<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-Q/A
Amendment No. 1
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to ______
_____________________________________________________________________
Commission file number: 0-14133
BLUE RHINO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 56-1870472
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
104 Cambridge Plaza Drive
Winston-Salem, North Carolina 27104
(Address of principal executive offices)
(336) 659-6900
(Registrant's telephone number, including area code)
____________________________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of December 13, 1999: 8,647,654 - common shares
<PAGE>
BLUE RHINO CORPORATION
This amendment changes the Balance Sheet and Consolidated Statement of Cash
Flows for the three months ended October 31, 1999 included in Part I, Item 1 to
correct typographical and EDGAR conversion errors. No other changes have been
made to the Quarterly Report on Form 10-Q for the period ended October 31, 1999.
INDEX
-----
PART 1: FINANCIAL INFORMATION 3
Item 1: Financial Statements (unaudited): 3
Condensed consolidated balance sheets as of October 31, 1999 and
July 31, 1999 3
Condensed consolidated statements of operations for the three
month periods ended October 31, 1999 and 1998 4
Condensed consolidated statements of cash flows for the three
month periods ended October 31, 1999 and 1998 5
Notes to condensed consolidated financial statements 6
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3: Quantitative and Qualitative Disclosures about Market Risk 14
PART II: OTHER INFORMATION 15
Item 1: Legal Proceedings 15
Item 2: Changes in Securities 15
Item 3: Defaults Upon Senior Securities 15
Item 4: Submission of Matters to a Vote of Security Holders 15
Item 5: Other Information 15
Item 6: Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2
<PAGE>
PART I. FINANCIAL INFORMATION
- - - -----------------------------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Blue Rhino Corporation
Condensed Consolidated Balance Sheets
As of October 31, 1999 and July 31, 1999
(in thousands)
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
---------- ----------
(unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 781 $ 913
Accounts receivable, net 9,734 12,736
Inventories 191 106
Prepaid expenses and other current assets 1,881 2,137
-------- --------
Total current assets 12,587 15,892
Cylinders held under operating lease agreements, net 17,873 17,205
Property, plant and equipment, net 18,409 16,646
Intangibles, net 10,993 9,478
Other assets 954 678
-------- --------
Total assets $ 60,816 $ 59,899
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 4,996 $ 6,386
Current portion of long-term debt and capital lease obligations 1,148 1,423
Accrued liabilities 968 641
-------- --------
Total current liabilities 7,112 8,450
Notes payable to bank 11,990 16,580
Long-term debt, less current maturities 6,446 7,037
Capital lease obligations, less current maturities 350 494
-------- --------
Total liabilities 25,898 32,561
Stockholders' equity:
Common stock 9 8
Additional paid in capital 54,064 46,825
Accumulated deficit (19,155) (19,495)
-------- --------
Total stockholders' equity 34,918 27,338
-------- --------
Total liabilities and stockholders' equity $ 60,816 $ 59,899
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
Blue Rhino Corporation
Condensed Consolidated Statements of Operations
For the Three Months Ended October 31, 1999 and 1998
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
------------------
1999 1998
------- ------
(unaudited)
<S> <C> <C>
Revenues:
Net sales $13,443 $9,222
Lease income 765 212
------- ------
Total revenues 14,208 9,434
Operating costs and expenses:
Cost of sales 10,123 6,934
Selling, general and administrative 2,450 1,773
Depreciation and amortization 917 524
------- ------
Total operating costs and expenses 13,490 9,231
------- ------
Income from operations 718 203
Other expenses (income):
Interest expense 378 32
Loss on investee - 311
Other income, net - (70)
------- ------
Income (loss) before taxes 340 (70)
Income taxes - -
------- ------
Net income (loss) $ 340 $ (70)
======= ======
Earnings (loss) per common share:
Basic and diluted $ 0.04 $(0.01)
======= ======
Weighted average common shares used in
computing earnings (loss) per common share:
Basic 8,242 7,631
======= ======
Diluted 8,268 7,631
======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Blue Rhino Corporation
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended October 31, 1999 and 1998
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
----------------------
1999 1998
-------- --------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 340 $ (70)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 917 524
Loss on disposal of assets 3 -
Loss on investee - 311
Expense related to distributor stock option plan 77 74
Accretion of interest and amortization of discount on
convertible notes 72 -
Changes in operating assets and liabilities, net
of business acquisitions:
Accounts receivable 3,002 2,552
Inventories (55) -
Other current assets 100 (1,201)
Accounts payable (1,390) (1,866)
Other accrued liabilities 203 (62)
-------- -------
Net cash provided by operating activities 3,269 262
-------- -------
Cash flows from investing activities:
Business acquisitions (1,256) (3,614)
Purchases of property, plant and equipment (2,272) (1,099)
Purchases of cylinders held under operating leases, net (861) (3,654)
Collections on notes receivable 20 104
-------- -------
Net cash used in investing activities (4,369) (8,263)
-------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses 6,361 -
Proceeds from issuance of convertible notes 7,000 -
Payment on cylinder financing (7,000) -
Proceeds from notes payable to bank 10,500 9,933
Payments on notes payable to bank (15,090) (3,433)
Payment of financing costs (435) -
Payments of long-term debt and capital lease obligations (368) (285)
-------- -------
Net cash provided by financing activities 968 6,215
-------- -------
Net decrease in cash and cash equivalents (132) (1,786)
Cash and cash equivalents at beginning of period 913 5,908
-------- -------
Cash and cash equivalents at end of period $ 781 $ 4,122
======== =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
5
<PAGE>
Blue Rhino Corporation
Notes to Condensed Consolidated Financial Statements
October 31, 1999 (Unaudited)
(dollars in thousands, except share and per share data)
Note 1 - Basis of Presentation
The condensed consolidated financial statements of Blue Rhino Corporation
(the "Company") include the accounts of its wholly owned subsidiaries, Rhino
Services, L.L.C., formed in March 1997, CPD Associates, Inc., formed in March
1998 and USA Leasing, L.L.C. ("USA Leasing") formed in October 1998. All
intercompany transactions and balances have been eliminated in consolidation.
The accompanying unaudited interim condensed consolidated financial
statements of the Company have been prepared by the Company in accordance with
the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of items of a normal
recurring nature) considered necessary for a fair presentation have been
included. Operating results for the three months ended October 31, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending July 31, 2000.
The balance sheet at July 31, 1999 has been derived from the audited
financial statements of the Company as of July 31, 1999 but does not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
These financial statements should be read in conjunction with the audited
consolidated financial statements of Blue Rhino Corporation as of and for the
year ended July 31, 1999.
Note 2 - Inventories
Inventories consisted of the following at:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
----------------- ---------------
<S> <C> <C>
(unaudited)
Patio heaters $ 110 $ -
Other supplies 81 106
----- -----
$ 191 $ 106
===== =====
</TABLE>
Note 3 - Intangibles, net
Intangibles consisted of the following at:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
----------- --------
(unaudited)
<S> <C> <C>
Goodwill $ 9,630 $9,570
Patents and trademarks 1,522 61
Noncompete agreements 398 293
Accumulated amortization (557) (446)
------- ------
$10,993 $9,478
======= ======
</TABLE>
6
<PAGE>
On September 17, 1999, the Company completed the acquisition of certain
assets related to the overfill prevention device ("OPD") developed, manufactured
and marketed by Bison Valve, L.L.C ("Bison Valve"). The acquired assets included
OPD molds, dies, and all intellectual property relating to the OPD developed by
Bison Valve, which includes two patent applications on the OPD. This acquisition
has been accounted for by the purchase method of accounting. The aggregate
purchase price, including certain acquisition costs, was approximately $1,655,
of which approximately $1,572 was allocated to intangibles consisting of patents
and a non-compete agreement.
Note 4 - Notes Payable to Bank
On December 9, 1999, the Company entered into an amended and restated
credit facility with its bank. The $25,000 facility will be used to
finance working capital, acquisitions and capital expenditures, and to support
the issuance of documentary and standby letters of credit (the "Amended and
Restated Bank Credit Facility"). The Amended and Restated Bank Credit Facility
replaced the Company's prior facility and the facility of the Company's wholly
owned subsidiary, USA Leasing. The Amended and Restated Bank Credit Facility,
which expires on August 31, 2001, bears interest at a maximum rate of LIBOR plus
2.25% and is collateralized by a lien on substantially all of the Company's
assets. In addition to interest, the Amended and Restated Bank Credit Facility
requires a commitment fee of $50 and a 1/4% fee on any unused balance. The
Amended and Restated Bank Credit Facility also requires the Company to meet
certain covenants, including maintaining a minimum net worth, debt coverage and
cash flow coverage ratios. As of October 31, 1999, the Company had borrowings
under its existing credit facilities of $11,990, which bear interest at a
maximum rate of LIBOR plus 2.25%. Each of the Company's subsidiaries has
executed a guaranty of this facility in favor of the bank.
Note 5 - Certain Transactions
Common Stock and Warrant Private Placement
On September 7, 1999, the Company completed a $7,236 private placement of
981,119 units each consisting of one share of the Company's Common Stock and one
warrant to purchase 0.35 shares of Common Stock. The offering was only made to
"accredited investors", as defined in Rule 501(a) of Regulation D. The investors
included the following officers and directors of the Company: Messrs. Billy D.
Prim, Craig J. Duchossois, Andrew J. Filipowski, Mark Castaneda, Steven D.
Devick, Richard A. Brenner and Jerald D. Shadley, who in the aggregate purchased
438,747 of the 981,119 units sold. The price per unit was $7.375, which was the
closing price of the Company's Common Stock on September 3, 1999, the last
trading day prior to consummation of the offering. The warrants may be exercised
at a price equal to $8.48 per share at any time prior to September 7, 2004.
7
<PAGE>
Convertible Note and Warrant Private Placement
On September 22, 1999, the Company entered into an agreement with two
institutional investors (the "Investors") to issue $7,000 of 5% Convertible
Notes (the "Convertible Notes") and 332,203 warrants to purchase Common Stock in
a private placement (the "Convertible Note Offering"). The Convertible Notes
have a two-year term and bear interest at 5% per annum, payable in full in cash
or in shares of Common Stock at the Company's option. The Company may require
the holders of the Convertible Notes to convert the principal and interest on
the Convertible Notes into common stock over a company-chosen conversion period,
which may be from 20 to 60 days and must be in amounts of at least $300 subject
to certain conditions. Upon the occurrence of certain events, the holder may
convert the principal and interest on the Convertible Notes into common stock.
The Convertible Notes convert at the lesser of a fixed conversion price or 95%
of the weighted average price of the common stock at the time of conversion. The
warrants are exercisable for five years at an exercise price of $8.48 per share.
The Company valued the warrants at approximately $610 (which is reflected in the
balance sheet as a discount offsetting long term debt and a credit to paid-in
capital) and is amortizing this amount using the effective interest method over
the term of the Convertible Notes. The fair value of the warrants was determined
by using the Black-Scholes pricing model with the following weighted-average
assumptions: expected life of two years; expected volatility of 40%; expected
dividends of $0 and a risk-free interest rate of 5.83%. In the future, the
Company may also require the Investors to purchase, in up to two additional
transactions, Convertible Notes in an aggregate amount equal to at least $1,000
but not more than $4,900 if certain conditions are met. The Convertible Notes
are subordinate, subject to certain exceptions, to up to $25,000 of the
Company's indebtedness to its bank.
The Company used the net proceeds of the two September 1999 offerings to
repay $7.0 million of cylinder financing, repay other indebtedness and acquire
assets.
Affiliated Distributors
In August 1999, the Company's Chairman and Chief Executive Officer, Billy
D. Prim, and Vice Chairman, Andrew J. Filipowski sold all of their interests in
Blue Rhino distributors to an existing investor in Platinum Propane Holdings,
LLC, a holding company for five Blue Rhino distributors. This investor is not
affiliated with the Company.
8
<PAGE>
Note 6 - Income Taxes
No provision for income taxes was recorded for the three months ended
October 31, 1999 due to the reversal of deferred tax assets for which the
benefit was fully reserved.
Note 7 - Earnings (Loss) Per Share
The basic and diluted earnings (loss) per share was determined as follows:
<TABLE>
<CAPTION>
Three Months Ended
October 31,
--------------------------
1999 1998
---------- ----------
<S> <C> <C>
Basic and diluted earnings (loss) per common share:
Net income (loss)................................................... $ 340 $ (70)
Weighted average common shares used in computing the
Earnings (loss) per common share (in thousands):
Basic............................................................. 8,242 7,631
Effect of dilution................................................ 26 __
---------- ----------
Diluted........................................................... 8,268 7,631
========== ==========
Basic and diluted earnings (loss) per common share.................. $ 0.04 $(0.01)
========== ==========
</TABLE>
Options to purchase Common Stock and the assumed exercise of warrants
during the three months ended October 1998 have been excluded from the
computation of diluted loss per common share as they were anti-dilutive.
Note 8 - Subsequent Events
S-3 Registration Statement
On November 12, 1999, the Company filed a Registration Statement on Form
S-3 (the "Registration") with the Securities and Exchange Commission to register
3,261,885 shares for re-sale by certain security holders. The shares include
958,402 shares previously issued in private stock offerings, 100,000 warrants
issued in the Bison Valve acquisition and 2,203,483 shares that may be issued
upon the conversion or exercise of the securities issued in the Company's
September 22, 1999 Convertible Note Offering. Blue Rhino controls the timing and
extent of conversion of the Convertible Notes into shares. The Registration does
not represent the offering of new shares. The Registration was declared
effective on November 29, 1999.
Joint Venture
On October 21, 1999, the Company and Manchester Tank and Equipment Company
("Manchester") entered into a letter of intent to establish a joint venture to
operate and manage the automated propane bottling and cylinder refurbishing
plant currently under construction in Hamptonville, North Carolina. Blue Rhino
and Manchester will share in the cost of developing and constructing the plant.
The terms of the joint venture agreement are being negotiated.
Acquisitions
In December 1999, the Company also closed on two acquisitions of cylinder
exchange assets, including cylinder display racks and sellers' right, title and
interest in a total of approximately 880 cylinder exchange accounts and
locations for an aggregate cash purchase price of approximately $1.7 million.
One acquisition, for a purchase price of approximately $1.3 million, was for
cylinder exchange assets and approximately 700 cylinder exchange accounts and
locations in Georgia, Tennessee and South Carolina. The second acquisition had a
purchase price of approximately $400,000 for approximately 180 cylinder exchange
accounts and locations in Ohio. These acquisitions will be accounted for under
the purchase method of accounting and will be financed with cash provided by our
Amended and Restated Bank Credit Facility and from cash provided by operations.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with
the accompanying Condensed Consolidated Financial Statements and related notes
of Blue Rhino Corporation and its wholly owned subsidiaries, Rhino Services,
L.L.C., CPD Associates, Inc. and USA Leasing, L.L.C. (together with Blue Rhino
Corporation, Rhino Services, L.L.C., CPD Associates, Inc. and USA Leasing,
L.L.C., the "Company"), and with the Company's audited consolidated financial
statements as of and for the fiscal year ended July 31, 1999, on file with the
Securities and Exchange Commission. The results of operations for the three
months ended October 31, 1999 are not necessarily indicative of results that may
be expected for the year ended July 31, 2000, in part due to the seasonality of
the Company's business. Historically, the Company has generated approximately
65% to 70% of its revenues in the six months beginning in February and ending
in July which months correspond with our third and fourth fiscal quarters.
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. 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. We are
continually adding locations, concluding the first quarter of fiscal 2000 with
approximately 20,000 locations, a net increase of 1,500 locations. From time to
time customer locations are deinstalled due to closings,
relocations, competitive, regulatory and other factors. In addition, some
acquired locations are never converted to Blue Rhino locations for various
reasons. As previously reported, Hechinger's, one of our customers has been in
bankruptcy proceedings and, as a result, has closed stores, resulting in a loss
of approximately 100 locations. Approximately 300 locations were deinstalled in
the three months ended October 31, 1999 for various reasons. While we continue
to add locations through acquisition and further penetration of existing
retailer relationships, we may experience additional deinstallations in the
future. The number of retail locations we report as of any date or the number of
locations by which our installed base has increased in any period is net of any
deinstallations in that period.
9
<PAGE>
Results of Operations
Comparison of the Three Months Ended October 31, 1999 as Compared to the Three
Months Ended October 31, 1998
Total revenues. Total revenues increased 50.6% to approximately $14.2
million for the three months ended October 31, 1999 from approximately $9.4
million for the three months ended October 31, 1998. The total revenues of $14.2
million for the three months ended October 31, 1999 consisted of approximately
$13.1 million from cylinder transactions, $364,000 from product sales (combined
cylinder transactions and product sales are reflected on the statement of
operations as net sales) and $765,000 from lease income. The product sales
include sales of patio heaters, a new product offering in this three month
period, and do not include cylinder sales which are part of cylinder
transactions. The lease income is generated primarily from cylinders and
cylinder displays under lease to distributors. The increase in total revenues
was due primarily to the increase in the number of retail locations placed in
service and increased sales volume at existing locations. The installed base of
retail locations increased 67% to approximately 20,000 locations at October 31,
1999 from approximately 12,000 locations at October 31, 1998. The number of
cylinders transacted increased 39.3% to approximately 982,000 units in the three
months ended October 31, 1999 from approximately 705,000 units during the three
months ended October 31, 1998.
Gross margin. Gross margin increased to 28.8% in the first quarter of
fiscal 2000 from 26.5% in the first quarter of fiscal 1999. This increase was
due primarily to additional lease income from cylinders and cylinder displays.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased 38.8% to approximately $2.5 million for the
three months ended October 31, 1999 from approximately $1.8 million for the
three months ended October 31, 1998 but decreased as a percentage of total
revenues to 17.6% for the three months ended October 31, 1999 from 19.2% for the
three months ended October 31, 1998. The increase in selling, general and
administrative expenses was due primarily to additional compensation costs
stemming primarily from the growth of our internal sales force, costs related to
our introduction of a patio heater product and additional costs associated with
operating a public company, including investor relations and other professional
fees. The decrease in selling, general and administrative expenses as a
percentage of total revenues was due primarily to the fact that a significant
portion of our selling, general and administrative expenses are fixed and, as a
result, selling, general and administrative expenses increased at a slower rate
than total revenues.
Depreciation and amortization. Depreciation and amortization increased to
approximately $917,000 for the first quarter of fiscal 2000 from approximately
$524,000 for the first quarter of fiscal 1999. Depreciation expense increased by
$332,000 to approximately $763,000 for the first quarter of fiscal 2000 from
approximately $431,000 for the first quarter of fiscal 1999 primarily due to the
increase in the number of installed cylinder displays and the commencement of
depreciation on cylinders held under operating lease agreements. We continued to
purchase additional cylinders and cylinder displays to support growth in our
installed base of retail locations. Our purchase of computer technology also
impacted depreciation expense to a lesser extent. Amortization expense increased
by $61,000 to approximately $154,000 in the first quarter of fiscal 2000 from
approximately $93,000 in the first quarter of fiscal 1999 principally due to the
increased amortization of intangibles associated with the purchase of retail
propane cylinder exchange assets and to a lesser extent the amortization of
patents related to our September 1999 purchase of certain assets related to the
overfill prevention device ("OPD") from Bison Valve, L.L.C. ("Bison Valve").
Interest expense. Interest expense increased to approximately $378,000 in
the first quarter of fiscal 2000 from approximately $32,000 in the first quarter
of fiscal 1999. The increase in interest expense resulted from the additional
borrowings outstanding under our credit facilities. The additional borrowings
were used primarily to purchase cylinders leased to our distributors, for
business acquisitions and for capital expenditures including construction in
progress on our automated propane bottling and cylinder refurbishing facility.
The interest expense in the first quarter of fiscal 1999 was a result of capital
lease obligations incurred principally to purchase computer technology.
10
<PAGE>
Loss on investee. The loss on investee in the quarter ended October 31,
1998 reflects the application of the equity method of accounting to our
convertible loan to Bison Valve. We recorded these losses as Bison Valve used
the proceeds of our loan to fund losses incurred primarily in researching,
developing, marketing and producing an OPD and other propane related products.
As of October 31, 1998, we recognized charges for the entire principal balance
of the convertible loan. In September 1999, we purchased from Bison Valve the
intellectual property, inventory and certain other assets related to its
Underwriters Laboratories-approved OPD.
Other income-net. Other income-net decreased to $0 in the first quarter of
fiscal 2000 from $70,000 in the first quarter of fiscal 1999. The other income-
net in the first quarter of fiscal 1999 resulted primarily from interest income
from excess cash balances and various notes receivable.
Liquidity and Capital Resources
Our primary sources of funds have been the issuance of stock and the
incurrence of debt, most recently through a private stock offering and a
convertible note offering in September 1999. We had positive working capital of
approximately $5.5 million as of October 31, 1999, which is primarily the result
of available proceeds from the private stock and convertible note offerings and
to a lesser extent from cash provided by operations.
Net cash provided by operations was approximately $3.3 million for the
first quarter of fiscal 2000 and approximately $262,000 for the first quarter of
fiscal 1999. For the first quarter of fiscal 2000, cash provided by operations
included approximately $340,000 of net income.
Net cash used in investing activities was approximately $4.4 million in the
first quarter of fiscal 2000 and $8.3 million for the first quarter of fiscal
1999. The primary components of cash used in investing activities in both
periods included acquisitions, purchases of cylinders leased to our distributors
and investments in property, plant and equipment including approximately $1.1
million in the first quarter of fiscal 2000 for the automated propane bottling
and cylinder refurbishing plant.
Net cash provided by financing activities was approximately $1.0 million
for the first quarter of fiscal 2000 and approximately $6.2 million for the
first quarter of fiscal 1999. Cash provided by financing activities in the
first quarter of fiscal 2000 included net proceeds of approximately $6.4 million
from a common stock and warrant private placement and $7.0 million from a
convertible notes and warrants private placement. For the first quarter of
fiscal 1999, cash provided by financing activities resulted from bank
borrowings. In both periods, the cash used in financing activities included
payments on various notes payable and capital lease obligations.
In September 1999, we entered into an agreement with two institutional
investors (the "Investors") to issue $7.0 million of 5% Convertible Notes (the
"Convertible Notes") and 332,203 warrants to purchase Common Stock (the
"Warrants") in a private placement (the "Convertible Note Offering"). The
Convertible Notes have a two year term and bear interest at 5% per annum,
payable in full in cash or in common stock at maturity. We may require the
holders of the Convertible Notes to convert the principal and interest on the
Convertible Notes into Common Stock over a Company-chosen conversion period,
which may be from 20 to 60 days and must be in amounts of at least $300,000
subject to certain conditions. Upon the occurrence of certain events, the holder
may convert the principal and interest on the Convertible Notes into Common
Stock. The Convertible Notes convert at the lesser of a fixed conversion price
or 95% of the Weighted Average Price of the Common Stock at the time of
conversion. The warrants are exercisable for five years at an exercise price of
$8.48 per share. In the future, we may also require the Investors to
11
<PAGE>
purchase in up to two additional transactions Convertible Notes in an aggregate
amount equal to at least $1.0 million but not more than $4.9 million if certain
conditions are met. In addition, the Convertible Notes are subordinate, subject
to certain exceptions, to up to $25.0 million of our indebtedness to our bank.
Also, in September 1999, we completed a $7.2 million private placement of
981,119 units with each consisting of one share of our Common Stock, and one
warrant to purchase 0.35 shares of Common Stock. The offering was made only to
"accredited investors", as defined in Rule 501(a) of Regulation D. The
investors included the following officers and directors of the Company: Billy D.
Prim, Craig J. Duchossois, Andrew J. Filipowski, Mark Castaneda, Steven D.
Devick, Richard A. Brenner and Jerald D. Shadley, who in the aggregate purchased
438,747 of the 981,119 units sold. The price per unit was $7.375, which was the
closing price of our Common Stock on September 3, 1999, the final trading day
prior to the consummation of the offering. The warrants may be exercised at a
price equal to $8.48 per share at any time prior to September 7, 2004. Upon the
repayment of $2.6 million of the indebtedness of its wholly owned subsidiary,
USA Leasing to its bank, the bank will release Billy D. Prim, Andrew J.
Filipowski, Craig J. Duchossois and Peer Pedersen from their $650,000 guarantees
of such indebtedness.
We used the aggregate net proceeds of approximately $13.3 million from our
common stock and warrant private placement and our convertible notes and
warrants private placement to repay $7.0 million of cylinder financing, to
purchase certain assets related to the overfill prevention device from Bison
Valve, L.L.C. with approximately $1.3 million and the balance was used to repay
outstanding borrowings under our notes payable to our bank.
