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INVESTMENT AGREEMENT
BY AND AMONG
BLUE RHINO CORPORATION
USA LEASING, L.L.C.
RHINO SERVICES, L.L.C.
CPD ASSOCIATES, INC.
QUICKSHIP, INC.
UNIFLAME CORPORATION
AND
ALLIED CAPITAL CORPORATION
JUNE 15, 2001
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$15,000,000 Senior Subordinated Debentures
due August 31, 2006 of Blue Rhino Corporation and its subsidiaries
Warrant to purchase 1,372,071 shares
of Common Stock of Blue Rhino Corporation
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TABLE OF CONTENTS
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ARTICLE I. - DEFINITIONS..........................................................................................1
SECTION 1.1 DEFINED TERMS...............................................................................1
SECTION 1.2 TERMS GENERALLY............................................................................17
ARTICLE II. - THE INVESTMENT.....................................................................................17
SECTION 2.1 FUNDING....................................................................................17
SECTION 2.2 SENIOR DEBT................................................................................17
SECTION 2.3 REPAYMENT OF DEBENTURES....................................................................17
SECTION 2.4 INTEREST ON DEBENTURES.....................................................................17
SECTION 2.5 DEFAULT INTEREST...........................................................................17
SECTION 2.6 PREPAYMENT.................................................................................17
SECTION 2.7 MANDATORY PREPAYMENT OF THE DEBENTURES.....................................................18
SECTION 2.8 PAYMENTS...................................................................................18
SECTION 2.9 TAXES......................................................................................19
SECTION 2.10 USE OF PROCEEDS............................................................................20
SECTION 2.11 WARRANT....................................................................................20
ARTICLE III. - CONDITIONS........................................................................................20
SECTION 3.1 CONDITIONS TO CLOSING......................................................................20
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES.....................................................................22
SECTION 4.1 ORGANIZATION...............................................................................22
SECTION 4.2 AUTHORIZATION..............................................................................22
SECTION 4.3 ENFORCEABILITY.............................................................................23
SECTION 4.4 GOVERNMENTAL APPROVALS.....................................................................23
SECTION 4.5 BORROWERS' BUSINESS........................................................................23
SECTION 4.6 FINANCIAL CONDITION........................................................................23
SECTION 4.7 INDEBTEDNESS...............................................................................24
SECTION 4.8 WARRANT SHARES.............................................................................24
SECTION 4.9 OWNERSHIP AND CONTROL......................................................................24
SECTION 4.10 NO MATERIAL ADVERSE CHANGE.................................................................25
SECTION 4.11 TITLE TO PROPERTIES; POSSESSION UNDER LEASES...............................................25
SECTION 4.12 LITIGATION; COMPLIANCE WITH LAWS...........................................................26
SECTION 4.13 CONTRACTS, ETC.............................................................................26
SECTION 4.14 NO SIDE AGREEMENT; AFFILIATE TRANSACTIONS..................................................27
SECTION 4.15 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.................................27
SECTION 4.16 USE OF PROCEEDS............................................................................27
SECTION 4.17 TAX RETURNS................................................................................27
SECTION 4.18 NO UNTRUE STATEMENTS OR MATERIAL OMISSIONS; PUBLIC DISCLOSURE..............................27
SECTION 4.19 EMPLOYEE BENEFIT MATTERS...................................................................27
SECTION 4.20 ENVIRONMENTAL MATTERS......................................................................28
SECTION 4.21 LABOR MATTERS..............................................................................29
SECTION 4.22 EMPLOYEES..................................................................................29
SECTION 4.23 SOLVENCY...................................................................................29
SECTION 4.24 LICENSES...................................................................................30
SECTION 4.25 BROKERS....................................................................................30
SECTION 4.26 INTELLECTUAL PROPERTY......................................................................30
SECTION 4.27 INSURANCE..................................................................................30
ARTICLE V. - INVESTOR REPRESENTATIONS............................................................................30
SECTION 5.1 INVESTMENT.................................................................................30
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SECTION 5.2 AUTHORITY..................................................................................30
SECTION 5.3 EXPERIENCE.................................................................................30
SECTION 5.4 ACCREDITED INVESTOR........................................................................30
ARTICLE VI. - AFFIRMATIVE COVENANTS..............................................................................31
SECTION 6.1 EXISTENCE; BUSINESS AND PROPERTIES.........................................................31
SECTION 6.2 INSURANCE..................................................................................31
SECTION 6.3 OBLIGATIONS AND TAXES......................................................................31
SECTION 6.4 FINANCIAL STATEMENTS; REPORTS, ETC.........................................................32
SECTION 6.5 LITIGATION AND OTHER NOTICES...............................................................33
SECTION 6.6 EMPLOYEE BENEFITS..........................................................................33
SECTION 6.7 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS..................................34
SECTION 6.8 COMPLIANCE WITH LAWS.......................................................................34
SECTION 6.9 PREPARATION OF ENVIRONMENTAL REPORTS.......................................................34
SECTION 6.10 FURTHER ASSURANCES.........................................................................35
SECTION 6.11 MAINTENANCE OF OFFICE OR AGENCY............................................................35
SECTION 6.12 FINANCIAL RATIOS AND COVENANTS.............................................................35
SECTION 6.13 FUTURE FINANCINGS..........................................................................36
SECTION 6.14 OBSERVATION RIGHTS.........................................................................37
SECTION 6.15 RESERVATION OF WARRANT SHARES..............................................................37
SECTION 6.16 REPLACEMENT OF WARRANT.....................................................................38
SECTION 6.17 HEDGING....................................................................................38
ARTICLE VII. - NEGATIVE COVENANTS................................................................................38
SECTION 7.1 INDEBTEDNESS...............................................................................38
SECTION 7.2 LIENS......................................................................................40
SECTION 7.3 SALE AND LEASE-BACK TRANSACTIONS...........................................................41
SECTION 7.4 INVESTMENTS................................................................................41
SECTION 7.5 MERGERS, CONSOLIDATIONS, SALES OF ASSETS, ACT OF DISSOLUTION...............................42
SECTION 7.6 DIVIDENDS AND DISTRIBUTIONS................................................................43
SECTION 7.7 TRANSACTIONS WITH AFFILIATES...............................................................43
SECTION 7.8 BUSINESS OF CREDIT PARTIES AND SUBSIDIARIES................................................43
SECTION 7.9 INVESTMENT COMPANY ACT.....................................................................44
SECTION 7.10 ACQUISITIONS...............................................................................44
SECTION 7.11 EMPLOYEE COMPENSATION......................................................................44
SECTION 7.12 PREPAYMENTS................................................................................44
SECTION 7.14 FISCAL YEARS...............................................................................44
SECTION 7.15 STAY, EXTENSION AND USURY LAWS.............................................................44
SECTION 7.16 INCONSISTENT AGREEMENTS; CHARTER AMENDMENTS................................................45
ARTICLE VIII. - EVENTS OF DEFAULT AND REMEDIES...................................................................45
SECTION 8.1 EVENTS OF DEFAULT..........................................................................45
SECTION 8.2 WAIVERS....................................................................................47
SECTION 8.3 ENFORCEMENT ACTIONS........................................................................47
SECTION 8.4 COSTS......................................................................................47
SECTION 8.5 SET-OFF....................................................................................47
SECTION 8.6 REMEDIES NON-EXCLUSIVE.....................................................................48
ARTICLE IX. - MISCELLANEOUS......................................................................................48
SECTION 9.1 NOTICES....................................................................................48
SECTION 9.2 SURVIVAL OF AGREEMENT......................................................................48
SECTION 9.3 BINDING EFFECT.............................................................................49
SECTION 9.4 SUCCESSORS AND ASSIGNS.....................................................................49
SECTION 9.5 EXPENSES; INDEMNITY........................................................................49
SECTION 9.6 WAIVER OF CONSEQUENTIAL AND PUNITIVE DAMAGES...............................................50
SECTION 9.7 APPLICABLE LAW.............................................................................50
SECTION 9.8 WAIVERS; AMENDMENTS........................................................................50
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SECTION 9.9 INTEREST RATE LIMITATION...................................................................51
SECTION 9.10 ENTIRE AGREEMENT...........................................................................51
SECTION 9.11 WAIVER OF JURY TRIAL.......................................................................51
SECTION 9.12 SEVERABILITY...............................................................................51
SECTION 9.13 COUNTERPARTS...............................................................................52
SECTION 9.14 HEADING....................................................................................52
SECTION 9.15 JURISDICTION; CONSENT TO SERVICE OF PROCESS................................................52
SECTION 9.16 CONSENTS AND APPROVALS; DEFAULTS...........................................................52
SECTION 9.17 RELATIONSHIP OF THE PARTIES; ADVICE OF COUNSEL.............................................53
SECTION 9.18 REGULATION FD..............................................................................53
SECTION 9.19 REGISTRATION AND TRANSFER OF DEBENTURES....................................................54
SECTION 9.20 NO SHORTING PROVISIONS.....................................................................55
EXHIBITS AND SCHEDULES
SCHEDULE 4.4 GOVERNMENTAL APPROVALS
SCHEDULE 4.5 BORROWERS' BUSINESS
SCHEDULE 4.7 INDEBTEDNESS
SCHEDULE 4.9 OWNERSHIP AND CONTROL
SCHEDULE 4.10 MATERIAL ADVERSE CHANGES
SCHEDULE 4.11 LEASES
SCHEDULE 4.12 LITIGATION
SCHEDULE 4.13 CONTRACTS
SCHEDULE 4.14 AFFILIATE TRANSACTIONS
SCHEDULE 4.19 EMPLOYEE BENEFIT MATTERS
SCHEDULE 4.21 LABOR MATTERS
SCHEDULE 4.22 EMPLOYEES
SCHEDULE 4.26 INTELLECTUAL PROPERTY
SCHEDULE 4.27 INSURANCE
SCHEDULE 7.2 LIENS
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INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement") is made as of June 15,
2001 by and among: (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"); and (iii) Allied Capital Corporation, a Maryland corporation
("Allied").
RECITALS:
A. The Company has requested that Allied invest in the Borrowers the
aggregate sum of Fifteen Million Dollars ($15,000,000) in exchange for the
Debentures and Warrant. Allied is willing to make such investment in the
Borrowers on the terms and conditions set forth herein.
B. The parties wish to set forth herein their understandings and
agreements pertaining to this transaction.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Allied and its
successors and assigns with respect to its interest in all or any part of any of
the Debentures, Warrant or Warrant Shares (as these terms are hereinafter
defined) (individually, a "Holder" and collectively, the "Holders"), the
Borrowers jointly and severally hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"Act of Bankruptcy," when used in reference to any Person, means the
occurrence of any of the following with respect to such Person: (i) such Person
shall have made an assignment for the benefit of his or its creditors; (ii) such
Person shall have admitted in writing his or its inability to pay his or its
debts as they become due; (iii) such Person shall have filed a voluntary
petition in bankruptcy; (iv) such Person shall have been adjudicated a bankrupt
or insolvent; (v) such Person shall have filed any petition or answer seeking
for himself or itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future Applicable Law pertinent to such circumstances; (vi) such Person shall
have filed or shall file any answer admitting or not contesting the material
allegations of a
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bankruptcy, insolvency or similar petition filed against such Person; (vii) such
Person shall have sought or consented to, or acquiesced in, the appointment of
any trustee, receiver, or liquidator of such Person or of all or any substantial
part of the properties of such Person; (viii) 60 days shall have elapsed after
the commencement of an action against such Person seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future Applicable Law without such action having
been dismissed or without all orders or proceedings thereunder affecting the
operations or the business of such Person having been stayed, or if a stay of
any such order or proceedings shall thereafter be set aside and the action
setting it aside shall not be timely appealed; or (ix) 60 days shall have
expired after the appointment, without the consent or acquiescence of such
Person of any trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets and properties of such Person without such
appointment having been vacated.
"Act of Dissolution," when used in reference to any Person (other than
an individual), shall mean the occurrence of any action initiating, or any event
that results in, the dissolution, liquidation, winding-up or termination of such
Person.
"Affiliate" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified. "Affiliate" shall also mean any beneficial owner of Capital Stock
representing 10% or more of the total voting power of the voting Capital Stock
(on a fully diluted basis) of the Company or any of its Subsidiaries (whether or
not currently exercisable) and any Person who would be an Affiliate of such
beneficial owner pursuant to the first sentence hereof.
"Applicable Law(s)" when used in the singular, shall mean any
applicable federal, state or local law, ordinance, order, regulation, rule or
requirement of any governmental or quasi-governmental agency, instrumentality,
board, commission, bureau or other authority having jurisdiction, and, when used
in the plural, shall mean all such applicable federal, state and local laws,
ordinances, orders, regulations, rules and requirements.
"Approval" has the meaning specified in Section 9.16(a).
