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THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE SECURITIES LAWS. THIS DEBENTURE MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OF THE DEBENTURE UNDER SUCH ACT
AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE ISSUER HEREOF IS
SATISFIED THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR OFFER.
THIS DEBENTURE IS SUBJECT TO THE TERMS OF SUBORDINATION SET FORTH IN SECTION 4
HEREOF.
SENIOR SUBORDINATED DEBENTURE
$15,000,000 June 15, 2001
FOR VALUE RECEIVED, the undersigned, (i) BLUE RHINO
CORPORATION, a Delaware corporation (the "Company"), (ii) USA Leasing, L.L.C., ,
a Delaware limited liability company, RHINO SERVICES, L.L.C., a Delaware limited
liability company, CPD ASSOCIATES, INC., a North Carolina corporation,
QUICKSHIP, INC., a Delaware corporation, and UNIFLAME CORPORATION, a Delaware
corporation (collectively with the Company, the "Borrowers") jointly and
severally promise to pay to the order of ALLIED CAPITAL CORPORATION, a Maryland
corporation (the "Holder"), the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000), together with interest thereon as set forth below, at its offices
or such other place as the Holder may designate in writing.
1. Investment Agreement. This Senior Subordinated Debenture (the
"DEBENTURE") is executed and delivered by the Borrowers at the Closing in
connection with an investment (the "INVESTMENT") being made by the Holder in the
Borrowers, pursuant to the terms and conditions of an Investment Agreement by
and among the Borrowers and the Holder, dated of even date herewith (the
"INVESTMENT AGREEMENT"). This Debenture is subject to the terms and conditions
of the Investment Agreement. A copy of the Investment Agreement may be examined
during normal business hours at the offices of the Company. Any capitalized term
used herein and not otherwise defined herein shall have the meaning assigned to
it in the Investment Agreement.
2. Interest Rate Provisions.
2.1 Interest. Except as provided in Section 4.2.2 hereof, from
the date hereof and thereafter until the repayment of this Debenture in full,
interest shall accrue on the principal balance of this Debenture outstanding
from time to time at the fixed rate of 13% per annum.
2.2 Default Interest Rate. If (i) the Borrowers shall default
in the payment when due of the principal of or interest on this Debenture or any
other amount becoming due hereunder, by acceleration or otherwise, or under any
other Loan Document to which any Borrower is a party or (ii) any other Default
or Event of Default exists under Section 6.12 of the
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Investment Agreement, in each case whether or not such default is declared, the
interest rate on this Debenture shall each increase to 17% per annum.
2.3 Calculation of Interest. Interest shall be calculated on
the basis of a 360-day year assuming 12 equal 30 day months and shall be
computed for each payment period on the principal balance for the actual number
of days outstanding.
3. Payment Provisions. The following payment provisions are subject to
Section 4 hereof.
3.1 Interest Payments. Commencing on August 1, 2001, and
continuing on each succeeding November 1, February 1, May 1 and August 1
thereafter, up to and including the Maturity Date (each such date, a "PAYMENT
DATE"), the Borrowers shall pay in cash to the Holder quarterly installments of
interest only (in arrears) on the then outstanding principal balance under this
Debenture.
3.2 Principal Payments and Payment at Maturity. On the
Maturity Date, the entire then outstanding principal balance of this Debenture,
together with all accrued but unpaid interest, and all other sums owed hereunder
shall be due and payable in full in cash without further notice or demand.
3.3 Prepayments; Application of Payments.
(a) The Borrowers may prepay the then outstanding
principal amount of this Debenture in whole or in part at any time, so long as
if such prepayment occurs prior to the date of the third anniversary hereof, the
Borrowers pay to the Holder a prepayment premium (the "PREPAYMENT PREMIUM") as
defined in and calculated in accordance with Section 2.6 of the Investment
Agreement along with such prepayment. The Prepayment Premium shall be due
whether this Debenture is due upon voluntary or mandatory prepayment of this
Debenture in whole or in party. No Prepayment Premium shall be due or payable
with respect to any prepayment that occurs after June 15, 2004.
(b) Each prepayment with respect to this Debenture
shall be made in increments of $500,000 and shall be applied in the following
order of priority: (i) first, to any Prepayment Premium due pursuant to Section
2.6 of the Investment Agreement; (ii) second, to accrued, but unpaid, interest
at the applicable rate; and (iii) finally, to the then outstanding principal
balance of the Debenture.
3.4. Mandatory Prepayment of the Debenture.
(a) Election Requiring Borrowers to Prepay Debenture.