On December 9, 1999, we amended our credit facility with our bank. We can
use the up to $25.0 million facility to finance working capital, acquisitions
and capital expenditures, and to support the issuance of documentary and standby
letters of credit (the "Amended and Restated Bank Credit Facility"). The Amended
and Restated Bank Credit Facility replaced our prior facility and the facility
of our wholly owned subsidiary, USA Leasing. The Amended and Restated Bank
Credit Facility, which expires on August 31, 2001, bears interest at a maximum
rate of LIBOR plus 2.25% and is collateralized by a lien on substantially all
our assets. The Amended and Restated Bank Credit Facility also requires the
Company to meet certain covenants, including maintaining a minimum net worth,
debt coverage and cash flow coverage ratios. Each of our subsidiaries has
executed a guaranty of this facility in favor of the bank.
In December 1999, the Company also closed two acquisitions of cylinder
exchange assets, including cylinders, cylinder displays and sellers' right,
title and interest in a total of approximately 880 cylinder exchange accounts
and locations for an aggregate cash purchase price of approximately $1.7
million. One acquisition, for a purchase price of approximately $1.3 million,
was for cylinder exchange assets and approximately 700 cylinder exchange
accounts and locations in Georgia, Tennessee and South Carolina. The second
acquisition had a purchase price of approximately $400,000 for approximately 180
cylinder exchange accounts and locations in Ohio. These acquisitions will be
accounted for under the purchase method of accounting and will be financed with
cash provided by our Amended and Restated Bank Credit Facility and from cash
provided by operations.
We anticipate that our total capital expenditures excluding acquisitions
for fiscal 2000 will be approximately $10.0 million, and will relate primarily
to cylinders, cylinder displays and computer technology. Our capital expenditure
and working capital requirements in the foreseeable future will change depending
on the rate of our expansion, our operating results and any other adjustments in
our operating plan as needed in response to competition, acquisition
opportunities or unexpected events. We believe that existing borrowing capacity
under lines of credit, together with the remaining proceeds from the private
stock offering and the convertible note offering and cash provided by
operations, will be sufficient to meet our working capital requirements through
fiscal 2000. However, there can be no assurance that we will not seek or require
additional capital in the future as a result of expansion or otherwise.
Inflation
We do not believe that inflation has had a material adverse effect on our
net sales or the results of operations. However, there can be no assurance that
our business will not be affected by inflation in the future.
Impact of New Accounting Pronouncements
There were no items of comprehensive income for the three months ended
October 31, 1999 and October 31, 1998, as defined under SFAS No. 130, "Reporting
Comprehensive Income."
12
<PAGE>
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which was
effective for fiscal years beginning after June 15, 1999. SFAS No. 133 was
amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities--Deferral of the Effective Date of SFAS No. 133," which delayed the
effective date of implementation by one year. The Company is required to and
will adopt SFAS No. 133 in the first quarter of fiscal 2001. The Company has not
completed all of the analysis, but does not expect adoption to have a
significant effect on its consolidated results of operations or financial
position
Year 2000 Compliance
Year 2000 issues are the result of computer programs that were written
using two digits rather than four to define the applicable year. For example,
date sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of operations, including, among other material adverse
consequences, a temporary inability to process transactions or engage in similar
normal business activities. We depend on our management information systems
("MIS") to process orders, manage inventory and accounts receivable, maintain
distributor and customer information, assist distributors in delivering products
on a timely basis and in maintaining cost-efficient operations.
Our State of Readiness for Year 2000. We began evaluating our MIS for Year
2000 compliance in January 1997. Since that time we have developed a Year 2000
compliance policy encompassing employee education, testing, progress reporting,
external impact plans and contingency plans. Our Chief Information Officer
directs our Year 2000 compliance policy and oversees the remediation and testing
of MIS. As of July 31, 1999, we believe that we were 100% Year 2000 compliant.
All core MIS are currently 100% Year 2000 compliant. However, if our
modifications, testing and solicitations of third party compliance are not made
on a timely basis or do not resolve our Year 2000 issues, these issues could
have a negative effect on our business.
We have assessed the Year 2000 readiness of each of our core MIS and
remediated these systems as necessary. Our core MIS include Online Sales Account
Information System ("OASIS"), Platinum for Windows, Electronic Data Interchange
("EDI") and Blue Rhino Electronic Accounting System ("BREAS"). OASIS was already
compliant when it was implemented in February 1998, Platinum for Windows was
updated in March 1998 to be Year 2000 compliant, EDI was upgraded in December
1998 to be Year 2000 compliant and BREAS was upgraded in October 1998 to be Year
2000 compliant. We have engaged Integrated Solutions International, L.L.C. to,
among other things, assist us in implementing our distributors' use of Year 2000
compliant handheld computer units of BREAS. All of our distributors are
currently using Year 2000 compliant handheld units. We have established
integrated test procedures in which all of our MIS are simultaneously tested for
Year 2000 compliance. We expect these integrated tests to continue throughout
1999.
Historical and Estimated Costs. We have not established a separate Year
2000 compliance budget and do not expect to do so. To date, we have incurred
approximately $20,000 in Year 2000 compliance costs. We currently anticipate
that the implementation of our Year 2000 compliance policy will cost
approximately $25,000, all of which will be expensed. Although we can give no
assurances, we do not expect future costs related to Year 2000 compliance to
negatively affect our business in any material way. Costs are based on current
estimates and actual results may vary significantly from such estimates.
Most Reasonably Likely Worst Case Scenario. The most reasonably likely
worst case Year 2000 scenario we face is an interruption of our business
operations caused by the failure of third parties with which we have a material
relationship to achieve Year 2000 compliance. The consequences of a third party
failure are unknown, but could have a negative effect on our business. We are
considering several contingency plans to address possible business interruptions
caused by a non-compliant third party. Possible contingency plans include using
alternate service providers and using a manual billing, payment and collection
system. Initial contingency plans have been completed. Additional refinement and
monitoring will continue throughout the remainder of 1999. In addition, in an
effort to protect ourselves and increase the awareness of third parties whose
failure to comply could have a material effect on our business, we are seeking
to obtain certifications from them that they are Year 2000 compliant.
13
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk related to changes in interest rates on our
borrowings under our Amended and Restated Bank Credit Facility. Our Amended and
Restated Bank Credit Facility bears interest based on LIBOR. The Amended and
Restated Bank Credit Facility is collateralized by cylinders held under
operating leases with our independent distributors. The operating leases
currently yield 1% of the cylinder value monthly (approximately 12% annually)
and continue until either party terminates upon 60 day written notice to the
other party. Upon any significant increase in LIBOR, we would attempt to
renegotiate the operating leases with our independent distributors mitigating
the interest rate exposure on the majority of the notes payable to the bank.
However, there can be no assurance that we will be successful in such
renegotiations or that we will be able to mitigate any or all of the interest
rate risk.
We have no derivative financial instruments or derivative commodity
instruments in our cash equivalents and investments. We invest our cash and cash
equivalents and investments in investment grade, highly liquid investments
consisting of money market instruments, bank certificates of deposit and
overnight investments in commercial paper.
All of our transactions are conducted and accounts are denominated in
United States Dollars and as such we do not currently have exposure to foreign
currency risk. Furthermore, we do not have any direct exposure to commodity
price risk.
14
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On December 2, 1999 we filed a complaint against PricewaterhouseCoopers
LLP in the Superior Court of Forsyth County, North Carolina alleging negligence,
breach of fiduciary duty, breach of contract, defamation and unfair and
deceptive trade practices. This suit relates to the conduct of
PricewaterhouseCoopers during our engagement of them as our auditors. We do not
expect this litigation to have a material adverse effect on our financial
condition or results of operations.
We are not presently involved in any material litigation nor, to our
knowledge, is any material litigation threatened against us or our subsidiaries,
other than routine litigation arising in the ordinary course of business and
which is expected to be covered by insurance.
Item 2. Changes in Securities and Use of Proceeds
We used the aggregate net proceeds of approximately $13.3 million from our
common stock and warrant private placement and our convertible notes and
warrants private placement to repay $7.0 million of cylinder financing, to
purchase certain assets related to the overfill prevention device from Bison
Valve, L.L.C. with approximately $1.3 million and the balance was used to repay
outstanding borrowings under our notes payable to our bank.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.1 Amended and Restated Loan Agreement between Bank of America, N.A.
and Blue Rhino Corporation dated as of December 9, 1999
10.2 Amendment to Security Agreement between Bank of America, N.A. and
Blue Rhino Corporation dated as of December 9, 1999
10.3 Promissory Note in the amount of $25 million made by Blue Rhino
Corporation dated as of December 9, 1999 pursuant to the Amended and
Restated Loan Agreement (Exhibit 10.1)
10.4 Continuing and Unconditional Guaranty Agreement between CPD
Associates, Inc. and Bank of America, N.A. dated December 9, 1999
10.5 Continuing and Unconditional Guaranty Agreement between Rhino
Services, L.L.C. and Bank of America, N.A., dated December 9, 1999
10.6 Continuing and Unconditional Guaranty Agreement between USA Leasing,
L.L.C. and Bank of America, N.A. dated December 9, 1999
10.7 Asset Purchase Agreement between Blue Rhino Corporation and Georgia
Gas Distributions, Inc. dated December 9, 1999
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
Current report on Form 8-K dated August 16, 1999, Item 2 to report the
acquisition of 100% of the membership interests in USA Leasing, L.L.C.
Current report on Form 8-K dated September 23, 1999, Item 5 to Report the
completion of a Common Stock and Warrant Private Placement, Convertible Note and
Warrant Private Placement and the purchase of certain assets related to the
overfill prevention device from Bison Valve, L.L.C.
15
<PAGE>
Signatures
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Blue Rhino Corporation
Date: December 15, 1999 By: /s/ Billy D. Prim
-----------------------------------------------
Chairman, President and Chief Executive Officer
Date: December 15, 1999 By: /s/ Mark Castaneda
-----------------------------------------------
Chief Financial Officer
16
<PAGE>
Exhibit 10.1
BANK OF AMERICA, N.A.
AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") dated as of
December 9th, 1999, by and between BANK OF AMERICA, N.A., a national banking
association ("Bank") and the Borrower described below:
R E C I T A L S:
WHEREAS, Bank and Borrower are parties to that certain Loan Agreement dated
December 31, 1998 (the "BR Loan Agreement"), pursuant to which Bank made certain
loans to Borrower, as more fully described therein, including a revolving line
of credit (the "Revolver") in the original principal amount of up to $7,000,000,
and a non-revolving line of credit (the "Acquisition Line") in the principal
amount of up to $5,000,000; and
WHEREAS, on the same date, Bank and USA Leasing, L.L.C., a Delaware limited
company (the "Lessor"), entered into a Loan Agreement (the "Lessor Loan
Agreement"), pursuant to which Bank extended a non-revolving line of credit (the
"Lease Line") to Lessor in the principal amount of up to $13,000,000, which
Lease Line was personally guaranteed by the members of the Lessor (the
"Members") and by Borrower pursuant to limited guaranties (the "Guaranties");
and
WHEREAS, by that certain Amendment to Loan Agreement between the Borrower
and the Bank, dated June 14, 1999 (the "BR Loan Amendment"), the Bank agreed to
modify certain limitations on the amount of credit available under the various
loan facilities to allow Borrower to obtain additional advances under the
Revolver and the Acquisition Line, and also agreed to modify certain financial
covenants, to modify the Borrowing Base, and to make certain other changes in
the BR Loan Agreement; and
WHEREAS, pursuant to that certain Waiver Agreement among the Borrower, the
Lessor and the Bank, dated as of July 30, 1999 (the "Waiver"), the Bank agreed
to permit the sale of all of the Members' interests in the Lessor to the
Borrower, subject to certain terms and conditions, including that the Borrower
would execute an amended Guaranty of all indebtedness of the Lessor to the Bank;
and the Bank further agreed to release the limited guaranties of the Members of
the Lessor upon receipt of certain funds; and
WHEREAS, on September 21, 1999, the Borrower caused to be issued its
Convertible Note in the principal amount of $7,000,000 (such note and all other
notes issued pursuant thereto shall be referred to herein as the "Convertible
Notes"), together with certain warrants to purchase common stock of the
Borrower, payment of which Convertible Notes is subordinated to the prior
payment in full of Borrower's indebtedness to the Bank, up to a principal amount
of $25,000,000; and
<PAGE>
WHEREAS, the Bank consented to the issuance of the Convertible Notes,
subject to certain terms and conditions, and also agreed to waive the Borrower's
compliance with certain financial covenants as of July 31, 1999; and
WHEREAS, the Borrower has now requested that the Bank agree to restructure
the existing indebtedness of the Borrower and the Lessor pursuant to the BR Loan
Agreement and the Lessor Loan Agreement; and
WHEREAS, Bank has agreed to so restructure such indebtedness, subject to
certain terms and conditions, including that the BR Loan Agreement be restated
in its entirety; and
WHEREAS, the parties hereto wish to set forth their agreement with respect
to the foregoing matters and to restate the BR Loan Agreement;
NOW, THEREFORE, in consideration of the Loans described below and the
mutual covenants and agreements contained herein, and intending to be legally
bound hereby, Bank and Borrower agree that the BR Loan Agreement is hereby
restated as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:
A. Accounts Receivable. All of the Borrower's accounts, instruments,
contract rights, chattel paper, documents, and general intangibles arising from
the sale of goods and/or the rendition of services by the Borrower in the
ordinary course of business, and the proceeds thereof and all security and
guaranties therefor, whether now existing or hereafter created, and all
returned, reclaimed or repossessed goods, and all books and records pertaining
to the foregoing.
B. Borrower. Blue Rhino Corporation, a Delaware corporation.
C. Borrower's Address: 104 Cambridge Plaza Drive
Winston-Salem, NC 27104
D. Collateral. The property and interests in property securing
payment and performance of the Loans, as set forth in Section 3 hereof.
E. Cash Flow Coverage Ratio. The quotient of the aggregate of
Borrower's net income after tax (exclusive, however, of any non-cash gain or
loss attributable to Borrower's investment in the Bottling Company (as
hereinafter defined)), plus depreciation and amortization, plus interest
expense, minus dividends and distributions actually paid, divided by the sum of
the prior year's current maturities of long term debt (exclusive of any current
maturities of the Convertible Notes) plus current
2
<PAGE>
maturities of capital leases, plus interest expense, plus twenty percent (20%)
of the outstanding balance of the Revolver.
F. EBITDA. Earnings before interest expense, taxes, depreciation and
amortization.
G. Equipment. All machinery and equipment, including fixtures, now
owned or hereafter acquired by the Borrower.
H. Funded Debt. Debt incurred by borrowing money, specifically
excluding trade debt or accruals arising in the ordinary course of business, but
including, without limitation (i) purchase money indebtedness, (ii) the
principal portion of obligations under capital leases, and (iii) all obligations
guaranteeing or intended to guarantee any debt of any other entity, whether such
obligation is direct or indirect.
1. Hazardous Materials. All materials defined as hazardous wastes or
substances under any local, state or federal environmental laws, rules or
regulations, and petroleum, petroleum products, oil and asbestos.
i. Inventory. Means all non-obsolete inventory of Borrower of every
kind or character, wherever located, for which Borrower:
(i) has full title, free and clear of any security interest,
liens and claims whatsoever; and
(ii) has the right to convey such inventory as security for the
Obligations; and
(iii) such inventory is in first class order, condition and
repair.
K. LIBOR. The London Interbank Offered Rate for thirty-day deposits,
adjusted for applicable reserves, deposit insurance assessments and other
regulatory costs, as determined by the Bank, from time to time.
L. Loans. The loan described in Section 2 hereof and any other
existing or subsequent loan by Bank to the Borrower that is subject to this
Agreement.
M. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by Borrower in favor of Bank and all other
documents, instruments, guaranties, certificates and agreements executed and/or
delivered by Borrower, any guarantor or third party in connection with any Loan.
N. Material Adverse Effect. Any material adverse effect on (i) the
business, assets, operations or financial or other condition of Borrower and its
subsidiaries taken as a whole, (ii) the Borrower's ability to pay the
Obligations in accordance with the terms thereof, or (iii) the Collateral or
Bank's security interest in the
3
<PAGE>
Collateral or the priority of such security interest. Without limiting the
foregoing, any adverse effect on the business, assets, operations or financial
or other condition of Borrower and its subsidiaries (if any) involving,
individually or in the aggregate, a liability of the Borrower or any of its
subsidiaries in excess of applicable insurance coverage by more than $100,000
shall be deemed to be a "Material Adverse Effect" within the meaning of the
applicable provisions of this Agreement.
O. Note. The Revolver Note, as defined herein.
P. Obligations. The Loans and all other loans, advances,
indebtedness, liabilities, obligations, covenants and duties (including post-
petition interest on the foregoing, to the extent lawful) owing, arising, due or
payable from the Borrower to the Bank of any kind or nature, present or future,
arising under this Agreement or any of the other Loan Documents (including,
without limitation any Hedge Agreement, as defined in subparagraph 2 (B) (ii)),
whether direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising. The term includes, without limitation, all interest, charges,
reasonable expenses, reasonable fees, reasonable attorneys' fees and any other
sums chargeable to the Borrower by the Bank under this Agreement or any of the
other Loan Documents.
Q. Person. A corporation, an association, a joint venture, a limited
liability company, a partnership, an organization, a business, an individual, a
trust or a government or political subdivision thereof or any government agency
or any other legal entity.
R. Tangible Net Worth. The amount by which Borrower's total assets
exceed total liabilities in accordance with GAAP, minus (i) goodwill, (ii)
contract rights, (iii) assets representing claims on (A) shareholders,
directors, or officers or (B) Subsidiaries, and (iv) other assets constituting
intangible assets, including, without limitation, any patents, trademarks,
tradenames, copyrights or similar intellectual property.
S. Subsidiary. As to any Person, each of the Persons that directly or
indirectly, through one or more intermediaries, is controlled by such Person.
For the purpose of this definition, "control" means the possession, directly or
indirectly, of over fifty percent (50%) of the voting rights of the equity
holders of the entity, whether through the ownership of voting securities, by
contract or otherwise.
Accounting Terms. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from time
to time, consistently applied. All financial computations made under this
Agreement for the purpose of determining compliance with the financial
requirements of this Agreement shall be made, and all financial information
required under this Agreement shall be prepared, in accordance with GAAP, as in
effect on the date hereof.
4
<PAGE>
2. LOAN. Subject to the terms of this Agreement, Bank hereby agrees to
make a loan to Borrower, as follows:
A. Revolving Line of Credit. (i) Subject to the terms hereof, Bank agrees
to extend a revolving line of credit (the "Revolver") to Borrower, in the
original principal amount of up to Twenty-Five Million Dollars ($25,000,000),
for the purpose of refinancing and increasing the Borrower's revolving line of
credit, refinancing all indebtedness of Lessor to Bank, financing Borrower's
short-term working capital needs, including but not limited to payments under
letters of credit issued for the benefit of Borrower, and financing acquisitions
by Borrower. The Revolver will be available during the period commencing on the
date hereof and continuing until August 31, 2001 (which date, as extended in
accordance with the terms hereof, shall be the "Maturity Date"). Borrower may
from time to time borrow, repay and re-borrow, subject to the Borrowing Base
Agreement attached hereto as Exhibit "A" and by reference made a part hereof,
and the Borrowing Base set forth therein (the "Borrowing Base"). Borrower shall
execute and deliver to Bank a promissory note (the "Note") in the principal
amount of $25,000,000, which Note shall bear interest and be payable in
accordance with the terms set forth hereinbelow. It is further provided that the
commitment of the Bank to continue to make the Revolver available to the
Borrower beyond the Maturity Date is subject to annual review by the Bank
(subject to and following receipt of the Borrower's annual report of audit as
provided hereinafter), and the Bank may, in its sole discretion, elect to renew
the commitment for an additional year, whereupon the Maturity Date shall be
extended to the date that is one year after the then-current Maturity Date.
(ii) Interest and Principal. Subject to the terms of subparagraph 2 (B) (i)
below, interest on the principal amount outstanding under the Revolver from time
to time shall accrue at a floating rate of thirty-day LIBOR, plus two hundred
basis points (2.00%) per annum, which rate shall change on and as of each date
LIBOR changes. Accrued interest shall be payable monthly in arrears. The
principal of the Note shall be repaid in full, if not sooner paid, on the
Maturity Date, together with all accrued but unpaid interest thereon.
(iii) Fees. Borrower shall pay to Bank a commitment fee in the amount of
$50,000 at the closing of the Revolver. Borrower shall also pay Bank, quarterly
as invoiced by Bank, an availability fee in the amount of one-quarter percent
(1/4%) of the average unused amount of the Revolver.
(iv) Collateral Security. Repayment in full of the Revolver shall be
secured by all Accounts Receivable (as such term is defined in the Borrowing
Base Agreement attached hereto), and all Inventory and Equipment of Borrower,
now owned or hereafter acquired, including all proceeds thereof. The Revolver
shall also be secured by all interests hereafter acquired by the Borrower in
real estate and any improvements thereon, or in any Person owned, in whole or in
part, by the Borrower that acquires any interest in real estate and improvements
used by the Borrower.
5
<PAGE>
(v) Administration of Accounts. (a) Borrower agrees to submit to Bank,
within thirty (30) days after the end of each month during the term of the
Revolver, a summary aged trial balance of all accounts existing as of the last
day of such month, and all inventory, in form satisfactory to the Bank. Borrower
agrees to keep accurate and complete records of its accounts, and of all
payments and collections thereof, and of all inventory.
(b) Monthly, within thirty (30) days after the end of each monthly
period, Borrower shall submit a borrowing base certificate to Bank setting forth
the amount of Borrower's Eligible Accounts Receivable (as defined in the
Borrowing Base Agreement), Eligible Inventory (as defined in the Borrowing Base
Agreement) and Equipment as of the last day of such monthly period.
(c) Whether or not an Event of Default has occurred, Borrower shall
permit Bank, including any of its officers, agents or designees, to inspect and
verify the amount of or any other matter relating to the Borrower's accounts.
Borrower agrees to cooperate fully with Bank in such inspection and verification
process. Borrower further agrees to pay or reimburse Bank for payment of all
expenses incurred to monitor, inspect and examine Borrower's accounts, up to an
amount of $5,000 per year during the term of this Agreement.
(d) Bank shall have the right at any time after the occurrence of an
Event of Default to notify any or all account debtors that Borrower's accounts
have been assigned to Bank and to collect the accounts in its name.
(vi) Guaranties. Payment in full of all indebtedness of the Borrower
pursuant to the Revolver shall be guaranteed by all of the subsidiaries of the
Borrower, including Lessor, Rhino Services, L.L.C., and CPD Associates, Inc.,
and any Subsidiary formed or acquired after the date of this Agreement, pursuant
to guaranty agreements (the "Guaranties") in form and substance satisfactory to
Bank. The Guaranty of Lessor shall be secured by a security interest in and lien
on all inventory of Lessor, now owned or hereafter acquired, including all
proceeds thereof. Lessor shall also assign to Bank all of its rights as lessor
under leases of propane cylinders, including all proceeds and lease payments
under such leases. All such inventory and leases shall be referred to herein as
the "Lessor Collateral."
B. Other Interest Rate Provisions Applicable to the Loans.
(i) The interest rate applicable to the Revolver will vary, according to
the Borrower's compliance with the Funded Debt (including the Convertible Notes)
to EBITDA ratio (as defined below), as set forth in Exhibit B attached hereto,
which ratio shall be computed by the Borrower's certified public accountants, in
a manner reasonably acceptable to the Bank. Such financial ratio shall be
calculated quarterly as of the last day of each fiscal quarter of the Borrower
and, if the threshold ratio set forth on Exhibit B is satisfied, the alternative
interest rate set forth on Exhibit B shall apply to the Revolver during the next
succeeding quarter, beginning with the first day of the month following
6
<PAGE>
receipt of the Borrower's quarterly and annual financial statements,
respectively. It is provided, however, that the Borrower must be in compliance
with all of the terms and provisions of this Agreement to receive the rates set
forth in Exhibit B.
(ii) Borrower shall also have the option to fix the interest rate on all or
any portion of the Revolver, at any time, through the use of a Hedge Agreement
purchased from the Bank at the market rate for such products. For purposes
hereof, a "Hedge Agreement" means any agreement between Borrower and Bank, or
any affiliate of Bank, now existing or hereafter entered into, which provides
for an interest rate or commodity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross-currency swap, currency option, or
any combination of, or option with respect to, these or similar transactions,
for the purpose of hedging Borrower's exposure to fluctuations in interest
rates, currency valuations or commodity prices. Notwithstanding any other terms
of this Agreement, any loan subject to a Hedge Agreement shall be prepayable
only in accordance with, and subject to any fees imposed under, the terms of
such Hedging Agreement.
C. Information Requirements Related to Acquisitions by Borrower. Prior to
obtaining any advances under the Revolver for the purpose of financing the cost
(in whole or in part) of any acquisition (whether such acquisition is by merger
or purchase of assets), Borrower shall provide to Bank such information
concerning the proposed acquisition and the entity to be acquired (or the assets
to be purchased) as the Bank shall reasonably request. All such information
shall be treated by the Bank as confidential information, and shall not be
disclosed to or used by any other person without the express written consent of
Borrower.