"Asset Disposition" means any sale, lease (other than operating leases
entered into in the ordinary course of business), transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any of its Subsidiaries, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition") of any assets of the Company or any of its
Subsidiaries other than (a) the sale or other disposition of obsolete,
uneconomical, negligible, worn-out or surplus assets in the ordinary course of
business and in a commercially reasonable manner (including but not limited to
equipment and intellectual property) so long as the proceeds from such sale or
other disposition are applied to replace or upgrade the assets of the Company or
its Subsidiaries or to repay the Senior Debt or amounts outstanding under the
Debentures, (b) the sale of Inventory in the ordinary course of business for
fair value and on an arms'-length basis, (c) the sale, lease, transfer or other
disposition of assets in connection with a Permitted Reorganization; (d) the
sale, lease transfer or other disposition of assets from the Company or any of
its Subsidiaries to any Credit Party; or (e) the sale, lease, transfer or other
disposition of assets in any Fiscal Year having a value, in the aggregate with
all other assets (except assets which are excluded under
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clauses (a) through (d) above) sold, leased, transferred or disposed of during
such Fiscal Year, not to exceed $200,000.
"Audited Financials" has the meaning specified in Section 4.6(a).
"Borrowers' Business" means the (i) the business engaged in by the
Company and its Subsidiaries as of the Closing Date and similar and related
businesses (as described on Schedule 4.5) and (ii) such other lines of business
as may otherwise be consented to by an Approval by the Holders of the
Debentures.
"Business Day" means any day other than a Saturday, Sunday or day on
which banks in Washington, D.C. are authorized or required by law to close.
"Capital Expenditures" means, with respect to any Person and for any
period, the aggregate of all expenditures made by such Person or any of its
Subsidiaries during such period that, in conformity with GAAP on a Consolidated
basis and without duplication, are required to be included in or reflected on
the Consolidated balance sheet as a capital asset of such Person or such
Subsidiary; provided, however, that Capital Expenditures shall not include (a)
equipment which is purchased with the trade-in of existing equipment owned by
the Company or any Subsidiary to the extent of the trade-in credit with respect
to the equipment being traded in at such time, (b) expenditures of proceeds of
insurance settlements, condemnation awards and other settlements in respect of
lost, destroyed, damaged or condemned assets, equipment or other property to the
extent such expenditures are made to replace or repair such lost, destroyed,
damaged or condemned assets, equipment or other property or otherwise to acquire
assets or properties useful in the business of the Company and its Subsidiaries
within six (6) months of receipt of such proceeds, (c) expenditures to replace
assets sold, transferred or otherwise disposed of in accordance with this
Agreement to the extent of the sales price of such assets sold and to the extent
replaced within six (6) months of receipt of such sales price or (d) assets
acquired in connection with a Permitted Acquisition.
"Capital Lease" means any lease of (or other arrangement conveying the
right to use) real or personal property, the obligations of the lessee in
respect of which are required in accordance with GAAP to be capitalized on the
balance sheet of the lessee.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof
which obligations are required to be classified and accounted for as Capital
Leases on a balance sheet of such Person under GAAP, and the amount of such
obligations is the capitalized amount thereof determined in accordance with
GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participation or other equivalents (however designated) of capital stock of such
Person (if such Person is a corporation), any and all equivalent ownership
interests in such Person (if such Person is other than a corporation), any
securities convertible into or exchangeable for any of the foregoing and any and
all warrants or options to purchase any of the foregoing.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of
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not more than 90 days from the date of acquisition; (ii) time deposits,
certificates of deposit and banker's acceptances of any domestic commercial bank
having capital and surplus in excess of $200,000,000 having maturities of not
more than 90 days from the date of acquisition; (iii) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) and entered into with any bank meeting the
qualifications specified in clause (ii) above; (iv) commercial paper having, at
the time of acquisition thereof, the highest credit rating obtainable from
Standard & Poor's Ratings Services or Moody's Investors Service, Inc. and
maturing within ninety days after the date of acquisition; and (v) money market
funds which invest at least 90% of their assets in the types of securities or
instruments described in clauses (i), (ii), (iii) and (iv) above.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended from time to time.
"Change of Control" means one or more transactions resulting in (a) the
liquidation, dissolution or winding up of the Company, (b) the Transfer of all
or substantially all of the assets of the Company (excluding Transfers expressly
permitted under this Agreement), (c) a merger or consolidation of the Company
with another Person (other than another Borrower) where the Company is not the
surviving or successor entity; (d) one or more Persons (other than the
shareholders of the Company that are existing as of the date hereof) either (i)
owning in the aggregate in excess of 35% of the then outstanding Capital Stock
of the Company or (ii) being able to elect a majority of the Company's board of
directors or otherwise to exercise, directly or indirectly, a controlling
influence over the management or policies of the Company, (f) the Company shall
cease to own 100% of the Capital Stock of each of the other Credit Parties, or
(g) a Transfer by Billy D. Prim or his Permitted Transferees (as defined herein)
of more than 10.0% of the Common Stock of the Company owned or Controlled by
Billy D. Prim as of the date hereof, other than a Transfer by Billy D. Prim to a
successor on death or to his spouse, lineal descendants, father, mother,
grandfather, grandmother, brother(s) or sister(s), a trust exclusively for the
benefit thereof or a partnership or other entity that is exclusively owned by
Billy D. Prim and/or one or more of the foregoing persons (each, a "Permitted
Transferee"). A Permitted Reorganization shall not constitute a Change of
Control.
"Charges" has the meaning specified in Section 9.9.
"Closing" means the consummation of the Transaction.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended or otherwise modified from time to time.
"Common Stock" means any and all (as the context may require) of the
shares of the authorized common stock of the Company.
"Consolidated" means the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
"Consolidated Net Income" means, with respect to any Person and for any
specified period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period,
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determined in accordance with GAAP on a Consolidated basis and without
duplication; provided that (i) the Net Income (but not loss) of any Person that
is not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Subsidiary thereof, (ii)
the Net Income of any Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of that Net Income is not at the date of determination permitted without any
prior governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iv) the cumulative effect of
a change in accounting principles shall be excluded.
"Contracts" has the meaning specified in Section 4.15.
"Control" means, without limitation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and the terms "Controlling" and "Controlled" have
meanings correlative thereto.
"Covered Financing" means (a) the issuance of any Subordinated Debt of
any Credit Party or (b) the issuance of any Indebtedness convertible into
Capital Stock of the Company. "Covered Financing" shall exclude any financing
the sole purpose of which is to refinance, repay or redeem the Debentures and
any financing provided by the seller as part of a Permitted Acquisition.
"Credit Parties" means, collectively, the Borrowers and any Guarantors;
and "Credit Party" means each Borrower or any Guarantor.
"Debentures" means the senior subordinated debentures dated the date
hereof in the aggregate principal amount of $15,000,000 from the Borrowers made
payable severally to the Holders and evidencing the repayment obligation of the
Borrowers for the investment by the Holders therein described in Section 2.1,
together with all other debentures accepted from time to time in substitution,
renewal or replacement for all or any part thereof including pursuant to Section
9.19.
"Default" means any event or condition that upon notice, lapse of time
or both would constitute an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
stated maturity of the Debentures.
"Dollars" or "$" means lawful money of the United States of America.
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"EBITDA" means, with respect to any Person and for any specified
period, the total of the following of such Person and its Subsidiaries for such
period (in each case determined in accordance with GAAP on a Consolidated basis
and without duplication):
(a) Consolidated Net Income for such period,
plus
(b) the sum of (i) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (ii) Interest Expense of such Person and its Subsidiaries for such period,
whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to hedging obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income, plus (iii) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (iv) non-cash items increasing
Consolidated Net Income for such period (other than items that were accrued in
the ordinary course of business).
For purposes of calculating EBITDA with respect to any reference
period, (I) acquisitions that have been made by such Person and its
Subsidiaries, including through mergers or consolidations, stock purchases or
the acquisition of all or substantially all of the assets of a Person and
including any related financing transactions, during the reference period shall
be deemed to have occurred on the first day of the reference period; provided,
however, that only the actual historical results of operations of the Persons so
acquired, without adjustment for pro forma expense savings or revenue increases,
shall be used for such calculation; provided further, that in connection with
the acquisition of a Person or any assets engaged in or used in connection with
a cylinder exchange business, such calculations shall be made using the actual
revenues and units sold data applicable to such Person or assets and such
calculation shall be made in accordance and consistent with the Company's models
and projections approved by the Holders on an annual basis; and (II) for
purposes of calculating the Funded Leverage Ratio only, the EBITDA of such
Person and its Subsidiaries attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the end of such reference period, shall be excluded, and (III) the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Subsidiary of such Person shall
be added to Net Income only to the extent that a corresponding amount would be
permitted at the date of determination to be dividended or distributed to such
Person by such Subsidiary without prior governmental approval (that has not been
obtained), and without direct or indirect restriction pursuant to the terms of
its charter and all agreements, instruments,
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judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Environmental Claim" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to health, safety or
the environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory authority or
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety, natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA Affiliate" means any Person required at any relevant time to be
aggregated with the Company or any of its Subsidiaries under Sections 414(b),
(c), (m) or (o) of the Code.
"ERISA Event" means any of the following with respect to a Plan or
Multiemployer Plan, as applicable: (i) a Reportable Event with respect to a Plan
or a Multiemployer Plan, (ii) a complete or partial withdrawal by the Company or
any ERISA Affiliate from a Multiemployer Plan that results in liability under
Section 4201 or 4204 of ERISA, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA, (iii) the distribution
by the Company or any ERISA Affiliate under Section 4041 or 4041A of ERISA of a
notice of intent to terminate any Plan or the taking of any action to terminate
any Plan, (iv) the commencement of proceedings by the PBGC under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any ERISA Affiliate of a notice from any
Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan, (v) the institution of a proceeding by any fiduciary of
any Multiemployer Plan against the Company or any ERISA Affiliate to enforce
Section 515 of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Company or any ERISA Affiliate of any liability under Title
IV of ERISA, other than for PBGC premiums due but not delinquent under Section
4007 of ERISA, or the imposition or threatened imposition of any Lien upon any
assets of the Company or any ERISA Affiliate as a result of any alleged failure
to comply with the Internal Revenue Code or ERISA in respect of any Plan, (vii)
the engaging in or otherwise becoming liable for a nonexempt Prohibited
Transaction by the Company or any ERISA Affiliate, (viii) a violation of the
applicable requirements of Section 404 or 405 of ERISA or the
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exclusive benefit rule under Section 401(a) of the Internal Revenue Code by any
fiduciary of any Plan for which the Company or any ERISA Affiliate may be
directly or indirectly liable or (ix) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Internal Revenue Code or Section 307
of ERISA, would result in the loss of tax-exempt status of the trust of which
such Plan is a part if the Company or any ERISA Affiliate fails to timely
provide security to such Plan in accordance with the provisions of such
sections.
"Events of Default" has the meaning specified in Article VIII.
"Financial Officer" of any corporation or other entity means the chief
financial officer, treasurer or principal accounting officer of such corporation
or entity.
"Financials" means, collectively, the Audited Financials and the
Interim Financials, as defined in Section 4.6.
"Fixed Charge Ratio" means, as of the date of determination, the ratio
of (a) aggregate EBITDA of the Company for the immediately preceding four (4)
fiscal quarter period ending on, or most recently ended prior to, such date of
determination less the sum of (i) $2,000,000, (ii) taxes due during such period,
and (iii) Restricted Payments paid during such period to (b) the sum of (i) all
required payments of principal made with respect to Funded Indebtedness for
borrowed money (including, but not limited to, all payments with respect to
Capital Lease Obligations) during such period and (ii) Interest Expense paid,
accrued or scheduled to be paid for during such period.
"Free Cash Flow" means, with respect to any Person as of any date of
determination, EBITDA for the reference period ending on such date of
determination less the sum of (i) taxes paid by such Person and its Subsidiaries
in cash for such period and (ii) Interest Expense of such Person and its
Subsidiaries for such period paid in cash (including, without limitation, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, commissions,
discounts and net payments (if any) pursuant to hedging obligations), to the
extent that any such expense was deducted in computing such EBITDA.
"Funded Indebtedness" means, with respect to any Person as of any date
of determination, the sum of the following of such Person and its Subsidiaries
(determined in accordance with GAAP on a Consolidated basis and without
duplication): the sum of (i) the total amount of Indebtedness of such Person,
plus (ii) the aggregate liquidation value of all Disqualified Stock of such
Person, in each case.
"Funded Leverage Ratio" means, as with respect to any Person and for
any period and at any date of determination thereof, the ratio of (i) Funded
Indebtedness outstanding as at such date of determination to (ii) the aggregate
EBITDA of such Person for the relevant period ending on, or most recently ended
prior to, such date of determination.
"GAAP" means generally accepted accounting principles, consistently
applied, for the period or periods in question.
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"Governmental Authority(ies)" means any Federal, state, local,
quasi-governmental instrumentality or foreign court, or governmental agency,
authority, instrumentality, agency, bureau, commission, department or regulatory
body.
"Guarantor" means each entity that becomes a Guarantor under a Guaranty
Agreement.
"Guarantee Obligation" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or advance or supply funds for the purchase of) any security for the
payment of such Indebtedness, (b) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness, (c) to secure such Indebtedness by a Lien on
assets of such Person or (d) to maintain working capital, equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness; provided that the term
"Guarantee Obligation" shall not include endorsements for collection or deposit
in the ordinary course of business. The word "Guarantee" when used as a verb
shall have the correlative meaning.