Upon a Change of Control, the Holder shall have the right (but not the
obligation) to require the Borrowers to (a) prepay this Debenture for an amount
equal to the then outstanding principal balance, all accrued but unpaid interest
thereon and all Prepayment Premiums and (b) pay all of
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the other Obligations in full (the "MANDATORY PREPAYMENT PRICE"), which amount
shall be calculated on the date of the prepayment and be payable in cash on such
date.
(b) Procedure for Mandatory Prepayment. At least 30
days but no more than 60 days prior to a Change of Control, the Company shall
provide written notice ("Notice of Transfer") to the Holder setting forth the
event constituting the Change of Control and the date of such event. Upon
receipt of the Notice of Transfer, the Holder shall have 30 days during which it
may elect to require the Borrowers to prepay this Debenture. If the Holder
elects to require the Borrowers to prepay this Debenture, it shall provide
written notice ("Notice of Prepayment") to the Borrowers of its election to do
so within the 30-day period after its receipt of the Notice of Transfer. The
Borrowers shall pay the Mandatory Prepayment Price on the date of the Change of
Control.
4. Subordination. The indebtedness represented by this Debenture is
subordinate to the Senior Debt of the Borrowers in accordance with the terms
hereof.
4.1 Definitions. Capitalized terms used but not otherwise
defined herein shall have the following meanings:
Collection Action shall mean, with respect to the Junior Debt
(a) to sue for, take or receive from or on behalf of any Borrower or
any guarantor of the Junior Debt, by set-off or in any other manner,
the whole or any part of any moneys which may now or hereafter be owing
by any Borrower or any such guarantor with respect to the Junior Debt,
(b) to initiate or participate with others in any suit, action or
Proceeding against any Borrower or any such guarantor (including any
right to sue the Borrower or to file or participate in the filing of
any involuntary bankruptcy petition against such Borrower) to (i)
enforce payment of or to collect the whole or any part of the Junior
Debt or (ii) commence judicial enforcement of any of the rights and
remedies under the Junior Debt Documents or applicable law with respect
to the Junior Debt, (c) to exercise any put option or to cause any
Borrower or any such guarantor to honor any redemption or mandatory
prepayment obligation with respect to the Junior Debt or the Warrants
or any capital stock of the Company obtained upon exercise of the
Warrants or (d) to take any action to realize upon any collateral
securing the Junior Debt (if any) or to exercise any other right or
remedy with respect to such collateral.
Junior Debt shall mean all of the obligations of the Borrowers
to Holder evidenced by this Debenture and all other amounts now or
hereafter owed by the Borrowers to Holder under any of the Junior Debt
Documents.
Junior Debt Documents shall mean this Debenture, the
Investment Agreement, Warrants and any guaranty with respect to the
Junior Debt and all other documents, agreements and instruments
executed and delivered in connection therewith.
Junior Default shall mean a default in the payment of the
Junior Debt or in the performance of any term, covenant or condition
contained in the Junior Debt Documents
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or any other occurrence permitting Holder to accelerate the payment of
all or any portion of the Junior Debt.
Junior Default Notice shall mean a written notice from Holder
or the Company to holders of Senior Debt pursuant to which such holders
are notified of the occurrence of a Junior Default, which notice
incorporates a reasonably detailed description of such Junior Default.
Reorganization Subordinated Securities shall mean any notes,
other debt securities, or equity securities issued in a Proceeding in
substitution of all or any portion of the Junior Debt, in each case
that are subordinated in right of payment, performance or otherwise to
the Senior Debt (or any notes or other securities issued in
substitution of all or any portion of the Senior Debt) to at least the
same extent that the Junior Debt is subordinated to the Senior Debt
pursuant to the terms hereof.
Proceeding shall mean any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of
a custodian, receiver, trustee or other officer with similar powers or
any other proceeding for the liquidation, dissolution or other winding
up of a person or entity.
Senior Acceleration shall mean acceleration of the
indebtedness due under the Senior Debt Documents.
Senior Credit Facility means that certain Second Amended and
Restated Loan Agreement, by and among the Credit Parties and Bank of
America, N.A., dated as of June 30, 2000, as amended and modified
through that certain Third Modification Agreement dated as of June 15,
2001, as the same may be amended, supplemented or otherwise modified
from time to time and any agreement or agreements renewing, replacing,
restating or refinancing all or any of the debt or commitments
thereunder or any notes or agreements otherwise evidencing any Senior
Debt, but only in each case to the extent the Indebtedness thereunder
continues to constitute Senior Debt as provided in the definition
thereof.
Senior Covenant Default shall mean any default or event of
default with respect to the financial covenants or the negative
covenants in the Senior Credit Facility, which default or event of
default entitles the holders of Senior Debt to accelerate the maturity
of the Senior Debt.
