<PAGE>
As filed with the Securities and Exchange Commission on November 12, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
Blue Rhino Corporation
(Exact name of Registrant as specified in its charter)
---------------
Delaware 56-1870472
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
104 Cambridge Plaza Drive
Winston-Salem, North Carolina 27104
Telephone (336) 659-6900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
Billy D. Prim
Chairman and Chief Executive Officer
104 Cambridge Plaza Drive
Winston-Salem, North Carolina 27104
Telephone (336) 659-6900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Susan M. Hermann
Pedersen & Houpt, P.C.
161 N. Clark Street, Suite 3100
Chicago, Illinois 60601
Telephone (312) 641-6888
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [_]
If the Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Title of each class of maximum maximum Amount of
securities to be Amount to be offering price aggregate registration
registered registered per share(1) offering price fee
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.001per Share....... 3,261,885 Shares $8.19 $26,714,838 $7,427
- ------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
(1) Calculated in accordance with Rule 457(c) and based upon the average of
the closing bid and ask prices for the common stock on the Nasdaq National
Market on November 8, 1999.
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. The +
+selling securityholders may not sell these securities under this prospectus +
+until the registration statement filed with the Securities and Exchange +
+Commission is effective. This prospectus is not an offer to sell these +
+securities and it is not soliciting an offer to buy these securities in any +
+state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion
Preliminary Prospectus dated November 12, 1999
PROSPECTUS
3,261,885 Shares
[BLUE RHINO LOGO]
Common Stock
-----------
The selling securityholders listed on page 12 may offer from time to time up
to 3,261,885 shares of our common stock pursuant to this prospectus. Of the
shares which may be offered hereby:
. Up to 1,871,280 shares are available for the resale of shares issuable
upon the conversion of principal and accrued interest on our Convertible
Notes which we issued on September 23, 1999;
. Up to 332,203 shares are issuable upon the exercise of warrants issued
to the purchasers of our Convertible Notes;
. Up to 248,469 shares are issuable upon the exercise of warrants issued
to the purchasers of common stock and warrants in a private placement
completed on September 7, 1999;
. Up to 100,000 shares are issuable upon the exercise of warrants issued
in connection with an acquisition of assets consummated on September 17,
1999; and
. Up to 709,933 shares currently held by the selling securityholders.
We will not receive proceeds from the sale of shares of common stock by the
selling securityholders but we may receive the proceeds from the exercise of
the warrants by the selling securityholders unless the warrants are exercised
on a cashless basis. See "Use of Proceeds."
Our common stock is listed on the Nasdaq National Market under the symbol
"RINO." The last reported per share sale price for the common stock on November
8, 1999 was $8.00.
Investing in the common stock involves risks which are described in the
"Risk Factors" section beginning on page 5 of this prospectus.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information.................................. 2
Incorporation of Certain Documents by Reference...................... 3
Forward-Looking Statements........................................... 3
The Company.......................................................... 4
Risk Factors......................................................... 5
Use of Proceeds...................................................... 10
Description of Capital Stock......................................... 10
Selling Securityholders.............................................. 15
Plan of Distribution................................................. 19
Legal Matters........................................................ 20
Experts.............................................................. 20
</TABLE>
----------------
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. The selling securityholders are not making an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
as of the date on the front cover of this prospectus only. Our business,
financial condition, results of operations and prospects may have changed since
that date.
The terms "we," "us," "Blue Rhino" and "the Company," as used in this
prospectus refer to Blue Rhino Corporation and its subsidiaries, CPD
Associates, Inc., Rhino Services, L.L.C. and USA Leasing, L.L.C., and our
predecessor, except where it is made clear that such term means only the parent
company. The Blue Rhino(R) logo, including the name, the names RhinoTUFF(R),
Tri-Safe(R), Endless Summer(TM) and Endless Summer Comfort(TM) are our
registered and pending trademarks. This prospectus also includes trademarks of
other companies. Our principal offices are located at 104 Cambridge Plaza
Drive, Winston-Salem, North Carolina 27104 and our telephone number is (336)
659-6900.
----------------
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and periodic reports, proxy statements and other
information with the United States Securities and Exchange Commission (the
"Commission"). You may inspect these documents without charge at the principal
office of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, the
New York Regional Office located at 7 World Trade Center, Suite 1300, New York,
New York 10048, and the Chicago Regional Office located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and you may obtain copies of these
documents from the Commission's Public Reference Room at its principal office.
Information regarding the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The Commission maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's web site is http://www.sec.gov.
We have filed a registration statement on Form S-3 with the Commission
relating to the offering by the selling securityholders of common stock
pursuant to this prospectus. The registration statement contains information
not found in this prospectus. For further information, you should refer to the
registration statement which you can inspect and copy in the manner and at the
sources described above. Any statements we make in this prospectus or that we
incorporate by reference concerning the provisions of any document filed as an
exhibit to the registration statement or otherwise filed with the Commission
are not necessarily complete and, in each instance, reference is made to the
copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company
and are made a part of this prospectus:
. Our Annual Report on Form 10-K for the fiscal year ended July 31, 1999;
and
. Our Current Reports on Form 8-K dated August 16, 1999 and September 23,
1999.
All of the documents we have filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering made hereby are incorporated by reference into this prospectus
from the date we file the documents with the Commission. Any statement
contained in this prospectus or in a document incorporated in this prospectus
by reference shall be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any subsequently
filed document which is incorporated by reference into this prospectus modifies
or supersedes such statement. Any such statement so modified or superseded
shall not, except as so modified or superseded, constitute a part of this
prospectus.
Upon request, we will provide a copy of any or all of the documents
incorporated herein by reference (other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into the information that
this prospectus incorporates), without charge, to each person, including any
beneficial owner, to whom a copy of this prospectus is delivered. You should
direct written or telephone requests for such copies to our principal office:
Blue Rhino Corporation, 104 Cambridge Plaza Drive, Winston-Salem, North
Carolina 27104, Attention: Chief Financial Officer (telephone: 336-659-6900).
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties and assumptions, including,
among other things:
. Anticipated trends in our business, including consumer preferences for
propane grills and acceptance of cylinder exchange;
. Adequacy of our management and distribution infrastructure to manage
growth in sales and locations;
. Maintenance of high quality service for retailers through our
distributors;
. Placement of Blue Rhino cylinder exchange at new retail locations and
increasing sales at existing locations;
. Maintenance of relationships with existing retailers and distributors;
. Securing capital for future acquisitions and growth;
. Successful identification and introduction of new products and services;
and
. Adaptation to changes in the regulatory environment.
Words such as "expect," "will," "anticipate," "intend," "plan," "believe,"
"estimate" and variations of such words and similar expressions are intended to
identify such forward looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this
prospectus might not occur.
3
<PAGE>
THE COMPANY
We are the leading national provider of propane grill cylinder exchange in
the United States with Blue Rhino cylinder exchange displays at over 20,000
retail locations in 46 states and Puerto Rico. Cylinder exchange provides
consumers with a convenient means to exchange empty grill cylinders for clean,
safer, precision-filled cylinders. We offer our cylinder exchange at many
major home center/hardware, mass merchant, grocery and convenience stores
including Home Depot, Lowe's, Sears, WalHMart, Kroger and Kwik Shop. We
partner with retailers and independent distributors to provide consumers with
a nationally branded alternative to traditional grill cylinder refill. We
dedicate our efforts and capital to brand development, value-added marketing,
customer service, account growth, distributor development and management
information systems while our 49 independent distributors make the investments
in the vehicles and refilling and refurbishing equipment necessary to operate
cylinder exchange businesses.
The cylinder exchange process typically begins with a Blue Rhino
distributor establishing or restocking a grill cylinder display at a retail
customer. Upon delivery, the distributor records the cylinder inventory into a
handheld computer which calculates the number and type of cylinder exchanges,
upgrades and sales for the location and creates a delivery ticket for the
retailer. Distributors routinely transfer this delivery and inventory
information to Blue Rhino electronically. We then prepare an invoice for each
retailer which we typically transmit in a customized electronic format
compatible with the retailer's existing systems. We collect invoiced amounts
directly from the retailers and in turn remit a fixed amount per cylinder
transaction to our distributors. We negotiate terms of payment with retailers
which are generally 30 to 60 days from the date of invoice. We in turn remit
payment to our distributors on the fifteenth of each month for transactions
occurring during the previous month.
Our objective is to further strengthen our position as the leading national
provider of cylinder exchange. The key elements of our strategy to achieve
this objective are:
. Promoting the Blue Rhino brand and driving customer awareness of cylinder
exchange;
. Expanding existing retailer relationships by opening new locations and
increasing sales at existing locations;
. Adding new retailer relationships;
. Leveraging distributors' infrastructure by adding new retail locations
within their territories;
. Leveraging our corporate infrastructure to increase profitability;
. Pursuing strategic account acquisitions from other cylinder exchange
providers; and
. Developing new products and services related to propane use and backyard
living, such as patio heaters and the related cylinder exchange service.
During fiscal 1999 we significantly increased the number of Blue Rhino
cylinder exchange locations, continued developing and began marketing and
selling our commercial and residential patio heaters and began construction of
a propane bottling and cylinder refurbishing plant in North Carolina to
facilitate service by our distributors in the Southeastern United States.