"Guaranty Agreement" means any guaranty agreement entered into from
time to time in accordance with the terms hereof by any Subsidiaries of the
Company in favor of the Holders, in form and substance satisfactory to the
Holders, subordinated to the Senior Debt on the same terms as the Debentures.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Holder" and "Holders" have the meaning specified in the Recitals
hereto.
"Indebtedness" means, with respect to any Person at the time of any
determination (in each case determined in accordance with GAAP on a Consolidated
basis and without duplication), all obligations, contingent or otherwise, of
such Person which should be classified upon the balance sheet of such Person as
liabilities, but in any event including: (a) all obligations of such Person for
borrowed money; (b) all obligations of such Person upon which interest charges
are customarily paid or accrued; (c) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments; (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person; (e) all obligations of such Person
issued or assumed as the deferred and unpaid purchase price of property or
services (excluding all accrued liabilities and all trade accounts payable
incurred in the ordinary course of business that are not past due and which are
classified as short term liabilities in accordance with GAAP); (f) all
obligations of others secured by (or having an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed; (g)
all Guarantee Obligations by such Person of Indebtedness of others; (h) all
Capital Lease
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Obligations of such Person; (i) all obligations of such Person in respect of
interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements; (j) all obligations of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any Capital Stock in such Person or any other Person; (k) all
obligations of such Person, actual or contingent, as an account party in respect
of letters of credit or similar facilities and bankers' acceptances; and (l) all
obligations of any partnership or joint venture as to which such Person is or
may become personally liable to the extent such obligations are deemed to be
liabilities under GAAP.
"Indemnitee" has the meaning specified in Section 9.5(b).
"Intellectual Property" means, collectively, all of the Company's and
its Subsidiaries' now owned and hereafter acquired intellectual property,
including, without limitation the following: (a) all patents (including all
rights corresponding thereto throughout the world, and all improvements
thereon); (b) all trademarks (including service marks, trade names and trade
secrets, and all goodwill associated therewith); (c) all copyrights (including
all renewals, extensions and continuations thereof); (d) all applications for
patents, trademarks or copyrights and all applications otherwise relating in any
way to the subject matter of such patents, copyrights and trademarks; (e) all
patents, copyrights, trademarks or applications therefor arising after the date
of this Agreement; (f) all reissues, continuations, continuations-in-part and
divisions of the property described in the preceding clauses (a), (b), (c), (d),
and (e), including, without limitation, any claims by the Company or its
Subsidiaries against third parties for infringement thereof; and (g) all rights
to sue for past, present and future infringements or violations of any such
patents, trademarks, and copyrights.
"Interest" means any ownership or profit sharing interest (however
designated) in any general or limited partnership, trust, limited liability
company, private company or joint venture, and all agreements, instruments and
documents convertible, in whole or in part, into any one or more of the
foregoing.
"Interest Coverage Ratio" means, with respect to any Person for any
specified period, the ratio of (a) EBITDA for such period to (b) Interest
Expense for such period.
"Interest Expense" means, with respect to any Person and for any
specified period, the sum of the following of such Person and its Subsidiaries
for such period (in each case determined in accordance with GAAP on a
Consolidated basis and without duplication): (i) all interest paid, accrued or
scheduled to be paid in respect of any Funded Indebtedness (excluding original
issue discount); (ii) all but the principal component of payments in respect of
conditional sale contracts, Capital Leases and other title retention agreements;
(iii) commissions, discounts and other fees and charges with respect to letters
of credit and bankers' acceptance financings to the extent required by GAAP; and
(iv) net costs under interest rate protection agreements.
"Interest Rate" means a fixed rate of interest as set forth in and
payable in accordance with the terms of the Debentures.
"Interim Financials" has the meaning specified in Section 4.6.
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"Inventory" means "inventory" as defined in Article 9 of the UCC,
including all raw materials, work in process, parts, components, assemblies,
supplies and materials used or consumed in the Borrowers' Business, all goods,
wares and merchandise, finished or unfinished, held for sale or lease or leased
or furnished or to be furnished under contracts of service or hire.
"Investment Documents" means, collectively, the Loan Documents, the
Investor Rights Agreement and all other instruments and documents executed and
delivered in connection with the Transaction.
"Investments" means, collectively, (a) ownership or purchase of any
Capital Stock or evidence of Indebtedness, Interest in or other security of
another Person, (b) any loan, advance, contribution to capital, extension of
credit (except for current trade and customer accounts receivable for Inventory
sold or services rendered in the ordinary course of business and payable in
accordance with customary trade terms) to another Person, (c) any joint venture,
(d) any interest rate hedge agreement or similar agreement or (e) any
acquisition after Closing of any business or business unit of another Person
(whether acquired by purchase of assets or securities), or any commitment or
option to acquire any of the foregoing items (a) through (e).
"Investor Rights Agreement" means the Investor Rights Agreement, dated
of even date herewith, by and between the Company and Allied.
"Leases" has the meaning specified in Section 4.11(b).
"Licenses" shall mean, collectively, all rights, licenses, permits and
authorizations now or hereafter issued by any Governmental Authority reasonably
necessary in connection with the operation or conduct of the Borrowers'
Business.
"Lien" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Litigation Schedule" has the meaning specified in Section 4.14(a).
"Liquidity" means, as of a date of determination, the amount then
available and undrawn under the Revolver plus cash or Cash Equivalents then held
by the Borrowers.
"Loan Documents" means, collectively, this Agreement, the Debentures,
any Guaranty Agreement, the Warrant and all other instruments and documents
executed and delivered in connection therewith.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance, or
properties of the Credit Parties and their Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, prospects, management or condition, financial or
otherwise, of the Credit Parties and their Subsidiaries taken as a whole, (b)
the ability of the Credit Parties and their Subsidiaries taken as a whole, to
perform any of their obligations under any Investment Document, (c) the rights
and
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remedies of or benefits available to the Holders under any Investment Document,
or (d) the consummation of any transactions contemplated hereby or thereby.
"Maturity Date" means August 31, 2006.
"Maximum Rate" has the meaning specified in Section 9.9.
"Multiemployer Plan" shall mean any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate makes, is making or is obligated to make contributions or has made or
been obligated to make contributions.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of Preferred Stock dividends, excluding however, (i) any gain (or loss),
together with any related provision for taxes on such gain (or loss), realized
in connection with (a) any sale or other disposition of any assets (including,
without limitation, dispositions pursuant to sale and leaseback transactions,
but excluding any sale of cylinders in the ordinary course of business) or (b)
the disposition of any securities by such Person or the extinguishment of any
Indebtedness of such Person and (ii) any extraordinary or non-recurring gain (or
loss), together with any related provision for taxes on such extraordinary or
non-recurring gain (or loss).
"New Lending Office" has the meaning specified in Section 2.9(e).
"Non-U.S. Lender" has the meaning specified in Section 2.9(e).
"Obligations" means all indebtedness, advances pursuant to this
Agreement or otherwise, debts, liabilities and obligations, for the performance
of covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by the Credit Parties to the Holders, and all covenants
and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising
under this Agreement or any of the other Investment Documents. The term includes
all principal, interest (including all interest that accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of, or
for the reorganization of any Credit Parties, whether or not allowed in such
proceeding), any premiums, penalties or charges imposed in connection with the
prepayment of the Debentures, fees, charges, expenses, attorneys' fees, and any
other sum chargeable to the Credit Parties under this Agreement or any other
Investment Document.
"Other Taxes" has the meaning specified in Section 2.9(b).
"Permitted Acquisition" means any acquisition of all of the Capital
Stock or all or substantially all of the assets of any Person that is permitted
by the terms of Section 7.10.
"Permitted Annual Amortization Amount" means, with respect to any
amendments, modifications, renewals, replacements, restatements and refinancings
of Senior Debt, the maximum amount of principal that could have been paid by the
Borrowers during the immediately preceding four (4) fiscal quarter period ending
on, or most recently ended prior to, the date thereof to produce a Fixed Charge
Ratio, determined on a pro forma basis assuming that
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such amendment, modification, renewal, replacement, restatement and refinancing
had occurred as of the first day of such period, of not less than 1.3 to 1.0.
"Permitted Indebtedness" has the meaning specified in Section 7.1.
"Permitted Lien" has the meaning specified in Section 7.2.
"Permitted Reorganization" means any one or more (or any combination)
of the following transactions: (a) a merger, consolidation or any analogous
reorganization or transaction of a Credit Party with a Proposed Credit Party
provided that the Proposed Credit Party is the surviving entity in the case of a
merger or (b) a sale, lease, transfer or other disposition of any assets by a
Credit Party to another Credit Party and/or a Proposed Credit Party; provided
that in each case: (1) each Credit Party or Proposed Credit Party is Solvent and
will be Solvent immediately after giving effect to any such transaction, (2) no
Default or Event of Default exists or will exist immediately after giving effect
any such transaction, (3) no Credit Party that survives the Permitted
Reorganization shall be released from this Agreement or the Debentures; and (4)
immediately following the Permitted Reorganization, the Proposed Credit Parties
and the Credit Parties surviving the Permitted Reorganization shall own all of
the assets that were owned by the Credit Parties immediately preceding the
Permitted Reorganization (except for dispositions otherwise expressly permitted
under this Agreement). For purposes of this definition of "Permitted
Reorganization," any party formed specifically to effect the Permitted
Reorganization shall be deemed "Solvent."
"Person" means any natural person, corporation, business trust, limited
liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Prepayment Premium" means the amount payable as a prepayment premium,
if any, calculated in accordance with Section 2.6 of this Agreement.
"Prohibited Transaction" means a prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Code.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Proposed Credit Party" means, with respect to any Permitted
Reorganization, (a) a Wholly-Owned Subsidiary of a Credit Party that joins this
Agreement and the Debentures as a
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Borrower on the effective date of such Permitted Reorganization or (b) with the
consent of the Holders, which consent shall not be unreasonably withheld, a
Person that joins this Agreement and the Debentures as a Borrower on the
effective date of such Permitted Reorganization and agrees to be substituted for
Blue Rhino Corporation as the Company under this Agreement and a Wholly-Owned
Subsidiary of such Person that joins this Agreement and the Debentures as a
Borrower on the effective date of such Permitted Reorganization.
"R4 Technical Center" means the joint venture between the Company and
Manchester Tank Company with facilities in Hamptonville, North Carolina.
"Real Property" means, collectively, all real property owned by the
Company or its Subsidiaries or in which the Company or its Subsidiaries has a
leasehold interest and all real property hereafter acquired by the Company or
its Subsidiaries in fee or by means of a leasehold interest, including all real
property on which the Borrowers' Business is now or hereafter conducted,
together with all goods located on any such real property that are or may become
"fixtures" under the law of the jurisdiction in which such real property is
located.
"Receiver" means any receiver, trustee, custodian, liquidator, or
similar fiduciary.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material in,
into, onto or through the environment caused or known by the Company or any of
its Subsidiaries.
"Remedial Action" means (a) "remedial action" as such term is defined
in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions required by any
Governmental Authority or voluntarily undertaken to: (i) cleanup, remove, treat,
abate or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, (i) or (ii) above.
"Reportable Event" means (i) any "reportable event" within the meaning
of Section 4043(c) of ERISA for which the 30-day notice under Section 4043(a) of
ERISA has not been waived by the PBGC (including any failure to meet the minimum
funding standard of, or timely make any required installment under, Section 412
of the Internal Revenue Code or Section 302 of ERISA, regardless of the issuance
of any waivers in accordance with Section 412(d) of the Internal Revenue Code),
(ii) any such "reportable event" subject to advance notice to the PBGC under
Section 4043(b)(3) of ERISA, (iii) any application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Internal
Revenue Code, and (iv) a cessation of operations described in Section 4062(e) of
ERISA.
"Responsible Officer" of any corporation means its president, chief
executive officer, any executive officer or Financial Officer of such
corporation and any other officer or similar official thereof responsible for
the administration of the obligations of such corporation in respect of this
Agreement.
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"Restricted Payment" means (i) any dividend or other distribution of
any nature, direct or indirect, on account of any class of equity securities of
the Company or any of its Subsidiaries, now or hereafter outstanding, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any class of equity securities of
the Company or any of its Subsidiaries, now or hereafter outstanding, and (iii)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire any class of equity securities of
the Company or any of its Subsidiaries, now or hereafter outstanding.
"Revolver" means, collectively, the revolving line of credit referred
to in the Senior Credit Facility.
"SEC Reports" means each form, report, exhibit, schedule, registration
statement and definitive proxy statement filed by the Company with the
Securities and Exchange Commission on or prior to the date hereof.
"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 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
hereof) and (y) the amount of any Indebtedness incurred pursuant to Section
7.1(a)(xii) 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 any annual principal amortization payment in excess of the Permitted
Annual Amortization Amount, 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
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covenants identical to those set forth in Section 6.12(a) or (b) hereof that are
no more than 15% more restrictive as such financial covenants.
"Senior Lenders" means the lenders providing the Senior Debt under the
Senior Credit Facility.
"Solvent" means, as used to describe any Person, that such Person (a)
owns assets whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (b) is able to
pay all of its Indebtedness as such Indebtedness matures and (c) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Subordinated Debt" means any Indebtedness of the Company or any
Subsidiary thereof that is expressly subordinated and made junior in right and
time of payment to the Senior Debt and the Debentures.