3. COLLATERAL SECURITY. Payment and performance of the Note shall be
secured by the Collateral described above, and the Borrower hereby grants,
conveys, transfers and assigns to the Bank a security interest in and lien upon
all of such Collateral for such Note.
Borrower agrees and undertakes to execute and deliver to the Bank such
security agreements, pledge agreements, assignments, financing statements,
subordinations, certificates, waivers, estoppel agreements, and other
documentation, in form acceptable to the Bank, as may be requested by the Bank
in connection with the Collateral.
Borrower further agrees that it will, immediately upon the acquisition
thereof, assign and pledge to the Bank all of its ownership interest in any
entity formed to own and/or operate that certain bottling plant under
construction at Hamptonville, North Carolina (the "Bottling Company"), as
additional collateral security for the Note. Borrower will also grant Bank a
security interest in and lien upon any real property acquired after the date of
this Agreement costing in excess of $100,000, pursuant to deeds of trust,
mortgages or security deeds reasonably satisfactory to Bank, as additional
collateral security for the Note.
7
<PAGE>
4. CONDITIONS PRECEDENT. The Bank's agreement to extend the Revolver to
the Borrower is subject to the fulfillment, to the Bank's satisfaction, of all
of the following conditions:
A. Bank shall have received, on or before the date hereof (i) a copy of
the resolutions of the Board of Directors of the Borrower, certified on such
date by an officer of the Borrower, authorizing the execution and delivery of
this Agreement, the borrowings hereunder and the execution and delivery of the
Note, the other Loan Documents and the Collateral, and (ii) such additional
documents and requirements as the Bank or counsel for the Bank may reasonably
request.
B. The Borrower shall have executed and delivered all documentation for
the Loan, as requested by the Bank, which shall be in form and content
reasonably acceptable to the Bank and its counsel.
C. The Borrower shall have provided to the Bank, in form satisfactory to
the Bank, all financial and other information requested by Bank as to its
business and affairs.
D. The Borrower shall have provided to the Bank, in form and content
satisfactory to the Bank and its counsel, satisfactory evidence that the
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the corporate and legal
authority to own its property and carry on its business as now being conducted.
E. Each of the subsidiaries of the Borrower shall have provided to the
Bank certified copies of resolutions of their governing bodies authorizing
execution and delivery of the Guaranties, and satisfactory evidence that each of
such subsidiaries is duly organized, validly existing and in good standing under
the laws of their respective states of incorporation.
F. The Bank shall have received an opinion of the Borrower's counsel with
respect to such matters and in such form as is reasonably acceptable to the Bank
and its counsel.
G. All terms and conditions of the Bank's commitment letter to the
Borrower for the Loans have been satisfied and fulfilled, to the reasonable
satisfaction of the Bank.
H. No event has occurred or failed to occur that would have a Material
Adverse Effect on the financial condition of the Borrower as set forth in its
most recent annual and quarterly financial statements and internally-prepared
monthly financial statements submitted to Bank.
1. The Borrower shall have certified that the execution of the Loan
Documents shall not cause any default under any other contract or agreement to
which the Borrower or any of its subsidiaries is subject.
8
<PAGE>
J. The Borrower shall have paid or provided for the payment of all costs
and expenses incurred in connection with the making of the Loan, including,
without limitation, the Bank's attorneys' fees and expenses.
5. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and warrants
to Bank as follows:
A. Good Standing. Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the power and authority to own its property and to carry on its business in each
jurisdiction in which Borrower does business, and each of Borrower's
subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its organization, and has the power and authority to own
its property and carry on its business.
B. Authority and Compliance. Borrower and each of its subsidiaries
have full power and authority to execute and deliver the Loan Documents and to
incur and perform the obligations provided for therein, all of which have been
duly authorized by all proper and necessary action of the appropriate governing
body of Borrower and its subsidiaries, respectively. No consent or approval of
any public authority or other third party is required as a condition to the
validity of any Loan Document, and Borrower and each such Subsidiary, to the
best of the Borrower's knowledge after reasonable inquiry, are in compliance
with all laws and regulatory requirements to which they are subject.
C. Binding Agreement. This Agreement and the other Loan Documents
executed by Borrower and its subsidiaries constitute their valid and legally
binding obligations, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and similar laws and other laws generally
affecting the enforceability of creditors' rights and to general principles of
equity.
D. Litigation. There is no material proceeding involving Borrower or
any of its subsidiaries pending or, to the knowledge of Borrower, threatened
before any court or governmental authority, agency or arbitration authority,
which, if determined adversely to the Borrower, would have a Material Adverse
Effect on the Borrower and its subsidiaries, taken as a whole, except as
disclosed in Exhibit D attached hereto.
E. No Conflicting Agreements. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of Borrower or any of its subsidiaries and no
provision of any existing agreement, mortgage, indenture or contract binding on
Borrower or any of its subsidiaries or affecting their property, which would
conflict with or in any way prevent the execution, delivery or carrying out of
the terms of this Agreement and the other Loan Documents.
9
<PAGE>
F. Ownership of Assets. Borrower and its subsidiaries have good title
to their assets, and such assets are free and clear of liens, except those
granted to Bank and as disclosed to Bank in writing prior to the date of this
Agreement.
G. Taxes. All material taxes and assessments due and payable by
Borrower and its subsidiaries have been paid or are being contested in good
faith by appropriate proceedings and Borrower and its subsidiaries have filed
all material tax returns which they are required to file.
H. Financial Statements. The financial statements of Borrower
heretofore delivered to Bank have been prepared in accordance with GAAP applied
on a consistent basis throughout the period involved and fairly present
Borrower's financial condition as of the date or dates thereof, and there has
been no material adverse change in Borrower's financial condition or operations
since October 31, 1999. To the best of its knowledge, all factual information
furnished by Borrower to Bank in connection with this Agreement and the other
Loan Documents is and will be accurate and complete on the date as of which such
information is delivered to Bank.
I. Place of Business. Borrowers chief executive office is located at:
104 Cambridge Plaza Drive, Winston-Salem, North Carolina 27104.
J. Environmental Matters. The conduct of Borrower's and its
subsidiaries' business operations does not and will not violate any federal
laws, rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency, any applicable local or state law, rule,
regulation or rule of common law or any judicial interpretation thereof relating
primarily to the environment or Hazardous Materials, and Borrower and its
subsidiaries will not use or permit any other party to use any Hazardous
Materials at their places of business except such materials as are incidental to
their normal course of business, maintenance and repairs and which are handled
in compliance with all applicable environmental laws. Borrower agrees to permit
Bank, its agents, contractors and employees to enter and inspect any of
Borrower's and its subsidiaries' places of business or any of their other
property of Borrower at any reasonable time upon three (3) days prior notice for
the purposes of conducting an environmental investigation and audit (including
taking physical samples) to insure that they are complying with this covenant
and Borrower shall reimburse Bank on demand for the costs of any such
environmental investigation and audit. Borrower shall provide Bank, its agents,
contractors, employees and representatives with access to and copies of any and
all data and documents relating to or dealing with any Hazardous Materials used,
generated, manufactured, stored or disposed of by Borrower's and its
subsidiaries' business operations within five (5) days of the request therefor.
K. Year 2000 Compliance. Borrower represents that it has (i)
initiated a review and assessment of all areas within its and each of its
subsidiaries' businesses and operations (including those affected by suppliers
and vendors) that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by Borrower or any of its
subsidiaries (or their suppliers and vendors)
10
<PAGE>
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis and (iii) to date, implemented that plan in accordance with that
timetable. Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that the
Borrower reasonably believes a failure to do so will not have a Material Adverse
Effect on its business, financial condition, or ability to repay the Loans.
Borrower further represents that it will promptly notify the Bank in the
event Borrower discovers or determines that any computer application (including
those of its suppliers and vendors) that is material to its or any of its
subsidiaries' businesses and operations will not be Year 2000 compliant on a
timely basis, except to the extent that the Borrower reasonably believes such
failure will not have a Material Adverse Effect on its business, financial
condition or ability to repay the Loans.
L. No Material Adverse Effect. To the best of the Borrower's
knowledge, neither this Agreement nor any of the Loan Documents, nor any
statements furnished to the Bank by or on behalf of the Borrower and its
subsidiaries in connection with the Loans or the Loan Documents, contain any
untrue statement of a material fact. To the best knowledge of the Borrower,
there is no fact that the Borrower has not disclosed to the Bank in writing that
would have a Material Adverse Effect.
M. Continuation of Representation and Warranties. All representations
and warranties made under this Agreement shall be deemed to be made at and as of
the date hereof and at and as of the date of any future advance under any Loan
(except insofar as such representations and warranties relate expressly to an
earlier date, and except for the representations and warranties in Section 6. D
and H, which shall be deemed to be made solely on the date of this Agreement).
6. AFFIRMATIVE COVENANTS. Until full payment and performance of all
Obligations of Borrower under the Loan Documents, Borrower will, unless Bank
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. Financial Condition. Maintain Borrower's financial condition as
follows, determined in accordance with GAAP applied on a consistent basis
throughout the period involved, except to the extent modified by the following
definitions:
(i) Maintain a ratio of total liabilities (exclusive of the
Convertible Notes) to Tangible Net Worth plus the balance of the Convertible
Notes of 1.50 for the period January 31, 2000 to October 30, 2001, and 1.25 at
all times from and after October 31, 2001;
11
<PAGE>
(ii) Maintain a ratio of Funded Debt (exclusive of the Convertible
Notes) to EBITDA, as follows:
(a) not greater than 3.00 to one from April 30, 2000 to July 30, 2000;
(b) not greater than 2.50 to one from July 31, 2000 to January 30,
2001;
(c) not greater than 2.00 to one from January 31, 2001 to July 30,
2001; and
(d) not greater than 1.75 from and after July 31, 2001.
(iii) Maintain a ratio of Funded Debt (including the Convertible
Notes) to EBITDA, as follows:
(a) not greater than 3.50 to one from April 30, 2000 to July 30, 2000;
(b) not greater than 3.00 to one from July 31, 2000 to January 30,
2001;
(c) not greater than 2.50 to one from January 31, 2001 to July 30,
2001; and
(d) not greater than 2.00 from and after July 31, 2001.
(iv) Maintain a Cash Flow Coverage Ratio of not less than 1.2 to one
at April 30, 2000 for the trailing four (4) fiscal quarters, and at each fiscal
quarter end thereafter.
B. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to Bank and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Bank's officers or
authorized representatives to visit and inspect Borrower's books of account and
other records at such reasonable times and as often as Bank may desire. Borrower
shall pay the reasonable fees and disbursements of any accountants or other
agents of Bank selected by Bank for the foregoing purposes one time each year
during the term of the Loans. Unless written notice of another location is given
to Bank, Borrower's books and records will be located at Borrower's chief
executive office set forth above. All financial statements called for below
shall be prepared in form and content acceptable to Bank and by independent
certified public accountants acceptable to Bank.
In addition, Borrower will:
(i) Furnish to Bank (a) a report of audit of Borrower (including any
management letter), prepared by a firm of certified public accountants
reasonably acceptable to Bank, within 120 days after the close of each such
fiscal year and (b) a copy of the Borrower's federal income tax return, for each
fiscal year of Borrower, within 30 days of the date the same is filed;
(ii) Furnish to Bank a copy of the Borrower's quarterly report on Form
10-Q, within 45 days after the close of each such fiscal quarter;
12
<PAGE>
(iii) Furnish to Bank monthly financial statements (including a balance
sheet and profit and loss statement) of Borrower, which shall be prepared by
Borrower, for each month of each fiscal year of Borrower, within 45 days after
the close of each such month.
(iv) Furnish to Bank a compliance certificate for (and executed by an
authorized representative of) Borrower concurrently with and dated as of the
date of delivery of each of the financial statements as required in paragraphs
(i) and (ii) above, containing (a) a certification that the financial statements
of even date are true and correct and that the Borrower is not in default under
the terms of this Agreement, and (b) computations and conclusions, in such
detail as Bank may request, with respect to compliance with this Agreement, and
the other Loan Documents, including computations of all quantitative covenants.
Such compliance certificates shall be substantially in the form of Exhibit C
attached hereto.
(v) Furnish to Bank promptly such additional information, reports and
statements respecting the business operations and financial condition of
Borrower, from time to time, as Bank may reasonably request.
C. Insurance. Except as otherwise provided herein, maintain insurance
with insurance companies reasonably acceptable to the Bank on such of its
properties, in such amounts and against such risks as is customarily maintained
by similar businesses operating in the same vicinity, specifically to include
fire and extended coverage insurance covering all assets, business interruption
insurance, and liability insurance, all to be with such companies and in such
amounts as are satisfactory to Bank. Satisfactory evidence of such insurance
will be supplied to Bank prior to funding under the Loans and 30 days prior to
each policy renewal. Bank acknowledges and agrees that Borrower is self-insured
for collision damage on all vehicles constituting equipment; that it requires
its lessees to maintain collision insurance on all vehicles constituting
inventory held for lease, which insurance names the Borrower as loss payee; and
that it is self insured for workers compensation insurance. Borrower agrees that
it will notify Bank immediately if separate insurance coverage is hereafter
purchased by Borrower covering such risks, such insurance to be subject to the
terms of this section.
D. Existence and Compliance. Maintain its existence, good standing
and qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
E. Adverse Conditions or Events. Promptly advise Bank in writing of
(i) any condition, event or act which comes to its attention that the Borrower
reasonably believes would or might have a Material Adverse Effect on Borrower's
financial condition or operations, the Collateral, or Bank's rights under the
Loan Documents, (ii) any litigation filed by or against Borrower seeking in
excess of $50,000 in damages, (iii) any event that has occurred that would
constitute an event of default under any Loan Documents and (iv) any uninsured
or partially uninsured loss through
13
<PAGE>
fire, theft, liability or property damage in which the uninsured damages are in
excess of an aggregate of $100,000.00.
F. Taxes and Other Obligations. Pay all of its taxes, assessments
and other obligations, including, but not limited to taxes, costs or other
expenses arising out of this transaction, as the same become due and payable,
except to the extent the same are being contested in good faith by appropriate
proceedings in a diligent manner.
G. Maintenance. Maintain all of its tangible property in good
condition and repair, except for those properties deemed to be obsolete by the
Borrower, and make all necessary replacements thereof, and preserve and maintain
all licenses, trademarks, privileges, permits, franchises, certificates and the
like necessary for the operation of its business.
H. Notification of Environmental Claims. Borrower shall immediately
advise Bank in writing of (i) any and all enforcement, cleanup, remedial,
removal, or other governmental or regulatory actions instituted, completed or
threatened pursuant to any applicable federal, state, or local laws, ordinances
or regulations relating to any Hazardous Materials affecting Borrower's business
operations; and (ii) all claims made or threatened by any third party against
Borrower relating to damages, contribution, cost recovery, compensation, loss or
injury resulting from any Hazardous Materials. Borrower shall immediately notify
Bank of any remedial action taken by Borrower with respect to Borrower's
business operations.
7. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrower under the Loan Documents, Borrower will not, without the
prior written consent of Bank (and without limiting any requirement of any other
Loan Documents):
A. Ownership and Management. Make or permit to be made any material
change in the ownership or executive management of the Borrower; provided,
however, that the Borrower shall not be prohibited by this covenant from
conducting any public offering of its capital stock, or from issuing its capital
stock pursuant to the terms of the Convertible Notes, the warrants issued in
connection with the Convertible Notes, or the warrants issued to certain
investors in September, 1999.
B. Transfer of Assets or Control. Sell, lease, sell and leaseback,
assign or otherwise dispose of or transfer any assets, except in the normal
course of its business, or enter into any merger or consolidation, or transfer
control or ownership of the Borrower, or form or acquire any Subsidiary, except
for a wholly-owned Subsidiary which has executed a guaranty of the Revolver, in
form satisfactory to the Bank. It is expressly provided, however, that Borrower
may transfer all of its interest in the assets related to the bottling facility
under construction at Hamptonville, North Carolina, to the Bottling Company,
which will be formed to own such assets jointly with Manchester Tank & Equipment
Company.
14
<PAGE>
C. Liens. Grant, suffer or permit any contractual or noncontractual
lien on or security interest in its assets, except in favor of Bank, or fail to
promptly pay when due all lawful claims, whether for labor, materials or
otherwise, except claims which the Borrower is diligently contesting in good
faith and has provided reserves that are adequate in the Bank's reasonable
judgment.
D. Extensions of Credit. Make any loan or advance to any individual,
partnership, corporation or other entity, except (i) intercompany advances to
Subsidiaries of the Borrower which have guaranteed all indebtedness to the Bank,
(ii) as previously disclosed to Bank in writing, and (iii) other loans, not in
excess of an aggregate principal amount of $250,000.
E. Borrowings. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, deferred payment for the purchase of
assets, lease payments, as surety or guarantor for the debt for another, or
otherwise), other than to Bank, except for normal trade debts incurred in the
ordinary course of Borrower's business, and except for existing indebtedness
disclosed to Bank in writing and acknowledged by Bank prior to the date of this
Agreement. Borrower shall also be permitted to incur indebtedness to
Subsidiaries, shareholders or related companies hereafter, as long as the
incurrence of such indebtedness is disclosed to Bank and all such indebtedness
is fully subordinated to Borrower's indebtedness to Bank, in form satisfactory
to Bank. Borrower shall also be permitted to incur up to $500,000, in the
aggregate, of purchase money indebtedness in connection with acquisitions by
Borrower, payable to the former owners of the acquired entities or assets.
F. Capital Leases. Enter into capital leases in excess of an
aggregate of Two Million Five Hundred Thousand Dollars ($2,500,000) in amount of
all capital leases at any time outstanding.
G. Payments on Convertible Notes. Make any payment or prepayment in
any amount on the Convertible Notes with funds obtained, in whole or in part,
from advances under the Revolver.
H. Dividends and Distributions. At any time Borrower is in default
under this Agreement, or would be in default following or as a result thereof,
make any distribution (other than dividends payable in capital stock of
Borrower) on any shares of any class of its capital stock, or apply any of its
property or assets to the purchase, redemption or other retirement of any shares
of any class of capital stock of Borrower, or in any way amend its capital
structure.
I. Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not reasonably
related to its business as presently conducted.
8. DEFAULT. Borrower shall be in default under this Agreement and under
each of the other Loan Documents (an "Event of Default") if it shall default in
the
15
<PAGE>
payment of any amounts due and owing under the Loans. Borrower shall also be in
default if it should fail to timely and properly observe, keep or perform any
term, covenant, agreement or condition in any Loan Document (other than a
payment default) or in any other loan agreement, promissory note, guaranty,
security agreement, deed of trust, assignment, pledge or other contract securing
or evidencing payment of any indebtedness of Borrower to Bank or any affiliate
or subsidiary of Bank of America Corporation, and such default shall continue
uncured for a period of thirty (30) days (such thirty-day cure period to apply
to any such default, notwithstanding the absence of any such cure period in or
the conflicting provisions of any other Loan document). Borrower shall also be
in default hereunder if it shall default in payment of any amounts due and owing
under the Convertible Notes.
9. REMEDIES UPON DEFAULT. If an Event of Default shall occur, Bank shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.
10. NOTICES. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement
must be in writing delivered to the other party at the following address:
Borrower: Blue Rhino Corporation
104 Cambridge Plaza Drive
Winston-Salem, NC 27104
ATTN: Mark Castaneda
Chief Financial Officer
Bank: Bank of America, N.A.
380 Knollwood Street
Winston-Salem, NC 27103
ATTN: J. Thomas Johnson, Jr.
Senior Vice President
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by hand delivery, upon delivery;
B. If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid.
11. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in connection with Bank's
collection of, or attempts to collect, any Obligations due hereunder or under
the Notes.
16
<PAGE>
12. MISCELLANEOUS. Borrower and Bank further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
Bank under any Loan Document, or allowed it by law or equity shall be cumulative
of each other and may be exercised in addition to any and all other rights of
Bank, and no delay in exercising any right shall operate as a waiver thereof,
nor shall any single or partial exercise by Bank of any right preclude any other
or future exercise thereof or the exercise of any other right. Borrower
expressly waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of
acceleration. No notice to or demand on Borrower in any case shall, of itself,
entitle Borrower to any other or future notice or demand in similar or other
circumstances.
B. Applicable Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of North Carolina (excluding, however, any principles of
conflicts of laws) and applicable federal law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by either party
therefrom, shall be effective unless the same shall be in writing and signed by
each party, and then shall be effective only in the specified instance and for
the purpose for which given. This Loan Agreement is binding upon Borrower, its
successors and assigns, and inures to the benefit of Bank, its successors and
assigns; however, no assignment or other transfer of Borrower's rights or
obligations hereunder shall be made or be effective without Bank's prior written
consent, nor shall it relieve Borrower of any obligations hereunder. There is no
third party beneficiary of this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Bank shall be in
form and content satisfactory to Bank and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or validity
of any other provision herein and the invalidity or unenforceability of any
provision of any Loan Document to any person or circumstance shall not affect
the enforceability or validity of such provision as it may apply to other
persons or circumstances.
F. Indemnification. Borrower shall indemnify, defend and hold Bank
and its successors and assigns harmless from and against any and all claims,
demands, suits, losses, damages, assessments, fines, penalties, costs or other
expenses (including reasonable attorneys' fees and court costs) ("Indemnified
Damages") arising from or in any way related to any of the transactions
contemplated hereby, except Indemnified Damages occurring as a result of willful
or negligent conduct of the Bank, including but not limited to actual or
threatened damage to the environment, agency costs
17
<PAGE>
of investigation, personal injury or death, or property damage, due to a release
or alleged release of Hazardous Materials, arising from Borrower's business
operations, any other property owned by Borrower or in the surface or ground
water arising from Borrower's business operations, or gaseous emissions arising
from Borrower's business operations or any other condition existing or arising
from Borrower's business operations resulting from the use or existence of
Hazardous Materials, whether such claim proves to be true or false. Borrower
further agrees that its indemnity obligations shall include, but are not limited
to, liability for damages resulting from the personal injury or death of an
employee of the Borrower, regardless of whether the Borrower has paid the
employee under the worker's compensation laws of any state or other similar
federal or state legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to, damage to any
real or personal property of the Borrower, the Bank, and of any third parties.
The Borrower's obligations under this paragraph shall survive the repayment of
the Loans and foreclosure of the Collateral.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making
of the Loans and shall continue in full force and effect so long as the Loans
are outstanding or the obligation of the Bank to make any advances under the
Loans shall not have expired.
H. Updated Appraisals and Maintenance of Collateral Value. Bank may
at its option, at Borrower's expense, obtain an appraisal of the Collateral
securing payment of the Loans. The costs of each such appraisal shall be payable
by Borrower to Bank on demand. If such appraisal shows the market value of the
Collateral has declined, Borrower agrees that, upon demand by Bank, it will
immediately either pledge additional collateral in form and substance
satisfactory to Bank or make such payments as shall be necessary to reduce the
principal balance outstanding under the Loan.
13. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO, INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING ANY CLAIM BASED ON
OR ARISING FROM AN ALLEGED TORT, SHALL BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE FEDERAL ARBITRATION ACT (OR IF NOT APPLICABLE, THE
APPLICABLE STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR THE ARBITRATION
OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE, INC., OR ANY SUCCESSOR THEREOF
("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT OF ANY
INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON ANY ARBITRATION
AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY TO THIS
AGREEMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO
COMPEL ARBITRATION OF ANY CONTROVERSY OR CLAIM TO WHICH THIS AGREEMENT APPLIES
IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.
18
<PAGE>
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
THE BORROWER'S DOMICILE AT TIME OF THE EXECUTION OF THIS AGREEMENT AND
ADMINISTERED BY J.A.M.S., WHICH WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS
UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN THE
AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL BE
COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE ARBITRATOR
SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT OF
SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL
BE DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II) BE A
WAIVER BY THE BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF THE BANK HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR (C) TO OBTAIN
FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT LIMITED TO)
INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A RECEIVER. THE BANK
MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH PROPERTY, OR OBTAIN SUCH
PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR AFTER THE PENDENCY OF ANY
ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS AGREEMENT. NEITHER THE EXERCISE
OF SELF HELP REMEDIES NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR
FORECLOSURE OR PROVISIONAL OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF
THE RIGHT OF ANY PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE
THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
14. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
15. RATIFICATION OF ORIGINAL AGREEMENT. Borrower hereby acknowledges that
it is indebted to the Bank pursuant to the BR Loan Agreement in accordance with
the terms thereof, as amended prior to the date hereof, and that there exists no
defense, offset to, or claim in diminution or avoidance of, any of its
liabilities and obligations pursuant to such BR Loan Agreement, as so amended.
Borrower further ratifies and affirms the BR Loan Agreement, as amended
previously and as amended and
19
<PAGE>
restated by this Amended and Restated Loan Agreement; agrees that there is no
change or modification thereto, except as expressly provided herein; and agrees
that the BR Loan Agreement, as amended previously and as amended and restated
hereby, shall be and constitute the Loan Agreement, with the same effect as if
this Agreement had been made on the date of the BR Loan Agreement, and not a
novation thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
BORROWER:
---------
BLUE RHINO CORPORATION
ATTEST: /s/ Billy D. Prim
By:____________________________
/s/ Mark Castaneda CEO
_________________________ Title:_________________________
Secretary
[Corporate Seal]
BANK:
-----
BANK OF AMERICA, N.A.