Senior Debt means all of the following: (a) the aggregate
principal indebtedness advanced from time to time under the Senior
Credit Facility up to a maximum aggregate principal amount that shall
not exceed the sum of (x) $42,500,000 (as reduced by all prepayments of
principal outstanding thereunder from the proceeds of the R-4
Transaction pursuant to the terms of Section 7.16 of the Investment
Agreement) and (y) the amount of any Indebtedness incurred pursuant to
Section 7.1(a)(xii) of the Investment
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Agreement and designated as "Senior Debt" by the Credit Parties, (b)
all interest accrued and accruing on the aggregate principal
outstanding under the Senior Credit Facility from time to time
(including, without limitation, any interest accruing after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to any Credit Party, whether
or not a claim for post-filing or post-petition interest is allowed in
such proceeding); (c) all other reasonable fees or monetary obligations
owed under the Senior Credit Facility; and (d) all reasonable costs
incurred by the Senior Lenders under the Senior Credit Facility in
commencing or pursuing any enforcement action(s) with respect to the
amounts described in clauses (a) through (c), including attorneys' fees
and disbursements. "Senior Debt" shall also include all amendments,
modifications, renewals, replacements, restatements and refinancings of
the foregoing, in whole or in part, provided such amendments,
modifications, renewals, replacements, restatements or refinancings do
not (i) increase the interest rate or default rate payable on any
component thereof by more than 2% over the interest rate or default
rate, respectively, that is applicable thereto on the date hereof, (ii)
extend the final maturity of the Senior Debt beyond August 1, 2006,
(iii) provide for principal amortization payments that results in a
Fixed Charge Ratio as of the date of such refinancing of less than 1.3
to 1.0, or (iv) include additional financial covenants or amend any of
the financial covenants set forth in the Senior Credit Facility to
render such covenants more restrictive, other than additional financial
covenants identical to those set forth in Section 6.12(a) or (b) of the
Investment Agreement that are no more than 15% more restrictive as such
financial covenants.
Senior Debt Documents shall mean the Senior Credit Facility
and all other documents, agreements and instruments evidencing or
pertaining to all or any portion of the Senior Debt.
Senior Default shall mean any Senior Payment Default or Senior
Covenant Default.
Senior Default Notice shall mean a written notice from the
holders of Senior Debt to Holder pursuant to which Holder is notified
of the occurrence of a Senior Default, which notice incorporates a
reasonably detailed description of such Senior Default.
Senior Payment Default shall mean any failure by the Borrowers
to make any required payment of interest or principal, or any other
monetary payment, under the Senior Debt Documents, which failure
continues beyond the expiration of any applicable cure period provided
by the terms of the Senior Debt Documents, including, without
limitation, any default in payment of Senior Debt after acceleration
thereof.
Warrant means, collectively, the warrants to purchase
1,372,071 shares of Common Stock of the Company (as adjusted in
accordance with the terms thereof), issued in accordance with the
Investment Agreement.
4.2. Subordination.
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4.2.1 Subordination of Junior Debt to Senior Debt.
Each of the Borrowers covenants and agrees, and Holder by its acceptance of this
Debenture (whether upon original issue or upon transfer or assignment) likewise
covenants and agrees, that (a) the payment of any and all of the Junior Debt
shall be subordinate and subject in right of payment, to the extent and in the
manner hereinafter set forth, to the prior payment in full in cash of the Senior
Debt and (b) the existing and hereafter acquired liens and security interests of
any holder of Senior Debt in any collateral securing all or any portion of the
Senior Debt shall be senior, regardless of the time or method of perfection, to
all existing and hereafter acquired liens and security interests, if any, of
Holder (or any agent therefor) in the collateral, if any, securing all or any
portion of the Junior Debt. The Company shall provide to Holder notice of each
holder of Senior Debt upon the incurrence of Senior Debt from such holder, which
notice shall include the name, address and phone number of such holder, and
Holder shall promptly acknowledge in writing receipt of such notice. Each holder
of Senior Debt, whether now outstanding or hereafter created, incurred, assumed
or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the
provisions contained herein. This Section 4 shall constitute a continuing offer
to all Persons who, in reliance upon such provisions, become holders or, or
continue to hold, Senior Debt, and such provisions are made for the benefit of
the holders of the Senior Debt, and such holders are made obligees hereunder and
any one or more of them may enforce such provisions.