"Subsidiary" means, with respect to any Person (herein referred to as
the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity having ordinary voting power or more than 50% of the
general partnership interests are, at the time any determination is being made,
owned, controlled or held, or (b) that is, at the time any determination is
made, otherwise Controlled, by such Person.
"Taxes" has the meaning specified in Section 2.9(a).
"Transaction" has the meaning specified in Section 4.2.
"Transfer" means the sale, assignment, lease, transfer, mortgaging,
encumbering or other disposition, whether voluntary or involuntary, and whether
or not consideration is received therefor.
"Warrant Shares" means all shares of Common Stock issued or issuable
upon the exercise of the Warrant.
"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), a form of which is attached hereto as Exhibit C.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person of which securities (except for directors' qualifying shares) or other
ownership interests representing 100% of the equity or 100% of the ordinary
voting power or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more wholly owned subsidiaries of such Person or by such Person and one or more
wholly owned subsidiaries of such Person.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part 1 of Subtitle E of Title IV of ERISA.
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SECTION 1.2 Terms Generally. The definitions in Section 1.1 apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun includes the corresponding masculine, feminine
and neuter forms. The words "include," "includes" and "including" are deemed to
be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Schedules are deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Investment Document means such document as
amended, restated, supplemented or otherwise modified from time to time and (b)
all terms of an accounting or financial nature are construed in accordance with
GAAP, as in effect from time to time.
ARTICLE II.
THE INVESTMENT
SECTION 2.1 Funding. At the closing under this Agreement (the
"Closing"), the Borrowers will borrow, and Allied will lend to the Borrowers,
the aggregate sum of $15,000,000. All such indebtedness shall be evidenced by,
and is to be repaid according to the terms of, one or more Debentures. The
entire principal sum will be advanced at Closing.
SECTION 2.2 Senior Debt. The Holders' rights under the Debentures and
this Agreement are subordinate as to right of payment only to the Senior Debt
pursuant to the terms of Section 4 of the Debentures.
SECTION 2.3 Repayment of Debentures. Subject to the terms of Section
2.7 and the terms of Section 4 of the Debentures, all unpaid principal amounts
and accrued and unpaid interest under the Debentures, and all other obligations
of the Borrowers to the Holders due and owing hereunder shall be paid upon the
earliest of (i) the date of acceleration of the Debentures pursuant to Article
VIII, (ii) the date of redemption pursuant to Section 2.6 or 2.7 and (ii) the
Maturity Date, in immediately available dollars, without set-off, defense or
counterclaim.
SECTION 2.4 Interest on the Debentures. Subject to the provisions of
Section 2.5, the Debentures shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days assuming 12 equal 30 day
months) at the Interest Rate, payable in accordance with the Debentures.
SECTION 2.5 Default Interest. If (i) the Borrowers shall default in the
payment when due of the principal of or interest on the Debentures or any other
amount becoming due hereunder, whether at maturity or upon acceleration,
redemption or otherwise, or under any other Loan Document to which any Borrower
is a party or (ii) any Event of Default exists under Section 6.12 hereof, in
each case whether or not such default is declared, the Borrowers shall pay
interest, to the extent permitted by law, on amounts due under the Debentures so
long as such Event of Default is continuing (after as well as before judgment)
at the Interest Rate as provided in the Debentures.
SECTION 2.6 Prepayment. Subject to the terms of Section 4 of the
Debentures, the Borrowers may at any time and from time to time prepay the
Debentures, in whole or in part, upon at least 10 days but no more than 60 days
prior written or telecopy notice (or telephone
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notice promptly confirmed by written or telecopy notice) to the Holders before
2:00 p.m, Washington, D.C. time, subject to the Borrowers' obligation to pay a
prepayment premium (the "Prepayment Premium") of 3.0% of any principal prepaid
prior to and including the first anniversary of the Closing Date, a Prepayment
Premium of 2.0% of any principal prepaid after the first anniversary of the
Closing Date but prior to and including the second anniversary of the Closing
Date, a Prepayment Premium of 1.0% of any principal prepaid after the second
anniversary of the Closing Date but prior to and including the third anniversary
of the Closing Date and no Prepayment Premium after the third anniversary of the
Closing Date. Any partial prepayments shall be made in increments of $500,000
and shall be applied pro rata to amounts outstanding under the Debentures.
Notwithstanding any provision to the contrary, the Prepayment Premiums shall be
due and payable upon any voluntary or mandatory prepayment of the Debentures in
whole or in part. On the date of prepayment, the Borrowers shall, subject to the
terms of Section 4 of the Debentures, pay to the holders of the Debentures being
prepaid pursuant to this Section, the price specified above, by wire transfer of
immediately available funds to an account designated by such Holder.
Concurrently therewith, each Holder of Debentures being prepaid shall deliver to
the Borrowers the original copy of its Debenture or an affidavit of loss thereof
in a form that is reasonably satisfactory to the Company. Any offer made by the
Borrowers pursuant to this Section 2.6 shall be irrevocable so long as the
specified conditions are met.
SECTION 2.7 Mandatory Prepayment of the Debentures. The Borrowers'
obligations under the Debentures and this Agreement are not assumable; upon a
Change of Control, each Holder shall have the right (but not the obligation) to
require the Borrowers, subject to the terms of Section 4 of the Debentures, to
(a) prepay the Debentures held by such Holder for an amount equal to the then
outstanding principal balance, all accrued but unpaid interest thereon, and all
applicable Prepayment Premiums due under Section 2.6 above, and (b) pay in full
all of the other Obligations owing to such Holder, which amount shall be
calculated on the date of prepayment and be payable in cash on such date. On the
date of prepayment and subject to the terms of Section 4 of the Debentures, the
Borrowers shall pay to the Holders of the Debentures being prepaid pursuant to
this Section, the price specified above, by wire transfer of immediately
available funds to an account designated by such Holder. Concurrently therewith,
each Holder of Debentures being prepaid shall deliver to the Company the
original copy of its Debenture or an affidavit of loss thereof in a form that is
reasonably satisfactory to the Company. Any offer made by the Borrowers pursuant
to this Section 2.7 shall be irrevocable so long as the Change of Control
occurs.
SECTION 2.8 Payments.
(a) Subject to the terms of Section 4 of the Debentures, the
Borrowers shall make each payment (including principal of or interest on the
Debentures or other amounts) hereunder and under any other Investment Document
not later than 2:00 P.M., Washington, D.C. time, on the date when due in
immediately available dollars, without setoff, defense or counterclaim. Each
such payment shall be made to each Holder pursuant to written instructions from
such Holder to the Company, including pursuant to wire transfer instructions.
(b) Whenever any payment (including principal of or interest
or Prepayment Premium on the Debenture or other amounts) hereunder or under any
other Loan Document shall become due, or otherwise would occur, on a day that is
not a Business Day, such payment may
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be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest.
SECTION 2.9 Taxes.
(a) Any and all payments by or on behalf of the Borrowers
hereunder and under any Investment Document shall be made, in accordance with
Section 2.8, free and clear of and without deduction for any and all current or
future taxes, levies, imposts, deductions, charges or withholdings that are or
would be applicable to Allied, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the net income of a Holder and (ii)
franchise taxes imposed on the net income of a Holder, in each case by the
jurisdiction under the laws of which such Holder is organized or qualified to do
business or a jurisdiction or any political subdivision thereof in which the
Holder engages in business activity other than activity arising solely from the
Holder having executed this Agreement and having enjoyed its rights and
performed its obligations under this Agreement or any Investment Document or any
political subdivision thereof (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities that are or would be
applicable to Allied, collectively or individually, being called "Taxes"). If a
Borrower must deduct any Taxes from or in respect of any sum payable hereunder
or under any other Investment Document to a Holder, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.9) such Holder shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions and (iii) such Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrowers will pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or under any
Investment Document, or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any Investment Document that are or
would be applicable to Allied ("Other Taxes").
(c) Subject to Section 2.9(f) below, the Borrowers jointly and
severally agree to indemnify each Holder for the full amount of Taxes and Other
Taxes paid by such Holder and any liability (including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability prepared by such Holder absent manifest
error, shall be final conclusive and binding for all purposes. Such
indemnification shall be made within 30 days after the date such Holder makes
written demand therefor. The Borrowers shall have the right to receive that
portion of any refund of any Taxes and Other Taxes received by a Holder for
which any Borrower has previously paid any additional amount or indemnified such
Holder and which leaves the Holder, after such Borrower's receipt thereof, in no
better or worse financial position than if no such Taxes or Other Taxes had been
imposed or additional amounts or indemnification paid to the Holder. The Holder
shall have sole discretion as to whether (and shall in no event be obligated) to
make any such claim for any refund of any Taxes or Other Taxes.
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(d) As soon as practicable (and in any event within 60 days)
after the date of any payment of Taxes or Other Taxes by a Borrower to the
relevant Governmental Authority, such Borrower will deliver to each Holder, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.
(e) Nothing contained in this Section 2.9 shall require a
Holder to make available any of its tax returns (or any other information that
it reasonably deems to be confidential or proprietary).
SECTION 2.10 Use of Proceeds. The proceeds of the loan by Allied shall
be used to repay a portion of the Senior Debt outstanding prior to the date
hereof, with the remainder available to pay certain transaction expenses and for
working capital purposes for the Company and its Subsidiaries.
SECTION 2.11 Warrant.
(a) At the Closing, the Company shall issue and sell the
Warrant to Allied.
(b) Legends. It is understood that all certificates evidencing
shares of Common Stock, including the Warrant Shares, shall bear the legends set
forth below:
"THE SECURITIES EVIDENCED BY OR ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY APPLICABLE STATE SECURITIES LAW, AND MAY NOT BE OFFERED, ASSIGNED,
TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE DISPOSED OF IN ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND SUCH REGISTRATION OR
QUALIFICATION AS MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED."
The legend shall be removed by the Company from any certificate evidencing such
Common Stock upon delivery to the Company of an opinion by counsel, reasonably
satisfactory to the Company, that a registration statement under the Securities
Act of 1933, as amended, is at that time in effect with respect to the legended
security or that such security can be freely transferred in a public sale
without such a registration statement being in effect and that such transfer
will not jeopardize the exemption or exemptions from registration pursuant to
which the Company issued such Common Stock.
ARTICLE III.
CONDITIONS
SECTION 3.1 Conditions to Closing. The obligations of Allied to enter
into this Agreement and to perform its obligations hereunder is subject to the
satisfaction of the following conditions on or prior to the Closing Date:
(a) The representations and warranties set forth in Article IV
hereof shall be true and correct on and as of the Closing Date.
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(b) The Credit Parties shall be in compliance with all the
terms and provisions set forth herein and in each other Investment Document on
its part to be observed or performed, and at the time of and immediately after
the Transaction, no Event of Default or Default shall have occurred and be
continuing.
(c) Allied shall have completed a due diligence investigation
that does not result in a material negative finding as to the Company, its
Subsidiaries and their management. In this regard, the Company will furnish to
Allied such information as Allied may reasonably request in order to enable
Allied to complete the required due diligence.
(d) Allied shall have received the following items:
(i) a favorable written opinion of counsel to the
Credit Parties (A) dated the Closing Date, (B) addressed to Allied and
(C) covering such matters relating to the Investment Documents and the
Transaction as Allied shall reasonably request, and the Credit Parties
hereby request such counsel to deliver such opinion;
(ii) the Debentures, duly executed by the Borrowers
and each of the other Investment Documents, executed by each of the
parties thereto (other than Allied);
(iii) for each Credit Party: (A) a copy of the
certificate or articles of incorporation, including all amendments
thereto, of the Credit Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of the Credit Party as of a recent date, from
such Secretary of State; (B) a certificate of the Secretary or
Assistant Secretary of the Credit Party dated the Closing Date and
certifying (1) that attached thereto is a true and complete copy of the
by-laws of such Credit Party as in effect on the Closing Date and at
all times since a date prior to the date of the resolutions described
in clause (2) below, (2) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors of the
Credit Party authorizing the execution, delivery and performance of the
Investment Documents to which such Person is a party and that such
resolutions have not been modified, rescinded or amended and are in
full force and effect, (3) that the certificate or articles of
incorporation of the Credit Party have not been amended since the date
of the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (A) above, and (4) as to the incumbency
and specimen signature of each officer executing any Investment
Document or any other document delivered in connection herewith on
behalf of the Credit Party; and (C) a certificate of another officer as
to the incumbency and specimen signature of the Secretary or Assistant
Secretary executing the certificate pursuant to (B) above;
(iv) all amounts due and payable on or prior to the
Closing Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid
by the Borrowers hereunder or under any other Investment Document;
(v) the Audited Financials and Interim Financials, as
described in Section 4.6;
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(vi) the Investor Rights Agreement, in form and
substance satisfactory to Allied, duly executed by the Company; and
(vii) the Warrant, in form and substance satisfactory
to Allied, duly executed by the Company.
(e) The Borrowers shall have entered into the transaction
documents with respect to the Senior Credit Facility and Allied shall be
provided a copy of the documentation relating thereto.
(f) After giving effect to the transactions contemplated
hereby, the Company, and its Subsidiaries shall not have outstanding any
Indebtedness other than (A) the Senior Debt, (B) the extension of credit under
this Agreement and (C) the Indebtedness set forth in the Financials or listed on
Schedule 4.7.