/s/ J. Thomas Johnson, Jr
By:___________________________
Senior Vice President
Title:________________________
20
<PAGE>
EXHIBIT A
BORROWING BASE AGREEMENT
------------------------
1. Borrowing Base. The aggregate principal amount of all amounts from time
to time advanced pursuant to the terms of that promissory note dated December
__, 1999 in the principal amount of $25,000,000 (the "Note") shall not exceed
the Maximum Amount.
"Maximum Amount" shall mean the lesser of $25,000,000 or the Borrowing
Base. The "Borrowing Base" at any time, shall be equal to 80% of Eligible
Accounts Receivable, 50% of Eligible Inventory, and 50% of Equipment, as such
terms are defined herein or in the Amended and Restated Loan Agreement between
Borrower and Bank dated December __, 1999.
"Eligible Accounts Receivable" shall mean all accounts receivable of
Borrower which have been created in the ordinary course of Borrower's business
and for which Borrower's right to receive payment is absolute and not contingent
upon the fulfillment of any condition whatsoever, and shall not include:
(i) any invoice which is more than ninety (90) days past due;
(ii) any account for which there exists a right of set off, defense or
discount (except regular discounts allowed in the ordinary course of business to
promote prompt payment) and for which no defense or counterclaim has been
asserted;
(iii) any account which represents an obligation of any local, state
or federal governmental agency or entity;
(iv) any account which arises out of a contract or order which, by its
terms, forbids or makes void or unenforceable any assignment by Borrower to Bank
of the account receivable arising with respect thereto;
(v) any account arising from a "sale on approval," "sale or return,"
"consignment," or subject to any other repurchase or return agreement;
(vi) any account which represents an obligation of a customer which is
not a resident of the United States or its territories unless such account is
supported by a letter of credit in form and substance acceptable to Bank;
(vii) any account which arises from the sale or lease to or
performance of services for, or represents an obligation of, an employee,
affiliate, partner, parent or Subsidiary of Borrower;
(viii) any account which represents an obligation of a customer of
Borrower when 80% or more of Borrower's accounts from such customer are not
eligible pursuant to the foregoing formula; and
21
<PAGE>
(ix) any unapplied credits over 90 days old.
"Accounts Receivable" shall mean all of the Borrower's accounts,
instruments, contract rights, chattel paper, document, and general intangibles
arising from the sale of goods and/or the rendition of services by the Borrower
in the ordinary course of business, and the proceeds thereof and all security
and guaranties therefor, whether now existing or hereafter created, and all
returned, reclaimed or repossessed goods, and all books and records pertaining
to the foregoing.
"Eligible Inventory" shall mean all non-obsolete cylinder inventory of
Borrower or USA Leasing, L.L.C., a guarantor of the loans to Borrower, which is
under lease to third party lessees.
2. Advances. The amounts of advances under the Revolver Note shall be
determined consistent with the value of the Eligible Accounts Receivable and the
Eligible Inventory, taking into account all fluctuations of the value thereof.
The Bank shall be under no obligation to make any advance to Borrower in excess
of the limitations stated above.
3. Reporting. In addition to any reporting requirements required under the
Loan Agreement to which this Borrowing Base Agreement is attached, the Borrower
will submit the following in form and substance satisfactory to Bank:
(i) Accounts Receivable Aging. Not later than thirty (30) days after
and as the end of each month, a listing of accounts receivable aged from date of
invoice.
(ii) Borrowing Base Certificate. Not later than thirty (30) days after
the end of each month, Borrower will submit a Borrowing Base Certificate in the
form attached hereto as Exhibit A- 1.
4. [x] Lock Box Arrangement. Bank and Borrower shall, upon request of Bank,
establish and maintain one or more special lock box or blocked accounts for the
collection of the Accounts Receivables. Each such special account shall be with
a bank satisfactory to the Bank (which may be an affiliate of the Bank) and
shall be subject to the Bank's standard form agreement. Any checks or other
remittances against Accounts Receivables which are received by the Borrower
shall be held in trust for the Bank and turned over by the Borrower to the Bank
or to a person designated by the Bank in the identical form received (except for
any necessary endorsement) as speedily as possible.
5. Mandatory Payment. In the event the aggregate principal outstanding
balance of advances under the Revolver Note exceeds the Maximum Amount, Borrower
shall immediately and without notice or demand of any kind, make such payments
as shall be necessary to reduce the principal balance of the Revolver Note below
the Maximum Amount.
22
<PAGE>
BLUE RHINO CORPORATION BANK OF AMERICA, N.A.
/s/ Billy D. Prim
By:__________________(Seal) By: /s/ J. Thomas Johnson, Jr.
Name: Billy D. Prim _________________________ (Seal)
Title: Manager Name: J. Thomas Johnson Jr.
Title: Senior Vice President
23
<PAGE>
Exhibit 10.2
AMENDMENT TO SECURITY AGREEMENT
-------------------------------
THIS AMENDMENT TO SECURITY AGREEMENT (this "Amendment") dated as of
December 9, 1999, by and between BANK OF AMERICA, N.A., a national banking
association ("Bank") and BLUE RHINO CORPORATION ("Borrower"):
R E C I T A L S:
WHEREAS, Bank and Borrower are parties to that certain Loan Agreement dated
December 31, 1998 (the "BR Loan Agreement"), pursuant to which Bank made certain
loans to Borrower, as more fully described therein, including a revolving line
of credit (the "Revolver") in the original principal amount of up to $7,000,000,
and a non-revolving line of credit (the "Acquisition Line") in the principal
amount of up to $5,000,000; and
WHEREAS, on the same date, Bank and USA Leasing, LLC, a Delaware limited
company (the "Lessor"), entered into a Loan Agreement (the "Lessor Loan
Agreement"), pursuant to which Bank extended a non-revolving line of credit (the
"Lease Line") to Lessor in the principal amount of up to $13,000,000, which
Lease Line was personally guaranteed by the members of the Lessor (the
"Members") and by Borrower pursuant to limited guaranties (the "Guaranties");
and
WHEREAS, the indebtedness of the Borrower pursuant to the BR Loan Agreement
was secured by a security interest in all of the Borrower's accounts receivable,
inventory and equipment, pursuant to a Security Agreement dated December 31,
1998 (the "BR Security Agreement"), and the indebtedness of Lessor pursuant to
the Lessor Loan Agreement was secured by a security interest in all of the
Lessor's accounts receivable, chattel paper (including leases), inventory and
equipment, pursuant to a Security Agreement dated December 31, 1998; and
WHEREAS, by that certain Amendment to Loan Agreement between the Borrower
and the Bank, dated June 14, 1999 (the "BR Loan Amendment"), the Bank agreed to
modify certain limitations on the amount of credit available under the various
loan facilities to allow Borrower to obtain additional advances under the
Revolver and the Acquisition Line, and also agreed to modify certain financial
covenants, to modify the Borrowing Base, and to make certain other changes in
the BR Loan Agreement; and
WHEREAS, pursuant to that certain Waiver Agreement among the Borrower, the
Lessor and the Bank, dated as of July 30, 1999 (the "Waiver"), the Bank agreed
to permit the sale of all of the Members' interests in the Lessor to the
Borrower, subject to certain terms and conditions, including that the Borrower
would execute an amended Guaranty of all indebtedness of the Lessor to the Bank;
and the Bank further agreed to release the limited guaranties of the Members of
the Lessor upon receipt of certain funds; and
WHEREAS, on September 21, 1999, the Borrower caused to be issued its
Convertible Note in the principal amount of $7,000,000 (such note and all other
notes issued pursuant thereto shall be referred to herein as the "Convertible
Notes"), together with certain warrants to purchase
<PAGE>
common stock of the Borrower, payment of which Convertible Notes is subordinated
to the prior payment in full of Borrower's indebtedness to the Bank, up to a
principal amount of $25,000,000; and
WHEREAS, the Bank consented to the issuance of the Convertible Notes,
subject to certain terms and conditions, and also agreed to waive the Borrower's
compliance with certain financial covenants as of July 31, 1999; and
WHEREAS, the Borrower has now requested that the Bank agree to restructure
the existing indebtedness of the Borrower and the Lessor pursuant to the BR Loan
Agreement and the Lessor Loan Agreement; and
WHEREAS, Bank has agreed to so restructure such indebtedness, pursuant to
an Amended and Restated Loan Agreement of even date herewith (the "Restated Loan
Agreement"), so that Borrower will become the borrower under a revolving line of
credit in the principal amount of $25,000,000 (the "New Revolver"), payment of
which New Revolver the Lessor, among others, will guarantee; and
WHEREAS, the parties hereto wish to amend the BR Security Agreement, so
that it shall secure all of the Borrower's indebtedness pursuant to the Restated
Loan Agreement and the Revolver;
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, Bank and
Borrower agree as follows:
1. Amendment. The BR Security Agreement is hereby amended to include in
the "Obligations" secured thereby all of the Borrower's indebtedness to the Bank
pursuant to the Restated Loan Agreement and the New Revolver, as the same now
exists and as it may be amended, extended, or modified (including any amendment
or modification to increase the same) hereafter.
2. Ratification and Waiver. The Borrower expressly ratifies and affirms
all of its liabilities and obligations to the Bank under and pursuant to the BR
Security Agreement, and further stipulates and agrees that there exists no
claim, defense, offset to, or matter in avoidance of any of its liability on
account thereof, and does further unconditionally waive, release and discharge,
for itself and its successors and assigns, any and all claims, defenses, offsets
or matters in avoidance of any of its said liability to the Bank on account
thereof. No waiver or release of, or consent to any action or omission contrary
to the terms of, this Amendment and such BR Security Agreement, is intended or
shall be inferred hereby, other than as expressly set forth herein.
2
<PAGE>
3. Representations and Warranties. The Borrower represents and warrants to
the Bank as follows:
(a) Power and Authority; Enforceability. The Borrower has the power
and authority to execute and deliver this Amendment and to perform the
terms and conditions of the BR Security Agreement, as amended and modified
by this Amendment. The execution and delivery of this Amendment by the
Borrower and the performance of the BR Security Agreement, as amended and
modified by this Amendment, do not and will not violate any law, rule or
regulation, or constitute a breach of the articles of incorporation, bylaws
or corporate resolutions of Borrower or any agreement to which the Borrower
is a party or by which its assets are bound. The BR Security Agreement, as
amended and modified by this Amendment, constitutes the legal, valid and
binding obligation of the Borrower, enforceable in accordance with its
respective terms, subject to bankruptcy, insolvency, reorganization, and
similar laws and other law generally affecting the enforceability of
creditors' rights and to general principles of equity.
(b) No Default. Upon the execution and delivery of this Amendment by
the Borrower, the Borrower will not be in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in the BR Security Agreement, as amended and modified
by this Amendment, or any other agreement or instrument relating to the
Restated Loan Agreement to which it is a party.
(c) Representations. The representations and the information furnished
by the Borrower to the Bank with regard to this Amendment are and shall
continue to be true and not misleading in all material respects. In
addition, the representations and warranties of the Borrower to the Bank
contained herein, in the BR Security Agreement, in the Restated Loan
Agreement, and in any other document or instrument executed or delivered by
the Borrower in connection therewith, are and shall continue to be true and
not misleading in all material respects, except as otherwise disclosed in
writing to the Bank and approved by the Bank prior to the date hereof.
4. Covenants. The Borrower covenants and agrees that, unless the Bank
shall otherwise consent in writing, the Borrower shall:
(a) Compliance with Covenants. Continue to comply with all of the
terms, covenants and agreements contained in the BR Security Agreement, as
amended and modified by this Amendment.
(b) Further Assurances. Execute and deliver such further instruments,
and take such further action as the Bank may reasonably request, in each
case to further effect the purposes of the BR Security Agreement, as
modified by this Amendment.
5. No Other Amendment. Except as expressly amended hereby, the BR
Security Agreement shall be and remain in full force and effect in accordance
with its terms.
3
<PAGE>
6. Miscellaneous.
(a) All references to the "Security Agreement" or the "Agreement" in the BR
Security Agreement shall hereafter mean and refer to the BR Security Agreement
as amended hereby.
(b) All capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed to such terms in the BR Security Agreement.
7. Counterparts. This Amendment may be executed in separate counterparts,
and said counterparts taken together shall be deemed to constitute one and the
same instrument. An executed copy of this Amendment delivered by telecopier
shall have the same effect as an originally executed copy of this Amendment.
8. NO ORAL AGREEMENT. THIS WRITTEN AMENDMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
BORROWER:
---------
BLUE RHINO CORPORATION
ATTEST:
By: /s/ Billy D. Prim
----------------------------------
/s/ Mark Castaneda Title: Chairman and CEO and President
- - - ------------------------- -------------------------------
Secretary
[Corporate Seal]
BANK:
-----
BANK OF AMERICA, N.A.
By: /s/ J. Thomas Johnson, Jr
----------------------------------
Title: Senior Vice President
-------------------------------
4
<PAGE>
Exhibit 10.3
Bank of America, N.A.
PROMISSORY NOTE
Date: DECEMBER 9th, 1999 [_] New [X] Renewal Amount $25,000,000.00
Maturity Date: AUGUST 31, 2001
================================================================================
Bank: Borrower:
Bank of America, N.A.
Banking Center:
Commercial Landing BLUE RHINO CORPORATION
380 Knollwood Street 104 CAMBRIDGE PLAZA DR.
Winston-Salem, Forsyth Co., NC 27103 WINSTON-SALEM, FORSYTH CO., NC 27104
(Street address including county) (Name and street address, including county)
================================================================================
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its successor
and assigns, without setoff, at its offices indicated at the beginning of this
Note, or at such other place as may be designated by Bank, the principal amount
of UP TO TWENTY-FIVE MILLION AND NO/100 DOLLARS ($25,000,000.00), or so much
-------------------------------------------------------------
thereof as may be advanced from time to time in immediately available funds,
together with interest computed daily on the outstanding principal balance
hereunder, at an annual interest rate, and in accordance with the payment
schedule, indicated below.
[This Note contains some provisions preceded by boxes. If a box is marked, the
provision applies to this transaction; if it is not marked, the provision does
not apply to this transaction.]
1. Rate.
[_] Prime Rate. The Rate shall be the Prime Rate, plus _____________ percent,
per annum. The "Prime Rate" is the fluctuating rate of interest established by
Bank from time to time, at its discretion, whether or not such rate shall be
otherwise published. The Prime Rate is established by Bank as an Index and may
or may not at any time be the best or lowest rate charged by Bank on any loan.
[_] Fixed Rate. The Rate shall be fixed at _____________ percent per annum.
[X] Other. The rate shall be thirty-day LIBOR, plus two hundred basis points
(2.00%) per annum, as such Rate is determined by the Bank and changes from time
to time.
Notwithstanding any provision of this Note, Bank does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges in
excess of the maximum permitted by the applicable law of the State of North
Carolina; if any higher rate calling is lawful, then that higher rate calling
shall apply. Any payment in excess of such maximum shall be refunded to Borrower
or credited against principal, at the option of Bank.
2. Accrual Method. Unless otherwise indicated, interest at the Rate set
forth above will be calculated by the 365/360 day method (a daily amount of
interest is computed for a hypothetical year of 360 days; that amount is
multiplied by the actual number of days for which any principal is outstanding
hereunder). If interest is not to be computed using this method, the method
shall be: _____________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________.
3. Rate Change Date. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the index
or base rate changes. The Rate may also change in accordance with the interest
rate provisions of the Loan Agreement of even date herewith between the Borrower
and the Bank (the "Loan Agreement"). In the event any index is discontinued,
Bank shall substitute an index determined by Bank to be comparable, in its sole
discretion.
4. Payment Schedule. All payments received hereunder shall be applied first
to the payment of any expense or charges payable hereunder or under any other
loan documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option.
[_] Principal Plus Accrued Interest. Principal shall be paid in consecutive
equal installments of $_____________, plus accrued interest payable [_] monthly,
[_] quarterly or [_]_____________________________, commencing on ______________,
19___, and continuing on the [_] same day, [_] last day of each successive
month, quarter or other period (as applicable) thereafter, with a final payment
of all unpaid principal and accrued interest due on _________________, 19___.
[_] Fixed Principal and Interest. Principal and interest shall be paid in
consecutive equal installments of $_______________, payable [_] monthly, [_]
quarterly or [_] _______________________________, commencing on _____________,
19___, and continuing on the [_] same day, [_] last day of each successive
month, quarter or other period (as applicable) thereafter, with a final payment
of all unpaid principal and interest due thereon on _______________________,
19___. If, on any payment date, accrued interest exceeds the installment amount
set forth above, Borrower will also pay such excess as and when billed.
[X] Single Principal Payment. Principal shall be paid in full in a single
payment on AUGUST 31, 2001. Interest thereon shall be paid [_] at maturity, or
else [X] monthly, [_] quarterly or [_] ________________________, commencing on
JANUARY 2, 2000, and continuing on the [X] same day, [_] last day of each
successive month, quarter or other period (as applicable) thereafter, with a
final payment of all unpaid interest at the stated maturity of this Note.
[X] Other. This is the "Note" described in the Amended and Restated Loan
Agreement of even date herewith, to which reference is hereby made for
additional provisions affecting this Note.
Bank of America, Promissory Note
North Carolina (Commercial) -1- 2/96
<PAGE>
5. Revolving Feature.
[X] Borrower may borrow, repay and reborrow hereunder at any time, up to a
maximum aggregate amount outstanding at any one time equal to the principal
amount of this Note, provided that Borrower is not in default under any
provision of this Note, any other documents executed in connection with this
Note, or any other note or other loan documents now or hereafter executed in
connection with any other obligation of Borrower to Bank, and provided that the
borrowings hereunder do not exceed any borrowing base or other limitation on
borrowings by Borrower. Bank shall incur no liability for its refusal to advance
funds based upon its determination that any conditions of such further advances
have not been met. Bank records of the amounts borrowed from time to time shall
be conclusive proof thereof.
[_] Uncommitted Facility. Borrower acknowledges and agrees that,
notwithstanding any provisions of this Note or any other documents executed
in connection with this Note, Bank has no obligation to make any advance,
and that all advances are at the sole discretion of Bank.
[_] Out-Of-Debt Period. For a period of at least __________ consecutive
days during [_] each fiscal year, [_] any consecutive 12-month period,
Borrower shall fully pay down the balance of this Note, so that no amount
of principal or interest and no other obligation under this Note remains
outstanding.
6. Automatic Payment.
[_] Borrower has selected to authorize Bank to effect payment of sums due under
this Note by means of debiting Borrower's account number ______________________.
This authorization shall not affect the obligation of Borrower to pay such sums
when due, without notice, if there are insufficient funds in such accounts to
make such payment in full on the due date thereof, or if Bank fails to debit the
account.
7. Waivers, Consents and Covenants. Borrower, any indorser or guarantor
hereof, or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any Obligor
in connection with the delivery, acceptance, performance, default or enforcement
of this Note, any indorsement or guaranty of this Note, or any other documents
executed in connection with this Note or any other note or other loan documents
now or hereafter executed in connection with any obligation of Borrower to Bank
(the "Loan Document"); (b) consent to all delays, extensions, renewals or other
modifications of this Note or the Loan Documents, or waivers of any term hereof
or of the Loan Documents, or release or discharge by Bank of any of Obligors, or
release, substitution or exchange of any security for the payment hereof, or the
failure to act on the part of Bank, or any indulgence shown by Bank (without
notice to or further assent from any of Obligors), and agree that no such
action, failure to act or failure to exercise any right or remedy by Bank shall
in any way affect or impair the obligations of any Obligors or be construed as a
waiver by Bank of, or otherwise affect, any of Bank's rights under this Note,
under any indorsement or guaranty of this Note or under any of the Loan
Documents; and (c) agree to pay, on demand, all costs and expenses of collection
or defense of this Note or of any indorsement or guaranty hereof and/or the
enforcement or defense of Bank's rights with respect to, or the administration,
supervision, preservation, or protection of, or realization upon, any property
securing payment hereof, including, without limitation, reasonable attorney's
fees, including fees related to any suit, mediation or arbitration proceeding,
out of court payment agreement, trial, appeal, bankruptcy, proceedings or other
proceeding, in such amount as may be determined reasonable by any arbitrator or
court, whichever is applicable.
8. Prepayments. Prepayments may be made in whole or in part at any time on
any loan. All prepayments of principal shall be applied in the inverse order of
maturity, or in such other order as Bank shall determine in its sole discretion.
9. Delinquency Charge. To the extent permitted by law, a delinquency charge
may be imposed in an amount not to exceed four percent (4%) of the unpaid
portion of any payment that is more than fifteen days late. Unless the terms of
this Note call for repayment of the entire balance of this Note (both principal
and interest) in a single payment and not for installments of interest or
principal and interest, the 4% delinquency charge may be imposed not only with
respect to regular installments of principal or interest or principal and
interest, but also with respect, to any other payment in default under this Note
(other than a previous delinquency charge), including without limitation, a
single payment of principal due at the maturity of this Note. In the event any
installment, or portion thereof, is not paid in a timely manner, subsequent
payments will be applied first to the past due balance (which shall not include
any previous delinquency charges), specifically to the oldest maturing
installment, and a separate delinquency charge will be imposed for each payment
that becomes due until the default is cured.
10. Events of Default. The following are events of default hereunder: (a)
subject to the tolling of any applicable cure period, the failure to pay or
perform any obligation, liability or indebtedness of any Obligor to Bank, or to
any affiliate or subsidiary of Bank of America Corporation, whether under this
Note or any Loan Documents, as and when due (whether upon demand, at maturity or
by acceleration); (b) subject to the tolling of any applicable cure period, the
failure to pay or perform any other obligation, liability or indebtedness of any
Obligor to any other party; (c) the death of any Obligor (if an individual); (d)
the resignation or withdrawal of any partner or a material owner/guarantor of
Borrower, as determined by Bank in its sole discretion; (e) the commencement of
a proceeding against any Obligor for dissolution or liquidation, the voluntary
or involuntary termination or dissolution of any Obligor or the merger or
consolidation of any Obligor with or into another entity; (f) the insolvency of,
the business failure of, the appointment of a custodian, trustee, liquidator or
receiver for or for any of the property of, the assignment for the benefit of
creditors by, or the filing of a petition under bankruptcy, insolvency or
debtor's relief law or the filing of a petition for any adjustment of
indebtedness, composition or extension by or against any Obligor; (g) the
determination by Bank that any representation or warranty made to Bank by any
Obligor in any Loan Documents or otherwise is or was, when it was made, untrue
or materially misleading; (h) the entry of a judgment against any Obligor which
Bank deems to be of a material nature, in Bank's sole discretion; (i) the
seizure or forfeiture or, or the issuance of any writ of possession, garnishment
or attachment, or any turnover order for any property of any Obligor; or (j) the
failure of Borrower's business to comply with any law or regulation controlling
its operation, the failure to comply with which would result in a material
adverse effect on Borrower.
11. Remedies upon Default. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder and all other obligations of any Obligor to
Bank (however acquired or evidenced) shall, at the option of Bank, become
immediately due and payable and any obligation of Bank to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of Interest on the unpaid principal shall
be increased to 4% per annum in excess of the rate previously applicable to the
balance of unpaid principal hereunder (the "Default Rate"). The provisions
herein for a Default Rate and a delinquency charge shall not be deemed to extend
the time for any payment hereunder or to constitute a "grace period" giving
Obligors a right to cure any default. At Bank's option, any accrued and unpaid
interest, fees or charges may, for purposes of computing and accruing interest
on a daily basis after the due date of this Note or any installment thereof, be
deemed to be a part of the principal balance, and interest shall accrue on a
daily compounded basis after such date at the Default Rate provided in this Note
until the entire outstanding balance of principal and interest is paid in full.
Upon a default under this Note, Bank is hereby authorized at any time, at its
option and without notice or demand to set off and charge against any deposit
accounts of any Obligor (as well as any money, instruments, securities,
documents, chattel paper, credits, claims, demands, income and any other
property, rights and interests of any Obligor), which at any time shall come
into the possession or custody or under the control of Bank or any of its
agents, affiliates or correspondents, any and all obligations due hereunder.
Additionally, Bank shall have all rights and remedies available under each of
the Loan Documents, as well as all rights and remedies available at law or in
equity.
12. Non-Waiver. The failure at any time of Bank to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date. All
rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of Bank's
rights under this Note. No waiver of any of its rights hereunder, and no
modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligors to Bank
in any other respect at any other time.