4
<PAGE>
RISK FACTORS
Investing in the common stock will provide you with an equity ownership
interest in Blue Rhino. As a Blue Rhino stockholder, you may be subject to
risks inherent in our business. The performance of your shares will reflect the
performance of our business relative to, among other things, competition and
general economic, market and industry conditions. The value of your investment
may increase or decline and could result in a loss. You should carefully
consider the following factors as well as other information contained in this
prospectus before deciding to invest in shares of our common stock.
Uncertainty of Continued Rapid Growth
We are a young company that has experienced a very high growth rate. In
order to continue to grow, we must be able to:
. Find productive new retail locations;
. Demonstrate to consumers the benefits of cylinder exchange;
. Maintain relationships with distributors who are able to expand our
business and achieve our quality and service standards;
. Refine and maintain a corporate infrastructure sufficient to support
growth;
. Secure capital to fund growth; and
. Identify and consummate acquisitions of retail accounts from existing
cylinder exchange providers.
Even if we successfully implement our growth strategy, we may not be able to
sustain our recent growth rates.
Ability of Distributors and Management to Manage Growth in Sales and Number of
Retail Locations
The number of retail locations offering Blue Rhino cylinder exchange and our
corresponding sales have grown significantly over the past several years along
with the creation of our independent distributor network. As of July 31, 1995,
we had 1,608 retail exchange locations, substantially all of which were in the
South/Southeastern United States, and had no independent distributor network.
As of October 31, 1999, we had 49 independent distributors servicing in excess
of 20,000 retail locations in 46 states and Puerto Rico. To successfully grow,
we depend upon our distributors to adequately service an increasing number of
retail accounts. Due to our recent growth, certain distributors have
experienced service problems, particularly during peak demand periods such as
holiday weekends. We have also had to undertake capital intensive initiatives
such as our cylinder leasing program and the construction of an automated
propane bottling and cylinder refurbishing plant to support our distributors in
keeping up with our growth. This growth also requires our executive officers,
who have only limited prior experience managing a public company, to skillfully
manage Blue Rhino and our retailer and distributor relationships. If we fail to
effectively manage our growth, our business may suffer.
Lack of Contractual Relationships with Retailers
None of our significant retail accounts are contractually bound to offer
Blue Rhino cylinder exchange. Therefore, retailers can discontinue Blue Rhino
cylinder exchange at any time and offer a competitor's cylinder exchange or no
cylinder exchange program at all. Continued relations with a retailer depend
upon various factors, including customer service, consumer demand, competition
and cost. In addition, certain of our retailers have multiple vendor policies
and, therefore, may seek to offer a competitor's cylinder exchange program at
new or existing locations. If any significant retailer terminates, reduces or
is unwilling to expand its relationship with us, our business may suffer. See
"--Volatile Product; Potential Product Liability."
5
<PAGE>
Concentration of Revenues with a Limited Number of Retailers
We depend upon our relationships with a limited number of major retailers
for a significant portion of our net sales. Home Depot represented
approximately 23% of our fiscal 1999 net sales. Lowe's and WalHMart each
represented approximately 13% for fiscal 1999. Our failure to maintain or
expand relationships with any of these retailers or a significant business
downturn at any of these retailers could negatively impact our business.
Dependence on Distributor Relationships
We rely exclusively on independent distributors to deliver our products to
retailers. Our success will depend on our ability to maintain existing
distributor relationships and on the distributors' ability to set up and
adequately service an expanding base of retail accounts. We exercise only
limited influence over the resources that our independent distributors devote
to cylinder exchange. We could suffer a loss of consumer or retailer goodwill
if our distributors do not adhere to our quality control and service guidelines
or fail to ensure an adequate and timely supply of cylinders at retail
locations. Problems a national retailer may have with one distributor could
result in the loss of other locations of that retailer serviced by one or more
of our other distributors. If any major distributor were to discontinue
servicing one or more retailers or terminate its distribution agreement, our
business may suffer.
Dependence on Consumer Acceptance of Cylinder Exchange
We derive substantially all of our revenues from cylinder exchange, a
relatively new retailing concept for consumers and retailers. According to a
1997 study by the Barbecue Industry Association, 79% of the consumers who use
propane grills refill rather than exchange their cylinders. Our success will
depend in large part on our ability to successfully encourage consumers to
switch from traditional refilling methods to cylinder exchange and encourage
retailers to offer cylinder exchange.
Seasonal and Quarterly Fluctuations in Our Business
Our quarterly operating results fluctuate significantly primarily because
consumers grill most frequently in the spring and summer, especially in colder
regions of the United States. As a result, we earn most of our revenue during
our third and fourth quarters ended April 30 and July 31. Sustained periods of
poor weather, particularly during the spring and summer, can negatively impact
our total revenues and operating income. Our timing and rate of establishing
new retail locations and expenses incurred in anticipation of increased sales
also may cause quarterly fluctuations in our results of operations.
Accordingly, the results of operations in any quarter will not necessarily be
indicative of the results that we may achieve for a full fiscal year or any
future quarter.
Concentration of Retail Locations with a Limited Number of Distributors
As of September 30, 1999, six distributors serviced approximately 35% of our
retail locations. Sales by these key distributors resulted in approximately 40%
of our net sales for fiscal 1999. The five distributors owned by Platinum
Propane Holding, L.L.C. ("Platinum Propane") accounted for approximately 31% of
our net sales for fiscal 1999. Ceramic Industries, Inc. accounted for
approximately 9% of our net sales for fiscal 1999. A disruption in service by
one or more of these distributors may cause our business to suffer.
Varying Local Permitting Processes Affecting Retail Locations
Local ordinances, which vary from jurisdiction to jurisdiction, generally
require retailers to obtain permits to store and sell propane cylinders. These
ordinances influence retailers' acceptance of cylinder exchange, distribution
methods, cylinder packaging and storage. The ability and time required to
obtain permits varies by jurisdiction. Delays in obtaining permits have from
time to time significantly delayed the installation of new retail locations.
Some jurisdictions have refused to issue the necessary permits and thereby have
prevented a
6
<PAGE>
limited number of installations. Certain jurisdictions may also impose
additional restrictions on our ability to market and our distributors' ability
to maintain the cylinder exchange program. Revisions to these regulations or
violations of current or future regulations by us or our distributors may cause
our business to suffer.
Competition in Grill Cylinder Refilling Industry
The grill cylinder refilling industry is highly fragmented and competitive.
Competition in our industry is based primarily upon convenience, quality of
product, service, historical relationships, perceived safety and price. A 1997
Barbecue Industry Association study states that 79% of the consumers who use
propane grills refill rather than exchange their cylinders. Accordingly, our
primary competition comes from the approximately 20,000 bulk refilling stations
owned and operated by propane dealers, as well as certain rental outlets,
recreational vehicle centers and hardware stores. Major propane providers, such
as AmeriGas Propane Partners, L.P., Cornerstone Propane Partners, L.P.,
Ferrellgas Propane Partners, L.P., Heritage Propane Partners, L.P. and Suburban
Propane Partners, L.P., could establish new or expand their existing cylinder
exchange businesses nationally. These major propane providers have greater
resources than we do and may be able to undertake more extensive marketing
campaigns and adopt more aggressive pricing policies than we can. We also
compete with numerous regional cylinder exchange providers, which typically
have operations in a few states, and with local cylinder exchange providers. If
these competitors expand their cylinder exchange programs or new competitors
enter the market or grow to compete with us on a national scale, our market
share and gross margins could decrease.
Volatile Product; Potential Product Liability
Propane is a gas which, if exposed to flame or high pressure, may ignite or
explode, potentially causing significant property damage and/or bodily harm.
Accidents may occur during the refurbishing, refilling, transport, storage,
exchange, use or disposal of cylinders and other Blue Rhino products. Because
the Blue Rhino name and logo are prominently displayed on all cylinders,
cylinder displays and other Blue Rhino products, such as patio heaters, we
could be subjected to damage claims. In addition, as a result of our
acquisition of the assets of Bison Valve, we could be subject to additional
product liability for the failure of a valve, regardless of whether such valve
was fitted on a Blue Rhino cylinder. At such time as we begin operating our
automated propane bottling and cylinder refurbishing plant, we may become
subject to claims related to manufacturing defects or workplace accidents. In
the event of an accident, we could incur substantial expense, receive adverse
publicity and/or suffer a loss of sales. A grill cylinder-related accident
involving personal injury could result in product liability actions against us
or our distributors and could affect the willingness of retailers to offer or
consumers to use cylinder exchange. Adverse publicity relating to any such
incident could also affect our reputation and the perceived benefits of
cylinder exchange. Furthermore, there can be no assurance that insurance will
provide sufficient coverage in any particular case or that we or our
distributors will be able to continue to obtain insurance coverage at
acceptable levels and cost.
Product Recalls and Prior Accidents Affecting Blue Rhino
Prior to May 1996, we operated a propane refilling facility in Booneville,
North Carolina. In July 1995, an explosion resulting in significant structural
damage to the plant occurred at this facility when a filled cylinder fell from
a conveyor belt, began to leak and subsequently ignited. In September 1997, a
fire occurred at one of our distributor's cylinder refurbishing facility when a
cylinder was left unattended on a sleeve application machine and caught fire.
In July, 1999, a fire occurred at one of our distributor's cylinder
refurbishing facility from an unidentified cause resulting in significant
damage. In August 1997, Rotorix, Inc., the distributor of Ceodux cylinder
valves, issued a recall of Ceodux valves placed on Worthington cylinders after
July 16, 1997. We instructed our distributors to inventory the cylinders at
their plants and retail locations and remove any cylinders with the recalled
valves. However, we cannot be sure that all recalled valves have been removed
from circulation.