(g) No event that has or reasonably would be expected to have
a Material Adverse Change shall have occurred since April 30, 2001.
(h) The Borrowers shall have provided to Allied a pro forma
Consolidated and consolidating balance sheet of the Company and its Subsidiaries
as of the Closing Date giving effect to the incurrence of the full amount of the
Indebtedness contemplated under this Agreement and the use of the proceeds
thereof.
(i) Allied shall have received such other documents,
instruments and information as Allied may reasonably request.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
In order to induce Allied to enter into the Transaction, each of the
Borrowers jointly and severally represents and warrants to Allied on the Closing
Date (which representations and warranties shall survive the execution and
delivery of this Agreement) that, except as set forth on the disclosure
schedules attached hereto or as set forth in the Company's SEC Reports:
SECTION 4.1 Organization; Powers. Each of the Credit Parties and each
of their Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority to own its property and assets and to carry on its
business as now conducted and as proposed to be conducted, (c) is qualified to
do business in, and is in good standing in, every jurisdiction where such
qualification is required, except where the failure so to qualify would not
reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect, and (d) has the power and authority to execute, deliver
and perform its obligations under each of the Investment Documents and each
other agreement or instrument contemplated hereby, and to borrow hereunder.
SECTION 4.2 Authorization. The execution, delivery and performance by
the Credit Parties of each of the Investment Documents to which such Credit
Party is or is to become a party and the obligations hereunder and thereunder
(collectively, the "Transaction") and the consummation of the transactions
contemplated thereunder (a) have been duly authorized by all
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necessary action on the part of such Credit Party and (b) will not (i) violate
(A) (x) any provision of law, statute, rule or regulation, or (y) the
certificate or articles of incorporation or other constitutive documents or
by-laws of such Credit Party, (B) any order of any Governmental Authority
applicable to or binding upon such Credit Party or any of their respective
Subsidiaries or (C) any provision of any indenture, agreement or other
instrument to which such Credit Party is a party or by which such Person or any
of such Person's Property is or may be bound (including, without limitation, the
Senior Credit Facility) which is reasonably likely to result in a Material
Adverse Effect, (ii) result in a breach of or constitute (alone or with notice
or lapse of time or both) a default under or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument which is
reasonably likely to result in a Material Adverse Effect or (iii) result in the
creation or imposition of any Lien upon or with respect to any Property now
owned or hereafter acquired by such Credit Party which is reasonably likely to
result in a Material Adverse Effect.
SECTION 4.3 Enforceability. This Agreement has been duly executed and
delivered by the Borrowers and constitutes, and each other Investment Document
when executed and delivered by each Credit Party will constitute, a legal, valid
and binding obligation of such Person enforceable against such Person in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws relating
to or affecting creditors' rights generally from time to time in effect and to
general principles of equity (including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing), regardless or whether
considered in a proceeding in equity or at law and the availability of the
remedy of specific performance.
SECTION 4.4 Governmental Approvals. Except as specifically disclosed on
Schedule 4.4, each Credit Party and each of their respective Subsidiaries has
all material governmental authorizations, approvals, consents, permits,
licenses, certifications and qualifications, and has complied in all material
respects with all applicable requirements of the United States, and other
jurisdictions where such Person conducts business or owns property, to conduct
its business as is presently conducted and to own and operate its facilities as
they are presently operated. No action, consent or approval or registration or
filing with or any other action by any Governmental Authority is required in
connection with the Transaction, except for such as have been made or obtained
and are in full force and effect.
SECTION 4.5 Borrowers' Business; Subsidiaries. The Company and each of
its Subsidiaries is as of the Closing exclusively engaged in the operation of
the Borrowers' Business. Schedule 4.5 sets forth as of the Closing Date a list
of all Subsidiaries of each Credit Party and the percentage ownership interest
of the Credit Party therein, as well as a list of all joint ventures and
partnerships of each Credit Party or any of its Subsidiaries with any other
Person. The shares of capital stock or other ownership interests so indicated on
Schedule 4.5 are fully paid and non-assessable and are owned by such Credit
Party or its Subsidiary free and clear of all Liens.
SECTION 4.6 Financial Condition.
(a) The Company has previously provided to Allied a true and
complete copy of the audited Consolidated and consolidating balance sheet of the
Company and its Subsidiaries as at July 31, 1999 and July 31, 2000, and the
related Consolidated and consolidating statements
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of income and cash flow of the Company and its Subsidiaries for the fiscal year
then ended (the "Audited Financials"). The Audited Financials were prepared in
accordance with GAAP, are true and correct in all material respects and fairly
present the Company's and each of its Subsidiaries' operations and their cash
flows at such date and for the period then ended. The auditors have issued an
unqualified statement to the Company concerning the Audited Financials, a copy
of which is included with the Audited Financials.
(b) The Company has previously provided to Allied a true and
complete copy of the preliminary unaudited Consolidated and consolidating
balance sheet of the Company and its Subsidiaries as at April 30, 2001 and the
related preliminary unaudited Consolidated and consolidating statements of
income and Consolidated cash flow of the Company and its Subsidiaries for the
nine-month period then ended (the "Interim Financials"). The Interim Financials
were prepared in accordance with GAAP (except that footnotes are omitted), are
true and correct in all material respects and fairly present the Company's and
each of its Subsidiaries' operations and their cash flows at such date and for
the period then ended, subject to normal and immaterial year-end adjustments.
(c) The Company has previously provided Allied with pro forma
Consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of each of fiscal years 2001 through 2003, giving
effect to the incurrence of the full amount of Indebtedness contemplated under
this Agreement and the use of the proceeds thereof, and the related Consolidated
statements of projected cash flow, projected retained earnings and projected
income for such fiscal year (the "Projected Statements"). The Projected
Statements are based on estimates, information and assumptions believed by the
Credit Parties to be reasonable and the Credit Parties have no reason to
believe, in the light of conditions existing at the time of delivery, that such
projections are incorrect or misleading in any material respect.
SECTION 4.7 Indebtedness. Set forth in the Financials or listed on
Schedule 4.7 attached hereto is a complete and accurate list of all
Indebtedness, liabilities or obligations of any nature (whether liquidated or
unliquidated, mature or not yet mature, absolute or contingent, secured or
unsecured) of the Company and its Subsidiaries. Neither the Company nor any of
its Subsidiaries is in default or alleged to be in default in any material
respect with respect to any of its liabilities listed in the Audited Financials
or the Interim Financials.
SECTION 4.8 Warrant Shares. All of the Warrant Shares have been duly
authorized and reserved for issuance, and upon issuance subsequent to the
payment of the exercise price in accordance with the terms of the Warrant, the
Warrant Shares will be validly issued, fully paid and non-assessable.
SECTION 4.9 Ownership and Control. Attached hereto as Schedule 4.9 is
an accurate and complete list of the following information: (a) the authorized
capitalization of the Company and each of its Subsidiaries as of the date
hereof; (b) the number of shares of each class of the issued capital stock of
the Company and each of its Subsidiaries and the number of outstanding shares
thereof; (c) the number of shares covered by all convertible securities and all
options, warrants and similar rights held with respect to the capital stock of
the Company and each of its Subsidiaries; (d) the percentage of the outstanding
shares of capital stock held by the Company and each of its Subsidiaries, and
(e) all joint ventures and partnerships of the Company or any of its
Subsidiaries with any other Person. As of the date hereof, the Warrant Shares
constitute
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10.0% of the Common Stock of the Company on a fully diluted basis (after giving
effect to the issuance of Common Stock upon the exercise or conversion of all
options, warrants or other rights and securities convertible into or
exchangeable therefor). All shares of capital stock of the Company and each of
its Subsidiaries and all convertible securities, options, warrants and similar
rights held with respect to the Capital Stock of the Company and each of its
Subsidiaries have been duly authorized, and are validly issued, are fully paid
and nonassessable (in the case of capital stock), and are owned of record as set
forth on Schedule 4.9 attached hereto, free and clear of all Liens (other than
Permitted Liens permitted by Section 7.2). Except as listed in Schedule 4.9
attached hereto or as contemplated by the Investor Rights Agreement, there are
no outstanding options, warrants, convertible securities or other stock purchase
rights issued by the Company or any of its Subsidiaries as of the date hereof,
and there are no sale agreements, pledges, proxies, voting trusts, powers of
attorney or other agreements or instruments binding upon the shareholders of the
Company or any of its Subsidiaries with respect to beneficial and record
ownership of, or voting rights with respect to, the capital stock of Company or
any of its Subsidiaries as of the date hereof.
SECTION 4.10 No Material Adverse Change. Since the ending date of the
Interim Financials, other than as disclosed in Schedule 4.10 hereto, there has
occurred no Material Adverse Change.
SECTION 4.11 Title to Properties; Possession Under Leases.
(a) The Company and each of its Subsidiaries has good and
marketable title to, or valid leasehold interests in, all of its material
properties and assets free and clear of Liens, other than Permitted Liens
permitted by Section 7.2.
(b) Attached hereto as Schedule 4.11 is an accurate and
complete list, as of the date hereof, of all leases of Real Property and other
material leases to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries, or any of its assets is bound,
together with all amendments or supplements thereto (collectively, the
"Leases"). True and complete copies of each of the Leases have been made
available to Allied prior to the date hereof. Each of the Leases is as of the
date hereof valid, binding and enforceable in accordance with its terms and
remains in full force and effect. To the best of the Borrowers' knowledge,
neither the Company nor any of its Subsidiaries is in default or alleged to be
in default in any material respect with respect to any of its obligations under
any of the Leases (nor would be in default or alleged to be in default with the
giving of notice, passage of time, or both), and no party other than the Company
or any of its Subsidiaries is in material default with respect to such party's
obligations under any of the Leases (or would be in default or alleged to be in
default with the giving of notice, passage of time, or both). The Company's and
each of its Subsidiaries' possession of any property leased by it has not been
disturbed, nor has any claim been asserted against the Company or such
Subsidiary that is or could be adverse to the Company's or such Subsidiary's
interests under any of the Leases. None of the Leases is subject to any material
rights of set-off, recoupment or similar deduction or offset. Except for
Permitted Liens permitted by Section 7.2, neither the Company nor any of its
Subsidiaries has assigned or encumbered any of its rights, title or interest in
or under any of the Leases nor agreed to any oral modifications of any of the
provisions of any of the Leases.
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SECTION 4.12 Litigation; Compliance with Laws.
(a) Except as set forth on Schedule 4.12 (the "Litigation
Schedule"), there are no actions, suits or proceedings at law or in equity or by
or before any Governmental Authority now pending or, to the best of knowledge of
the Borrowers, threatened against or affecting the Company or any of its
Subsidiaries or any business, Property or rights of the Company or any of its
Subsidiaries (i) that involve any Investment Document or the Transaction or (ii)
as to which there is a reasonable possibility of an adverse determination that
could reasonably be expected to result in a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries nor any of
their respective material properties or assets is in violation of nor will the
continued operation of its material properties and assets as currently conducted
violate, any law, rule or regulation, or is in default with respect to any
judgment, writ, injunction, decree or order of any Governmental Authority.
(c) Except for matters set out in the Litigation Schedule,
neither the Company nor any of its Subsidiaries is in breach of, default under,
or in violation of: (a) any Applicable Law, decree, or order of any Governmental
Authority, which breach, default or violation would reasonably be expected to
result in a Material Adverse Effect; or (b) any deed, lease, loan agreement,
commitment, bond, note, deed of trust, restrictive covenant, license, indenture,
contract, or other agreement, instrument or obligation to which it is a party or
by which it is bound or to which its assets are subject, which breach, default
or violation would reasonably be expected to result in a Material Adverse
Effect.
SECTION 4.13 Contracts, Etc. Attached hereto as Schedule 4.13 is an
accurate and complete list of all material contracts (including all those
representing 10% or more of the Company's Consolidated total revenue, profit or
volume) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or any of its assets is bound
(collectively, the "Contracts"). The Company and each of its Subsidiaries has
entered into all Contracts necessary for the conduct of its business as
presently conducted. True and complete copies of each of the Contracts have been
made available to Allied. Each of the Contracts is valid, binding and
enforceable in accordance with its terms and remains in full force and effect.
Neither the Company nor any of its Subsidiaries is in default or, to the best
knowledge of the Borrowers, alleged to be in default in any material respect
with respect to any of its obligations under any of the Contracts (nor would be
in default or alleged to be in default with the giving of notice, passage of
time, or both), and, to the best knowledge of the Borrowers, no party other than
the Company or any of its Subsidiaries is in default with respect to such
party's obligations under any of the Contracts (or would be in default or
alleged to be in default with the giving of notice, passage of time, or both).
No claim has been asserted against the Company or any of its Subsidiaries that
is or could be materially adverse to its interests under any of the Contracts.
None of the Contracts is subject to any material rights of set-off, recoupment
or similar deduction or offset. Except for Permitted Liens permitted by Section
7.2, neither the Company nor any of its Subsidiaries has assigned or encumbered
any of its rights, title or interest in or under any of the Contracts nor agreed
to any oral modifications of any of the material provisions of any of the
Contracts.