4.2.2 Proceedings.
(a) Payments. In the event of any Proceeding
involving any Borrower, (i) all Senior Debt first shall be paid in full in cash
before any payment of or with respect to the Junior Debt from such Borrower
shall be made (other than a distribution of Reorganization Subordinated
Securities which Holder is hereby specifically authorized to receive and
retain); (ii) any payment or distribution, whether in cash, property or
securities which, but for the terms hereof, otherwise would be payable or
deliverable in respect of the Junior Debt from such Borrower (other than a
distribution of Reorganization Subordinated Securities which Holder is hereby
specifically authorized to receive and retain), shall be paid or delivered
directly to holders of Senior Debt (pro rata to such holders) (to be held and/or
applied thereby in accordance with the terms of the Senior Debt Documents) until
all Senior Debt is paid in full, in cash, and Holder irrevocably authorizes,
empowers and directs all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect all such
payments and distributions, and Holder also irrevocably authorizes, empowers and
directs holders of Senior Debt to demand, sue for, collect and receive every
such payment or distribution; and (iii) Holder agrees to execute and deliver to
each holder of Senior Debt of which Holder has notice or its representative all
such further instruments confirming the authorization referred to in the
foregoing clause (ii).
(b) Voting and Other Matters. At any meeting
of creditors or in the event of any Proceeding involving any Borrower, Holder
shall retain the right to vote, file a proof of claim and otherwise act with
respect to the Junior Debt (including the right to vote to accept or reject any
plan of partial or complete liquidation, reorganization, arrangement,
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composition, or extension), provided that Holder shall not initiate or prosecute
any claim or action in such Proceeding challenging the enforceability of the
Senior Debt, this Section 4, or any liens and security interests securing the
Senior Debt. In the event Holder fails to execute, verify, deliver and file any
proofs of claim in respect of the Junior Debt in connection with any such
Proceeding prior to 15 days before the expiration of the time to file any such
proof or fails to vote any such claim in any such Proceeding prior to 5 days
before the expiration of the time to vote any such claim, Holder hereby
irrevocably authorizes, empowers and appoints the holders of Senior Debt its
agent and attorney-in-fact to execute, verify, deliver and file such proofs of
claim and vote such claim in any such Proceeding; provided the holders of Senior
Debt shall have no obligation to exercise any such authority with respect to
Holder's claim. In the event that the holders of Senior Debt vote any claim in
accordance with the authority granted hereby, Holder shall not be entitled to
change or withdraw such vote.
(c) Reinstatement. The Senior Debt shall
continue to be treated as Senior Debt and the provisions hereof shall continue
to govern the relative rights and priorities of holders of Senior Debt and
Holder even if all or part of the Senior Debt or the security interests securing
the Senior Debt are subordinated, set aside, avoided or disallowed in connection
with any such Proceeding. This Section 4 shall be reinstated if at any time any
payment of any of the Senior Debt is rescinded or must otherwise be returned by
any holder of Senior Debt or any representative of such holder.
4.2.3 Payment Upon Senior Default.
(a) Commencement of Payment Blockage.
Subject to Section 4.2.3(b), the Borrowers may not make and Holder may not
receive any payment with respect to this Debenture or any other Junior Debt
Document (whether as a result of a Collection Action or otherwise) if, at the
time of such payment:
(i) A Senior Payment Default exists
and such Senior Payment Default shall not have been
cured or waived in accordance with the terms of the
Senior Debt Documents;
(ii) The Company and Holder shall
have received a Senior Default Notice from the
holders of Senior Debt stating that a Senior Covenant
Default exists; or
(iii) the holders of Senior Debt
have accelerated such Senior Debt.
(b) Termination of Payment Blockage. The
Borrowers may resume payments (and may make any payments missed due to the
application of Section 4.2.3(a)) in respect of the Junior Debt or any judgment
with respect thereto:
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(i) In the case of a Senior Payment
Default referred to in Section 4.2.3(a)(i), upon a
cure or waiver thereof in accordance with the terms
of the Senior Debt Documents;
(ii) In the case of a Senior
Covenant Default referred to in Section 4.2.3(a)(ii),
upon the earlier to occur of (x) the cure or waiver
of all Senior Covenant Defaults referenced in the
applicable Senior Default Notice in accordance with
the terms of the Senior Debt Documents, or (y) the
expiration of a period of 180 days from the date such
Senior Default Notice was received by Holder; or
(iii) In the case of acceleration of
the Senior Debt, upon the earlier to occur of (y) the
indefeasible satisfaction in full of the Senior Debt
and the termination of all lending commitments under
the Senior Debt Documents, and (z) any modification
of the Senior Debt Documents by which the
acceleration is rescinded and the indebtedness is
reinstated and no longer immediately due and payable
in full.
(c) Limitation on Payment Blockages.