7
<PAGE>
Regulation of Propane
Federal, state and local authorities regulate the transportation, handling,
storage and sale of propane in order to protect consumers, employees, property
and the environment. The handling of propane in most regions of the United
States is governed by guidelines published by the National Fire Protection
Association in Pamphlets 54 and 58. These guidelines require that all
cylinders produced or recertified after September 30, 1998 and all grill
cylinders refilled after April 2002 must be fitted with an overfill prevention
device valve. Failure of our distributors to comply with these regulations
could subject us to potential governmental action for violation of such
regulations which could result in fines, penalties and/or injunctions.
Risks Associated with Convertible Note Conversions
The following risks are associated with the conversion of the $7,000,000 of
5% Convertible Notes we issued on September 23, 1999 ("Convertible Notes"):
. Because the variable conversion price of the Convertible Notes is a
function of the market price of our common stock at the time of
conversion, the lower the price of our common stock at the time the
holders convert, the greater the number of shares of common stock issued
upon conversion resulting in greater dilution of our stockholders;
. To the extent that a holder of a Convertible Note sells the common stock
issued upon conversion into the market, and disregarding the manner in
which such shares are sold as well as any other factors such as reactions
to our operating results and general market conditions which may be
operative in the market at such time, such sales may cause a decrease in
the market price of our common stock, which in turn, relative to
additional conversions of the Convertible Notes, would reduce the
variable conversion price and increase the number of shares of common
stock issued upon subsequent conversion of the Convertible Notes and
available for sale into the market;
. Short sales of our common stock may accompany conversions and sales of
common stock from conversions, which sales in the aggregate could cause
downward pressure upon the price of our common stock, excluding the
effect of other market factors possibly operative at the time; and
. Conversions of the Convertible Notes may result in substantial dilution
of the interests of the other holders of common stock.
. Our common stock could be delisted by the Nasdaq National Market in the
event that our stock price decreases below the $1 minimum bid price as
required by the Nasdaq National Market or we otherwise fail to satisfy
the minimum listing requirements of the Nasdaq National Market. Should
such a delisting extend for five or more consecutive trading days, a
triggering event would occur under the Convertible Notes allowing the
holders of the Convertible Notes to require us to redeem the outstanding
Convertible Notes.
. The term of the Convertible Notes is only two years. If we do not desire
to convert the notes into common stock we will be required to repay or
refinance the notes. We cannot be assured that we will have the cash
available to repay the Convertible Notes or that refinancing will be
available or that the such refinancing will be on favorable terms.
We May Be Limited In Our Use of Our Federal Net Operating Loss Carryforwards
As of July 31, 1999, we had federal net operating loss carryforwards
("NOLs"), subject to review by the Internal Revenue Service, totaling
approximately $18.3 million. A federal NOL can generally be carried back two
or three years and then forward fifteen or twenty years (depending on the year
in which the loss was incurred), and used to offset taxable income earned by a
company (and thus reduce its income tax liability). Currently there is no
limitation on our ability to use NOL's to reduce future income taxes. However,
if an "ownership change" as defined in Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"), occurs with respect to our capital
stock, our ability to use NOLs would be limited to specific annual amounts.
8
<PAGE>
Generally, an ownership change occurs if certain persons or groups increase
their aggregate ownership by more than 50 percentage points of our total
capital stock in any three-year period.
If an ownership change occurs, our ability to use NOLs to reduce income
taxes is limited to an annual amount based on the fair market value of our
capital stock immediately prior to the ownership change multiplied by the long-
term tax-exempt interest rate. The long-term tax-exempt interest rate is
published monthly by the IRS. The carryforward period to use NOLs is not
affected by the ownership change limitations. Our use of new NOLs arising after
the date of an ownership change would not be affected.
We issued a substantial number of shares of our common stock in connection
with our private placement of common stock which was conducted on September 7,
1999 and may issue additional shares on the exercise of outstanding warrants
and options as well as upon the conversion of our Convertible Notes. The
issuance of a significant number of shares of common stock could result in an
ownership change. If we were to experience such an ownership change we estimate
that our ability to use our NOLs could be delayed.
The extent of the actual future use of our federal NOL's is subject to
inherent uncertainty because it depends on the amount of taxable income we may
earn. We cannot give any assurance that we will have sufficient taxable income
in future years to use any of our federal NOL's before they would otherwise
expire.
Blue Rhino Distributors' Dependence on Management Information Systems
We depend on our management information systems ("MIS") to process orders,
manage inventory and accounts receivable collections, maintain distributor and
customer information, maintain cost-efficient operations and assist
distributors in delivering products on a timely basis. In addition, our staff
of six MIS professionals relies heavily on the support of Information
Management System Services ("IMSS"), a division of R.J. Reynolds Tobacco
Company. Any disruption in the operation of our MIS, the loss of employees
knowledgeable about such systems, the termination of our relationship with IMSS
or our failure to continue to effectively modify such systems as our business
expands could negatively affect our business.
Blue Rhino's Dependence on Trademarks, Proprietary Information and Copyrights
We consider our trademarks, particularly the Blue Rhino logo, including the
name, and the design of our product packaging, to be valuable to our business
and the establishment of our national branded cylinder exchange program. We
rely on a combination of copyright and trademark laws and other arrangements to
protect our proprietary rights and could incur substantial expense to enforce
our rights under copyright or trademark laws. The requirement to change any of
our trademarks, service marks or trade name could entail significant expense,
result in the loss of any goodwill associated with that trademark, service mark
or trade name, and impact our ability to apply for copyrights and additional
trademarks in the future.
Potential Negative Effect of Our Failure to Achieve Year 2000 Compliance
Certain of our MIS use two digit data fields which recognize dates using the
assumption that the first two digits are "19" (i.e., the number 00 is
recognized as the year 1900 rather than the year 2000). Therefore, our date
critical functions relating to the Year 2000 and beyond, such as sales,
distribution, inventory control and financial systems, may be negatively
affected unless we make changes to these computer systems. We expect that
upgrades to our MIS with respect to the Year 2000 issue will require capital
expenditures of approximately $25,000. In addition, the failure of parties with
whom we have a material relationship to achieve Year 2000 compliance could
cause an interruption in our business. It is still uncertain whether we can
resolve these issues in a cost-effective or timely manner or whether we will
incur significantly greater expense in resolving these issues.
9
<PAGE>
Unpredictable Propane Supplies and Costs
Our distributors purchase propane from natural gas providers and oil
refineries which produce propane as a by-product of the refining process. The
supply and price of propane fluctuates depending upon underlying natural gas
and oil prices and the ability of suppliers to deliver propane. A substantial
increase in propane prices could lead to decreased profit margins for
distributors and could impact their ability or desire to service our retail
accounts.
Blue Rhino's Dependence on Suppliers
To adequately service our retail accounts, our distributors need a
sufficient supply of cylinders and valves. There are only two major cylinder
suppliers and only five major valve suppliers in the U.S. market. The
implementation of National Fire Protection Association guidelines requiring the
introduction of valves with overfill prevention devices and growth in propane
grill sales and use could increase demand for cylinders and valves. If the
distributors were unable to obtain sufficient quantities of cylinders or
valves, delays or reductions in cylinder availability could occur which may
cause our business to suffer.
Management's Substantial Ownership of Blue Rhino
As of October 31, 1999, current executive officers, directors and entities
controlled by them beneficially owned, in the aggregate, approximately 46.2% of
our outstanding common stock. As a result, they can exert considerable voting
control in connection with matters requiring stockholder approval, including
election of directors and approval of significant corporate transactions,
provided that they vote together on such matters, and may have the effect of
delaying or preventing a change in control of Blue Rhino or impeding or
precluding transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of shares of common stock covered by this prospectus. See "Selling
Securityholders." If and when all or a part of the warrants are exercised and
the shares of common stock are issued to the selling securityholders, we will
receive the proceeds from the exercise of the warrants by the selling
securityholders, unless the selling securityholders exercise their warrants on
a cashless basis. Assuming the selling securityholders exercise all of their
warrants for cash, we will receive $5,662,402. We will use such proceeds for
working capital and other general corporate purposes.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common stock
having a par value of $0.001 per share and 20,000,000 shares of "blank check"
preferred stock having a par value of $0.001 per share. We are seeking the
approval of our stockholders at our annual meeting of stockholders scheduled
for December 21, 1999, to reduce the number of shares of authorized common
stock to 37,500,000 shares and the number of shares of preferred stock to
7,500,000. The following description of our capital stock and certain
provisions of our Second Amended and Restated Certificate of Incorporation (the
"Charter") and our by-laws is qualified in its entirety by the provisions of
the Charter and by-laws (which are included as exhibits to the Registration
Statement of which this prospectus is a part) and the General Corporation Law
of the State of Delaware (the "DGCL").
Common Stock
All outstanding shares of common stock are fully paid and nonassessable. The
holders of common stock are entitled to one vote for each share held of record
on all matters voted upon by stockholders and may not
10
<PAGE>
cumulate votes. Thus, the owners of a majority of the common stock outstanding
may elect all of the directors if they choose to do so, and the owners of the
balance of such shares would not be able to elect any directors. Subject to the
rights of holders of any future series of preferred stock that may be
designated, each share of outstanding common stock is entitled to participate
equally in any distribution of net assets made to the stockholders in a
liquidation, dissolution or winding up of Blue Rhino Corporation and is
entitled to participate equally in dividends if, as and when declared by our
board of directors. There are no redemption, sinking fund, conversion or
preemptive rights with respect to the shares of common stock. All shares of
common stock have equal rights and preferences.