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SECTION 4.14 No Side Agreements; Affiliate Transactions. There exists
no agreement or understanding calling for any payment or consideration from a
customer or supplier of the Company or any of its Subsidiaries to an officer,
director, shareholder or manager of any Credit Party with respect to any
transaction between any Credit Party or any of its Subsidiaries and a supplier
or customer. Except as set forth in Schedule 4.14, neither the Company nor any
of its Subsidiaries is a party to or bound by any agreement or arrangement
(whether oral or written) to which any Affiliate of the Company or any such
Subsidiary is a party except upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than it could obtain in a comparable arm's-length
transaction with an unaffiliated Person.
SECTION 4.15 Investment Company Act; Public Utility Holding Company
Act. Neither the Company nor any of its Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended or (b) a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended.
SECTION 4.16 Use of Proceeds. The Borrowers will use the proceeds of
the investment only for the purposes specified in Article II.
SECTION 4.17 Tax Returns. The Company and each of its Subsidiaries has
filed or caused to be filed all Federal, state, local and foreign tax returns or
materials required to have been filed by it or has filed extensions therefor
except where the failure to do so is not reasonably expected to result in a
Material Adverse Effect, and has paid or caused to be paid all taxes as and when
due and payable by it thereunder and all assessments received by it thereunder,
except taxes that are being contested in good faith by appropriate proceedings
and for which the Company and each of its Subsidiaries shall have set aside on
its books adequate reserves.
SECTION 4.18 No Untrue Statements or Material Omissions; Public
Disclosure. None of the statements contained in any report, financial statement,
exhibit or schedule furnished by or on behalf of the Borrowers to Allied
(including the Company's business plan) in connection with the negotiation of
any Investment Document or included therein or delivered pursuant thereto,
contained or contains any untrue statement of material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading as of the time when made or delivered. The Company has filed all
reports or information in compliance with the Securities Exchange Act of 1934,
as amended, and none of such reports or information filed by the Company during
the 18 months preceding the Closing Date (upon which Allied is entitled to rely
in making the investment pursuant to this Investment Agreement) contains any
untrue statement of material fact or omits to state a material fact necessary to
make the statements therein not misleading.
SECTION 4.19 Employee Benefit Matters. Attached hereto as Schedule 4.19
is an accurate and complete list of each single-employer plan described in
Section 4001(a) of ERISA, as to which the Company or any of its Subsidiaries is,
or immediately after the Closing Date will be, an "employer" or a "substantial
employer" as defined in Sections 3(5) and 4001(a)(2) of ERISA, respectively or
is assuming any liability or will be liable to make contributions or for the
payment of benefits. The Company has made available to Allied true and complete
copies of each of the plans listed on Schedule 4.19 attached hereto. There have
been no "reportable events" as set forth in Section 4043(b) of ERISA with
respect to any such plan, and no
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termination of any such plan since the effective date of ERISA which could
result in any tax, penalty or liability being imposed upon the Company or any of
its Subsidiaries, which is reasonably likely to result in a Material Adverse
Effect. Except as otherwise described on Schedule 4.19 hereto, neither the
Company nor any of its Subsidiaries has participated in, and the execution and
delivery of this Agreement by the Company or any of its Subsidiaries will not
involve, any "prohibited transaction" (as defined in Section 4975 of the
Internal Revenue Code of 1986, as amended) that could subject the Company or any
of its Subsidiaries to any tax or penalty imposed by Section 4975 of the
Internal Revenue Code of 1986, as amended, which is reasonably likely to result
in a Material Adverse Effect. To the best knowledge of the Borrowers, no
predecessor-in-interest to the Company or any of its Subsidiaries has
participated in any "prohibited transaction" (as defined in Section 4975 of the
Internal Revenue Code of 1986, as amended) that could subject the Company or any
of its Subsidiaries to any tax or penalty imposed by Section 4975 of the
Internal Revenue Code of 1986, as amended, which is reasonably likely to result
in a Material Adverse Effect. Since the effective date of ERISA, neither the
Company nor any of its Subsidiaries nor, to the best knowledge of the Borrowers,
any predecessor-in-interest to the Company or any of its Subsidiaries, has
incurred any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, to which the Company or any of its Subsidiaries could be
subject or for which it might be liable, which is reasonably likely to result in
a Material Adverse Effect. Assuming no amounts loaned by Allied hereunder are
"plan assets," as such term is defined in the ERISA regulations, neither the
Company nor any of its Subsidiaries is, and immediately after the Closing will
not be, a party to, and none of the operations of the Company or any of its
Subsidiaries is, or after the Closing will be, covered by, a "multi-employer
plan", as defined in Section 3(37) of ERISA.
SECTION 4.20 Environmental Matters.
(a) The Real Properties owned or operated by the Company and
its Subsidiaries (the "Properties") do not contain any Hazardous Materials from
the operations of the Company and its Subsidiaries in amounts or concentrations
which (i) constitute, or constituted a violation of, (ii) require Remedial
Action under, or (iii) are reasonably likely to result in liability under,
Environmental Laws, except for violations, Remedial Actions or liabilities that
are not reasonably likely to result in a Material Adverse Effect;
(b) The Properties and all operations of the Company and its
Subsidiaries are in compliance, and in the last five years have been in
compliance, with all Environmental Laws and all necessary Environmental Permits
have been obtained and are in effect, except where the failure to comply or the
failure to obtain an Environmental Permit is not reasonably likely to result in
a Material Adverse Effect;
(c) There have been no Releases or threatened Releases at,
from, under or proximate to the Properties or otherwise in connection with the
operations of the Company and its Subsidiaries that are reasonably likely to
result in a Material Adverse Effect;
(d) Neither the Company nor any of its Subsidiaries has
received any notice of an Environmental Claim in connection with the Properties
or the operations of the Company or any of its Subsidiaries or with regard to
any Person whose liabilities for environmental matters the Company or any of its
Subsidiaries has retained or assumed, in whole or in part, contractually, by
operation of law or otherwise which is reasonably likely to result in a Material
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Adverse Effect, nor do the Credit Parties have reason to believe that any such
notice will be received or is being threatened; and
(e) Hazardous Materials (other than propane) have not been
transported from the Properties, nor have such Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of the Properties
in a manner that could give rise to liability under any Environmental Law, nor
have the Credit Parties or any of their Subsidiaries retained or assumed any
liability, contractually, by operation of law or otherwise, with respect to the
generation, treatment, storage or disposal of such Hazardous Materials, in each
case that are reasonably likely to result in a Material Adverse Effect.
SECTION 4.21 Labor Matters. As of the date hereof, there are no
strikes, lockouts or slowdowns against the Company or any of its Subsidiaries
pending or, to the actual knowledge of the Credit Parties, threatened. To the
best of the Borrower's knowledge, the hours worked by and payments made to
employees of the Company or any of its subsidiaries have not been in violation
of the Fair Labor Standards Act or any other applicable federal, state, local or
foreign law dealing with such matters. Except as disclosed in Schedule 4.21
hereto, all payments due from the Company or any of its Subsidiaries or for
which any claim may be made against the Company or any of its Subsidiaries, on
account of wages and employee health and welfare insurance and other benefits,
have been paid or accrued as a liability on the books of the Company or such
Subsidiary. The consummation of the Transaction will not give rise to any right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Company or any of its Subsidiaries
is bound.
SECTION 4.22 Employees. Attached hereto as Schedule 4.22 is an accurate
and complete list of all material employment and compensation contracts,
including all retirement benefit agreements not disclosed on Schedule 4.19,
between the Company or any of its Subsidiaries and its officers and executives.
The Company has made available to Allied accurate and complete copies of all
such contracts. To the best knowledge of the Credit Parties, no officer,
executive or other key employee of the Company or any of its Subsidiaries has
advised the President of the Company or any of its Subsidiaries (orally or in
writing) that he or she intends to terminate employment with the Company or any
of its Subsidiaries.
SECTION 4.23 Solvency. Immediately after the consummation of the
Transaction to occur on the Closing Date and after giving effect to the
application of the proceeds of the investment, (a) the fair value of the assets
of the Company and its Subsidiaries, on a Consolidated basis, will exceed its
debts and liabilities, subordinated, contingent or otherwise; (b) the present
fair saleable value of the property of the Company and its Subsidiaries, on a
Consolidated basis, will be greater than the amount that will be required to pay
the liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and matured, (c)
the Company and its Subsidiaries, on a Consolidated basis, will be able to pay
its debts and liabilities, subordinated, contingent or otherwise, as and when
such debts and liabilities become absolute and matured; and (d) the Company and
its Subsidiaries, on a Consolidated basis, will not have unreasonably small
capital with which to conduct the businesses in which it is engaged as such
businesses are now conducted on the Closing Date.
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SECTION 4.24 Licenses. The Company and its Subsidiaries have good title
to all of the Licenses necessary to operate the Borrowers' Business except to
the extent such failure to do so is not reasonably likely to have a Material
Adverse Effect.
SECTION 4.25 Brokers. Neither the Company nor any of its Subsidiaries
has engaged the services of a broker in connection with the Transactions.
SECTION 4.26 Intellectual Property. As of the Closing Date, the Company
and each of its Subsidiaries owns or will own or has rights to use all
Intellectual Property necessary to continue to conduct its business in all
material respects as now or heretofore conducted by it or proposed to be
conducted by it, and each patent, material trademark and material copyright and
License owned by the Company or any of its Subsidiaries is listed, together with
application or registration numbers, as applicable in Schedule 4.26. To the best
of the Borrowers' knowledge, the Company and each of its Subsidiaries conducts
its business and affairs without infringement of or interference with any
Intellectual Property of any other Person and no Credit Party has knowledge that
another Person is infringing or interfering with any Intellectual Property of
the Company or its Subsidiaries.
SECTION 4.27 Insurance. The Company has made available to Allied
insurance certificates and accurate and complete copies of the insurance binders
or policies for all of the insurance maintained by the Company or any of its
Subsidiaries as listed on Schedule 4.27. The Company and its Subsidiaries have
insurance in such amounts and covering such risks and liabilities as may be
reasonable and prudent. Such insurance is in full force and effect and all
premiums have been duly paid.
ARTICLE V.
INVESTOR REPRESENTATIONS
Allied represents and warrants to the Borrowers as follows:
SECTION 5.1 Investment. Allied is acquiring the Debentures and the
Warrant (collectively, the "Securities") for its own account for investment and
not with a view to, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling the same; and Allied
has no present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof.
SECTION 5.2 Authority. Allied has full power and authority to enter
into and to perform this Agreement in accordance with its terms. Allied
represents that it has not been organized, reorganized or recapitalized
specifically for the purpose of investing in the Securities.
SECTION 5.3 Experience. Allied has carefully reviewed the
representations concerning the Borrowers contained in this Agreement and has
made detailed inquiry concerning the Borrowers, their business and their
personnel; the officers of the Borrowers have made available to Allied any and
all written information that Allied has requested and has answered to Allied's
satisfaction all inquiries made by Allied.
SECTION 5.4 Accredited Investor. Allied is an "Accredited Investor"
within the definition set forth in Rule 501(a)(3) of the Securities Act.
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ARTICLE VI.
AFFIRMATIVE COVENANTS
Except as otherwise provided herein, until the Debentures and all
expenses or other amounts payable under the Loan Documents are repaid in full,
unless the Holders shall otherwise consent in writing, the Credit Parties
jointly and severally covenant and agree with the Holders to do all of the
following:
SECTION 6.1 Existence; Businesses and Properties.
(a) Each of the Credit Parties will do or cause to be done all
things necessary to preserve and maintain its and its Subsidiaries' legal
existence.
(b) Each of the Credit Parties will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and trade
names material to the conduct of its and such Subsidiaries' business; comply in
all material respects with all applicable laws, rules, regulations and decrees
and orders of any Governmental Authority, whether now in effect or hereafter
enacted; and at all times maintain and preserve all Property material to the
conduct of such business and keep such Property in good repair, working order
and condition (ordinary wear and tear excepted) and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times.
SECTION 6.2 Insurance. Each of the Credit Parties will keep its and
each of its Subsidiaries' insurable properties adequately insured at all times
by financially sound and reputable insurers; maintain such other insurance to
such extent and against such risks as is reasonable and prudent and as may
otherwise be reasonably required by the Holders, including commercial general
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any properties
owned, occupied or controlled by it, hazard insurance and business interruption
insurance; and maintain such other insurance as may be required by law.
SECTION 6.3 Obligations and Taxes. Each of the Credit Parties will pay,
and cause its Subsidiaries to pay, its material Indebtedness and other material
obligations promptly and in accordance with their terms and to pay and discharge
promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property,
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
reasonably be expected to result in a Material Adverse Effect and give rise to a
Lien upon such properties or any part thereof, provided, however, that such
payment and discharge shall not be required with respect to any such tax,
assessment charge, levy or claim so long as the validity or amount thereof shall
be contested in good faith by appropriate proceedings and any Credit Party and
its Subsidiaries, as applicable, shall have set aside on its books adequate
reserves with respect thereto in accordance with GAAP and such contest operates
to suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien.