-2-
<PAGE>
13. Applicable Law, Venue and Jurisdiction. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the State of North Carolina. In any litigation in
connection with or to enforce this Note or any Indorsement or guaranty of this
Note or any Loan Documents, Obligors, and each of them, irrevocably consent to
and confer personal jurisdiction on the courts of the State of North Carolina or
the United States located within the State of North Carolina and expressly waive
any objections as to venue in any such courts. Nothing contained herein shall,
however, prevent Bank from bringing any action or exercising any rights within
any other state or jurisdiction or from obtaining personal jurisdiction by any
other means available under applicable law.
14. Partial Invalidity. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other provision
herein and the invalidity or unenforceability of any provision of this Note or
of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.
15. Binding Effect. This Note shall be binding upon and inure to the benefit of
Borrower, Obligors and Bank and their respective successors, assigns, heirs and
personal representatives, provided, however, that no obligations of Borrower or
Obligors hereunder can be assigned without prior written consent of Bank.
16. Controlling Document. To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an issue.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY
WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL
SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER, BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSURE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT, NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
Borrower represents to Bank that the proceeds of this loan are to be used
primarily for business, commercial or agricultural purposes. Borrower
acknowledges having read and understood, and agrees to be bound by, all terms
and conditions of this Note and hereby executes this Note under seal as of the
date here above written.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN OR ORAL AGREEMENTS BETWEEN THE PARTIES.
Borrower Corporate or Partnership Borrower
BLUE RHINO CORPORATION
_____________________________(Seal)
/s/ Billy D. Prim
___________________________________ By:___________________________(Seal)
Print Individual's Name Billy D. Prim
Name:_______________________________
_____________________________(Seal) Chairman and CEO
Title:______________________________
___________________________________
Print Individual's Name ____________________________________
Attest (If Applicable)
[Corporate Seal]
Bank of America Promissory Note
North Carolina [Commercial] -3- 2/96
<PAGE>
Exhibit 10.4
Bank of America, N.A.
Date: December 9, 1999
CONTINUING AND UNCONDITIONAL GUARANTY
================================================================================
Bank: Guarantor:
Bank of America, N.A.
Banking Center:
Commercial Lending CPD ASSOCIATES, INC.
380 Knollwood Street 104 CAMBRIDGE PLAZA DRIVE
Winston-Salem, Forsyth Co., NC 27103 WINSTON-SALEM, FORSYTH CO., NC 27104
(Street address including county) (Name and street address, including
county)
================================================================================
"Borrower": BLUE RHINO CORPORATION
---------------------------------------------------------------------
(Borrower's Name)
1. Guaranty. FOR VALUE RECEIVED, and to induce Bank of America, N.A. (Attn: J.
Thomas Johnson, Jr.) ("Bank") to make loans or advances or to extend credit or
other financial accommodations or benefits, with or without security, to or for
the account of Borrower, the undersigned "Guarantor", if more than one, then
each of them jointly and severally, hereby becomes surety for the irrevocably
and unconditionally guarantees to Bank the full and prompt payment when due,
whether by acceleration or otherwise, of any and all Liabilities of Borrower to
Bank. This Guaranty is continuing and unlimited as to the amount, and is
cumulative to and does not supersede any other guaranties.
Guarantor further unconditionally guarantees the faithful, prompt and complete
compliance by Borrower with all Obligations (as hereinafter defined). The
undertakings of Guarantor hereunder are independent of the Liabilities and
Obligations of Borrower and a separate action or actions for payment, damages or
performance may be brought or prosecuted against Guarantor, whether or not an
action is brought against Borrower or to realize upon the security for the
Liabilities and/or Obligations, whether or not Borrower is joined in any such
action or actions, and whether or not notice is given or demand is made upon
Borrower.
Bank shall not be required to proceed first against Borrower, or any other
person or entity, whether primarily or secondarily liable, or against any
collateral held by it, before resorting to Guarantor for payment, and Guarantor
shall not be entitled to assert as a defense to the enforceability of the
Guaranty any defense of Borrower with respect to any Liabilities or Obligations.
2. Paragraph Headings, Governing Law and Binding Effect. Guarantor agrees that
the paragraph headings in this Guaranty are for convenience only and that they
will not limit any of the provisions of this Guaranty. Guarantor further agrees
that this Guaranty shall be governed by and construed in accordance with the
laws of the State of North Carolina and applicable United States federal law.
Guarantor further agrees that this Guaranty shall be deemed to have been made in
the State of North Carolina at Bank's address indicated above, and shall be
governed by, and construed in accordance with, the laws of the State of North
Carolina, or the United States courts located within the State of North
Carolina, and is performable in the State of North Carolina. This Guaranty is
binding upon Guarantor, his, their or its executors, administrators, successor
or assigns, and shall inure to the benefit of Bank, its successors, indorsees or
assigns. Anyone executing this Guaranty shall be bound by the terms hereof
without regard to execution by anyone else.
3. Definitions.
A. "Guarantor" shall mean Guarantor or any one or more of them.
B. "Liability" or "Liabilities" shall mean without limitation, all
liabilities, overdrafts, indebtedness, and obligations of Borrower and/or
Guarantor to Bank, whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, now or
hereafter existing, or held or to be held by Bank for its own account or as
agent for another or others, whether created directly, indirectly, or acquired
by assignment or otherwise, including but not limited to all extensions or
renewals thereof, and all sums payable under or by virtue thereof, including
without limitation, all amounts of principal and interest, all expenses
(including reasonable attorney's fees and cost of collection) incurred in the
collection thereof or the enforcement of rights thereunder (including without
limitation, any liability arising from failure to comply with state or federal
laws, rules and regulations concerning the control of hazardous waste or
substances at or with respect to any real estate securing any loan guaranteed
hereby), whether arising in the ordinary course of business or otherwise. If
Borrower is a partnership, corporation or other entity the term "Liability" or
"Liabilities" as used herein shall include all Liabilities to Bank of any
successor entity or entities.
C. "Loan Documents" shall mean all deeds in secure debt, deeds of trust,
mortgages, security agreements and other documents securing payment of the
Liabilities and all notes and other agreements, documents, and instruments
evidencing or relating to the Liabilities and Obligations.
D. "Obligation" or "Obligations" shall mean all terms, conditions,
covenants, agreements and undertakings of Borrower and/or Guarantor under all
notes and other documents evidencing the Liabilities, and under all deeds to
secure debt, deeds of trust, mortgages, security agreements and other
agreements, documents and instruments executed in connection with the
Liabilities or related thereto.
4. Waivers by Guarantor. Guarantor waives notice of acceptance of this
Guaranty, notice of any Liabilities or Obligations to which it may apply,
presentment, demand for payment, protest, notice of dishonor or nonpayment of
any Liabilities, notice of intent to accelerate, notice of acceleration, and
notice of any suit or the taking of other action by Bank against Borrower,
Guarantor or any other person, any applicable statute of limitations and any
other notice to any party liable on any Loan Document (including Guarantor).
Each Guarantor also hereby waives any claim, right or remedy which such
Guarantor may now have or hereafter acquire against Borrower that arises
hereunder and/or from the performance by any other Guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Bank against Borrower or against any security
which Bank now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise.
Guarantor also waives the benefits of any provision of law requiring that Bank
exhaust any right or remedy, or take any action, against Borrower, any
Guarantor, any other person and/or property including but not limited to the
provisions of N.C. Gen. Stat. Sec. 26-7 through Sec. 26-9, inclusive as amended,
or otherwise.
Bank of America, N.A. Guaranty
North Carolina (Commercial) -1- 2/98
<PAGE>
Bank may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to Guarantor (except as required
by law), without incurring responsibility to Guarantor, without impairing,
releasing or otherwise affecting the Obligations of Guarantor, in whole or in
part, and without the indorsement or execution by Guarantor of any additional
consent, waiver or guaranty: (a) change the manner, place or terms of payment,
or change or extend the time of or renew, or change any interest rate or alter
any Liability or Obligation or installment thereof, or any security therefor;
(b) loan additional monies or extend additional credit to Borrower, with or
without security, thereby creating new Liabilities or Obligations the payment or
performance of which shall be guaranteed hereunder, and the Guaranty herein made
shall apply to the Liabilities or Obligations as so changed, extended,
surrendered, realized upon or otherwise altered; (c) sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner and in any order
any property at any time pledged or mortgaged to secure the Liabilities or
Obligations and any offset there against; (d) exercise or refrain from
exercising any rights against Borrower or others (including Guarantor) or act or
refrain from acting in any other manner; (e) settle or compromise any Liability
or Obligation or any security therefor and subordinate the payment of all or any
part thereof to the payment of any Liability or Obligation of any other parties
primarily or secondarily liable on any of the Liabilities or Obligations; (f)
release or compromise any Liability of Guarantor hereunder or any Liability or
Obligation of any other parties primarily or secondarily liable on any of the
Liabilities or Obligations; or (g) apply any sums from any sources to any
Liability without regard to any Liabilities remaining unpaid.
5. Subordination. Upon demand of Bank, Guarantor agrees that it will not
demand, take or receive from Borrower, by set-off or in any other manner,
payment of any debt, now and at any time or times hereafter owing by Borrower to
Guarantor unless and until all the Liabilities and Obligations shall have been
fully paid and performed, and any security interest, liens or encumbrances which
Guarantor now has and from time to time hereafter may have upon any of the
assets of Borrower shall be made subordinate, junior and inferior and postponed
in priority, operation and effect to any security interest of Bank in such
assets.
6. Waivers by Bank. No delay on the part of Bank in exercising any of its
options, powers or rights, and no partial or single exercise thereof, shall
constitute a waiver thereof. No waiver of any of its rights hereunder, and no
modification or amendment of this Guaranty, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; and each
such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of Bank or the obligations of
Guarantor to Bank in any other respect at any other time.
7. Termination. This Guaranty shall be binding on each Guarantor until written
notice of revocation signed by such Guarantor or written notice of the
dissolution of such Guarantor shall have been received by Bank, notwithstanding
change in name, location, composition or structure of, or the dissolution,
termination or increase, decrease or change in personnel, owners or partners of
Borrower, or any one or more of Guarantors. No notice of revocation or
termination hereof shall affect in any manner rights arising under this Guaranty
with respect to Liabilities or Obligations that shall have been committed,
created, contracted, assumed or incurred prior to receipt of such written notice
pursuant to any agreement entered into by Bank prior to receipt of such notice.
The sole effect of such notice of revocation or termination hereof shall be to
exclude from this Guaranty, Liabilities or Obligations thereafter arising that
are unconnected with Liabilities or Obligations theretofore arising or
transactions entered into theretofore.
8. Partial invalidity and/or Enforceability of Guaranty. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document as it may apply to any
person or circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
In the event Bank is required to relinquish or return the payments, the
collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Liability, by
reason of a proceeding arising under the Bankruptcy Code, or for any other
reason, this Guaranty shall automatically continue to be effective
notwithstanding any previous cancellation or release effected by Bank.
9. Change of Status. Guarantor will not become a party to a merger or
consolidation with any other company, except where Guarantor is the surviving
corporation or entity, and all covenants under this Guaranty are assumed by the
surviving entity. Further, Guarantor may not change its legal structure, without
the written consent of Bank and all covenants under this Guaranty are assumed by
the new or surviving entity. Guarantor further agrees that this Guaranty shall
be binding, legal and enforceable against Guarantor in the event Borrower
changes its name, status or type of entity.
10. Financial and Other Information. Guarantor agrees to furnish to Bank any and
all financial information and any other information regarding Guarantor and/or
collateral requested in writing by Bank written ten (10) days of the date of the
request. Guarantor has made an independent investigation of the financial
condition and affairs of Borrower prior to entering into this Guaranty, and
Guarantor will continue to make such investigation; and in entering into this
Guaranty Guarantor has not relied upon any representation of Bank as to the
financial condition, operation or creditworthiness of Borrower. Guarantor
further agrees that Bank shall have no duty or responsibility now or hereafter
to make any investigation or appraisal of Borrower on behalf of Guarantor or to
provide Guarantor with any credit or other information which may come to its
attention now or hereafter.
11. Notices. Notice shall be deemed reasonable if mailed postage prepaid at
least five (5) days before the related action to the address of Guarantor or
Bank, at their respective addresses indicated at the beginning of this Guaranty,
or to such other address as any party may designate by written notice to the
other party. Each notice, request and demand shall be deemed given or made, if
sent by mail, upon the earlier of the date of receipt or five (5) days after
deposit in the U.S. Mail, first class postage prepaid, or if sent by any other
means, upon delivery.
12. Guarantor Duties. Guarantor shall upon notice or demand by Bank promptly and
with due diligence pay all Liabilities and perform and satisfy all Obligations
for the benefit of Bank in the event of (a) the occurrence of any default under
any Loan Documents; (b) the failure of any Borrower or Guarantor to perform any
obligation or pay any liability or indebtedness of any Borrower or Guarantor to
Bank, or to any affiliate of Bank, whether under any Note, Guaranty, or any
other agreement, now or hereafter existing, as and when due (whether upon
demand, at maturity or by acceleration); (c) the failure of any Borrower or
Guarantor to pay or perform any other liability, obligation or indebtedness of
any Borrower or Guarantor to any other party; (d) the death of any Borrower or
Guarantor (if an individual); (e) the resignation or withdrawal of any partner
or a material owner/Guarantor of Borrower, as determined by Bank in its sole
discretion; (f) the commencement of a proceeding against any Borrower or
Guarantor for dissolution or liquidation, the voluntary or involuntary
termination or dissolution of any Borrower or Guarantor or the merger or
consolidation of any Borrower or Guarantor with or into another entity; (g) the
insolvency, or the business failure of, or the appointment of a custodian,
trustee, liquidator or receive for or of any of the property of, or the
assignment for the benefit of creditors by, or the filing of a petition under
bankruptcy, insolvency or debtor's relief law or the filing of a petition for
any adjustment of indebtedness, composition or extension by or against any
Borrower or Guarantor; (h) the sole determination by Bank that any
representation or warranty to Bank in any Loan Document or otherwise to Bank was
untrue or materially misleading when made; (i) the failure of Guarantor or
Borrower to timely deliver such financial statements including tax returns and
all schedules, or other statements of condition or other information, as Bank
shall request from time to time; (j) the entry of a judgment against Borrower or
Guarantor which Bank deems to be of a material nature in the sole discretion of
Bank; (k) the seizure or forfeiture of any of Borrower or Guarantor's property,
or the issuance of any writ of possession, garnishment or attachment, or any
turnover order; (l) any lien or additional security interest being placed upon
any collateral which is security for any Loan Document; or (m) the failure of
Borrower's business to comply with any law or regulation controlling the
operation of Borrower's business, the failure to comply with which would result
in a material adverse effect on Borrower.
13. Remedies. Upon the failure of Guarantor to fulfill its duty to pay all
Liabilities and perform and satisfy all Obligations as required hereunder, Bank
shall have all of the remedies of a creditor and, to the extent applicable, of a
secured party, under all applicable law, and without limiting the generality of
the foregoing, Bank may, at its option and without notice or demand; (a) declare
any Liability due and payable at once; (b) take possession of any collateral
pledged by Borrower or Guarantor wherever located, and sell, resell, assign,
transfer and deliver all or any part of said collateral of Borrower or Guarantor
at any public or private sale or otherwise dispose of any or all of the
collateral in its then condition, for cash or on credit or for future delivery,
and in connection therewith Bank may impose reasonable conditions upon any such
sale, and Bank, unless prohibited by law the provisions of which cannot be
waived, may purchase all or any part of said collateral to be sold, free from
and discharged of all trusts, claims, rights or redemption and equities of
Borrower or Guarantor whatsoever; Guarantor acknowledges and agrees that the
sale of any collateral through any nationally recognized
Bank of America, N.A. Guaranty
North Carolina [Commercial] -2- 2/96
<PAGE>
broker-dealer, investment banker or any other method common in the securities
industry shall be deemed a commercially reasonable sale under the Uniform
Commercial Code or any other equivalent statute or federal law, and expressly
waives notice thereof except as provided herein; and (c) set-off against any or
all liabilities of Guarantor all money owed by Bank or any of its agents or
affiliates in any capacity to Guarantor whether or not due, and also set-off
against all other Liabilities of Guarantor to Bank all money owed by Bank in
any capacity to Guarantor, and if exercised by Bank, Bank shall be deemed to
have exercised such right of set-off and to have made a charge against any such
money immediately upon the occurrence of such default although made or entered
on the books subsequent thereto.
Bank shall have a properly perfected security interest in all of Guarantor's
funds on deposit with Bank to secure the balance of any Liabilities and/or
Obligations that Guarantor may now or in the future owe Bank. Bank is granted a
contractual right of set-off and will not be liable for dishonoring checks or
withdrawals where the exercise of Bank's contractual right of set-off or
security interest results in insufficient funds in Guarantor's account. As
authorized by law, Guarantor grants to Bank this contractual right of set-off
and security in all property of Guarantor now or at anytime hereafter in the
possession of Bank, including but not limited to any joint account, special
account, account by the entireties, tenancy in common, and all dividends and
distributions now or hereafter in the possession or control of Bank.
14. Attorney Fees, Cost and Expenses. Guarantor shall pay all costs of
collection and reasonable attorney's fees, including reasonable attorney's fees
in connection with any suit, mediation or arbitration proceeding, out of Court
payment agreement, trial, appeal, bankruptcy proceedings or otherwise, incurred
or paid by Bank in enforcing the payment of any Liability or defending this
agreement.
15. Collateral.
[ ] Check if applicable. Guarantor hereby pledges, assigns and grants to Bank a
security interest in and title to the collateral described in the security
agreement, deed of trust, deed to secure debt, mortgage or other collateral
instrument dated of even date herewith, which collateral, except for any margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), shall secure this Guaranty, whether currently existing or
arising in the future. Guarantor agrees to execute such security agreements,
financing statements and other documents as Bank may reasonably require or
request to obtain and perfect its security interest in said collateral.
16. Preservation of Property. Bank shall not be bound to take any steps
necessary to preserve any rights in any property pledged as collateral to Bank
to secure Borrower and/or Guarantor's Liabilities and Obligations as against
prior parties who may be liable in connection therewith, and Borrower and
Guarantor hereby agree to take any such steps. Bank, nevertheless, at any time,
may (a) take any action it deems appropriate for the care or preservation of
such property or of any rights of Borrower and/or Guarantor or Bank therein; (b)
demand, sue for, collect or receive any money or property at any time due,
payable or receivable on account of or in exchange for any property pledged as
collateral to Bank to secure Borrower and/or Guarantor's Liabilities to Bank;
(c) compromise and settle with any person liable on such property; or (d) extend
the time of payment or otherwise change the terms of the Loan Documents as to
any party liable on the Loan Documents, all without notice to, without incurring
responsibility to, and without affecting any of the Obligations or Liabilities
of Guarantor.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
-------------
BORROWER'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE
COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL
SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
---------------------
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
18. Controlling Document. To the extent that this Guaranty conflicts with or is
in any way incompatible with any other Loan Document concerning this Obligation,
any promissory note shall control over any other document, and if such
promissory note does not address an issue, then each other document shall
control to the extent that it deals most specifically with an issue.
19. Execution Under Seal. This Guaranty is being executed under seal by
Guarantor.
20. NOTICE OF FINAL AGREEMENT. THIS WRITTEN GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Bank of America, N.A. Guaranty
North Carolina [Commercial] -3- 2/96
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
under seal on this 9th day of December, 1999.
Witnessed By: Guarantor:
/s/ Lori Hall
- - - ---------------------------------- -----------------------------------(Seal)
Lori Hall, Administrative Asst.
- - - ---------------------------------- ------------------------------------
Print Name and Title Print Individual's Name
Corporate or Partnership Guarantor:
CPD ASSOCIATES, INC.
By: /s/ Mark Castaneda (Seal)
---------------------------------
Name: Mark Castaneda
-------------------------------
Title: Vice President
------------------------------
------------------------------------
Attest (if applicable)
[Corporate Seal]
Corporate Acknowledgment
State of North Carolina )
)
County of Forsyth )
This instrument was acknowledged before me on December 9th, 1999, by Mark
Castaneda, ________________ of CPD ASSOCIATES, INC., a Delaware corporation, on
behalf of said corporation.
[SEAL] OFFICIAL SEAL /s/ Abbye R. Caudle
ABBYE R. CAUDLE --------------------------------------
Notary Public-North Carolina Notary Public
FORSYTH COUNTY in and for the State of North Carolina
My Commission Expires
9/26/04 Abbye R. Caudle
--------------------------------------
Print Name of Notary
September 26, 2004
- - - ---------------------
My Commission Expires
Bank of America, N.A. Guaranty
North Carolina (Commercial) -4- 2/96
<PAGE>
Exhibit 10.5
Bank of America, N.A.
Date: DECEMBER 9, 1999
CONTINUING AND UNCONDITIONAL GUARANTY
================================================================================
Bank: Guarantor:
Bank of America, N.A.
Banking Center:
Commercial Lending RHINO SERVICES, L.L.C.
380 Knollwood Street 104 CAMBRIDGE PLAZA DRIVE
Winston-Salem, Forsyth Co., NC 27103 WINSTON-SALEM, FORSYTH CO., NC 27104
(Street address including county) (Name and street address, including
county)
================================================================================
"Borrower": BLUE RHINO CORPORATION
---------------------------------------------------------------------
(Borrower's Name)
1. Guaranty. FOR VALUE RECEIVED, and to induce Bank of America, N.A. (Attn: J.
Thomas Johnson, Jr.) ("Bank") to make loans or advances or to extend credit or
other financial accommodations or benefits, with or without security, to or for
the account of Borrower, the undersigned "Guarantor", if more than one, then
each of them jointly and severally, hereby becomes surety for the irrevocably
and unconditionally guarantees to Bank the full and prompt payment when due,
whether by acceleration or otherwise, of any and all Liabilities of Borrower to
Bank. This Guaranty is continuing and unlimited as to the amount, and is
cumulative to and does not supersede any other guaranties.
Guarantor further unconditionally guarantees the faithful, prompt and complete
compliance by Borrower with all Obligations (as hereinafter defined). The
undertakings of Guarantor hereunder are independent of the Liabilities and
Obligations of Borrower and a separate action or actions for payment, damages or
performance may be brought or prosecuted against Guarantor, whether or not an
action is brought against Borrower or to realize upon the security for the
Liabilities and/or Obligations, whether or not Borrower is joined in any such
action or actions, and whether or not notice is given or demand is made upon
Borrower.
Bank shall not be required to proceed first against Borrower, or any other
person or entity, whether primarily or secondarily liable, or against any
collateral held by it, before resorting to Guarantor for payment, and Guarantor
shall not be entitled to assert as a defense to the enforceability of the
Guaranty any defense of Borrower with respect to any Liabilities or Obligations.
2. Paragraph Headings, Governing Law and Binding Effect. Guarantor agrees that
the paragraph headings in this Guaranty are for convenience only and that they
will not limit any of the provisions of this Guaranty. Guarantor further agrees
that this Guaranty shall be governed by and construed in accordance with the
laws of the State of North Carolina and applicable United States federal law.
Guarantor further agrees that this Guaranty shall be deemed to have been made in
the State of North Carolina at Bank's address indicated above, and shall be
governed by, and construed in accordance with, the laws of the State of North
Carolina, or the United States courts located within the State of North
Carolina, and is performable in the State of North Carolina. This Guaranty is
binding upon Guarantor, his, their or its executors, administrators, successor
or assigns, and shall inure to the benefit of Bank, its successors, indorsees or
assigns. Anyone executing this Guaranty shall be bound by the terms hereof
without regard to execution by anyone else.
3. Definitions.
A. "Guarantor" shall mean Guarantor or any one or more of them.
B. "Liability" or "Liabilities" shall mean without limitation, all
liabilities, overdrafts, indebtedness, and obligations of Borrower and/or
Guarantor to Bank, whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, now or
hereafter existing, or held or to be held by Bank for its own account or as
agent for another or others, whether created directly, indirectly, or acquired
by assignment or otherwise, including but not limited to all extensions or
renewals thereof, and all sums payable under or by virtue thereof, including
without limitation, all amounts of principal and interest, all expenses
(including reasonable attorney's fees and cost of collection) incurred in the
collection thereof or the enforcement of rights thereunder (including without
limitation, any liability arising from failure to comply with state or federal
laws, rules and regulations concerning the control of hazardous waste or
substances at or with respect to any real estate securing any loan guaranteed
hereby), whether arising in the ordinary course of business or otherwise. If
Borrower is a partnership, corporation or other entity the term "Liability" or
"Liabilities" as used herein shall include all Liabilities to Bank of any
successor entity or entities.
C. "Loan Documents" shall mean all deeds in secure debt, deeds of trust,
mortgages, security agreements and other documents securing payment of the
Liabilities and all notes and other agreements, documents, and instruments
evidencing or relating to the Liabilities and Obligations.
D. "Obligation" or "Obligations" shall mean all terms, conditions,
covenants, agreements and undertakings of Borrower and/or Guarantor under all
notes and other documents evidencing the Liabilities, and under all deeds to
secure debt, deeds of trust, mortgages, security agreements and other
agreements, documents and instruments executed in connection with the
Liabilities or related thereto.