Preferred Stock
Our board of directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to 20,000,000 shares of preferred stock and to determine the price,
rights, preferences and privileges of those shares. In addition, the terms of
the preferred stock and the rights of the holders of preferred stock may
adversely affect the rights of the holders of common stock. While we have no
present intention to issue shares of preferred stock, such issuance could have
the effect of making it more difficult for a third party to acquire a majority
of our outstanding voting stock. In addition, such preferred stock may have
other rights, including economic rights senior to the common stock, and, as a
result, the issuance of preferred stock could negatively impact the market
value of the common stock.
Convertible Notes
On September 23, 1999, the Company issued $7,000,000 of 5% Convertible Notes
(the "Convertible Notes") and warrants to purchase 332,203 shares of Common
Stock to two insitutional investors (the "Investors"). The following summary of
the material terms of the Convertible Notes is qualified by reference to the
full text of the underlying documents which are exhibits to the Company's Form
8-K filed on September 23, 1999.
Conversion
The principal and accrued interest on the Convertible Notes is convertible,
in whole or in part, by dividing the amount to be converted by the lesser of
(i) a "fixed conversion price" or (ii) a "variable conversion price." The fixed
conversion price shall equal $20.00 per share. The variable conversion price
shall equal 95% of the dollar volume-weighted average price for the Common
Stock on the Nasdaq National Market (as reported by Bloomberg Financial Markets
through its "Volume at Price" function) on the conversion date (the "Variable
Conversion Price"). For a period of 18 months, the Convertible Notes may not be
converted unless the Company, subject to certain exceptions, requires
conversion, or:
. our common stock is not listed or quoted on the Nasdaq National Market or
New York Stock Exchange, or has been suspended from trading for more than
one day,
. a change of control or Triggering Event or event of default shall have
occurred or be pending,
. we issue or sell or are deemed to have issued or sold any convertible
securities that are convertible into or exercisable or exchangeable for
shares of common stock at a variable price,
. we fail to pay any redemption amount or issue any shares upon a
conversion of the Convertible Notes or exercise of the related warrants,
. we issue additional shares of common stock or securities convertible into
common stock other than (i) up to 500,000 shares issuable in connection
with acquisitions at a value per share equal or greater than the market
price of the common stock, (ii) shares issuable upon the exercise of
employee, director and distributor options and outstanding warrants, or
. with respect to the conversion of up to 25% of the total amount
outstanding on the Convertible Notes, if on or after December 23, 2000 at
least 75% of the aggregate original principal amounts of all Convertible
Notes remains outstanding.
11
<PAGE>
Upon the occurrence of any events outlined in the bullet points above, the
holders of the Convertible Notes may elect to convert all or any portion of the
Convertible Notes into common stock. "Triggering Events" include the Company's:
. failure to register the shares issuable upon conversion of the
Convertible Notes or related warrants on or before February 25, 2000;
. failure to maintain the effectiveness of such registration statement,
. the common stock not being listed or quoted on the Nasdaq National Market
or the New York Stock Exchange,
. failure to issue any common stock upon conversion as required,
. inability to issue any shares of common stock as a result of restrictions
on the issuance of shares under Nasdaq rules; or
. failure to obtain the consent of its stockholders to the issuance of
common stock upon conversion of the Convertible Notes and related
warrants before January 31, 2000.
Upon the occurrence of a Triggering Event, the holders of Convertible Notes
could require the Company to convert the balance of their Convertible Notes
into common stock or to redeem all of the remaining principal and interest at a
price equal to 120% of the outstanding balance. In the event that the Company
or its transfer agent does not timely effect a conversion of the Convertible
Notes, the Company is subject to certain liquidated damage penalties including
reductions in the variable conversion price, adjustments to the applicable
fixed conversion price and certain other penalties as more fully described in
the Convertible Notes.
The holders of the Convertible Notes are prohibited from converting their
notes if, after giving effect to such conversion, the holder would beneficially
own at the time of conversion in excess of 4.99% of the outstanding shares of
common stock of the Company following such conversion. In addition, unless
approved by our stockholders, we are not required to issue shares of our common
stock upon conversion of the Convertible Notes if such issuance would cause the
total number of shares issued at a conversion price lower than the market price
of our common stock to be greater than 1,729,530 shares, which equals 20% of
our common stock outstanding prior to September 23, 1999. At the next annual
meeting of our stockholders scheduled for December 21, 1999, we shall seek the
approval of our stockholders to issue the total number of shares issuable upon
conversion of the Convertible Notes even if such number of shares exceed 20% of
our common stock outstanding prior to our September 1999 private placements.
Additional Closings
In the future, the Company may require the Investors to purchase in up to
two additional closings Convertible Notes in an amount equal in the aggregate
to at least $1.0 million but not more than $4.9 million if certain conditions
are met. The Investors' obligation to purchase additional Convertible Notes is
conditioned upon:
. the effectiveness of a registration statement with the Commission
covering the resale of the shares of common stock issuable upon
conversion or exercise of the Convertible Notes and the Warrants issued
at the initial closing and shares to be issued upon the conversion of any
notes or exercise of warrants issued at any subsequent closing,
. the Company's common stock is listed on the the Nasdaq National Market or
the New York Stock Exchange,
. the Company shall not have consummated a change of control or defaulted
under the terms of the Securities Purchase Agreement or Convertible
Notes,
. the stock price of the Common Stock shall be at least $8.50 per share
(adjusted for stock splits, combinations and recapitalizations effected
after the initial closing date),
12
<PAGE>
. we shall have converted at least $1.75 million of the balance of the
initial Convertible Notes into common stock,
. we shall have received stockholder approval of the issuance of the common
stock issuable upon the conversion of the Convertible Notes and exercise
of the related warrants as required and
. the satisfaction of certain other terms and conditions, all as more fully
set forth in the Securities Purchase Agreement.
Interest
The outstanding principal balance on the Convertible Notes bears interest at
5% per annum. Interest accrues until paid in full. After and during the
continuance of an event of default, the Convertible Notes bear a default rate
of interest equal to 18%.
Registration of Shares; Possible Adjustment of Conversion Price and Exercise
Price
We are required to register with the Commission the resale of at least 200%
of the number of shares of common stock issuable upon conversion of the
Convertible Notes and exercise of the related warrants. The number of shares is
based on the Conversion Price at the time of the filing of the registration
statement. We have agreed to use our best efforts to file the initial
registration statement as soon as possible but no later than November 21, 1999
and have the registration statement declared effective by the Commission no
later than February 4, 2000. In addition, during the period the registration
statement is effective, we have agreed that the resale of at least 150% of the
shares of common stock issuable upon conversion of the Convertible Notes and
the resale of at least 100% of the shares of common stock issuable upon
exercise of the related warrants will remain registered under the registration
statement.
Other Terms
Under the transaction documents relating to the Convertible Notes we have
made or undertaken certain other representations, warranties, agreements, and
indemnification obligations. The operative agreements also contain (i) a right
of first refusal in favor of the investors which applies to certain of our
private equity financings and (ii) prohibit us from entering into certain
related party transactions. The Convertible Notes are also subject to anti-
dilution provisions which are triggered in the event of certain stock splits,
recapitalizations or other dilutive transactions, as well as issuances of
common stock at a price below the market price or the fixed conversion price in
effect, or the issuance of warrants, options, rights, or convertible securities
which have an exercise price or conversion price less than the market price on
the date of issuance or the fixed conversion price, other than for certain
previously outstanding securities and certain excluded securities. In the event
that we issue securities in the future which have a conversion price or
exercise price which varies with the market price and the terms of such
variable price are more favorable than the variable conversion price in the
Convertible Notes, the purchasers may elect to substitute the more favorable
variable price when making conversions of the Convertible Notes. Finally, the
Convertible Notes are subordinate subject to certain exceptions, to up to $25.0
million of the Company's bank indebtedness.
Warrants
We have four outstanding series of warrants to purchase common stock.
Following is a description of these series:
1998 Warrants
In January 1998, we issued warrants to purchase 81,913 shares of common
stock at an exercise price of $13.00 per share to the four purchasers of $3.25
million of 10.5% promissory notes. These warrants are
13
<PAGE>
exercisable until December 31, 2008 and are subject to adjustment upon the
subdivision or reclassification of the shares issuable upon the exercise of the
warrants.
Series 1999-A Warrants
On September 7, 1999, we issued warrants to purchase 343,383 shares of
common stock at an exercise price of $8.48 per share to the purchasers of
981,119 shares of our common stock for an aggregate purchase price of
approximately $7.2 million. The exercise price per share equals 115% of the
closing price for our common stock on the last trading day prior the issuance
of the warrants. These warrants are exercisable until September 7, 2004 and are
subject to adjustment upon the subdivision or reclassification of the shares
issuable upon the exercise of the warrants. 248,469 of the shares issuable upon
the exercise of these warrants may be offered by the selling securityholders
pursuant to this prospectus.