Notwithstanding any provision of this Section 4.2.3 to the contrary:
(i) The Borrowers shall not be
prohibited from making, and Holder shall not be
prohibited from receiving, payments under Section
4.2.3(a)(ii) (x) on more than one occasion within any
period of 365 consecutive days and (y) on more than
an aggregate of four occasions so long as this
Debenture is outstanding; and
(ii) No Senior Covenant Default
existing on the date a Senior Default Notice is given
pursuant to Section 4.2.3 shall be used as a basis
for any subsequent Senior Default Notice unless such
default has been cured or waived for a period of at
least 90 days.
(d) Non-Applicability to Proceeding. The
provisions of this Section 4.2.3 shall not apply to any payment with respect to
which Section 4.2.2 would be applicable.
4.2.4 Payments Otherwise Permitted. The failure of
the Borrowers to make any payment with respect to the Junior Debt by reason of
the operation of Section 4.2.3 shall not be construed as preventing the
occurrence of a Junior Default under the applicable Junior Debt Documents.
Nothing contained in this Section 4.2 or elsewhere herein or in the Junior Debt
Documents shall prevent the Borrowers at any time, except during the pendency of
any Proceeding referred to in Section 4.2.2 or under the conditions referred to
in Section 4.2.3, from making payments or prevent Holder from receiving payments
or exercising any remedy available to Holder under the Junior Debt documents at
any time on account of the principal, interest or other charges with respect to
the Junior Debt.
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4.2.5 Restriction on Collection Action by Holder.
Upon any event of default under the Junior Debt Documents, and after fifteen
days prior written notice to holders of Senior Debt of which Holder has notice,
Holder may accelerate the Junior Debt. Notwithstanding any such acceleration or
any default under the Junior Debt Documents, until the Senior Debt is
indefeasibly paid in full in cash and all lending commitments under the Senior
Debt Documents have been terminated, Holder shall not, without the prior written
consent of the holders of a majority in principal amount of the Senior Debt,
take any Collection Action with respect to the Junior Debt, except as permitted
in the following sentence or Section 4.2.2 hereof. Upon the earliest to occur
of:
(a) the passage of 180 days from the
delivery of a Junior Default Notice to the holders of Senior Debt of which
Holder has notice if any Junior Default described therein shall not have been
cured or waived within such period; or
(b) acceleration of the Senior Debt; or
(c) the occurrence of any Proceeding with
respect to any Borrower or its assets; or
(d) the commencement by any holder of the
Senior Debt of any judicial or non-judicial action or proceeding against any
Borrower or any guarantor of the Senior Debt to (i) enforce payment of or to
collect the whole or any part of the Senior Debt, (ii) enforce any of the rights
and remedies available to any holder of the Senior Debt with respect to the
Senior Debt or any collateral securing the Senior Debt, or (iii) realize upon
any of the collateral securing the Senior Debt or exercise any other right or
remedy with respect to such collateral; or
(e) the occurrence of any Senior Default or
Junior Default arising from the merger, sale, liquidation, dissolution, or
change of control of any Borrower,
Holder may, upon ten days prior written notice to the holders of Senior Debt of
which Holder has notice, take any Collection Action. Such ten day notice may be
given during the 180 day period described in clause (a) above. Notwithstanding
the foregoing, Holder may vote, file proofs of claim and otherwise act with
respect to the Junior Debt in any Proceeding involving any Borrower or its
assets to the extent otherwise permitted by Section 4.2.2. Any amount received
by Holder as a result of any Collection Action with respect to the Junior Debt
prior to the indefeasible satisfaction of the Senior Debt in full in cash and
termination of all lending commitments under the Senior Debt Documents will be
paid to the holders of Senior Debt (pro rata to such holders) to the extent
required by the provisions of Section 4.2.8 hereof.
4.2.6 No Prepayments. Under no circumstances shall
the Borrowers be entitled to make, or Holder be entitled to demand, take,
receive, or retain, any prepayments of interest or principal on account of any
of the Junior Debt prior to the indefeasible payment in full in cash of the
Senior Debt and the termination of all lending commitments under the Senior Debt
Documents. Payments received by Holder after acceleration of the Junior Debt or
the
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commencement of a Collection Action otherwise permitted hereby shall not
constitute a prohibited prepayment under this Section 4.2.6.