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SECTION 6.4 Financial Statements, Reports, etc. The Company will
furnish to the Holders:
(a) within 90 days after the end of each fiscal year, the
Consolidated and consolidating balance sheets and related statements of
operations, stockholders' equity and cash flows, showing the financial condition
of the Company and its Subsidiaries, as of the close of such fiscal year and the
results of its operations during such year, such Consolidated statements to be
audited by an independent public accountant of recognized national or regional
standing acceptable to the Holders, and accompanied by an opinion of such
accountant (which shall not be qualified in any material respect) that such
financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries on a Consolidated basis in
accordance with GAAP;
(b) within 30 days after the end of each month, the
Consolidated and consolidating financial statements of the Company and its
Subsidiaries (including revenue and gross profit information by major product
line), setting forth in each case in comparative form the corresponding figures
for the corresponding month and fiscal year-to-date period of the preceding
fiscal year and the corresponding figures for the corresponding month and fiscal
year-to-date period of the annual forecast, all certified by its Financial
Officer as fairly presenting in all material respects the financial condition
and results of operations of the Company and its Subsidiaries on a Consolidated
basis in accordance with GAAP (but without footnotes), subject to normal
year-end audit adjustments, together with a monthly management summary
description of operations, together with detailed calculations evidencing
compliance with the financial ratios and covenants set forth in Section 6.12;
(c) concurrently with any delivery of financial statements
under sub-paragraph (a) or (b) above, a certificate of the accounting firm or
Financial Officer of the Company opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to accounting
matters and disclaim responsibility for legal interpretations) containing a
detailed calculation of the relevant items used to calculate compliance with the
financial covenants set forth in Section 6.12 and, certifying that no Event of
Default or Default has occurred or, if such an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto;
(d) to the extent that any Credit Party is or becomes subject
to such reporting requirements, promptly after the same become publicly
available, notice of all final periodic and other reports, proxy statements and
other materials filed by such Credit Party with the U.S. Securities and Exchange
Commission (the "SEC"), or any Governmental Authority succeeding to any or all
of the functions of said Commission, or with any national securities exchange,
or distributed to its shareholders (exclusive of proprietary information unless
(i) the Person that is the source of the information or report is a public
company and (ii) such Person would then be required to file such proprietary
information with the SEC), as the case may be;
(e) promptly upon reasonable request by any Holder, copies of
all material documents filed by the Company or any of its Subsidiaries with any
Governmental Authority, including, without limitation, the U.S. Internal Revenue
Service, the U.S. Environmental
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Protection Agency (and any state equivalent), the U.S. Occupational Safety &
Health Administration, but excluding the SEC.
(f) before each fiscal year, a copy of each Credit Party's
annual budget (detailed on a month to month basis) for the next succeeding
fiscal year (by major product line) and projections for the next succeeding
three fiscal years, in a form consistent with past practices;
(g) promptly after entering into the same, copies of all
shareholders agreements of the Company or its Subsidiaries; and
(h) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of the
Company or any of its Subsidiaries, or compliance with the terms of any
Investment Document, as any Holder may reasonably request or to otherwise enable
the Holder to file any form required by any Governmental Authority.
SECTION 6.5 Litigation and Other Notices. The Borrowers will furnish to
the Holders prompt written notice of the following:
(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) within 30 days thereof, the filing or commencement of or
any written threat or notice of intention of any Person to file or commence, any
material action, suit or proceeding, whether at law or in equity or by or before
any Governmental Authority, against the Company, any of its Subsidiaries or any
Affiliate thereof;
(c) at least 20 days and no more than 60 days prior notice of
any Change of Control;
(d) within 30 days of filing, notice of any material filing by
the Company or any of its Subsidiaries with any Governmental Authority,
including, without limitation, the U.S. Internal Revenue Service, the U.S.
Environmental Protection Agency (and any state equivalent), the U.S.
Occupational Safety & Health Administration and the SEC and, if requested by the
Holders, copies of such filings;
(e) within 10 days of receipt, notice of default on any
material loans or leases to which any Credit Party is a party; and
(f) any development that has resulted in, or would reasonably
be expected to result in, a Material Adverse Effect (including, without
limitation, any enforcement, remedial or other governmental regulatory or other
action instituted, completed or threatened in writing against the Company or any
of its Subsidiaries pursuant to any applicable Environmental Law, and any claim
made by any Person against the Company or any of its Subsidiaries relating to
liability in respect of Hazardous Materials, which in each case would reasonably
be expected to result in a Material Adverse Effect).
SECTION 6.6 Employee Benefits. Each Credit Party will, and will cause
its Subsidiaries to, (a) comply in all material respects with the applicable
provisions of ERISA and the Code and
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(b) furnish to the Holders as soon as possible after, and in any event within 10
days after any Responsible Officer of such Credit Party or Subsidiary thereof or
any ERISA Affiliate knows or has reason to know that any ERISA Event has
occurred that alone or together with any other ERISA Event could reasonably be
expected to result in liability of such Credit Party or Subsidiary thereof in an
aggregate amount exceeding $500,000, a statement of a Financial Officer of such
Credit Party setting forth details as to such ERISA Event and the action, if
any, that such Credit Party proposes to take with respect thereto.
SECTION 6.7 Maintaining Records; Access to Properties and Inspections.
Each Credit Party will keep, and will cause its Subsidiaries to keep, proper
books of record and account in which full and correct entries in conformity with
GAAP are made of all dealings and transactions in relation to its business and
activities. Each Credit Party will permit any representatives designated by the
Holders to obtain background information on the Credit Parties, their
Subsidiaries and their management, to visit and inspect the financial records
and the properties of such Credit Party and its Subsidiaries at reasonable times
during normal business hours and as often as reasonably requested and to make
extracts from and copies of such financial records, and permit any
representatives designated by the Holders to discuss the affairs, finances and
condition of such Credit Party and its Subsidiaries with the officers thereof
and independent accountants therefor. The Holders will provide prior notice to
the Company of any planned discussions with its independent accountants and will
permit an officer of the Company to be present. In addition, the Borrowers shall
permit the Holders to conduct a review of the use of the proceeds of the
Debentures and shall certify in writing to the Holders that the proceeds of the
Debentures were used in accordance with Section 2.10 hereof.
SECTION 6.8 Compliance with Laws. Each Credit Party will comply, and
cause its Subsidiaries to comply, in all material respects with all Federal,
state, local and foreign laws and regulations applicable to them where the
failure to comply is reasonably likely to result in a Material Adverse Effect.
Without limiting the generality of the foregoing, each Credit Party will, and
will cause its Subsidiaries to comply, and will exercise its commercially
reasonable efforts to cause all lessees and other persons occupying their
Properties to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and Properties; obtain and
renew all material Environmental Permits necessary for their operations and
Properties; and conduct in all material respects any Remedial Action in
accordance with applicable Environmental Laws; provided, however, that no Credit
Party shall be required to undertake any Remedial Action to the extent that
their obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to such
circumstances.
SECTION 6.9 Preparation of Environmental Reports. If an Event of
Default caused by reason of a breach of Section 4.20 or Section 6.8 shall have
occurred and be continuing, then the Credit Parties shall, at the request of the
Holders, provide to the Holders within 45 days after such request, at the
expense of the Credit Parties, a Phase I environmental site assessment report
for any of the Company's or its Subsidiaries' properties described in such
request, prepared by an environmental consulting firm acceptable to the Holders
(and, if based upon the recommendation of such environmental consulting firm, a
Phase II environmental site assessment report) indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance, removal
or remedial action in connection with any Hazardous Materials on such
properties; without limiting the generality of the foregoing, if the Holders
determine at
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any time that a material risk exists that any such report will not be provided
within the time referred to above, the Holders may retain an environmental
consulting firm to prepare such report at the expense of the Credit Parties, and
each such Credit Party hereby grants and agrees to cause any Subsidiary that
owns any property described in such request to grant at the time of such
request, to the Holders such firm and any agents or representatives thereof an
irrevocable non-exclusive license, subject to the rights of tenants, to enter
onto their respective properties to undertake such assessment.
SECTION 6.10 Further Assurances. Each Credit Party will execute, and
will cause their Subsidiaries to execute, any and all further documents,
agreements and instruments, and take all further action that may be required
under applicable law, or that the Holders may reasonably request, in order to
effectuate the transactions contemplated by the Investment Documents. The Credit
Parties shall deliver or cause to be delivered to the Holders all such
instruments and documents (including legal opinions) as the Holders may
reasonably request to evidence compliance with this Section.
SECTION 6.11 Maintenance of Office or Agency. Each Credit Party shall
maintain an office or agency (i) where the Debentures may be presented for
payment, or for registration and transfer and for exchange as provided in this
Agreement; and (ii) where notices and demands to or upon such Credit Party in
respect of the Debentures may be served. The location of such office or agency
initially shall be the principal office of the Company as set forth in Section
9.1 hereof. The Company shall give the Holders written notice of any change of
location thereof.
SECTION 6.12 Financial Ratios and Covenants. The Credit Parties shall
with respect to each period set forth below have complied or comply with and
maintain each of the following financial ratios and financial covenants, using
the information set forth in the financial statements provided by the Credit
Parties in accordance with Section 6.4 above:
(a) Funded Leverage Ratio. For the fiscal quarter ending July
31, 2001 and for each fiscal quarter ending thereafter, a Funded Leverage Ratio
for the immediately preceding four (4) quarter period then ended shall not be
more than the ratio set forth below for such date:
----------------------------------------------------------------------
QUARTERS ENDING RATIO
----------------------------------------------------------------------
July 31, 2001 5.89 to 1.0
----------------------------------------------------------------------
October 31, 2001 5.08 to 1.0
----------------------------------------------------------------------
January 31, 2002 4.60 to 1.0
----------------------------------------------------------------------
April 30, 2002 4.31 to 1.0
----------------------------------------------------------------------
July 31, 2002 through April 30, 2003 4.03 to 1.0
----------------------------------------------------------------------
July 31, 2003 through April 30, 2004 3.75 to 1.0
----------------------------------------------------------------------
July 31, 2004 and thereafter 3.25 to 1.0
----------------------------------------------------------------------
(b) Interest Coverage Ratio. For the fiscal quarter ending
July 31, 2001 and for each fiscal quarter ending thereafter, an Interest
Coverage Ratio for the immediately preceding four (4) quarter period then ended
shall not be less than the amount set forth below for such period:
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----------------------------------------------------------------------
QUARTERS ENDING RATIO
----------------------------------------------------------------------
July 31, 2001 1.77 to 1.0
----------------------------------------------------------------------
October 31, 2001 through October 31, 2002 1.80 to 1.0
----------------------------------------------------------------------
January 31, 2003 through April 30, 2003 2.00 to 1.0
----------------------------------------------------------------------
July 31, 2003 through April 30, 2004 2.25 to 1.0
----------------------------------------------------------------------
July 31, 2004 and thereafter 2.50 to 1.0
----------------------------------------------------------------------
(c) Capital Expenditures. The aggregate amount of Capital
Expenditures made by the Credit Parties shall not at any time exceed all of the
following: (i) for the three months ended July 31, 2001, $4,000,000, (ii) as of
July 31, 2002 for the immediately preceding four (4) quarter period then ended,
the sum of (A) $8,300,000 plus (B) the net proceeds to the Company from the sale
of Capital Stock of the Company during such period (other than Capital Stock
issued in accordance with Section 6.12(d) below), (iii) as of the end of each
fiscal quarter beginning on or after August 1, 2002 for the immediately
preceding four (4) quarter period then ended, the sum of (A) Free Cash Flow for
such period plus (B) the net proceeds to the Company from the sale of Capital
Stock of the Company during such period (other than Capital Stock issued in
accordance with Section 6.12(d) below) and (iv) as of the end of each fiscal
year beginning on or after August 1, 2002 and for so long as the Funded Leverage
Ratio for such fiscal year is equal to or greater than 3.00 to 1.0, the sum of
(A) $8,300,000 plus (B) the net proceeds to the Company from the sale of Capital
Stock of the Company during such period (other than Capital Stock issued in
accordance with Section 6.12(d) below).
(d) Liquidity. If as of the end of any month Liquidity falls
below $3,000,000, the Company shall commence using its best efforts to raise,
and within 105 days after the end of such month shall raise, at least $5,000,000
from the sale of Capital Stock of the Company, the proceeds of which must be
used to repay the Revolver and restore Liquidity.
SECTION 6.13 Future Financings. Until the Debentures are repaid in
full, the Holders shall have the rights described in this Section 6.13 with
respect to any Covered Financing proposed by or to the Company or its
Subsidiaries. The Credit Parties shall not, nor permit any of their Subsidiaries
to, enter into any Covered Financing unless and until such Credit Party or such
Subsidiary has complied in full with the requirements of this Section 6.13. If
such Credit Party or such Subsidiary desires to undertake any Covered Financing,
then, prior to entering into such Covered Financing, such Credit Party or such
Subsidiary shall be obligated to first comply with following requirements:
(a) Such Credit Party or such Subsidiary shall provide written
notice to the Holders of the proposed Covered Financing and the terms and
conditions of such Covered Financing (the "Material Terms and Conditions").
