby that exist on the date hereof
or arise from facts or actions occurring prior hereto or on the date hereof.
Nothing contained in this Amendment shall be construed to constitute a novation
with respect to the obligations described in the Credit Agreement.

 

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7. All references to the Credit Agreement in any of the Loan Documents, or any
other documents or instruments that refer to the Credit Agreement, shall be
deemed to be references to the Credit Agreement as amended by this Amendment.

 

8. This Amendment shall be construed in accordance with and governed by the laws
of the Commonwealth of Virginia.

 

9. Any Dispute arising out of or related to this Amendment or any of the Loan
Documents shall be resolved by binding arbitration as provided in Section 9.07
of the Credit Agreement. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH
RESPECT TO ANY DISPUTE.

 

10. This Amendment may be executed in any number of counterparts, each of which
shall be an original, but all of which taken together shall constitute one and
the same instrument.

 

11. This Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. The Borrower shall not have
the right to assign any of its rights or obligations under or delegate any of
its duties under the Credit Agreement, as amended by this Amendment, or any of
the other Loan Documents.

 

12. The Borrower hereby agrees that it will pay on demand all out-of-pocket
expenses incurred by the Bank in connection with the preparation of this
Amendment and any other related documents, including but not limited to the fees
and disbursements of counsel for the Bank.

 

13. This Amendment represents the final agreement between the Borrower and the
Bank with respect to the subject matter hereof, and may not be contradicted,
modified or supplemented in any way by evidence of any prior or contemporaneous
written or oral agreements of the Borrower and the Bank.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Borrower and the Bank have caused this Amendment to be
executed by their duly authorized officers under seal as of the date first
written above.

 

TREX COMPANY, INC. By:  

/s/ Paul D. Fletcher

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  (SEAL) Name:   Paul D. Fletcher     Title:  

Senior Vice President and

Chief Financial Officer

    BRANCH BANKING AND TRUST COMPANY OF VIRGINIA By:  

/s/ David A. Chandler

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  (SEAL) Name:   David A. Chandler     Title :   Senior Vice President    

 

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