4.2.7 Amendment of Junior Debt Documents. Until the
Senior Debt is paid in full in cash and notwithstanding anything contained in
the Junior Debt Documents, the Senior Credit Facility or any of the other Senior
Debt Documents to the contrary, Holder shall not, without the prior written
consent of the holders of a majority in principal amount of the Senior Debt,
agree to any amendment, modification or supplement to the Junior Debt Documents
the effect of which is to (i) increase the maximum principal amount of the
Junior Debt or rate of interest on any of the Junior Debt, (ii) change any date
upon which payments of principal or interest on the Junior Debt are due to an
earlier date, (iii) add or make more restrictive any event of default or any
covenant with respect to the Junior Debt, (iv) change any redemption or
prepayment provisions of the Junior Debt to an earlier date or add any
additional events requiring such redemption or prepayment, (v) alter the
subordination provisions with respect to the Junior Debt, including, without
limitation, subordinating the Junior Debt to any other debt, (vi) take any liens
or security interests in assets of any Borrower or any other assets securing the
Senior Debt (other than such liens or security interests, if any, that exist in
favor of Holder as of the date hereof and are otherwise permitted by the Senior
Debt Documents ), (viii) change or amend any other term of the Junior Debt
Documents if such change or amendment would result in a Senior Default or (ix)
permit the exercise of the put rights of Holder under Section 3.2 of the
Investor Rights Agreement prior to the fifth anniversary of the date thereof.
4.2.8 Incorrect Payments and Proceeds of Collection
Action. If the Holder receives, prior to the indefeasible satisfaction of the
Senior Debt in full in cash and termination of all lending commitments under the
Senior Debt Documents, any payment or distribution on account of the Junior Debt
not permitted hereby (whether received as a result of a Collection Action or
otherwise), such payment or distribution shall be held in trust by Holder for
the benefit of all holders of Senior Debt and shall be promptly paid over to the
holders of Senior Debt (pro rata to such holders), or their designated
representatives, for application (in accordance with the Senior Debt Documents)
to the payment of the Senior Debt then remaining unpaid, until indefeasible
satisfaction of the Senior Debt in full in cash and termination of all lending
commitments under the Senior Debt Documents.
4.2.9 Sale Transfer, etc. Holder shall not sell,
assign, pledge, dispose of or otherwise transfer all or any portion of the
Junior Debt or any Junior Debt Document (a) without giving prior written notice
of such action to the holders of Senior Debt, and (b) unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the holders of Senior Debt of which the transferee or Holder has
notice an agreement providing for the continued subordination and forbearance of
the Junior Debt to the Senior Debt as provided herein and for the continued
effectiveness of all of the rights of the holders of the Senior Debt arising
hereunder. Notwithstanding the failure to execute or deliver any such agreement,
the subordination effected hereby shall survive any sale, assignment, pledge,
disposition or other transfer of all or any portion of the Junior Debt, and the
terms hereof shall be binding upon the successors and assigns of Holder.
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4.3. Modifications to Senior Debt. The holders of Senior Debt
may at any time and from time to time without the consent of or notice to
Holder, without incurring liability to Holder and without impairing or releasing
the obligations of Holder hereunder, change the manner or place of payment or
extend the time of payment of or renew or alter any of the terms of the Senior
Debt, or amend in any manner any agreement, note, guaranty or other instrument
evidencing or securing or otherwise relating to the Senior Debt; provided that
the Junior Debt shall not be subordinated in accordance herewith to indebtedness
or obligations to the extent such indebtedness or obligations do not constitute
"Senior Debt" under the definition set forth in Section 4.1 hereof.
4.4. Continued Effectiveness. The terms hereof, the
subordination effected hereby, and the rights and the obligations of Holder, the
Borrowers, any holders of the Senior Debt arising hereunder shall not be
affected, modified or impaired in any manner or to any extent by the validity or
enforceability of any of the Senior Debt Documents or the Junior Debt Documents,
or any exercise or non-exercise of any right, power or remedy under or in
respect of the Senior Debt or the Senior Debt Documents or the Junior Debt or
the Junior Debt Documents. The Holder and each other holder of Junior Debt
hereby acknowledges that the provisions hereof are intended to be enforceable at
all times, whether before the commencement of, after the commencement of, in
connection with or premised on the occurrence of a Proceeding.
4.5. No Contest by Holder. Holder agrees that it will not at
any time contest the validity, perfection, priority or enforceability of the
Senior Debt, the Senior Debt Documents, or the liens and security interests of
any holders of the Senior Debt in any collateral securing the Senior Debt.
4.6. Representations and Warranties. The original Holder of
this Debenture hereby represents and warrants to the holders of Senior Debt as
follows:
4.6.1 Existence and Power. Holder is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Maryland.
4.6.2 Authority. Holder has the power and authority
to enter into, execute, deliver and carry out the terms hereof, all of
which have been duly authorized by all proper and necessary action and
are not prohibited by its organizational documents.
4.6.3 Binding Agreements. This Debenture constitutes
the valid and legally binding obligation of Holder enforceable in
accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by equitable principles.