Bison Valve Warrants
On September 17, 1999, we issued warrants to purchase 100,000 shares of
common stock at an exercise price of $7.40 per share as a part of the
consideration for our acquisition of certain assets of Bison Valve, L.L.C. The
exercise price per share equals the closing price for our common stock on the
last trading day prior the issuance of the warrants. These warrants are
exercisable until September 17, 2004 and are subject to adjustment upon the
subdivision or reclassification of the shares issuable upon the exercise of the
warrants. All of the shares issuable upon the exercise of these warrants may be
offered by the selling securityholders pursuant to this prospectus.
Convertible Note Warrants
On September 23, 1999, we issued warrants to purchase in the aggregate
332,203 shares of common stock at an exercise price of $8.48 per share to the
purchasers of our Convertible Notes. The warrants expire on September 23, 2004
and are subject to certain anti-dilution provisions in the event we sell common
stock or securities convertible or exercisable into common stock at a price
less than the exercise price of such warrants or the market price of the common
stock. In connection with any additional closings of the Convertible Notes, we
must issue warrants to purchase common stock, exercisable for five years, which
at the time of issuance has a market value (as determined using the average of
the closing share price for the ten days prior to the closing) equal to 35% of
the principal value of the Convertible Notes sold at such additional closing.
Certain Provisions of Delaware Law
Business Combination Provision
We are subject to the provisions of Section 203 of the DGCL. Subject to
certain exceptions, Section 203 prohibits a publicly held Delaware corporation
from engaging in a "business combination" with an "interested stockholder" for
a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the interested stockholder attained
such status with the approval of the board of directors or unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, assets sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
Limitation on Liability
As permitted by the provisions of the DGCL, the Charter eliminates, in
certain circumstances, the monetary liability of our directors for a breach of
their fiduciary duty as directors. These provisions do not eliminate the
liability of a director: (i) for a breach of a director's duty of loyalty to us
or our stockholders, (ii) for acts or omissions by a director not in good faith
or which involve intentional misconduct or a knowing
14
<PAGE>
violation of law, (iii) for liability arising under Section 174 of the DGCL
(relating to the declaration of dividends and purchase or redemption of shares
in violation of the DGCL) or (iv) for any transaction from which the director
derived an improper personal benefit. In addition, these provisions do not
eliminate the liability of a director for violations of federal securities
laws, nor do they limit our rights or our stockholders' rights, in appropriate
circumstances, to seek equitable remedies such as injunctive or other forms of
non-monetary relief. Such remedies may not be effective in all cases. If the
DGCL is amended to authorize a further limitation or elimination of the
liability of directors or officers, then the liability of one of our directors
or officers shall, in addition to the limitation of personal liability
provided in the Charter, be limited or eliminated to the fullest extent
permitted by the DGCL, as from time to time amended.
Anti-takeover Effect of Provisions of Charter and By-laws
Certain provisions of our Charter and by-laws could discourage potential
acquisition proposals and could delay or prevent a change in control of Blue
Rhino. These provisions are intended to enhance the likelihood of continuity
and stability in the composition of our board of directors and in the policies
formulated by our board of directors and to discourage certain types of
transactions that may involve an actual or threatened change in our control,
such as an unsolicited acquisition proposal. Because these provisions could
have the effect of discouraging a third party from acquiring control of Blue
Rhino, they may inhibit fluctuations in the market price of shares of common
stock that could otherwise result from actual or rumored takeover attempts
and, therefore could deprive stockholders of an opportunity to realize a
takeover premium. These provisions also may have the effect of limiting the
price that certain investors might be willing to pay in the future for shares
of our common stock and of preventing changes in our management.
Election and Removal of Directors. Our board of directors is divided into
three classes of directors serving staggered three-year terms, thereby
preventing a change in a majority of the Board in any single year. Ordinary
vacancies in the board of directors may be filled by the affirmative vote of
the directors then in office.
Stockholder Consent. The Charter provides that stockholder action can be
taken only at an annual or special meeting of stockholders and cannot be taken
by written consent in lieu of a meeting. In addition, the Charter provides
that, except as otherwise required by law, special meetings of our
stockholders can be called only pursuant to a resolution adopted by a majority
of our board of directors, our Chairman of the Board or our President.
Stockholders desiring to nominate persons to be elected as our directors or to
have other business placed on the agenda of an annual meeting of our
stockholders must give written notice to the board of directors of such
request 120 days in advance of the anniversary date of the release of our
proxy statement to stockholders in connection with the preceeding year's
annual meeting.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock is LaSalle Bank,
National Association, Chicago, Illinois.
SELLING SECURITYHOLDERS
The table below lists the selling securityholders and other information
regarding the beneficial ownership of our common stock by each of the selling
securityholders as of November 8, 1999. Of the 3,213,349 shares of common
stock offered by the selling securityholders:
. Up to 1,822,744 shares are available for the resale of shares issuable
upon the conversion of principal and accrued interest on our Convertible
Promissory Notes which we issued on September 23, 1999;
. Up to 332,203 shares are issuable upon the exercise of warrants issued to
the purchasers of our Convertible Notes;
15
<PAGE>
. Up to 248,469 shares are issuable upon the exercise of warrants issued to
the purchasers of our units consisting of common stock and warrants in a
private placement completed on September 7, 1999;
. Up to 100,000 shares are issuable upon the exercise of warrants issued in
connection with an acquisition of assets consummated on September 17,
1999; and
. Up to 709,933 shares currently held by the selling securityholders.
The first column of the table sets forth the number of shares benefically
held by each selling securityholder on November 8, 1999, including the number
of shares which would have been held by each selling securityholder on
November 8, 1999 upon conversion of all principal and accrued interest through
November 8, 1999 on our Convertible Notes and warrants then held by that
selling securityholder without regard to restrictions on the number of shares
that a selling securityholder may own at any time.
Our conversion calculations with respect to the Convertible Notes assume a
conversion price per share of approximately 7.529, which represents 95% of the
average of the dollar volume-weighted average price for our common stock on
the Nasdaq National Market on November 8, 1999 as reported by Bloomberg
Financial Markets through its "Volume at Price" function. The shares issuable
upon the conversion of the Convertible Notes are subject to fluctuations from
time to time based on changes in the price of our common stock. The selling
securityholders who hold Convertible Notes are offering the shares of common
stock that they may acquire on conversion of our Convertible Notes and
exercise of the related warrants, as indicated in the third column. The total
number of shares which we have registered for resale on conversion of the
Convertible Notes represent approximately 200% of the shares that would have
been issuable to the selling securityholders on November 8, 1999 upon
conversion of all of the Convertible Notes plus 332,203 shares issuable upon
the exercise of warrants issued to such selling securityholders. The
information provided in the table below has been obtained from the selling
securityholders.
<TABLE>
<CAPTION>
Percentage
of Shares
Shares Owned Shares Shares Owned Beneficially
Beneficially Offered Beneficially Owned After
Prior to the by this After this this
Selling Securityholder Offering (1) Offering Offering (1) Offering (2)
- ---------------------- ------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
HFTP Investment L.L.C.(3)..... 905,602 1,573,916 0 *
Leonardo, L.P.(4)............. 362,240 629,566 0 *
Billy D. Prim(5).............. 1,377,181 183,050 1,194,131 13.6
Watson Strategic Investments,
L.P.(6)...................... 183,050 183,050 0 *
Michael A. Waters(7).......... 100,000 100,000 0 *
Howard R. Conant(8)........... 91,525 91,525 0 *
Conant Family Partnership(9).. 91,525 91,525 0 *
Joseph A. Cusimano IRA(10).... 91,525 91,525 0 *
Peter H. Huizenga(11)......... 45,762 45,762 0 *
Donald P. Kelly Revocable
Trust(12).................... 45,762 45,762 0 *
KMK Associates, L.P.(13)...... 45,762 45,762 0 *
Lunn Partners Multiple
Opportunities Portfolio,
L.P.(14)..................... 45,762 45,762 0 *
Lunn Partners Small Cap Value
Equity Fund, L.P.(15)........ 45,762 45,762 0 *
Peer Pedersen(16)............. 93,487 45,762 45,725 *
Richard A. Brenner(17)........ 29,635 18,304 11,331 *
Steven D. Devick(18).......... 359,551 18,304 341,247 3.9
Jerald D. and Sidney A.
Shadley(19).................. 16,471 4,725 11,746 *
Mark Castaneda(20)............ 19,676 1,822 17,854 *
</TABLE>
- --------
*Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Commission. In computing the number of shares beneficially owned by a
person and the percentage ownership of that person, shares of
16
<PAGE>
common stock subject to options, warrants or convertible securities held
by that person that are currently convertible or exercisable or
convertible or exercisable within 60 days of the date hereof are deemed
outstanding, subject to the limitation on the conversion of our
Convertible Notes which prevents the holders thereof from holding over
4.99% of our outstanding common stock at any time. Except as indicated in
the footnotes to this table and as provided pursuant to applicable
community property laws, the stockholders named in the table have sole
voting and investment power with respect to the shares set forth opposite
each stockholder's name.
(2) Percentage of Shares Beneficially Owned After this Offering reflects
8,647,654 shares outstanding as of November 8, 1999.
(3) Shares Owned Beneficially Prior to the Offering includes 668,314 shares of
common stock issuable upon the conversion of a Convertible Note and
237,288 shares issuable upon the exercise of a warrant issued on September
23, 1999. Promethean Asset Management, L.L.C. ("Promethean") is the
investment manager of HFTP Investments LLC ("HFTP") and consequently has
voting control and investment discretion over securities held by HFTP.