4. Waivers by Guarantor. Guarantor waives notice of acceptance of this
Guaranty, notice of any Liabilities or Obligations to which it may apply,
presentment, demand for payment, protest, notice of dishonor or nonpayment of
any Liabilities, notice of intent to accelerate, notice of acceleration, and
notice of any suit or the taking of other action by Bank against Borrower,
Guarantor or any other person, any applicable statute of limitations and any
other notice to any party liable on any Loan Document (including Guarantor).
Each Guarantor also hereby waives any claim, right or remedy which such
Guarantor may now have or hereafter acquire against Borrower that arises
hereunder and/or from the performance by any other Guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Bank against Borrower or against any security
which Bank now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise.
Guarantor also waives the benefits of any provision of law requiring that Bank
exhaust any right or remedy, or take any action, against Borrower, any
Guarantor, any other person and/or property including but not limited to the
provisions of N.C. Gen. Stat. Sec. 26-7 through Sec. 26-9, inclusive as amended,
or otherwise.
Bank of America, N.A. Guaranty
North Carolina (Commercial) -1- 2/98
<PAGE>
Bank may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to Guarantor (except as required
by law), without incurring responsibility to Guarantor, without impairing,
releasing or otherwise affecting the Obligations of Guarantor, in whole or in
part, and without the indorsement or execution by Guarantor of any additional
consent, waiver or guaranty: (a) change the manner, place or terms of payment,
or change or extend the time of or renew, or change any interest rate or alter
any Liability or Obligation or installment thereof, or any security therefor;
(b) loan additional monies or extend additional credit to Borrower, with or
without security, thereby creating new Liabilities or Obligations the payment or
performance of which shall be guaranteed hereunder, and the Guaranty herein made
shall apply to the Liabilities or Obligations as so changed, extended,
surrendered, realized upon or otherwise altered; (c) sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner and in any order
any property at any time pledged or mortgaged to secure the Liabilities or
Obligations and any offset there against; (d) exercise or refrain from
exercising any rights against Borrower or others (including Guarantor) or act or
refrain from acting in any other manner; (e) settle or compromise any Liability
or Obligation or any security therefor and subordinate the payment of all or any
part thereof to the payment of any Liability or Obligation of any other parties
primarily or secondarily liable on any of the Liabilities or Obligations; (f)
release or compromise any Liability of Guarantor hereunder or any Liability or
Obligation of any other parties primarily or secondarily liable on any of the
Liabilities or Obligations; or (g) apply any sums from any sources to any
Liability without regard to any Liabilities remaining unpaid.
5. Subordination. Upon demand of Bank, Guarantor agrees that it will not
demand, take or receive from Borrower, by set-off or in any other manner,
payment of any debt, now and at any time or times hereafter owing by Borrower to
Guarantor unless and until all the Liabilities and Obligations shall have been
fully paid and performed, and any security interest, liens or encumbrances which
Guarantor now has and from time to time hereafter may have upon any of the
assets of Borrower shall be made subordinate, junior and inferior and postponed
in priority, operation and effect to any security interest of Bank in such
assets.
6. Waivers by Bank. No delay on the part of Bank in exercising any of its
options, powers or rights, and no partial or single exercise thereof, shall
constitute a waiver thereof. No waiver of any of its rights hereunder, and no
modification or amendment of this Guaranty, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; and each
such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of Bank or the obligations of
Guarantor to Bank in any other respect at any other time.
7. Termination. This Guaranty shall be binding on each Guarantor until written
notice of revocation signed by such Guarantor or written notice of the
dissolution of such Guarantor shall have been received by Bank, notwithstanding
change in name, location, composition or structure of, or the dissolution,
termination or increase, decrease or change in personnel, owners or partners of
Borrower, or any one or more of Guarantors. No notice of revocation or
termination hereof shall affect in any manner rights arising under this Guaranty
with respect to Liabilities or Obligations that shall have been committed,
created, contracted, assumed or incurred prior to receipt of such written notice
pursuant to any agreement entered into by Bank prior to receipt of such notice.
The sole effect of such notice of revocation or termination hereof shall be to
exclude from this Guaranty, Liabilities or Obligations thereafter arising that
are unconnected with Liabilities or Obligations theretofore arising or
transactions entered into theretofore.
8. Partial invalidity and/or Enforceability of Guaranty. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document as it may apply to any
person or circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
In the event Bank is required to relinquish or return the payments, the
collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Liability, by
reason of a proceeding arising under the Bankruptcy Code, or for any other
reason, this Guaranty shall automatically continue to be effective
notwithstanding any previous cancellation or release effected by Bank.
9. Change of Status. Guarantor will not become a party to a merger or
consolidation with any other company, except where Guarantor is the surviving
corporation or entity, and all covenants under this Guaranty are assumed by the
surviving entity. Further, Guarantor may not change its legal structure, without
the written consent of Bank and all covenants under this Guaranty are assumed by
the new or surviving entity. Guarantor further agrees that this Guaranty shall
be binding, legal and enforceable against Guarantor in the event Borrower
changes its name, status or type of entity.
10. Financial and Other Information. Guarantor agrees to furnish to Bank any and
all financial information and any other information regarding Guarantor and/or
collateral requested in writing by Bank written ten (10) days of the date of the
request. Guarantor has made an independent investigation of the financial
condition and affairs of Borrower prior to entering into this Guaranty, and
Guarantor will continue to make such investigation; and in entering into this
Guaranty Guarantor has not relied upon any representation of Bank as to the
financial condition, operation or creditworthiness of Borrower. Guarantor
further agrees that Bank shall have no duty or responsibility now or hereafter
to make any investigation or appraisal of Borrower on behalf of Guarantor or to
provide Guarantor with any credit or other information which may come to its
attention now or hereafter.
11. Notices. Notice shall be deemed reasonable if mailed postage prepaid at
least five (5) days before the related action to the address of Guarantor or
Bank, at their respective addresses indicated at the beginning of this Guaranty,
or to such other address as any party may designate by written notice to the
other party. Each notice, request and demand shall be deemed given or made, if
sent by mail, upon the earlier of the date of receipt or five (5) days after
deposit in the U.S. Mail, first class postage prepaid, or if sent by any other
means, upon delivery.
12. Guarantor Duties. Guarantor shall upon notice or demand by Bank promptly and
with due diligence pay all Liabilities and perform and satisfy all Obligations
for the benefit of Bank in the event of (a) the occurrence of any default under
any Loan Documents; (b) the failure of any Borrower or Guarantor to perform any
obligation or pay any liability or indebtedness of any Borrower or Guarantor to
Bank, or to any affiliate of Bank, whether under any Note, Guaranty, or any
other agreement, now or hereafter existing, as and when due (whether upon
demand, at maturity or by acceleration); (c) the failure of any Borrower or
Guarantor to pay or perform any other liability, obligation or indebtedness of
any Borrower or Guarantor to any other party; (d) the death of any Borrower or
Guarantor (if an individual); (e) the resignation or withdrawal of any partner
or a material owner/Guarantor of Borrower, as determined by Bank in its sole
discretion; (f) the commencement of a proceeding against any Borrower or
Guarantor for dissolution or liquidation, the voluntary or involuntary
termination or dissolution of any Borrower or Guarantor or the merger or
consolidation of any Borrower or Guarantor with or into another entity; (g) the
insolvency, or the business failure of, or the appointment of a custodian,
trustee, liquidator or receive for or of any of the property of, or the
assignment for the benefit of creditors by, or the filing of a petition under
bankruptcy, insolvency or debtor's relief law or the filing of a petition for
any adjustment of indebtedness, composition or extension by or against any
Borrower or Guarantor; (h) the sole determination by Bank that any
representation or warranty to Bank in any Loan Document or otherwise to Bank was
untrue or materially misleading when made; (i) the failure of Guarantor or
Borrower to timely deliver such financial statements including tax returns and
all schedules, or other statements of condition or other information, as Bank
shall request from time to time; (j) the entry of a judgment against Borrower or
Guarantor which Bank deems to be of a material nature in the sole discretion of
Bank; (k) the seizure or forfeiture of any of Borrower or Guarantor's property,
or the issuance of any writ of possession, garnishment or attachment, or any
turnover order; (l) any lien or additional security interest being placed upon
any collateral which is security for any Loan Document; or (m) the failure of
Borrower's business to comply with any law or regulation controlling the
operation of Borrower's business, the failure to comply with which would result
in a material adverse effect on Borrower.
13. Remedies. Upon the failure of Guarantor to fulfill its duty to pay all
Liabilities and perform and satisfy all Obligations as required hereunder, Bank
shall have all of the remedies of a creditor and, to the extent applicable, of a
secured party, under all applicable law, and without limiting the generality of
the foregoing, Bank may, at its option and without notice or demand; (a) declare
any Liability due and payable at once; (b) take possession of any collateral
pledged by Borrower or Guarantor wherever located, and sell, resell, assign,
transfer and deliver all or any part of said collateral of Borrower or Guarantor
at any public or private sale or otherwise dispose of any or all of the
collateral in its then condition, for cash or on credit or for future delivery,
and in connection therewith Bank may impose reasonable conditions upon any such
sale, and Bank, unless prohibited by law the provisions of which cannot be
waived, may purchase all or any part of said collateral to be sold, free from
and discharged of all trusts, claims, rights or redemption and equities of
Borrower or Guarantor whatsoever; Guarantor acknowledges and agrees that the
sale of any collateral through any nationally recognized
Bank of America, N.A. Guaranty
North Carolina [Commercial] -2- 2/96
<PAGE>
broker-dealer, investment banker or any other method common in the securities
industry shall be deemed a commercially reasonable sale under the Uniform
Commercial Code or any other equivalent statute or federal law, and expressly
waives notice thereof except as provided herein; and (c) set-off against any or
all liabilities of Guarantor all money owed by Bank or any of its agents or
affiliates in any capacity to Guarantor whether or not due, and also set-off
against all other Liabilities of Guarantor to Bank all money owed by Bank in
any capacity to Guarantor, and if exercised by Bank, Bank shall be deemed to
have exercised such right of set-off and to have made a charge against any such
money immediately upon the occurrence of such default although made or entered
on the books subsequent thereto.
Bank shall have a properly perfected security interest in all of Guarantor's
funds on deposit with Bank to secure the balance of any Liabilities and/or
Obligations that Guarantor may now or in the future owe Bank. Bank is granted a
contractual right of set-off and will not be liable for dishonoring checks or
withdrawals where the exercise of Bank's contractual right of set-off or
security interest results in insufficient funds in Guarantor's account. As
authorized by law, Guarantor grants to Bank this contractual right of set-off
and security in all property of Guarantor now or at anytime hereafter in the
possession of Bank, including but not limited to any joint account, special
account, account by the entireties, tenancy in common, and all dividends and
distributions now or hereafter in the possession or control of Bank.
14. Attorney Fees, Cost and Expenses. Guarantor shall pay all costs of
collection and reasonable attorney's fees, including reasonable attorney's fees
in connection with any suit, mediation or arbitration proceeding, out of Court
payment agreement, trial, appeal, bankruptcy proceedings or otherwise, incurred
or paid by Bank in enforcing the payment of any Liability or defending this
agreement.
15. Collateral.
[ ] Check if applicable. Guarantor hereby pledges, assigns and grants to Bank a
security interest in and title to the collateral described in the security
agreement, deed of trust, deed to secure debt, mortgage or other collateral
instrument dated of even date herewith, which collateral, except for any margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), shall secure this Guaranty, whether currently existing or
arising in the future. Guarantor agrees to execute such security agreements,
financing statements and other documents as Bank may reasonably require or
request to obtain and perfect its security interest in said collateral.
16. Preservation of Property. Bank shall not be bound to take any steps
necessary to preserve any rights in any property pledged as collateral to Bank
to secure Borrower and/or Guarantor's Liabilities and Obligations as against
prior parties who may be liable in connection therewith, and Borrower and
Guarantor hereby agree to take any such steps. Bank, nevertheless, at any time,
may (a) take any action it deems appropriate for the care or preservation of
such property or of any rights of Borrower and/or Guarantor or Bank therein; (b)
demand, sue for, collect or receive any money or property at any time due,
payable or receivable on account of or in exchange for any property pledged as
collateral to Bank to secure Borrower and/or Guarantor's Liabilities to Bank;
(c) compromise and settle with any person liable on such property; or (d) extend
the time of payment or otherwise change the terms of the Loan Documents as to
any party liable on the Loan Documents, all without notice to, without incurring
responsibility to, and without affecting any of the Obligations or Liabilities
of Guarantor.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
-------------
BORROWER'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE
COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL
SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
---------------------
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
18. Controlling Document. To the extent that this Guaranty conflicts with or is
in any way incompatible with any other Loan Document concerning this Obligation,
any promissory note shall control over any other document, and if such
promissory note does not address an issue, then each other document shall
control to the extent that it deals most specifically with an issue.
19. Execution Under Seal. This Guaranty is being executed under seal by
Guarantor.
20. NOTICE OF FINAL AGREEMENT. THIS WRITTEN GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Bank of America, N.A. Guaranty
North Carolina [Commercial] -3- 2/96
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
under seal on this 9th day of December, 1999.
Witnessed By: Guarantor:
/s/ Mark Castaneda
- - - ---------------------------------- -----------------------------------(Seal)
Vice President
- - - ---------------------------------- ------------------------------------
Print Name and Title Print Individual's Name
Corporate or Partnership Guarantor:
RHINO SERVICES, L.L.C. (SEAL)
By: /s/ Billy D. Prim (Seal)
---------------------------------
Name: Billy D. Prim
-------------------------------
Title: President
------------------------------
Acknowledgment
State of North Carolina )
)
County of Stokes )
This instrument was acknowledged before me on December 9th, 1999, by Billy D.
Prim, of RHINO SERVICES, LLC, a Delaware
limited liability company, on behalf of said company.
[SEAL] OFFICIAL SEAL /s/ Loretta C. Hall
LORETTA C. HALL --------------------------------------
Notary Public-North Carolina Notary Public
STOKES COUNTY in and for the State of North Carolina
My Commission Expires
11/26/01 Loretta C. Hall
--------------------------------------
Print Name of Notary
November 26, 2001
- - - ---------------------
My Commission Expires
Bank of America, N.A. Guaranty
North Carolina (Commercial) -4- 2/96
<PAGE>
Exhibit 10.6
Bank of America, N.A.
Date: December 9, 1999
CONTINUING AND UNCONDITIONAL GUARANTY
================================================================================
Bank: Guarantor:
Bank of America, N.A.
Banking Center:
Commercial Lending USA LEASING, L.L.C.
380 Knollwood Street 104 CAMBRIDGE PLAZA DRIVE
Winston-Salem, Forsyth Co., NC 27103 WINSTON-SALEM, FORSYTH CO., NC 27104
(Street address including county) (Name and street address, including
county)
================================================================================
"Borrower": BLUE RHINO CORPORATION
---------------------------------------------------------------------
(Borrower's Name)
1. Guaranty. FOR VALUE RECEIVED, and to induce Bank of America, N.A. (Attn: J.
Thomas Johnson, Jr.) ("Bank") to make loans or advances or to extend credit or
other financial accommodations or benefits, with or without security, to or for
the account of Borrower, the undersigned "Guarantor", if more than one, then
each of them jointly and severally, hereby becomes surety for the irrevocably
and unconditionally guarantees to Bank the full and prompt payment when due,
whether by acceleration or otherwise, of any and all Liabilities of Borrower to
Bank. This Guaranty is continuing and unlimited as to the amount, and is
cumulative to and does not supersede any other guaranties.
Guarantor further unconditionally guarantees the faithful, prompt and complete
compliance by Borrower with all Obligations (as hereinafter defined). The
undertakings of Guarantor hereunder are independent of the Liabilities and
Obligations of Borrower and a separate action or actions for payment, damages or
performance may be brought or prosecuted against Guarantor, whether or not an
action is brought against Borrower or to realize upon the security for the
Liabilities and/or Obligations, whether or not Borrower is joined in any such
action or actions, and whether or not notice is given or demand is made upon
Borrower.
Bank shall not be required to proceed first against Borrower, or any other
person or entity, whether primarily or secondarily liable, or against any
collateral held by it, before resorting to Guarantor for payment, and Guarantor
shall not be entitled to assert as a defense to the enforceability of the
Guaranty any defense of Borrower with respect to any Liabilities or Obligations.
2. Paragraph Headings, Governing Law and Binding Effect. Guarantor agrees that
the paragraph headings in this Guaranty are for convenience only and that they
will not limit any of the provisions of this Guaranty. Guarantor further agrees
that this Guaranty shall be governed by and construed in accordance with the
laws of the State of North Carolina and applicable United States federal law.
Guarantor further agrees that this Guaranty shall be deemed to have been made in
the State of North Carolina at Bank's address indicated above, and shall be
governed by, and construed in accordance with, the laws of the State of North
Carolina, or the United States courts located within the State of North
Carolina, and is performable in the State of North Carolina. This Guaranty is
binding upon Guarantor, his, their or its executors, administrators, successor
or assigns, and shall inure to the benefit of Bank, its successors, indorsees or
assigns. Anyone executing this Guaranty shall be bound by the terms hereof
without regard to execution by anyone else.
3. Definitions.
A. "Guarantor" shall mean Guarantor or any one or more of them.
B. "Liability" or "Liabilities" shall mean without limitation, all
liabilities, overdrafts, indebtedness, and obligations of Borrower and/or
Guarantor to Bank, whether direct or indirect, absolute or contingent, joint or
several, secured or unsecured, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or otherwise, now or
hereafter existing, or held or to be held by Bank for its own account or as
agent for another or others, whether created directly, indirectly, or acquired
by assignment or otherwise, including but not limited to all extensions or
renewals thereof, and all sums payable under or by virtue thereof, including
without limitation, all amounts of principal and interest, all expenses
(including reasonable attorney's fees and cost of collection) incurred in the
collection thereof or the enforcement of rights thereunder (including without
limitation, any liability arising from failure to comply with state or federal
laws, rules and regulations concerning the control of hazardous waste or
substances at or with respect to any real estate securing any loan guaranteed
hereby), whether arising in the ordinary course of business or otherwise. If
Borrower is a partnership, corporation or other entity the term "Liability" or
"Liabilities" as used herein shall include all Liabilities to Bank of any
successor entity or entities.
C. "Loan Documents" shall mean all deeds in secure debt, deeds of trust,
mortgages, security agreements and other documents securing payment of the
Liabilities and all notes and other agreements, documents, and instruments
evidencing or relating to the Liabilities and Obligations.
D. "Obligation" or "Obligations" shall mean all terms, conditions,
covenants, agreements and undertakings of Borrower and/or Guarantor under all
notes and other documents evidencing the Liabilities, and under all deeds to
secure debt, deeds of trust, mortgages, security agreements and other
agreements, documents and instruments executed in connection with the
Liabilities or related thereto.
4. Waivers by Guarantor. Guarantor waives notice of acceptance of this
Guaranty, notice of any Liabilities or Obligations to which it may apply,
presentment, demand for payment, protest, notice of dishonor or nonpayment of
any liabilities, notice of intent to accelerate, notice of acceleration, and
notice of any suit or the taking of other action by Bank against Borrower,
Guarantor or any other person, any applicable statute of limitations and any
other notice to any party liable on any Loan Document (including Guarantor).
Each Guarantor also hereby waives any claim, right or remedy which such
Guarantor may now have or hereafter acquire against Borrower that arises
hereunder and/or from the performance by any other Guarantor hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification, or participation in
any claim, right or remedy of Bank against Borrower or against any security
which Bank now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise.
Guarantor also waives the benefits of any provision of law requiring that Bank
exhaust any right or remedy, or take any action, against Borrower, any
Guarantor, any other person and/or property including but not limited to the
provisions of N.C. Gen. Stat. Sec. 26-7 through Sec. 26-9, inclusive as amended,
or otherwise.
Bank of America, N.A. Guaranty
North Carolina (Commercial) -1- 2/98
<PAGE>
Bank may at any time and from time to time (whether before or after revocation
or termination of this Guaranty) without notice to Guarantor (except as required
by law), without incurring responsibility to Guarantor, without impairing,
releasing or otherwise affecting the Obligations of Guarantor, in whole or in
part, and without the indorsement or execution by Guarantor of any additional
consent, waiver or guaranty: (a) change the manner, place or terms of payment,
or change or extend the time of or renew, or change any interest rate or alter
any Liability or Obligation or installment thereof, or any security therefor;
(b) loan additional monies or extend additional credit to Borrower, with or
without security, thereby creating new Liabilities or Obligations the payment or
performance of which shall be guaranteed hereunder, and the Guaranty herein made
shall apply to the Liabilities or Obligations as so changed, extended,
surrendered, realized upon or otherwise altered; (c) sell, exchange, release,
surrender, realize upon or otherwise deal with in any manner and in any order
any property at any time pledged or mortgaged to secure the Liabilities or
Obligations and any offset there against; (d) exercise or refrain from
exercising any rights against Borrower or others (including Guarantor) or act or
refrain from acting in any other manner; (e) settle or compromise any Liability
or Obligation or any security therefor and subordinate the payment of all or any
part thereof to the payment of any Liability or Obligation of any other parties
primarily or secondarily liable on any of the Liabilities or Obligations; (f)
release or compromise any Liability of Guarantor hereunder or any Liability or
Obligation of any other parties primarily or secondarily liable on any of the
Liabilities or Obligations; or (g) apply any sums from any sources to any
Liability without regard to any Liabilities remaining unpaid.
5. Subordination. Upon demand of Bank, Guarantor agrees that it will not
demand, take or receive from Borrower, by set-off or in any other manner,
payment of any debt, now and at any time or times hereafter owing by Borrower to
Guarantor unless and until all the Liabilities and Obligations shall have been
fully paid and performed, and any security interest, liens or encumbrances which
Guarantor now has and from time to time hereafter may have upon any of the
assets of Borrower shall be made subordinate, junior and inferior and postponed
in priority, operation and effect to any security interest of Bank in such
assets.
6. Waivers by Bank. No delay on the part of Bank in exercising any of its
options, powers or rights, and no partial or single exercise thereof, shall
constitute a waiver thereof. No waiver of any of its rights hereunder, and no
modification or amendment of this Guaranty, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; and each
such waiver, if any, shall apply only with respect to the specific instance
involved, and shall in no way impair the rights of Bank or the obligations of
Guarantor to Bank in any other respect at any other time.
7. Termination. This Guaranty shall be binding on each Guarantor until written
notice of revocation signed by such Guarantor or written notice of the
dissolution of such Guarantor shall have been received by Bank, notwithstanding
change in name, location, composition or structure of, or the dissolution,
termination or increase, decrease or change in personnel, owners or partners of
Borrower, or any one or more of Guarantors. No notice of revocation or
termination hereof shall affect in any manner rights arising under this Guaranty
with respect to Liabilities or Obligations that shall have been committed,
created, contracted, assumed or incurred prior to receipt of such written notice
pursuant to any agreement entered into by Bank prior to receipt of such notice.
The sole effect of such notice of revocation or termination hereof shall be to
exclude from this Guaranty, Liabilities or Obligations thereafter arising that
are unconnected with Liabilities or Obligations theretofore arising or
transactions entered into theretofore.
8. Partial invalidity and/or Enforceability of Guaranty. The unenforceability
or invalidity of any provision of this Guaranty shall not affect the
enforceability or validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document as it may apply to any
person or circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
In the event Bank is required to relinquish or return the payments, the
collateral or the proceeds thereof, in whole or in part, which had been
previously applied to or retained for application against any Liability, by
reason of a proceeding arising under the Bankruptcy Code, or for any other
reason, this Guaranty shall automatically continue to be effective
notwithstanding any previous cancellation or release effected by Bank.
9. Change of Status. Guarantor will not become a party to a merger or
consolidation with any other company, except where Guarantor is the surviving
corporation or entity, and all covenants under this Guaranty are assumed by the
surviving entity. Further, Guarantor may not change its legal structure, without
the written consent of Bank and all covenants under this Guaranty are assumed by
the new or surviving entity. Guarantor further agrees that this Guaranty shall
be binding, legal and enforceable against Guarantor in the event Borrower
changes its name, status or type of entity.
10. Financial and Other Information. Guarantor agrees to furnish to Bank any and
all financial information and any other information regarding Guarantor and/or
collateral requested in writing by Bank written ten (10) days of the date of the
request. Guarantor has made an independent investigation of the financial
condition and affairs of Borrower prior to entering into this Guaranty, and
Guarantor will continue to make such investigation; and in entering into this
Guaranty Guarantor has not relied upon any representation of Bank as to the
financial condition, operation or creditworthiness of Borrower. Guarantor
further agrees that Bank shall have no duty or responsibility now or hereafter
to make any investigation or appraisal of Borrower on behalf of Guarantor or to
provide Guarantor with any credit or other information which may come to its
attention now or hereafter.