4.6.4 Conflicting Agreements; Litigation. No
provisions of any mortgage, indenture, contract, agreement, statute,
rule, regulation, judgment, decree or order binding on Holder conflicts
with, or requires any consent which has not already been obtained
under, or would in any way prevent the execution, delivery or
performance
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of the terms hereof by Holder. The execution, delivery and carrying out
of the terms hereof will not constitute a default under, or result in
the creation or imposition of, or obligation to create, any lien or
security interest in the property of Holder pursuant to the terms of
any such mortgage, indenture, contract or agreement. No pending or, to
the best of Holder's knowledge, threatened, litigation, arbitration or
other proceedings if adversely determined would in any way prevent the
performance of the terms hereof by Holder.
4.6.5 No Divestiture. Holder is the sole owner,
beneficially and of record, of this Debenture and the Junior Debt.
4.6.6 Default under Junior Note. No Junior Default
exists under or with respect to this Debenture or any of the other
Junior Debt Documents.
4.7. Junior Default Notice. The Company shall provide the
holders of Senior Debt with a Junior Default Notice upon the occurrence of each
Junior Default, and shall notify such holders in the event such Junior Default
is cured or waived.
4.8. Cumulative Rights, No Waivers. Each and every right,
remedy and power granted to any holder of the Senior Debt hereunder shall be
cumulative and in addition to any other rights remedy or power specifically
granted herein or the Senior Debt Documents or now or hereafter existing in
equity, at law, by virtue of statute or otherwise, and may be exercised by any
holder of Senior Debt, from time to time, concurrently or independently and as
often and in such order as such holder may deem expedient. Any failure or delay
on the part of the holder of Senior Debt in exercising any such right, remedy or
power, or abandonment or discontinuance of steps to enforce the same, shall not
operate as a waiver thereof or affect the rights of such holder thereafter to
exercise the same, and any single or partial exercise of any such right, remedy
or power shall not preclude any other or further exercise thereof or the
exercise of any other right, remedy or power, and no such failure, delay,
abandonment or single or partial exercise of the rights of such holder hereunder
shall be deemed to establish a custom or course of dealing or performance among
the parties hereto.
4.9. Modification. Any modification or waiver of any provision
hereof, or any consent to any departure by Holder therefrom, shall not be
effective in any event unless the same is in writing and signed by the holders
of a majority in principal amount of the outstanding Senior Debt, and then such
modification, waiver or consent shall be effective only in the specific instance
and for the specific purpose given. Any notice or demand given to Holder by any
holder of Senior Debt in any circumstances not specifically required by such
holder hereunder shall not entitle Holder to any other or further notice or
demand in the same, similar or other circumstances unless specifically required
hereunder.
4.10. Additional Documents and Actions. Holder at any time,
and from time to time, after the execution and delivery hereof, promptly will
execute and deliver such further documents and do such further acts and things
as the holders of Senior Debt reasonably may request that may be necessary in
order to effect fully the purposes hereof.
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4.11. Notices. Unless otherwise specifically provided herein,
any notice or other communication required or permitted to be given shall be in
writing addressed to the respective party at the address provided by such party
to the Company and may be personally served, telecopied or sent by overnight
courier service or certified or registered United States mail and shall be
deemed to have been given (a) if delivered in person, when delivered; (b) if
delivered by telecopy, on the date of transmission if transmitted on a Business
Day before 4:00 p.m. (Eastern time) or, if not, on the next succeeding Business
Day; (c) if delivered by overnight courier, two Business Days after delivery to
such courier properly addressed; or (d) if by United States mail, four Business
Days after deposit in the United States mall, postage prepaid and properly
addressed.
4.15. Defines Rights of Creditors; Obligations Unconditional.
The provisions of this Section 4 are solely for the purpose of defining the
relative rights of Holder and the holders of Senior Debt and shall not be deemed
to create any rights or priorities in favor of any other Person, including,
without limitation, the Borrowers. As between the Borrowers and Holder, nothing
contained herein shall impair the unconditional and absolute obligation of the
Borrowers to Holder to pay the Junior Debt as such Junior Debt shall become due
and payable in accordance with the Junior Debt Documents.