Promethean is indirectly controlled by Mr. James F. O'Brien. Mr. O'Brien
and Promethean disclaim beneficial ownership of the shares beneficially
owned by HFTP.
(4) Shares Owned Beneficially Prior to the Offering includes 267,325 shares of
common stock issuable upon the conversion of a Convertible Note and 94,915
shares issuable upon the exercise of a warrant issued on September 23,
1999. Angelo Gordon & Co., L.P. ("Angelo Gordon") is the general partner
of Leonardo, L.P. A.G. Partners, L.P. is the sole general partner of
Angelo Gordon. Mr. John M. Angelo, the Chief Executive Officer of Angelo
Gordon, and Mr. Michael L. Gordon, the Chief Operating Officer of Angelo
Gordon, are the sole general partners of A.G. Partners, L.P.
(5) Includes 1,030,076 shares of common stock held by Mr. Prim of which
135,593 shares are offered hereby, 47,457 shares issuable upon the
exercise of a warrant issued in September 1999 all of which are offered
hereby, 72,180 shares of common stock issuable upon the exercise of vested
options held by Mr. Prim, 216,127 shares of common stock owned by American
Oil and Gas, Inc., of which Mr. Prim owns 56% of the issued and
outstanding shares and has voting control, 7,561 shares of common stock
beneficially owned by Debbie W. Prim, 1,890 shares of common stock
beneficially owned by Debbie W. Prim as trustee on behalf of Sarcanda
Westmoreland and 1,890 shares of common stock beneficially owned by Debbie
W. Prim as trustee on behalf of Anthony G. Westmoreland. Mr. Prim is the
Chairman, President and Chief Executive Officer of Blue Rhino.
(6) Includes 135,593 shares of common stock held by Watson Strategic
Investments, L.P. all of which are offered hereby and 47,457 shares
issuable upon the exercise of a warrant issued in September 1999, all of
which are offered hereby. BDF Management, Inc. is the general partner of
Watson Strategic Investments, L.P. Arthur J. Watson, Jr. is the president
of BDF Management, Inc. and has voting and investment control over the
shares held by Watson Strategic Investments, L.P.
(7) Includes 100,000 shares of common stock issuable upon the exercise of a
warrant issued in September 1999.
(8) Includes 67,797 shares of common stock all of which are offered hereby and
23,728 shares issuable upon the exercise of a warrant issued in September
1999, all of which are offered hereby.
(9) Includes 67,797 shares of common stock all of which are offered hereby and
23,728 shares issuable upon the exercise of a warrant issued in September
1999, all of which are offered hereby. Paul A. Vishney is the trustee of
each of the trusts which are general partners of the Conant Family
Partnership.
(10) Includes 67,797 shares of common stock all of which are offered hereby
and 23,728 shares issuable upon the exercise of a warrant issued in
September 1999, all of which are offered hereby.
(11) Includes 33,898 shares of common stock all of which are offered hereby
and 11,864 shares issuable upon the exercise of a warrant issued in
September 1999, all of which are offered hereby.
(12) Includes 33,898 shares of common stock all of which are offered hereby
and 11,864 shares issuable upon the exercise of a warrant issued in
September 1999, all of which are offered hereby. Donald P. Kelly is the
trustee of the Donald P. Kelly Revocable Trust.
17
<PAGE>
(13) Includes 33,898 shares of common stock all of which are offered hereby and
11,864 shares issuable upon the exercise of a warrant issued in September
1999, all of which are offered hereby. Patrick J. Kelly and Thomas N.
Kelly are the general partners of KMK Associates, L.P.
(14) Includes 33,898 shares of common stock all of which are offered hereby and
11,864 shares issuable upon the exercise of a warrant issued in September
1999, all of which are offered hereby. Lunn Partners, LLC ("Lunn
Partners") is the general partner of Lunn Partners Multiple Opportunities
Portfolio, L.P. Robert J. Lunn is the manager of Lunn Partners and has
shared voting and investment control over these shares. Mr. Lunn is a
nominee for election as a director of Blue Rhino at the next annual
meeting of our stockholders.
(15) Includes 33,898 shares of common stock all of which are offered hereby and
11,864 shares issuable upon the exercise of a warrant issued in September
1999, all of which are offered hereby. Lunn Partners is the general
partner of Lunn Partners Small Cap Value Equity Fund, L.P. Robert J. Lunn
is the manager of Lunn Partners and has shared voting and investment
control over these shares. Mr. Lunn is a nominee for election as a
director of Blue Rhino at the next annual meeting of our stockholders.
(16) Includes 81,623 shares of common stock of which 33,898 shares are offered
hereby and 11,864 shares issuable upon the exercise of a warrant issued in
September 1999, all of which are offered hereby. Mr. Pedersen is a
principal in the law firm of Pedersen & Houpt, Professional Corporaiton,
which serves as counsel to Blue Rhino.
(17) Includes 22,224 shares of common stock, of which 13,559 are offered hereby
and 4,745 shares issuable upon the exercise of a warrant issued in
September 1999, all of which are offered hereby and 2,667 shares issuable
upon the exercise of options which will vest on December 30, 1999. Mr.
Brenner is one of our directors.
(18) Includes 13,559 shares owned by Mr. Devick, all of which are offered
hereby, 4,745 shares issuable upon the exercise of warrants issued in
September 1999, all of which are offered hereby, 3,781 shares issuable
upon the exercise of vested options held by Mr. Devick, 1,333 shares
issuable upon the exercise of options which will vest on December 21,
1999, 2,667 shares issuable upon the exercise of options which will vest
on December 30, 1999 and 333,466 shares owned beneficially by Platinum
Venture Partners I, L.P. the general partner of which is devine
Interventures, Inc. Mr. Devick is a director of devine Interventures, Inc.
and one of our directors.
(19) Includes 3,500 shares held jointly by Jerald and Sidney Shadley, all of
which are offered hereby, 1,225 shares issuable upon the exercise of
warrants issued in September 1999, all of which are offered hereby, 2,000
shares owned by Mr. Shadley and 6,746 shares of common stock issuable upon
the exercise of vested options held by Mr. Shadley. Mr. Shadley is our
Vice President, Sales.
(20) Includes 2,850 shares of common stock owned by Mr. Castaneda of which
1,350 are offered hereby, 472 shares issuable upon the exercise of
warrants issued in September 1999, all of which are offered hereby and
16,354 shares of common stock issuable upon the exercise of vested options
held by Mr. Castaneda. Mr. Castaneda is our Secretary, Chief Financial
Officer and is one of our directors.
We are registering the shares for resale by the selling securityholders in
accordance with registration rights we have granted to the selling
securityholders. We will pay the registration and filing fees, printing
expenses, listing fees, blue sky fees, if any, and fees and disbursements of
our counsel and the selling securityholders' counsel in connection with this
offering, but the selling securityholders will pay any underwriting discounts,
selling commissions and similar expenses relating to the sale of the shares. In
addition, we have agreed to indemnify the selling securityholders, and certain
affiliated parties against certain liabilities, including liabilities under the
Securities Act of 1933 (the "Securities Act"), in connection with this
offering. The selling securityholders have agreed to indemnify us and our
directors and officers, as well as any person that controls us, against certain
liabilities, including certain liabilities under the Securities Act. The
position of the Commission is that indemnification of our directors or
officers, or persons that control us for liabilities under the Securities Act
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
18
<PAGE>
PLAN OF DISTRIBUTION
The selling securityholders (or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest) may sell
shares from time to time in public transactions, on or off the Nasdaq National
Market, or private transactions, at prevailing market prices or at privately
negotiated prices, including but not limited to, one or any combination of the
following types of transactions:
. ordinary brokers' transactions;
. transactions involving cross or block trades or otherwise on the Nasdaq
National Market;
. purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this prospectus;
. ""at the market" to or through market makers or into an existing market
for the common stock;
. in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
. through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
. in privately negotiated transactions; or
. to cover short sales.
In effecting sales, brokers or dealers engaged by the selling
securityholders may arrange for other brokers or dealers to participate in the
resales. The selling securityholders may enter into hedging transactions with
broker-dealers, and in connection with those transactions, broker-dealers may
engage in short sales of the shares. The selling securityholders also may sell
shares short and deliver the shares to close out such short positions. The
selling securityholders also may enter into option or other transactions with
broker-dealers that require the delivery to the broker-dealer of the shares,
which the broker-dealer may resell pursuant to this prospectus. The selling
securityholders also may pledge the shares to a broker-dealer or financial
institution, and upon a default, the broker-dealer or financial institution
may effect sales of the pledged shares pursuant to this prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling securityholders in amounts
to be negotiated in connection with the sale. The selling securityholders and
any participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting
compensation.
Information as to whether underwriters who the selling securityholders may
select, or any other broker-dealer, is acting as principal or agent for the
selling securityholders, the compensation to be received by underwriters that
the selling securityholders may select or by any broker-dealer acting as
principal or agent for the selling securityholders, and the compensation to be
paid to other broker-dealers, in the event the compensation of such other
broker-dealers is in excess of usual and customary commissions, will, to the
extent any such information exists or is required, be set forth in a
supplement to this prospectus. Any dealer or broker participating in any
distribution of the shares may be required to deliver a copy of this
prospectus, including a prospectus supplement, if any, to any person who
purchases any of the shares from or through such dealer or broker.