11. Notices. Notice shall be deemed reasonable if mailed postage prepaid at
least five (5) days before the related action to the address of Guarantor or
Bank, at their respective addresses indicated at the beginning of this Guaranty,
or to such other address as any party may designate by written notice to the
other party. Each notice, request and demand shall be deemed given or made, if
sent by mail, upon the earlier of the date of receipt or five (5) days after
deposit in the U.S. Mail, first class postage prepaid, or if sent by any other
means, upon delivery.
12. Guarantor Duties. Guarantor shall upon notice or demand by Bank promptly and
with due diligence pay all Liabilities and perform and satisfy all Obligations
for the benefit of Bank in the event of (a) the occurrence of any default under
any Loan Documents; (b) the failure of any Borrower or Guarantor to perform any
obligation or pay any liability or indebtedness of any Borrower or Guarantor to
Bank, or to any affiliate of Bank, whether under any Note, Guaranty, or any
other agreement, now or hereafter existing, as and when due (whether upon
demand, at maturity or by acceleration); (c) the failure of any Borrower or
Guarantor to pay or perform any other liability, obligation or indebtedness of
any Borrower or Guarantor to any other party; (d) the death of any Borrower or
Guarantor (if an individual); (e) the resignation or withdrawal of any partner
or a material owner/Guarantor of Borrower, as determined by Bank in its sole
discretion; (f) the commencement of a proceeding against any Borrower or
Guarantor for dissolution or liquidation, the voluntary or involuntary
termination or dissolution of any Borrower or Guarantor or the merger or
consolidation of any Borrower or Guarantor with or into another entity; (g) the
insolvency, or the business failure of, or the appointment of a custodian,
trustee, liquidator or receive for or of any of the property of, or the
assignment for the benefit of creditors by, or the filing of a petition under
bankruptcy, insolvency or debtor's relief law or the filing of a petition for
any adjustment of indebtedness, composition or extension by or against any
Borrower or Guarantor; (h) the sole determination by Bank that any
representation or warranty to Bank in any Loan Document or otherwise to Bank was
untrue or materially misleading when made; (i) the failure of Guarantor or
Borrower to timely deliver such financial statements including tax returns and
all schedules, or other statements of condition or other information, as Bank
shall request from time to time; (j) the entry of a judgment against Borrower or
Guarantor which Bank deems to be of a material nature in the sole discretion of
Bank; (k) the seizure or forfeiture of any of Borrower or Guarantor's property,
or the issuance of any writ of possession, garnishment or attachment, or any
turnover order; (l) any lien or additional security interest being placed upon
any collateral which is security for any Loan Document; or (m) the failure of
Borrower's business to comply with any law or regulation controlling the
operation of Borrower's business, the failure to comply with which would result
in a material adverse effect on Borrower.
13. Remedies. Upon the failure of Guarantor to fulfill its duty to pay all
Liabilities and perform and satisfy all Obligations as required hereunder, Bank
shall have all of the remedies of a creditor and, to the extent applicable, of a
secured party, under all applicable law, and without limiting the generality of
the foregoing, Bank may, at its option and without notice or demand; (a) declare
any Liability due and payable at once; (b) take possession of any collateral
pledged by Borrower or Guarantor wherever located, and sell, resell, assign,
transfer and deliver all or any part of said collateral of Borrower or Guarantor
at any public or private sale or otherwise dispose of any or all of the
collateral in its then condition, for cash or on credit or for future delivery,
and in connection therewith Bank may impose reasonable conditions upon any such
sale, and Bank, unless prohibited by law the provisions of which cannot be
waived, may purchase all or any part of said collateral to be sold, free from
and discharged of all trusts, claims, rights or redemption and equities of
Borrower or Guarantor whatsoever; Guarantor acknowledges and agrees that the
sale of any collateral through any nationally recognized
Bank of America, N.A. Guaranty
North Carolina [Commercial] -2- 2/96
<PAGE>
broker-dealer, investment banker or any other method common in the securities
industry shall be deemed a commercially reasonable sale under the Uniform
Commercial Code or any other equivalent statute or federal law, and expressly
waives notice thereof except as provided herein; and (c) set-off against any or
all liabilities of Guarantor all money owed by Bank or any of its agents or
affiliates in any capacity to Guarantor whether or not due, and also set-off
against all other Liabilities of Guarantor to Bank all money owed by Bank in
any capacity to Guarantor, and if exercised by Bank, Bank shall be deemed to
have exercised such right of set-off and to have made a charge against any such
money immediately upon the occurrence of such default although made or entered
on the books subsequent thereto.
Bank shall have a properly perfected security interest in all of Guarantor's
funds on deposit with Bank to secure the balance of any Liabilities and/or
Obligations that Guarantor may now or in the future owe Bank. Bank is granted a
contractual right of set-off and will not be liable for dishonoring checks or
withdrawals where the exercise of Bank's contractual right of set-off or
security interest results in insufficient funds in Guarantor's account. As
authorized by law, Guarantor grants to Bank this contractual right of set-off
and security in all property of Guarantor now or at anytime hereafter in the
possession of Bank, including but not limited to any joint account, special
account, account by the entireties, tenancy in common, and all dividends and
distributions now or hereafter in the possession or control of Bank.
14. Attorney Fees, Cost and Expenses. Guarantor shall pay all costs of
collection and reasonable attorney's fees, including reasonable attorney's fees
in connection with any suit, mediation or arbitration proceeding, out of Court
payment agreement, trial, appeal, bankruptcy proceedings or otherwise, incurred
or paid by Bank in enforcing the payment of any Liability or defending this
agreement.
15. Collateral.
[X] Check if applicable. Guarantor hereby pledges, assigns and grants to Bank a
security interest in and title to the collateral described in the security
agreement, deed of trust, deed to secure debt, mortgage or other collateral
instrument dated of even date herewith, which collateral, except for any margin
stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System), shall secure this Guaranty, whether currently existing or
arising in the future. Guarantor agrees to execute such security agreements,
financing statements and other documents as Bank may reasonably require or
request to obtain and perfect its security interest in said collateral.
16. Preservation of Property. Bank shall not be bound to take any steps
necessary to preserve any rights in any property pledged as collateral to Bank
to secure Borrower and/or Guarantor's Liabilities and Obligations as against
prior parties who may be liable in connection therewith, and Borrower and
Guarantor hereby agree to take any such steps. Bank, nevertheless, at any time,
may (a) take any action it deems appropriate for the care or preservation of
such property or of any rights of Borrower and/or Guarantor or Bank therein; (b)
demand, sue for, collect or receive any money or property at any time due,
payable or receivable on account of or in exchange for any property pledged as
collateral to Bank to secure Borrower and/or Guarantor's Liabilities to Bank;
(c) compromise and settle with any person liable on such property; or (d) extend
the time of payment or otherwise change the terms of the Loan Documents as to
any party liable on the Loan Documents, all without notice to, without incurring
responsibility to, and without affecting any of the Obligations or Liabilities
of Guarantor.
17. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE, OR IF THERE IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE
COUNTY WHERE SUCH REAL OR PERSONAL PROPERTY IS LOCATED AT THE TIME OF THE
EXECUTION OF THIS INSTRUMENT, AGREEMENT OR DOCUMENT AND ADMINISTERED BY J.A.M.S.
WHO WILL APPOINT AN ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL
SERVE. ALL ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
18. Controlling Document. To the extent that this Guaranty conflicts with or is
in any way incompatible with any other Loan Document concerning this Obligation,
any promissory note shall control over any other document, and if such
promissory note does not address an issue, then each other document shall
control to the extent that it deals most specifically with an issue.
19. Execution Under Seal. This Guaranty is being executed under seal by
Guarantor.
20. NOTICE OF FINAL AGREEMENT. THIS WRITTEN GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Bank of America, N.A. Guaranty
North Carolina [Commercial] -3- 2/96
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed
under seal on this 9th day of December, 1999.
Witnessed By: Guarantor:
/s/ Mark Castaneda -----------------------------------(Seal)
/s/Mark Castaneda, CFU
- - - ---------------------------------- ------------------------------------
Print Name and Title Print Individual's Name
Corporate or Partnership Guarantor:
USA LEASING, L.L.C. (SEAL)
By: /s/ Billy D. Prim (Seal)
---------------------------------
Name: Billy D. Prim
-------------------------------
Title: Manager
------------------------------
Acknowledgment
State of North Carolina )
)
County of Stokes )
This instrument was acknowledged before me on December 9th, 1999, by Billy D.
--------
Prim , of USA LEASING, LLC, a Delaware limited liability
- - - ---------------------
company, on behalf of said company.
[SEAL] OFFICIAL SEAL
LORETTA C. HALL
Notary Public-North Carolina
STOKES COUNTY
My Commission Expires /s/ Loretta C. Hall
11/26/01 --------------------------------------
Notary Public
in and for the State of North Carolina
--------------
November 26, 2001 Loretta C. Hall
- - - --------------------- --------------------------------------
My Commission Expires Print Name of Notary
Bank of America, N.A. Guaranty
North Carolina (Commercial) -4- 2/96
<PAGE>
Exhibit 10.7
ASSET PURCHASE AGREEMENT
by and among
Blue Rhino Corporation
"Buyer"
and
Georgia Gas Distributors, Inc.
"Seller"
Dated: November 9, 1999
<PAGE>
Asset Purchase Agreement
- - - --------------------------------------------------------------------------------
THIS ASSET PURCHASE AGREEMENT ("Agreement") is made this the 9th day of
November 1999 by and between Blue Rhino Corporation, a Delaware corporation
("Buyer") and Georgia Gas Distributors, Inc., a Georgia corporation ("Seller").
R E C I T A L S:
---------------
The Seller desires to sell to Buyer and the Buyer desires to purchase from
the Seller its 20 pound propane gas cylinder exchange business (the "Business")
and certain operating assets of the Seller, upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and obligations
herein contained and other good and valuable considerations, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
ARTICLE I
Purchase and Sale of Assets
---------------------------
1.1 Assets to be Purchased. Subject to the terms and conditions hereof, on
----------------------
the date of the Closing (the "Closing"), the Seller agrees to sell to the Buyer
and the Buyer agrees to purchase from the Seller the following assets and the
Business of the Seller (the "Assets"):
(a) All right, title and interest in and to all of Seller's seven hundred
three (703) retail cylinder exchange accounts and locations
("Locations"), as set forth on Exhibit 1.1(a) hereto.
(b) Seven hundred thirty-eight (738) retail exchange racks and displays
("Displays").
(c) Thirteen thousand seven hundred eighty-four (13,784) 20 pound propane
gas cylinders ("Cylinders").
(d) All of the machinery and equipment currently used by Seller in the
Business as set forth on Exhibit 1.1(d) attached hereto.
1
<PAGE>
(e) All of the motor vehicles of Seller set forth on Exhibit 1.1(e)
attached hereto.
(f) All inventory and supplies of Seller relating to the Business as of
Closing as agreed by the Parties.
(g) Seller's complete Customer List for the Business.
(h) Assignment of all licenses, permits, goodwill, records and all other
intangible rights of the Seller used or useful in the Business of the
Seller and relating to the Assets to the extent legally assignable.
(i) All business records relating to the Assets as agreed by the Parties
including (but not limited to) all sales data, customer lists, records
and files, accounts, contracts, performance data, and all other data
and information applicable to the operation of the Business.
(j) Excluded from this Agreement are the six (6) Industrial Customers
serviced by Gas To Go as set forth on Exhibit 1.1(j) attached hereto.
1.2 Liabilities and Obligations to be Assumed. Subject to the terms and
-----------------------------------------
conditions of this Agreement, as of the date of Closing, the Seller agrees to
assign and transfer to the Buyer and the Buyer agrees to pay or assume the
unperformed contracts, purchase and sale commitments and other agreements or
instruments relating to the Business to which the Seller is a party, and which
are limited to the list set forth on Exhibit 1.2 hereof.
The liabilities referred to in this Section are herein sometimes
collectively called the "Assumed Obligations."
Notwithstanding anything to the contrary contained herein, the following
liabilities are not to be paid or assumed by the Buyer hereunder:
---
-2-
<PAGE>
(a) any liability for any federal, state or local income taxes of the
Seller or its owners, all of which taxes will be timely paid and borne
entirely by the Seller; Seller shall be solely responsible for paying
whatever federal, state or local income taxes are incurred by it as a
result of this transaction and the Buyer's purchase of the Assets
pursuant to this Agreement;
(b) any litigation, or claims and assessments of Seller not yet in
litigation, whether or not identified on Exhibit 2.12 arising from
events occurring prior to the date of the Closing;
(c) any labor or unfair labor practices or employment discrimination claims
which occur prior to Closing;
(d) any obligations of the Seller under any profit-sharing or any other
employee benefit plans occurring prior to Closing; and
(e) any liability of any kind whatsoever, known or unknown other than the
assumed obligations which arise from events occurring prior to the date
of Closing.
1.3 Purchase Price; Payment. Subject to the terms and conditions of this
-----------------------
Agreement and in reliance on the representations and warranties of the Seller
contained herein, and in consideration of the sale, conveyance, transfer and
delivery of all of the Assets, the Buyer agrees to pay to the Seller a purchase
price of one million one hundred thousand ($1,100,000) dollars (the "Purchase
Price") (subject to adjustment as set forth in Section 1.4 hereof). The Purchase
Price shall be paid eight hundred thousand ($800,000) dollars in cash at Closing
and three hundred thousand ($300,000) dollars within one hundred eighty (180)
days after Closing.
1.4 Adjustments to Purchase Price. The Purchase Price will be adjusted as
-----------------------------
follows:
-3-
<PAGE>
(a) Locations: One hundred eighty (180) days following Closing, a total
count of then customer Locations doing business with Buyer shall be
made. If the total count is greater than 703, the purchase price shall
be increased by an amount equal to $1,000 multiplied by the difference
between 703 and the then total count of Locations. If the total count
is less than 703, the purchase price shall be decreased by an amount
equal to $1,000 multiplied by the difference between 703 and the then
total count of Locations, except a customer Location ceasing to do
business with Buyer during the 180 days following Closing shall, for
purposes of calculating the total count, be included in the total count
as an active customer Location if both of the following conditions are
met:
(i) Any increase in price or any additional fee or charge has been
applied to that customer Location during the 180 days following
Closing other than standard service previously charged by Seller;
and
(ii) The loss of that customer Location would cause the total count to
become less than 703.
(b) Displays: The purchase price will be increased by $300 for each Display
in excess of 738 Displays and decreased by $300 for each Display less
than 738 transferred to Buyer at Closing.
(c) Cylinders: The purchase price will be increased by $16 for each
Cylinder in excess of 13,784 Cylinders and decreased by $16 for each
Cylinder less than 13,784 transferred to Buyer at Closing. Cylinders
must be fit-for-use in accordance with CGA-6 and shall exclude high
collar cylinders. Cylinders shall be palletized and separated by valve
type.
(d) Method of adjustment: Buyer and Seller shall set up acceptable
procedures to verify the count of Locations, Displays and Cylinders.
-4-
<PAGE>
Any adjustment resulting from verification by the Parties will be paid
in cash within one hundred eighty (180) days after the Closing.
1.5 Closing. The Closing of this transaction shall occur by United States
-------
mail or courier service on or before _________________ _____, 1999 or at such
time, date and place as the Parties may agree, provided however, that all
conditions to the Closing have been satisfied or waived in writing. At the
Closing, the Seller will execute and deliver to the Buyer appropriate
instruments of assignment, transfer and conveyance and such other instruments as
the Buyer shall reasonably request or, as specified in this Agreement. In
exchange, the Buyer shall deliver to the Seller the cash down-payment portion of
the Purchase Price and such other documents as the Seller shall reasonably
request or, as specified in this Agreement. The Seller and the Buyer shall
cooperate with and assist each other in the planning and orderly transfer of the
Assets.
1.6 Consulting Agreement. At the Closing, Buyer and Gerald E. Misel, Jr.
--------------------
will enter into the Consulting Agreement attached hereto as Exhibit 1.6.
1.7 Proration. Any revenue and cash expenses related to the Locations shall
---------
be prorated between the Parties as of the Closing Date.
ARTICLE II
Representations, Warranties and Covenants of the Seller
-------------------------------------------------------
The Seller hereby makes the following representations, warranties and
covenants, each of which is true and correct on the date hereof and will be true
and correct on the date of the Closing and each of them shall survive the date
of the Closing and the sale contemplated hereby.
-5-
<PAGE>
2.1 Corporate Existence and Qualification of Seller. The Seller is a
-----------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. The Seller has the power and authority to own and use
its properties and to transact the Business in which it is engaged, holds all
franchises, licenses and permits necessary and required therefor.
2.2 Approval of Agreement. The execution and delivery of this Agreement has
---------------------
been duly authorized and approved by proper corporate action of the Seller.
Pursuant to such authorization and approval, the Seller has full power and
authority to enter into this Agreement and to perform its obligations hereunder.
2.3 Financial Information. Attached hereto as Exhibit 2.3 is the Financial
---------------------
Information prepared by the Seller relating to the revenues and cylinder
exchanges for each of the Locations over the twelve (12) months ending July 31,
1999. Such Financial Information is hereinafter referred to as the "Financial
Information." The Financial Information is true, complete and correct in all
material respects and has been prepared by the Seller and presents fairly the
Financial Information as of the dates indicated.
2.4 Events Subsequent to July 31, 1999. Since July 31, 1999, except as set
----------------------------------
forth on Exhibit 2.4 hereto, there has been no material (a) change in the
condition of the Assets or Business (ordinary wear and tear excepted) other than
changes in the ordinary course of business, none of which have been materially
adverse; or (b) damage, destruction or loss, whether covered by insurance or
not, affecting the Assets or the Business of the Seller.
2.5 True and Complete Copies. Copies of the agreements, written contracts
------------------------
and documents previously delivered and to be delivered hereunder by the Seller
are and will be true and complete copies of such agreements, contracts and
-6-
<PAGE>
documents.
2.6 Personal Property. Except as set forth on Exhibit 2.6 hereto, the
-----------------
Seller has good and marketable title to all of the personal property Assets free
and clear of all liens, security interests, leases, covenants, conditions,
agreements, claims, restrictions and other encumbrances of every kind, and there
exists no restriction on the use or transfer of such property.
2.7 Customer List. Set forth on Exhibit 2.7 hereto is a customer list of
-------------
the Business which is true and correct as of the date indicated.
2.8 Use and Condition of Property. All of the Assets to be transferred to
-----------------------------
Buyer are in good operating condition and repair as required for their use in
the Business as presently conducted and will be in good operating condition as
of the Closing.
2.9 Licenses and Permits. Seller has all material licenses and permits
--------------------
required for the conduct of the Business and such licenses and permits are valid
and in full force and effect.
2.10 Contracts and Commitments. Except as set forth in Exhibit 2.10 hereto
-------------------------
and relating only to the Business, the Seller does not have outstanding:
(a) Other than this Agreement, any arrangement or other agreement which
involves (i) a sharing of profits, (ii) future payments to other
persons, or (iii) any joint venture contract or arrangement.
(b) Any contract containing covenants materially limiting the freedom of
the Seller to compete in the Business or with any person or in any
geographic area.
-7-
<PAGE>
(c) Any contract or commitment not made in the ordinary course of business
which is material to the Business, financial condition or operations
of the Seller except as otherwise disclosed herein.
(d) Any other material contract or commitment which is not cancelable
without penalty on ten (10) days notice or less and which is not
specifically set forth on any other Exhibit hereto.
2.11 No Breach of Statute, Decree, Order or Contract. To the best of
-----------------------------------------------
Seller's knowledge, as relates to the Assets, Seller is not in default under or
in violation of, any applicable statute, law, ordinance, decree, order, rule, or
regulation of any governmental body, or the provisions of any franchise or
license; or in default under, or in violation of, any provision of its Articles
of Incorporation, by-laws, or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or other commitment
or any other agreement to which the Seller is a party or by which it is bound
which may result in an adverse effect on the Business or condition, financial or
otherwise, of the Seller; and the execution of this Agreement and the
consummation of the transactions contemplated hereby has not and will not
constitute or result in any such default, breach or violation or in the creation
of any lien, charge or encumbrance upon any Asset.
2.12 Litigation. To the best of Seller's knowledge, except as set forth on
----------
Exhibit 2.12 hereto, there is no suit, claim, action or proceeding now pending
or to the best of Seller's knowledge, threatened before any court,
administrative or regulatory body, or any governmental agency, nor, to the best
of Seller's knowledge, are there any grounds therefor, to which the Seller is a
party or which may result in any judgment, order, decree, liability or other
determination which will, or could, have any adverse effect upon any Asset. To
the best of Seller's knowledge, no such judgment, order or decree has been
entered against
-8-
<PAGE>
the Seller nor has any such liability been incurred which has, or could have,
such effect. To the best of Seller's knowledge, there is no claim, action or
proceeding now pending or threatened before any court, administrative or
regulatory body, or any governmental agency, which will, or could, prevent or
hamper the consummation of the transactions contemplated by this Agreement.
2.13 Insurance Policies. Set forth on Exhibit 2.13 hereto is a list of all
------------------
insurance policies in force covering the Assets.
2.14 Books and Records. As relates to the Assets, the books of account,
-----------------
corporate books and other records of the Seller are in all material respects
complete and correct, have been maintained in accordance with normal business
practices, and the matters contained therein are accurately reflected on the
Financial Information in all material respects.
2.15 Product Liability. To the best of Seller's knowledge, there exist no
-----------------
claims against the Seller for injury to person or property of its employees or
any third persons suffered as a result of the sale of any products or services
of the Business sold by the Seller prior to the date of this Agreement,
including, but not limited to, claims arising because of the defective or unsafe
nature of its equipment or service. The Seller has, and on the date of Closing
will have, full and adequate insurance coverage for potential products liability
claims against it relating to the Business as set out on Exhibit 2.13.
2.16 Assumed Obligations. The Assumed Obligations to be assumed by the
-------------------
Buyer under the provisions of Section 1.2 hereof are all valid and in full force
and effect and to the best of Seller's knowledge, no party to any such Assumed
Obligation is in default with respect to any term or condition thereof, nor has
any event occurred which, through the passage of time or the giving of notice,
or both, would constitute a default thereunder or would cause the acceleration
of any obligation of any party thereto. Except as specifically set forth on
-9-
<PAGE>
Exhibit 2.16 hereto, none of the Assumed Obligations will result in a penalty
upon termination. The Assumed Obligations will be valid and in full force and
effect on the Closing. Each Assumed Obligation will be duly assigned to the
Buyer on the Closing and upon such assignment, the Buyer will acquire all of the
Seller's right, title and interest in and to such Assumed Obligation and will be
substituted for the Seller under the terms of such Assumed Obligation. The
Seller has delivered to the Buyer true, correct and complete copies of the
contracts, agreements or other documents creating or evidencing each Assumed
Obligation.
2.17 Necessary Property, Title and Transfer of Assets. The Assets and
------------------------------------------------
Assumed Obligations being sold and delivered by the Seller to the Buyer
constitute all of such property now used in and necessary for the conduct of the
Business of the Seller. To the best of Seller's knowledge, except as set forth
on Exhibit 2.17 hereto, no consent is necessary to, and there exists no
restriction on, the transfer of any of the Assets to the Buyer or the assignment
of the Assumed Obligations to the Buyer. There exists no condition, restriction
or reservation affecting the title to or utility of the Assets or Assumed
Obligations which would prevent the Buyer from occupying or utilizing the Assets
or Assumed Obligations, or any part thereof, to the same full extent that the
Seller might continue to do so if the sale and transfer contemplated hereby did
not take place.
2.18 Reasonableness-Validity of Contracts. To the best of Seller's
------------------------------------
knowledge, no purchase commitment for inventory to which the Seller is a party
is in excess of the normal, ordinary, usual and current requirements of its
Business or at a price in excess of the current reasonable market price.
Each of the contracts and agreements relating to the Business to which the
Seller is a party is a valid and binding obligation of the parties thereto in
accordance with its terms and conditions. To the best of Seller's knowledge, no
-10-
<PAGE>
party to any such contract or agreement is in default with respect to any
material term or condition thereof, nor has any event occurred which, through
the passage of time or the giving of notice, or both, would constitute a default
thereunder or would cause the acceleration of any obligation of any party
thereto or the creation of a lien or encumbrance upon any Asset.
2.19 No Material Misstatement or Omissions. To the best of Seller's
-------------------------------------
knowledge, Sections 2.1 through and including 2.18 of this Article II, including
the material contained in the Exhibits referred to in said Sections, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not materially false or misleading.
There is no fact which materially adversely affects, or in the future may (so
far as the Seller reasonably foresees) materially adversely affect, the
Business, properties or financial or business condition of the Seller which has
not been set forth therein. The representations, warranties and covenants made
in this Article will be true and complete on and as of the Closing with the
same force and effect as though made on and as of the Closing.
ARTICLE III
Representations and Warranties of the Buyer
-------------------------------------------
The Buyer hereby makes the following representations and warranties, each
of which is true and correct on the date hereof and will be true and correct on
the date of Closing, and each of which shall survive the date of Closing and the
sale contemplated hereby.