4.16. Subrogation. After the indefeasible payment in full in
cash of the Senior Debt and the termination of all lending commitments under the
Senior Debt Documents, and prior to repayment in full of the Junior Debt, Holder
shall be subrogated to the rights of the holders of Senior Debt to the extent
that distributions otherwise payable to Holder have been applied to the Senior
Debt in accordance with the provisions of this Section 4. For purposes of such
subrogation, no payments or distributions to the holders of Senior Debt of any
cash, property or securities to which Holder would be entitled except for the
provisions of this Section 4, and no payments pursuant to the provisions of this
Section 4 to the holders of Senior Debt by Holder, shall, as among the
Borrowers, their creditors (other than the holders of Senior Debt), any
guarantors of the Senior Debt or Junior Debt, and Holder be deemed to be a
payment of distribution by the Borrowers or such guarantor to or on account of
the Senior Debt. The holders of Senior Debt shall have no obligation or duty to
protect Holder's rights of subrogation arising pursuant to this Section 4 or
under any applicable law, nor shall such holders be liable for any loss to, or
impairment of, any subrogation rights held by the Holder.
4.17. Conflict. In the event of any conflict between any term,
covenant or condition of this Section 4 and any term, covenant or condition of
any of the Junior Debt Documents, the provisions of this Section 4 shall control
and govern.
4.19. WAIVER OF JURY TRIAL. HOLDER, THE BORROWERS AND THE
HOLDERS OF SENIOR DEBT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECTION 4. EACH
OF HOLDER, THE BORROWERS AND THE HOLDERS OF SENIOR DEBT ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS
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RELIED ON THE WAIVER IN ENTERING INTO THIS SECTION 4 AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF HOLDER, BORROWER
AND HOLDERS OF SENIOR DEBT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE
OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
4.20. Reliance. Upon any payment or distribution of assets of
the Company or any guarantor of the Junior Debt or Senior Debt in connection
with any Proceeding with respect thereto, Holder shall be entitled to rely upon
any order or decree by any court of competent jurisdiction in which such
Proceeding is pending, delivered to Holder, purporting to enforce or interpret
this Section 4 for the purpose of ascertaining the holders of Senior Debt
entitled to participate in such payment or distribution in accordance with this
Section 4, the amount thereof, and all other matters related thereto. Holder
shall not at any time be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to it, unless and until Holder
shall have received written notice thereof in accordance with this Section 4
from the Company or the holders of Senior Debt, and prior to the receipt of any
such written notice Holder shall be entitled to assume conclusively that no such
facts exist, without, however, limiting the rights of the holders of Senior Debt
to recover from Holder, or the obligation of Holder to turn over to the holders
of Senior Debt, any payment or distribution made to Holder to which Holder is
not entitled in accordance with this Section 4.
5. Assignment. This Debenture and the obligations hereunder may not be
assigned by the Borrowers without the prior written consent of the Holder.
6. Default and Remedies. The occurrence of an Event of Default under
the Investment Agreement shall constitute a default hereunder and shall entitle
the Holder to exercise the rights and remedies specified in the Investment
Agreement, as well as those available at law or in equity.
7. Waivers. Each of the Borrowers hereby waives presentment, demand,
protest, or further notice of any kind (except such notices as may be
specifically required by the express terms of the Investment Agreement).
8. Controlling Law. This Debenture and all matters related hereto shall
be governed, construed and interpreted strictly in accordance with the laws of
the State of Maryland, without regard to its principles of conflicts of law.
9. No Usury. This Debenture is subject to the express condition that at
no time shall the Borrowers be obligated or required to pay interest hereunder
at a rate which could subject the Holder to either civil or criminal liability
as a result of being in excess of the maximum rate which the Borrowers are
permitted by law to contract or agree to pay. If, by the terms of this
Debenture, the Borrowers are at any time required or obligated to pay interest
at a rate in excess of such maximum rate, the rate of interest under this
Debenture shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at
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such maximum rate and the portion of all prior interest payments in excess of
such maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of this Debenture.
[Signatures on next page]
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IN WITNESS WHEREOF, the undersigned has caused this Debenture
to be executed and its seal affixed on the day and year first above written.
BLUE RHINO CORPORATION
By:/s/ Billy Prim (SEAL)
-------------------------------------
Name: Billy Prim
Title: President
USA LEASING, L.L.C.
By: Blue Rhino Corporation, as Manager
By:/s/ Billy Prim (SEAL)
-------------------------------------
Name: Billy Prim
Title: President
RHINO SERVICES, L.L.C.
By: Blue Rhino Corporation, as Manager
By:/s/ Billy Prim (SEAL)
-------------------------------------
Name: Billy Prim
Title: President
CPD ASSOCIATES, INC.
By:/s/ Mark Castaneda (SEAL)
-------------------------------------
Name: Mark Castaneda
Title: Vice President
QUICKSHIP, INC.
By:/s/ Mark Castaneda (SEAL)
-------------------------------------
Name: Mark Castaneda
Title: Treasurer
UNIFLAME CORPORATION
By:/s/ Mark Castaneda (SEAL)
-------------------------------------
Name: Mark Castaneda
Title: Vice President
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