We have advised the selling securityholders that during such time as they
may be engaged in a distribution of the shares they are required to comply
with Regulation M promulgated under the Exchange Act. With certain exceptions,
Regulation M precludes any selling securityholder, any affiliated purchasers
and any broker-dealer or other person who participates in a distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security that is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases
made in order to stabilize the price of a security in connection with the
distribution of that security. All of the foregoing may affect the
marketability of the common stock.
19
<PAGE>
LEGAL MATTERS
The legality of the common stock being offered hereby will be passed upon
for us by Pedersen & Houpt, a Professional Corporation, Chicago, Illinois. John
H. Muehlstein, one of our directors, is also a principal of Pedersen & Houpt.
EXPERTS
The consolidated financial statements of Blue Rhino Corporation appearing in
Blue Rhino Corporation's Form 10-K for the year ended July 31, 1999, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements incorporated in this registration
statement by reference in our Form 10-K for the two fiscal years in the period
ended July 31, 1998 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,261,885 Shares
[Blue Rhino Logo Appears Here]
COMMON STOCK
----------------
PROSPECTUS
----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of fees and
expenses payable in connection with the issuance and distribution of the
common stock pursuant to the prospectus contained in this registration
statement. We will pay all of these expenses.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.............. $ 7,427
Nasdaq Listing Fee*.............................................. $17,500
Printing and engraving expenses**................................ $10,000
Legal fees and expenses**........................................ $15,000
Accounting fees and expenses**................................... $10,000
Miscellaneous**.................................................. $ 1,073
-------
Total........................................................ $61,000
=======
</TABLE>
- --------
*Previously Paid.
**Estimated.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") authorizes
indemnification of directors, officers, employees and agents of Blue Rhino
Corporation (the "Company"); allows the advancement of costs of defending
against litigation; and permits companies incorporated in Delaware to purchase
insurance on behalf of directors, officers, employees and agents against
liabilities whether or not in the circumstances such companies would have the
power to indemnify against such liabilities under the provisions of the
statute. The Company's Second Amended and Restated Certificate of
Incorporation ("Charter") provides that the Company will indemnify its
directors and officers to the fullest extent permitted by law.
Under the provisions of the Company's Charter, any director or officer who,
in his or her capacity as such, is made or threatened to be made a party to
any suit or proceeding shall be indemnified if the Board of Directors
determines such director or officer acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The Company will
not however indemnify any director or officer where such director or officer:
(a) breaches his or her duty of loyalty to the Company or its stockholders;
(b) fails to act in good faith or engages in intentional misconduct or knowing
violation of law; (c) authorizes payment of an unlawful dividend or stock
repurchase or redemption; or (d) obtains an improper personal benefit. While
liability for monetary damages has been eliminated, equitable remedies such as
injunctive relief or recission remain available. In addition, a director is
not relieved of his or her responsibilities under any other law, including the
federal securities laws.
Indemnification under the Company's Charter and Amended and Restated By-
laws ("By-laws") includes payment by the Company of expenses in defending an
action, suit or proceeding in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by the indemnified party to
repay such advance if it is ultimately determined that such person is not
entitled to indemnification under the Charter, which undertaking may be
accepted without reference to the financial ability of such person that makes
such repayments. The Company is not responsible for the indemnification of any
person seeking indemnification in connection with a proceeding initiated by
such person unless the initiation was approved by the Board of Directors of
the Company. The Charter and the DGCL further provide that such
indemnification is not exclusive of any other rights to which such individuals
may be entitled under the Charter, the Bylaws, any agreement, any vote of
stockholders or disinterested directors, or otherwise. The Company intends to
obtain directors and officers insurance covering its executive officers and
directors.
II-1
<PAGE>
Insofar as indemnification by the Company for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant tot he foregoing provisions, the Company has been
advised that in the opinion of the Securities and Exchange Commission (the
"Commission"), such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
Item 16. Exhibits and Financial Statement Schedules
The exhibits to the Registration Statement are listed in the Exhibit Index
which appears elsewhere in this Registration Statement and is hereby
incorporated herein by reference.
All other schedules are omitted because of the absence of the condition
under which they are required or because the information is included in the
consolidated financial statements or notes thereto.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include
any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration, by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by
reference to the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as the Company may be permitted to indemnify directors,
officers and controlling persons of the Company for liabilities arising
under the Securities Act pursuant to the provisions described under
Item 14 above or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by
a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted
against the Company by such director, officer, or controlling person in
connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Winston-Salem, North Carolina, on November 11, 1999.
Blue Rhino Corporation
/s/ Billy D. Prim
By:__________________________________
Billy D. Prim
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement, has been signed below by the following persons in
the capacities indicated on November 11, 1999
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Billy D. Prim Chairman of the Board, President and Chief
___________________________________________ Executive Officer (Principal Executive
Billy D. Prim Officer)
/s/ Mark Casteneda Secretary, Chief Financial Officer and
___________________________________________ Director (Principal Financial and
Mark Casteneda Accounting Officer)
/s/ Andrew J. Filipowski Vice Chairman of the Board
___________________________________________
Andrew J. Filipowski
/s/ Craig J. Duchossois Director
___________________________________________
Craig J. Duchossois
/s/ Steven D. Devick Director
___________________________________________
Steven D. Devick
/s/ John H. Muehlstein Director
___________________________________________
John H. Muehlstein
/s/ Richard A. Brenner Director
___________________________________________
Richard A. Brenner
</TABLE>
II-3
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S> <C>
3.1 Second Amended and Restated Certificate of Incorporation of
the Company, incorporated by reference to Exhibit 3.1 to the
Company's Report on Form 10-Q dated July 2, 1998.
3.2 Amended and Restated Bylaws of the Company, incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-1 dated May 18, 1998.
4.1 Form of Certificate of Common Stock of the Company,
incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 dated May 18, 1998.
4.2 Registration Rights Agreement among the Company and the
purchasers of Common Stock and Warrants dated September 7,
1999 incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated September 23, 1999.
4.3 Registration Rights Agreement among the Company and the Buyers
of its Convertible Notes dated September 22, 1999 incorporated
by reference to Exhibit 4.2 to the Company's Current Report on
Form 8-K dated September 23, 1999.
4.4 Amendment to Amended and Restated Registration Rights
Agreement among the Company and certain holders of its common
stock dated September 7, 1999 incorporated by reference to
Exhibit 4.4 to the Company's Current Report on Form 8-K dated
September 23, 1999.
4.5 Form of Warrant to Purchase Common Stock of the Company issued
to purchasers of the Company's Common Stock in its private
offering dated September 7, 1999 incorporated by reference to
Exhibit 4.4 to the Company's Current Report on Form 8-K dated
September 23, 1999.
4.6 Form of Warrant to Purchase Common Stock of the Company issued
to purchasers of the Company's Convertible Notes incorporated
by reference to Exhibit 4.5 to the Company's Current Report on
Form 8-K dated September 23, 1999.
4.7 Form of Warrant issued to Michael A. Waters dated September
17, 1999 incorporated by reference to Exhibit 4.6 to the
Company's Current Report on Form 8-K dated September 23, 1999.
5.1 Legal Opinion of Pedersen & Houpt, P.C.
10.1(a) Loan Agreement, dated as of December 31, 1998, between the
Company and NationsBank, N.A., incorporated by reference to
Exhibit 10.1(a) to the Company's Registration Statement on
Form S-1 dated January 15, 1999.
10.1(b) Security Agreement, dated as of December 31, 1998 between the
Company and NationsBank, N.A., incorporated by reference to
Exhibit 10.1(b) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 dated January 15, 1999.
10.1(c) Promissory Note, dated as of December 31, 1998 between the
Company and NationsBank, N.A., incorporated by reference to
Exhibit 10.1(c) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 dated January 15, 1999.
10.1(d) Promissory Note, dated as of December 31, 1998 between the
Company and NationsBank, N.A., incorporated by reference to
Exhibit 10.1(d) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 dated January 15, 1999.
10.1(e) Amendment to Loan Agreement dated June 14, 1999 between the
Company and NationsBank, N.A. incorporated by reference to
Exhibit 10.1(e) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 dated July 21, 1999.
10.2 Note Purchase Agreement, dated as of January 1, 1998, among
the Company and Craig J. Duchossois, Andrew Filipowski, James
Liautaud and Lennard Carlson, incorporated by reference to
Exhibit 10.2 to the Company's Registration Statement on Form
S-1 dated May 18, 1998.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S> <C>
10.3(a) Asset Purchase Agreement, dated as of December 9, 1997,
between the Company and Bison Propane Bottle Exchange, LLC,
incorporated by reference to Exhibit 10.4(a) to the Company's
Registration Statement on Form S-1 dated May 18, 1998.
10.3(b) First Amendment to the Asset Purchase Agreement, dated as of
December 10, 1997, between the Company and Bison Propane
Bottle Exchange, LLC, incorporated by reference to Exhibit
10.4(b) to the Company's Registration Statement on Form S-1
dated May 18, 1998.
10.4 Multi-Draw Convertible Secured Promissory Note, dated as of
February 12, 1998, by Bison Valve, L.L.C. to the Company,
incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1 dated May 18, 1998.
10.5 Collateral Assignment of License Agreement, dated as of
February 12, 1998, by Bison Valve, L.L.C. to the Company,
incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-1 dated May 18, 1998.