3.1 Corporate Existence of Buyer. The Buyer is a corporation duly
----------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer has the corporate power and authority to own and use its
properties and to transact the business in which it is engaged.
-11-
<PAGE>
3.2 Approval of Agreement. The execution and delivery of this Agreement
---------------------
has been duly authorized and approved by proper corporate action of the Buyer.
Pursuant to such authorization and approval, the Buyer has full power and
authority to enter into this Agreement and to perform its obligations hereunder.
3.3 No Breach of Statute, Decree, Order or Contract. The execution of
-----------------------------------------------
this Agreement and the consummation of the transactions contemplated hereby have
not and will not constitute or result in the breach of any of the provisions of
or constitute a default under, the articles or certificate of incorporation or
by-laws of the Buyer, or any promissory note, indenture, evidence of
indebtedness or security therefor, lease, contract, purchase or other commitment
or any other agreement to which the Buyer is a party or by which it is bound
which would have a material adverse effect on the Buyer, taken as a whole.
ARTICLE IV
Covenants Concerning the Seller
-------------------------------
The Seller covenants and agrees with the Buyer that, from and after the
date of this Agreement and until the Closing, the Seller will conduct the
Business subject to the following provisions and limitations:
4.1 Operation of Business. Unless the prior written consent of the Buyer
---------------------
is otherwise obtained as relates to the Business, the Seller will:
(a) not enter into any contract or commitment or engage in any
transaction which is not in the usual and ordinary course of business
or which is inconsistent with past practices;
(b) not sell or dispose of any of the Assets except in the ordinary
course of business;
-12-
<PAGE>
(c) not create, assume, incur or guarantee any indebtedness other than
(i) in the usual and ordinary course of business or (ii) that was
previously incurred pursuant to existing contracts disclosed in the
Exhibits delivered pursuant hereto;
(d) not make or institute any unusual or novel method of transacting
business or change any accounting procedures or practices or its
financial structure;
(e) not perform any act, or attempt to do any act, or permit any act or
omission to act, which will cause a breach of any material contract,
commitment or obligation to which the Seller is a party;
(f) maintain its inventories at substantially the same level as on the
date of this Agreement;
(g) operate its Business in the usual, regular and ordinary course;
(h) maintain the Assets and properties in substantially the same state of
repair, order and condition as currently exist, reasonable wear and
tear excepted;
(i) continue to insure the Assets owned or leased by it against all
ordinary and insurable risks for which Seller is currently insured as
set forth in Exhibit 2.13 hereto and will operate, maintain and
repair all its property in a manner consistent with what the Seller
has done in the past;
(j) not take any action which would interfere with the ability of the
Seller to perform this Agreement, which would prevent the performance
of this Agreement, or which would materially impair the value of the
Business or Assets being acquired by the Buyer in this transaction;
and
(k) use its best efforts to preserve its business organization and
relationships intact and keep available to the Buyer, to the extent
desired by the Buyer, the services of its present employees and
-13-
<PAGE>
agents, and also use its best efforts to preserve the goodwill of
suppliers, customers, distributors and others having material
business relations with it.
4.2 Full Access. As relates only to the Assets and the Business,
-----------
representatives of the Buyer shall have full access at all reasonable times to
all premises, properties, records and contracts of the Seller, and the Seller
will furnish to the Buyer any information in respect to the 20 pound cylinder
Business as the Buyer may from time to time reasonably request. Such examination
and investigation by the Buyer shall not affect the warranties and
representations of the Seller contained in this Agreement.
ARTICLE V
Conditions to the Buyer's Obligations
-------------------------------------
The obligations of the Buyer to consummate the transactions provided for in
this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the date of the Closing, subject to the right of the
Buyer to waive any one or more of such conditions.
5.1 Representations and Warranties of Seller. The representations and
----------------------------------------
warranties of the Seller contained in this Agreement and in the certificates and
documents to be delivered to the Buyer pursuant hereto and in connection
herewith shall be true and correct in all material respects on the date hereof
and on the date of the Closing (except for changes specifically permitted
hereunder) as though such representations and warranties were made on the date
of the Closing.
5.2 Performance of this Agreement. The Seller shall have duly performed
-----------------------------
or complied in all material respects with all of the obligations to be performed
-14-
<PAGE>
or complied by it under the terms of this Agreement on or prior to the date of
Closing.
5.3 Material Adverse Change. There shall have been no material adverse
-----------------------
change, casualty or loss actual or threatened, in the Assets, the Business or
condition, financial or otherwise, of the Seller, which has not been previously
remedied by Seller or disclosed herein, whether or not covered by insurance, as
a result of any cause whatsoever.
5.4 No Violations of Law or Litigation. To the best of Seller's
----------------------------------
knowledge, as of the date of Closing there shall exist no violations of any
federal, state or local law or regulations materially affecting the Assets,
goodwill or the Business, and no governmental agency or body shall have made
charges of any such violations or shall have instituted, threatened or intimated
any action which would have a material adverse effect on and/or preclude the
transaction contemplated by this Agreement.
5.5 Receipt of Documents. The Buyer shall have received, in form and
--------------------
content satisfactory to it, all documents required to be delivered to it
hereunder, and such other documents (in addition to the foregoing) as may
reasonably be required by the Buyer in connection with this Agreement and the
transaction hereunder.
5.6 Certificate of the Seller. The Buyer shall have received a
-------------------------
certificate signed by an officer of the Seller dated as of the date of the
Closing, and subject to no qualification, certifying that the conditions set
forth in this Article have been fully satisfied. Such certificate shall be
deemed a representation and warranty of the Seller under this Agreement.
-15-
<PAGE>
5.7 Authorization and Good Standing. The Buyer shall have received from
-------------------------------
the Seller:
(a) A certificate that this Agreement has been duly executed and
delivered on behalf of the Seller, is valid, binding and enforceable
against the Seller in accordance with its terms, and has received all
requisite corporate authorization.
(b) A certificate that the Seller is a corporation duly organized and
validly existing under the laws of Georgia. The Seller has full power
and authority to own and use its properties and carry on its business
as being conducted immediately prior to the date of the Closing.
(c) A Certificate of Existence from the State of Georgia.
(d) An attorney's opinion or acceptable UCC reports from the Georgia
State Clerk's Cooperative Authority, Tennessee Secretary of State and
the South Carolina Secretary of State showing that the Assets are not
subject to any liens or encumbrances or a written commitment to
release any such liens or encumbrances from all secured parties.
5.8 Opinion of Counsel. The Buyer shall have received from Hoffman &
------------------
Associates, counsel to the Seller, an opinion of such counsel, dated the Closing
Date, to the effect that:
(a) This Agreement has been duly executed and delivered on behalf of the
Seller, is valid, binding and enforceable against the Seller in
accordance with its terms, and has received all requisite legal
corporate approval.
(b) The Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. The Seller has
full corporate power and authority to own and use its properties and
-16-
<PAGE>
carry on its business as being conducted immediately prior to the
Closing Date.
5.9 No Lawsuits. To the best of Seller's knowledge, no suit, action or
-----------
other proceeding or investigation shall be threatened or pending before or by
any court or governmental agency concerning this Agreement or the consummation
of the transactions contemplated hereby, or in connection with any material
claim against the Seller relating to the Business not disclosed on the Exhibits
hereto. To the best of Seller's knowledge, no governmental agency shall have
threatened or directed any request for information concerning this Agreement,
the transaction contemplated hereby or the consequences or implications of such
transaction to the Buyer or the Seller, or any member, officer, director,
employee or agent of either of them.
5.10 No Restrictions. To the best of Seller's knowledge, there shall exist
---------------
no conditions, restrictions or reservations affecting the title to or utility of
the Assets which would prevent the Buyer from occupying and utilizing the Assets
or any part thereof, to the same full extent that the Seller might continue to
do so if the sale and transfer contemplated hereby did not take place.
5.11 Consents. To the best of Seller's knowledge, there are no material
--------
contracts regarding the Business to be assigned hereunder which requires the
consent of any third party which consent has not be obtained.
5.12 Documents. The Buyer shall receive from the Seller on the date of the
---------
Closing appropriate documents conveying to the Buyer good and marketable title
to the Assets being transferred.
-17-
<PAGE>
5.13 Delivery of Certain Records. All books and records of the Seller
---------------------------
relating to the Assets being transferred and all other information and records
reasonably requested by the Buyer, shall have been made available to the Buyer
for inspection, and shall be in form and content satisfactory to the Buyer and
its counsel. The Seller shall have delivered the business records promised to
the Buyer pursuant to Section 1.1(i) hereof.
5.14 Approval of Counsel. The validity of the transaction herein
-------------------
contemplated and the form and substance of all opinions, instruments and other
documents or certificates to be delivered by the Seller hereunder shall be
reasonably satisfactory to House & Ingersoll, PLLC, counsel for the Buyer.
5.15 Further Assurances. The Buyer shall have received such further
------------------
instruments and documents as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained and the performance of all conditions to the
consummation of such transactions.
ARTICLE VI
Conditions to the Seller's Obligations
--------------------------------------
The obligations of the Seller to consummate the transactions provided for
in this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the date of the Closing, subject to the right of the
Seller to waive any one or more of such conditions:
6.1 Representations and Warranties of the Buyer. The representations and
-------------------------------------------
warranties of the Buyer contained in this Agreement and in the certificates and
documents to be delivered to the Seller pursuant hereto and in connection
-18-
<PAGE>
herewith shall be true and correct in all material respects on the date hereof
and on the date of the Closing (except for changes specifically permitted
hereunder) as though such representations and warranties were made on the date
of the Closing.
6.2 Performance of this Agreement. The Buyer shall have duly performed or
-----------------------------
complied in all material respects with all of the obligations to be performed or
complied by it under the terms of this Agreement on or prior to the date of the
Closing.
6.3 Certificate of the Buyer. The Seller shall have received a
------------------------
certificate signed by an officer of the Buyer dated as of the date of the
Closing and subject to no qualification certifying that the conditions set forth
in this Article have been fully satisfied. Such certificate shall be deemed a
representation and warranty of the Buyer hereunder.
6.4 Authorization and Good Standing. The Seller shall have received from
-------------------------------
the Buyer:
(a) A certificate that this Agreement has been duly executed and
delivered on behalf of the Buyer and is binding and enforceable
against it in accordance with its terms.
(b) A certificate that Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware. Buyer has full power and authority to own and use its
properties and carry on its business as being conducted immediately
prior to the date of the Closing.
(c) A Certificate of Existence from the State of Delaware.
-19-
<PAGE>
6.5 Payment of Purchase Price. The Seller shall receive from the Buyer on
-------------------------
the date of the Closing the cash down-payment portion of the Purchase Price
provided for in this Agreement.
6.6 Opinion of Counsel. The Seller shall have received from House &
------------------
Ingersoll, PLLC, counsel to the Buyer, an opinion of such counsel, dated the
Closing Date, to the effect that:
(a) This Agreement has been duly executed and delivered on behalf of the
Buyer, is valid, binding and enforceable against the Buyer in
accordance with its terms, and has received all requisite legal
corporate approval.
(b) The Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Buyer has
full corporate power and authority to own and use its properties and
carry on its business as being conducted immediately prior to the
Closing Date.
6.7 Further Assurances. The Seller shall have received such further
------------------
instruments and documents as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained and the performance of all conditions to the
consummation of such transactions.
6.8 No Lawsuits. No suit, action or other proceeding or investigation
-----------
shall be threatened or pending before or by any court or governmental agency
concerning this Agreement or the consummation of the transactions contemplated
hereby, or in connection with any material claim against Buyer not previously
disclosed to the Seller. No governmental agency shall have threatened or
directed any request for information concerning this Agreement, the transaction
-20-
<PAGE>
contemplated hereby, or the consequences or implications of such transaction to
Buyer or Seller, or any member, officer, director, employee or agent of either
of them.
6.9 Approval of Counsel. The validity of the transaction herein
-------------------
contemplated and the form and substance of all opinions, instruments and other
documents or certificates to be delivered by Buyer hereunder shall be reasonably
satisfactory to Hoffman & Associates, counsel for Seller.
ARTICLE VII
Indemnification
---------------
7.1 Indemnification of Buyer. For a term of three (3) years after the date
------------------------
of the Closing, the Seller hereby agrees to indemnify and hold the Buyer, any
subsidiary or affiliated corporation of the Buyer or any officer, director,
agent, employee, parent or affiliate of them (an "Indemnified Person") harmless
from and against any and all losses, claims, damages, liabilities, costs,
counsel fees and other expenses of any nature whatsoever incurred or asserted
against them, resulting from or arising out of (i) any breach by the Seller of
any representation, warranty, covenant, agreement or other obligation of the
Seller made or incurred under or pursuant to this Agreement; (ii) any claim
relating to the Assets or the Business occurring prior to or on the date of the
Closing (other than a claim arising out of acts of Buyer's employees, agents, or
representatives), whether or not such claim constitutes a breach of any
representations, warranty, covenant, agreement or other obligation of the
Seller; and (iii) any liability or obligation of the Seller which is not
expressly assumed by the Buyer under this Agreement; [(i) through (iii) herein
collectively referred to as "Indemnifiable Losses"].
-21-
<PAGE>
7.2 Indemnification of Seller. For a term of three (3) years after the
-------------------------
date of the Closing, the Buyer hereby agrees to indemnify and hold the Seller,
any subsidiary or affiliated corporation of the Seller or any officer, director,
agent, employee, parent or affiliate of them (an "Indemnified Person") harmless
from and against any and all losses, claims, damages, liabilities, costs,
counsel fees and other expenses of every nature whatsoever incurred or asserted
against them, resulting from or arising out of (i) any breach by the Buyer of
any representation, warranty, covenant, agreement or other obligation of the
Buyer made or incurred under or pursuant to this Agreement; and (ii) any claim
relating to the Assets or the Business occurring after the date of the Closing
(other than a claim arising out of acts of Seller's employees, agents, or
representatives), whether or not such claim constitutes a breach of any
representations, warranty, covenant, agreement or other obligation of the Buyer
[(i) and (ii) herein collectively referred to as "Indemnifiable Losses"].
7.3 Participation in Litigation. In the event any suit or other proceeding
---------------------------
is initiated against an Indemnified Person with respect to which such
Indemnified Person alleges the other party is or may be obligated to indemnify
such Indemnified Person hereunder, the other party shall be entitled to
participate in such suit or proceeding, at its expense and by counsel of its
choosing, provided that (a) such counsel is reasonably satisfactory to the
Indemnified Person, and (b) the Indemnified Person and its counsel shall retain
primary control over such suit or proceeding. If defense is undertaken by an
insurance company of either party, then either Buyer or Seller may participate
at their own expense. Such counsel shall be afforded access to all information
pertinent to the suit or proceeding in question. The Indemnified Person shall
not settle or otherwise compromise any such suit or proceeding without the prior
written consent of the other party, which consent shall not be unreasonably
-22-
<PAGE>
withheld, if the effect of such settlement or compromise would be to impose
liability on the other party hereunder.
7.4 Payment of Indemnity. In the event an Indemnified Person suffers an
--------------------
Indemnifiable Loss, then the other party shall pay such Indemnifiable Loss in
cash or make such escrow or other arrangements for the payment of such
Indemnifiable Loss as will absolve the Indemnified Person of any liability
therefor. Acknowledged payment by either party's insurance company shall
constitute acceptable arrangements for payment hereunder.
ARTICLE VIII
Miscellaneous
-------------
8.1 Survival of Warranties and Representations. Notwithstanding any
------------------------------------------
investigation by either the Seller or the Buyer, all representations, and
warranties of the Seller and Buyer made under or pursuant to this Agreement
shall survive the date of the Closing hereunder for a period of three (3) years.
All covenants and agreements of the Parties hereto shall survive until such
covenants and agreements have been fully performed.
8.2 Assignment; Binding Agreement.
-----------------------------
(a) This Agreement and all or any part of the Buyer's rights and
obligations hereunder may be assigned by the Buyer at any time only to
an affiliated entity of Buyer or a Blue Rhino Distributor but such
assignment will not relieve Buyer of any of Buyer's obligations,
duties or liabilities under this Agreement.
(b) Neither this Agreement nor any of the Seller's rights or obligations
hereunder may be assigned by the Seller without the Buyer's prior
written consent which shall not be unreasonably withheld but such
-23-
<PAGE>
assignment shall not relieve Seller of any obligations, duties and
liabilities under this Agreement.
(c) This Agreement shall be binding upon and shall inure to the benefit of
the Parties hereto and to their respective successors and permitted
assigns.
8.3 Termination of this Agreement. This Agreement and the transactions
-----------------------------
contemplated hereby may be terminated prior to the date of the Closing only as
follows:
(a) By mutual consent of the Buyer and the Seller.
(b) By the Party not at fault, if any of the conditions precedent to the
Closing are not met or waived on or at the Closing.
8.4 Remedies. Nothing contained herein is intended to or shall be
--------
construed so as to limit the remedies which either party may have against the
other in the event of a breach by either party of any representation, warranty
or agreement made under or pursuant to this Agreement, it being intended that
any remedies shall be cumulative and not exclusive. The Parties agree that if
any party hereto is obligated to, but nevertheless does not, consummate this
transaction, then any other party, in addition to all other rights or remedies,
shall be entitled to the remedy of specific performance mandating that the other
party or parties consummate this transaction. In an action for specific
performance by any party against another party, the other party shall not plead
adequacy of damages at law.
8.5 Entire Agreement and Modification. This Agreement, including the
---------------------------------
Exhibits attached hereto and the documents delivered pursuant hereto,
constitutes the entire agreement between the Parties. No changes of,
modifications of, or additions to this Agreement shall be valid unless the same
shall be in writing
-24-
<PAGE>
and signed by all Parties hereto.
8.6 Severability. If any provision of this Agreement shall be determined
------------
to be contrary to law and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.
8.7 Counterparts. This Agreement may be executed in one or more identical
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
8.8 Headings. The table of contents and article and section headings
--------
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement.
8.9 Governing Law. This Agreement shall be construed and interpreted
-------------
according to the laws of the State of North Carolina.
8.10 Payment of Fees and Expenses. Except as may be otherwise provided
----------------------------
herein, each party hereto shall pay all fees and expenses of such party's
respective counsel, accountants and other experts and all other expenses
incurred by such party incident to the negotiation, preparation and execution of
this Agreement and the consummation of the transaction contemplated hereby. Each
party agrees to indemnify and hold the other party harmless from and against any
claim or liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein.
8.11 Further Documents. The Seller and Buyer hereby agree to deliver to
-----------------
the other party such other and further agreements, consents, documents or
instruments of conveyance, assignment or transfer and to do such other things
and
-25-
<PAGE>
to take such other actions, supplemental or confirmatory, as may be required for
the purpose of or in connection with the consummation or evidencing of the
transactions contemplated hereunder.
8.12 Exhibits a Part of Agreement. The Exhibits to this Agreement
----------------------------
constitute an integral part of this Agreement.
8.13 No Public Announcement. The Parties hereto agree that they will make
----------------------
no public announcements concerning the sale of the Assets hereunder or which
make reference to said sale (or the sale of the Business represented thereby),
unless each party has previously agreed to the content of such announcement or
unless it is otherwise required by law.
8.14 Notices. All notices, requests, demands and other communications
-------
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered personally or sent by registered or certified
mail, postage prepaid, overnight courier or telecopy and addressed as set forth
below:
(a) If to Buyer: Blue Rhino Corporation
ATTN: Mr. Chris Holden
104 Cambridge Plaza Drive
Winston-Salem, NC 27104
copy to: Don R. House
House & Ingersoll PLLC
3325 Healy Drive
Winston-Salem, NC 27103
(b) If to Seller: Georgia Gas Distributors
ATTN: Mr. Gerald E. Misel, Jr.
6000 Lake Forest Drive, Suite 230
Atlanta, GA 30328
copy to: Michael W. Hoffman
Hoffman & Associates
6075 Lake Forrest Drive, Suite 200
Atlanta, GA 30328
-26-
<PAGE>
Any party may change the address to which notices are to be addressed by giving
the other parties notice in the manner herein set forth.
8.15 Arbitration. The Parties hereto agree to submit to arbitration any
-----------
and all matters in dispute or in controversy among them concerning the terms and
provisions of this Agreement. All such disputes and controversies shall be
determined and adjudged by an arbitrator or arbitrators selected in accordance
with the commercial arbitration rules (the "Rules") of the American Arbitration
Association. The arbitration shall be held in Atlanta, Georgia or such other
location as agreed by all of the Parties, and shall be conducted in accordance
with the Rules, and the decision of the arbitrator(s) shall be final and binding
on the Parties. The determination of which party (or combination thereof) shall
bear the costs and expenses incurred in any such arbitration proceedings shall
be determined by the arbitrator(s). Any such decision and satisfaction thereof
may be enforced in any court having jurisdiction over the subject matter or the
Parties. Notwithstanding the foregoing, either party may institute a civil
action in a court for the sole purpose of maintaining the status quo during the
pendency of any arbitration proceeding and the Parties agrees that said court
has personal jurisdiction over the Parties.
8.16 Attorney Fees. In the event an arbitration, suit or action is brought
-------------
by any party under this Agreement to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to recover
reasonable attorneys fees from the other party, the amount to be fixed by the
arbitrator, trial court, and/or appellate court.
8.17 Non-Compete. Seller agrees that during the term of three (3) years
-----------
after the Closing, it shall not, without the prior written consent of the Buyer,
directly or indirectly, for its benefit or the benefit of another person, firm
-27-
<PAGE>
or corporation either:
(a) engage in the 20 pound propane gas cylinder exchange business within
fifty (50) miles of any of the Locations;
(b) have any material ownership in any corporation, partnership, firm,
association or business (except Buyer) which is primarily engaged in
the exchange or refurbishing of propane gas cylinders within fifty
(50) miles of any of the Locations;
(c) request any customers of Buyer to curtail or cancel their business
with Buyer;
(d) disclose to any person, firm or corporation the name of any customers
of the Seller or Buyer; or
(e) induce or attempt to influence any employee of Buyer to terminate his
employment.
Excluded from this covenant are the six (6) Industrial Customers set forth
on Exhibit 1.1(j) attached hereto.
8.18 Binding Effect. This Agreement and all the provisions hereof shall be
--------------
binding upon and enure to the benefit of the Parties hereto and their respective
successors and allowed assigns.
8.19 Return of Documents. If the transaction contemplated herein fails
-------------------
to close for any reason, then Buyer shall return to Seller all Exhibits,
Financial Information and any other documentation provided to Buyer as soon as
practicable, and Buyer shall not, directly or indirectly, use, benefit or profit
from such information. To the extent any such information inappropriately
benefits Buyer, Buyer shall be liable to Seller for damages at law or in equity,
as may be determined by a court of competent jurisdiction.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of
the day and year first above written.
BUYER:
Blue Rhino Corporation
BY: /s/ Joseph T. Culp, Vice President
-----------------------------------
Officer
-28-
<PAGE>
SELLER:
Georgia Gas Distributors, Inc.
By: /s/ Gerald E. Misel, Jr.,
----------------------------------
Gerald E. Misel, Jr.,
Title: Vice President
-------------------------------
-29-
<PAGE>
List of Exhibits
----------------
1.1(a) List of Locations
1.1(d) Machinery and Equipment
1.1(e) Motor Vehicles
1.1(j) Excluded Industrial Customers
1.2 Liabilities and Contracts to be Assumed
1.6 Consulting Agreement
1.8 Standard Exchange Agreement and List of Applicable Locations
2.3 Financial Information
2.4 Subsequent Events
2.6 Liens and Encumbrances
2.7 Customer List
2.10 Contracts and Commitments
2.12 Litigation
2.13 Insurance
2.16 Exceptions to Assumed Obligations
2.17 Necessary Consents and Restrictions on Transfer
-30-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited Condensed Consolidated Financial Statements of Blue Rhino Corporation
and its Subsidiaries and Consolidated Affiliate as of and for the three month
period ended October 31, 1999 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 781
<SECURITIES> 0
<RECEIVABLES> 10,164
<ALLOWANCES> 430
<INVENTORY> 191
<CURRENT-ASSETS> 12,587
<PP&E> 23,024
<DEPRECIATION> 4,615
<TOTAL-ASSETS> 60,816
<CURRENT-LIABILITIES> 7,112
<BONDS> 18,786
0
0
<COMMON> 8
<OTHER-SE> 34,909
<TOTAL-LIABILITY-AND-EQUITY> 60,816
<SALES> 13,443
<TOTAL-REVENUES> 14,208
<CGS> 10,123
<TOTAL-COSTS> 10,123
<OTHER-EXPENSES> 3,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 378
<INCOME-PRETAX> 340
<INCOME-TAX> 0
<INCOME-CONTINUING> 340
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340
<EPS-BASIC> .04
<EPS-DILUTED> .04
<FN>
<F1> Receivables and PP&E are presented net of allowances and accrued
depreciation.</FN>
</TABLE>