10.6(a) Form of Distribution Agreement of the Company and Its
Distributors, incorporated by reference to Exhibit 10.7(a) to
the Company's Registration Statement on Form S-1 dated May 18,
1998.
10.6(b) Form of Sublease of Personal Property between the Company and
Its Distributors, incorporated by reference to Exhibit 10.7(b)
to the Company's Registration Statement on Form S-1 dated May
18, 1998.
10.7(a) Form of Security Agreement to Secure the Sale of Cylinders
between the Company and Its
Distributors, incorporated by reference to Exhibit 10.8(a) to
the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.7(b) Form of Promissory Note Evidencing the Sale of Cylinders
between the Company and Its
Distributors, incorporated by reference to Exhibit 10.8(b) to
the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.8 Amended and Restated Stock Option Plan for Non-employee
Directors of the Company, incorporated by reference to Exhibit
10.9 to the Company's Registration Statement on Form S-1 dated
January 5, 1999.
10.9 Distributor Stock Option Plan of the Company, incorporated by
reference to Exhibit 10.13 to the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.10 1994 Stock Incentive Plan of the Company, incorporated by
reference to Exhibit 10.14 to the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.11 Amended and Restated Registration Rights Agreement, dated as
of March 1, 1997, among the Company, Forsythe/Lunn Technology
Partners, L.L.C., Platinum Propane Holding, L.L.C., the
Purchasers of Units pursuant to the Unit Purchase Agreement
dated October 11, 1995 and the Purchasers of the Company's
Series A Convertible Participating Preferred Stock,
incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-1 dated May 18, 1998.
10.12 1998 Stock Incentive Plan of the Company, incorporated by
reference to Exhibit 10.18 to the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.13 Real Estate Lease between the Company and Rhino Real Estate,
L.L.C. dated as of January 1, 1999, incorporated by reference
to Exhibit 10.14 to the Company's Registration Statement on
Form S-1 dated January 5, 1999.
10.14(a) Master Lease dated as of February 1, 1996 between the Company
and Nelco, Ltd., Incorporated by reference to Exhibit 10.20(a)
to the Company's Registration Statement as Form S-1 dated May
18, 1998.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S> <C>
10.14(b) Lease Agreement dated July 30, 1996 between the Company and
Leasing Innovations, Incorporated incorporated by reference to
Exhibit 10.20(b) to the Company's Registration Statement as
Form S-1 dated May 18, 1998.
10.14(c) Lease Agreement dated June 26, 1997 between the Company and
Green Tree Vendor Services Corporation, incorporated by
reference to Exhibit 10.20(c) to the Company's Registration
Statement on Form S-1 dated May 18, 1998.
10.15 Services Agreement dated June 1, 1997 between the Company and
Information Management Systems Services incorporated by
reference to Exhibit 10.16 to the Company's Annual Report on
Form 10-K dated October 29, 1998.
10.16(a) Limited Guarantee dated December 31, 1998 made by the Company
in favor of NationsBank, N.A.
incorporated by reference to the Company's Amendment No. 1 to
Registration Statement on Form
S-1 dated January 15, 1999.
10.16(b) Subordinated Security Agreement dated December 31, 19898
between the Company and USA Leasing, L.L.C. incorporated by
reference to Amendment No. 1 to the Company's Registration
Statement on Form S-1 dated January 15, 1999.
10.16(c) Subordination Agreement dated December 31, 1998 among the
Company, USA Leasing, L.L.C. and NationsBank, N.A.
incorporated by reference to Amendment No. 1 to the Company's
Registration Statement on Form S-1 dated January 15, 1999.
10.17(a) Securities Purchase Agreement among the Company and Promethean
Investment Group, L.L.C. dated September 22, 1999 incorporated
by reference to Exhibit 10.1 to the Company's Current Report
on Form 8-K dated September 23, 1999.
10.17(b) Form of Convertible Note issued to purchasers of the Company's
Convertible Notes incorporated by reference to Exhbit 10.2 to
the Company's Current Report on Form 8-K dated September 23,
1999.
10.18 Asset Purchase Agreement among the Company, Bison Valve,
L.L.C. and Michael A. Waters dated September 17, 1999
incorporated by reference to Exhibit 10.3 to the Company's
Current Report on Form 8-K dated September 23, 1999.
10.19 Employment Agreement between the Company and Billy D. Prim
dated May 31, 1999 effective as of January 1, 1999
incorporated by reference to Exhibit 10.20(h) to the Company's
Annual Report on Form 10-K dated October 29, 1999.
21.1 Subsidiaries of the Company incorporated by reference to
Exhibit 21.1 to the Company's Annual Report on Form 10-K dated
October 29, 1999.
23.1 Consent of Pedersen & Houpt, P.C.*
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
24.1 Power of Attorney
</TABLE>
*Contained in Exhibit 5.1.
II-6
<PAGE>
Exhibit 5.1
LEGAL OPINION OF PEDERSEN & HOUPT, P.C.
(Pedersen & Houpt, P.C. Letterhead)
November 11, 1999
Blue Rhino Corporation
104 Cambridge Plaza Drive
Winston Salem, North Carolina 27104
Gentlemen:
We have acted as counsel to Blue Rhino Corporation, a Delaware corporation
(the "Company"), in connection with the preparation of a Registration Statement
on Form S-3 (as may hereafter be amended, the "Registration Statement"), which
has been filed by the Company with the Securities and Exchange Commission for
the purpose of registering under the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations thereunder the sale of up to
3,261,885 shares (the "Shares") of the Company's Common Stock, $.001 par value
per share ("Common Stock"). We are rendering this opinion in accordance with the
requirements of Item 601(b)(5)(i) of Regulation S-K under the 1933 Act.
Before rendering the opinions hereinafter set forth, we examined, among
other things:
1. Registration Statement;
2. The form of the Company's Second Amended and Restated Certificate of
Incorporation;
3. The Company's Amended and Restated Bylaws;
4. Resolutions of the Company's Board of Directors;
5. Warrants to purchase common stock of the Company issued to purchasers of
the Company's Common Stock in its private offering dated September 7,
1999 (the "September 7 Warrants")
6. Warrants to purchase common stock of the Company issued to purchasers of
the Company's Common Stock in its private offering dated September 23,
1999 (the "September 23 Warrants")
7. Warrant issued to Michael A. Waters dated September 17, 1999 (the
"Waters Warrant");
<PAGE>
8. Convertible Notes issued on September 23, 1999 (the "Convertible
Notes"); and
originals or photostatic or certified copies of all those corporate records of
the Company and of all those agreements, communications and other instruments,
certificates of public officials, certificates of corporate officials and such
other documents as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth. As to factual matters known to the Company, we
have relied without investigation, to the extent we deem such reliance proper,
upon certificates or representations made by the Company's duly authorized
representatives.
We are members of the Bar of the State of Illinois, and we express no
opinion with respect to laws other than the laws of the State of Illinois, the
General Corporation Law of the State of Delaware and federal laws of the United
States of America.
Based upon the foregoing, we are of the opinion that (i) the Shares
issuable upon conversion of the Company's Convertible Notes and upon exercise of
the September 7 Warrants, September 23 Warrants and Waters Warrant (together the
"Warrants") when issued and delivered upon such conversion or exercise, as the
case may be, in accordance with the terms of the Convertible Notes and the
Warrants, will be validly issued, fully paid and non-assessable (ii) and the
709,333 Shares that are currently outstanding were validly issued and are fully
paid and non-assessable.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and the references to us under the heading "Legal
Matters" in the prospectus that forms a part of the Registration Statement. We
also consent to the incorporation by reference of this consent into any
subsequent amendment of the Registration Statement filed in connection with the
Offering. In giving this consent, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
/s/ Pedersen & Houpt,
a Professional Corporation
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 pertaining to the registration of 3,261,885
shares of Blue Rhino Corporation's common stock and to the incorporation by
reference of our report dated September 21, 1999, except for Note 17, as to
which the date is October 25, 1999, with respect to the consolidated financial
statements and schedule of Blue Rhino Corporation included in its Annual Report
on Form 10-K for the year ended July 31, 1999 filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Winston-Salem, North Carolina
November 9, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
To the Board of Directors and
Shareholders of Blue Rhino Corporation:
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Blue Rhino Corporation of our report dated September
22, 1998 (except as to the information presented in Note 21 for which the date
is February 8, 1999) relating to the consolidated financial statements of Blue
Rhino Corporation, which appear in Blue Rhino Corporation's Form 10-K for the
year ended July 31, 1999. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Greensboro, North Carolina
November 9, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Billy D. Prim, as his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, to act,
without the other, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or any of them, or
their substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement, has been signed below by the following persons in
the capacities indicated on November 11, 1999
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Billy D. Prim Chairman of the Board,
- --------------------------- President and Chief Executive Officer
Billy D. Prim (Principal Executive Officer)
/s/ Mark Casteneda Secretary, Chief Financial Officer and Director
- --------------------------- (Principal Financial and Accounting Officer)
Mark Casteneda
/s/ Andrew J. Filipowski Vice Chairman of the Board
- ---------------------------
Andrew J. Filipowski
/s/ Craig J. Duchossois Director
- ---------------------------
Craig J. Duchossois
/s/ Steven D. Devick Director
- ---------------------------
Steven D. Devick
/s/ John H. Muehlstein Director
- ---------------------------
John H. Muehlstein
/s/ Richard A. Brenner Director
- ---------------------------
Richard A. Brenner
</TABLE>