(b) For a period of 15 days after receipt of such notice (the
"Offer Date"), the Holders shall have the exclusive option, but not the
obligation, to negotiate to provide the Covered Financing on the Material Terms
and Conditions and such additional terms and conditions as may be required,
customary and consistent with the Material Terms and Conditions or, if more than
one Holder desires to provide such financing, to participate therein on a pro
rata basis. A Holder's pro rata share, for purposes of this subsection (b),
shall equal a fraction, the numerator of which is the amount outstanding under
the Holder's Debenture and the denominator of which is the aggregate amount
outstanding under all of the Debentures held by
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all Holders exercising their rights to participate in the Covered Financing
under this subsection (b). The Holders shall have the sole and exclusive right
to enter into negotiations concerning the Covered Financing with such Credit
Party or Subsidiary as provided herein. Within 15 days after receipt of the
notice referred to above, each Holder shall give notice to such Credit Party or
Subsidiary stating whether or not it intends to provide or participate in the
Covered Financing in full but not in part and a date and time for consummation
of the Covered Financing not more than 60 days after such notice date (the
"Notification"). Failure by a Holder to give such notice within such time period
shall be deemed an election by it not to participate in negotiations concerning
the Covered Financing. With respect to a Covered Financing in which the Holders
elect not to participate, such Credit Party or Subsidiary shall thereafter be
free for a period of 90 days to obtain financing for that Covered Financing from
the third party offeror, pursuant to substantially similar Material Terms and
Conditions described in the Offer without any further obligations hereunder in
connection with such Covered Financing. Any material change or alteration to the
Material Terms and Conditions of such offer shall be deemed to be a new offer
and require such Credit Party or Subsidiary to comply with the provisions of
this Section 6.13 for such new offer.
SECTION 6.14 Observation Rights.
(a) The board of directors of the Company shall hold a general
meeting (which may be held by conference call) or propose adoption of
resolutions by written consent of the board of directors at least quarterly for
the purpose of discussing the business and operations of the Company and its
Subsidiaries. The Company shall notify Allied in writing of the date and time
for each general or special meeting of its board of directors or any committee
thereof (other than the Audit Committee and the Compensation Committee) or of
the adoption of any resolutions by written consent (describing in reasonable
detail the nature and substance of such action) at the time notice is provided
to the directors of the Company and concurrently deliver to the Holders any
materials delivered to directors of the Company, including a draft of any
resolutions proposed to be adopted by written consent. The Holders shall be free
to contact the directors of the Company and discuss the pending actions to be
taken.
(b) The Company shall permit one authorized representative of
Allied (or any transferee of Allied with the consent of the Company, which
consent shall not be unreasonably withheld) to attend and participate (but not
vote) in all meetings of its board of directors and any committee thereof (other
than the Audit Committee and the Compensation Committee) thereof, whether in
person, by telephone or otherwise; provided that such representative may be
excluded from any discussions concerning Allied (or such transferee), the
Debentures or this Agreement, and shall provide such representative with such
notice and other information with respect to such meetings as are delivered to
the directors of the Company and at the same time.
SECTION 6.15 Reservation of Warrant Shares. So long as any Warrant is
outstanding, the Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
issuance upon the exercise of the Warrant, such number of shares of Common Stock
issuable upon the exercise of the outstanding Warrant. All Warrant Shares which
are so issuable in accordance with the Warrant shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, Liens and
charges (except those based on the income, revenues or capital gains of the
Holder thereof). The Company shall take all such action as may be reasonably
necessary to assure that all such shares
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of Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately transmitted by the Company upon issuance).
SECTION 6.16 Replacement of Warrant. So long as any Warrant is
outstanding, the Company shall perform all acts required under the Warrant,
including the re-issuance or replacement of the Warrant to any of the Holders
upon transfer, exchange, loss or destruction thereof (upon provision of
reasonable indemnification and affidavit).
SECTION 6.17 Hedging. The Company shall hedge 75% of its exposure to
propane prices within six months after the date hereof in accordance with a
comprehensive hedging strategy approved by the Board.
ARTICLE VII.
NEGATIVE COVENANTS
Until the Debentures and all expenses or other amounts payable under
the Loan Documents are repaid in full, unless the Holders shall otherwise
consent in writing, the Credit Parties jointly and severally covenant and agree
not to do any of the following without the prior written consent of the Holders:
SECTION 7.1 Indebtedness.
(a) No Credit Party shall, nor will it permit any of its
Subsidiaries to, directly or indirectly incur, create, assume or permit to exist
any Indebtedness other than the following (together, the "Permitted
Indebtedness"):
(i) the Senior Debt;
(ii) Indebtedness existing on the date hereof and set
forth in the Financials or Schedule 4.7;
(iii) Indebtedness created hereunder and under the
other Investment Documents;
(iv) Indebtedness of any Credit Party or a Subsidiary
of a Credit Party to another Credit Party so long as (i) after such
transaction, the Person providing the Indebtedness will be Solvent and
(ii) no Default or Event of Default then exists or will exist after
such transaction;
(v) Indebtedness of any Credit Party to any of its
Wholly-Owned Subsidiaries, and Indebtedness of any Wholly-Owned
Subsidiaries to any Credit Party or any other Wholly-Owned
Subsidiaries, provided that, in each case, with respect to such
Subsidiary, prior to the incurrence of such Indebtedness such
Subsidiary shall have executed and delivered a Guaranty Agreement and
at the time any Wholly-Owned Subsidiary incurs any such Indebtedness,
such Subsidiary is Solvent; and provided further that the occurrence of
any event upon which any such Subsidiary ceases to be
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Wholly-Owned by the Credit Party shall result in this clause (v) no
longer permitting such Indebtedness;
(vi) Indebtedness of the Company or its Subsidiaries
in respect of performance bonds, bid bonds, appeal bonds, surety bonds
and similar obligations, in each case provided in the ordinary course
of business;
(vii) Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar
instrument drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is extinguished within five
(5) Business Days of its incurrence;
(viii) Indebtedness in respect of taxes, assessments,
governmental charges or levies, claims of customs authorities and
claims for labor, worker's compensation, materials and supplies to the
extent that payment therefor shall not at the time be required to be
made in accordance with the provisions of Section 7.2;
(ix) Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period for taking
an appeal so long as execution is not levied thereunder or in respect
of which the Company or the applicable Subsidiary shall at the time in
good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending
such appeal or review;
(x) endorsements for collection, deposit or
negotiation and warranties of products or services, in each case
incurred in the ordinary course of business;
(xi) any Indebtedness that is expressly subordinate
to the Debentures pursuant to a written subordination agreement in form
and substance acceptable to the Holders; and
(xii) any other Indebtedness incurred after August 1,
2002; provided that (A) after giving pro forma effect to the
incurrence, creation or assumption of such Indebtedness and the use of
the proceeds thereof, the Funded Leverage Ratio determined on a pro
forma basis shall not exceed the ratio set forth opposite such date:
----------------------------------------------------------------------
PERIOD RATIO
----------------------------------------------------------------------
August 1, 2002 through July 31, 2003 3.50 to 1.0
----------------------------------------------------------------------
August 1, 2003 through July 31, 2004 3.00 to 1.0
----------------------------------------------------------------------
August 1, 2004 and thereafter 2.75 to 1.0
----------------------------------------------------------------------
(B) the Credit Parties shall, prior to such incurrence, creation or
assumption, have provided to the Holders calculations showing
compliance with this clause (xii), (C) the credit documentation with
respect to such Indebtedness which does not constitute Senior Debt
shall not contain covenants or default provisions relating to the
Credit Party or any Subsidiary that are more restrictive than the
covenants and default provisions contained in the Investment Documents,
and (D) no Default or Event of Default exists or would exist
immediately after giving effect thereto, and (E) for purposes of this
clause (xii), any
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transaction (including any acquisition of stock, merger or
consolidation) pursuant to which any Person becomes a Subsidiary of a
Credit Party or its Subsidiary shall be deemed an assumption by the
Credit Party or its Subsidiary of any Indebtedness of such Person at
such time outstanding.
(xiii) Capital Lease Obligations and purchase money
Indebtedness for equipment acquired in the ordinary course of the
Borrowers' Business incurred after the date hereof not to exceed
$750,000 the aggregate outstanding at any time.
(xiv) Indebtedness represented by interest rate
protection agreements permitted by Section 7.4(c);
(xv) Indebtedness not otherwise permitted by the
foregoing paragraphs of this Section 7.1; provided that at the time or
creation, incurrence or assumption thereof and at any time thereafter,
the aggregate principal amount of such Indebtedness shall not exceed
$500,000.
(b) Notwithstanding any provision to the contrary, the Credit
Parties shall not, nor permit any of their Subsidiaries to, incur any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt unless such Indebtedness by its terms is subordinated to the Debentures or
the guarantee of the Company or such Subsidiary, as the case may be.
SECTION 7.2 Liens. No Credit Party shall, nor will it permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien on any
property or assets (including stock or other securities of any Person, including
any Subsidiary) now owned or hereafter acquired by it or on any income or
revenues or rights in respect of any thereof except the following (the
"Permitted Liens"):
(a) Liens securing the Senior Debt;
(b) Liens on Property of such Credit Party or its Subsidiaries
existing on the date hereof and set forth in Schedule 7.2; provided that such
Liens shall secure only those obligations that they secure on the date hereof
and the amount of Indebtedness secured thereby shall not be increased;
(c) Liens for taxes, assessments or governmental charges
(excluding any Lien imposed pursuant to any of the provisions of ERISA) not yet
due or which are permitted or are being contested in compliance with Section 6.3
but only if the existence of such Lien being contested would not likely have a
Material Adverse Effect;
(d) Liens of carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business and securing obligations that are not due and payable or which are
permitted or are being contested in compliance with Section 6.3;
(e) pledges and deposits made in the ordinary course of
business to secure obligations under workers' compensation, unemployment
insurance and other social security laws or regulations or to secure public or
statutory obligations;
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(f) deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases (other than Capital Lease
Obligations), liens to secure the performance of statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way,
restrictions on use of real property and other similar encumbrances incurred in
the ordinary course of business which, in the aggregate, are not substantial in
amount and do not materially detract from the value of the property subject
thereto or materially adversely interfere with the use of such property for its
present purposes;
(h) Capital Lease Obligations and purchase money Liens on
equipment acquired in the ordinary course of the Borrowers' Business with
respect to Indebtedness permitted under Section 7.1(xiii);
(i) Liens arising solely by virtue of any contractual or
statutory or common law provisions relating to banker's liens, rights to set-off
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution provided that (i) such deposit account is
not a dedicated cash collateral account and is not subject to restrictions
against access by the Credit Party or any Subsidiary in excess of those set
forth by regulations promulgated by the Board of Governors of the Federal
Reserve System and (ii) such deposit account is not intended by the Credit Party
or such Subsidiary to provide collateral to the depositary institution;
(j) judgment Liens not giving rise to an Event of Default; and
(k) Liens not otherwise permitted by the foregoing paragraphs
of this Section 7.2 with respect to Indebtedness permitted under Section
7.1(xiv).
SECTION 7.3 Sale and Lease-Back Transactions. No Credit Party shall,
nor will it permit any of its Subsidiaries to, enter into any arrangement,
directly or indirectly, with any Person whereby it or any of its Subsidiaries
shall sell or transfer any property, real or personal, used or useful in its or
any of its Subsidiaries' business, whether now owned or thereafter acquired, and
thereafter rent or lease such property or other property that it or any of its
Subsidiaries intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
SECTION 7.4 . Investments. No Credit Party shall, nor will they permit
any of its Subsidiaries to, make any Investments except:
(a) Investments existing on the date hereof;
(b) Cash Equivalents;
(c) Investments in respect of interest rate protection
agreements entered into in the ordinary course of business and not for
speculative purposes;
(d) Investments consisting of extensions of trade credit in
the ordinary course of the Borrowers' Business; and
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(e) loans and advances to employees in the ordinary course of
the business of such Credit Party and its Subsidiaries as presently conducted in
the aggregate amount of all such Investments under this clause (e) not to exceed
$100,000 at any one time outstanding;
(f) Investments in Proposed Credit Parties or Wholly-Owned
Subsidiaries of a Credit Party that join this Agreement and the Debentures as
Borrowers or become Guarantors under a Guaranty Agreement on or prior to the
date of such Investment;
(g) Investments constituting Capital Expenditures permitted
under Section 6.12(c) hereof;
(h) Investments in the R4 Technical Center; provided that any
such Investments made after the date hereof shall not exceed $500,000 in the
aggregate.
(i) Permitted Acquisitions;
(j) additional Investments (other than additional Investments
in the R4 Technical Center which is exclusively provided for under Section
7.4(h) above); provided that any such Investments made after the date hereof
shall not exceed $750,000 in the aggregate; and
(k) other investment instruments approved in writing by
Holders.
SECTION 7.5 Mergers, Consolidations, Sales of Assets, Act of
Dissolution.
(a) Except in connection with a Permitted Reorganization, no
Credit Party shall, nor will it permit any of its Subsidiaries to, merge or
consolidate or enter into any analogous reorganization or transaction with any
Person (except where the Credit Party or its Subsidiary is the surviving
corporation) or liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution) or permit any Subsidiary to do any of the foregoing; provided
that any Subsidiary may be merged with or liquidated into the Company or any
Wholly Owned Subsidiary of the Company (if the Company or such Wholly-Owned
Subsidiary is the surviving corporation).
(b) No Credit Party shall, nor permit any of its Subsidiaries
to, suffer an Act of Dissolution, except in connection with a Permitted
Reorganization or with respect to any Credit Party or Subsidiary with total
assets as of such Act of Dissolution of less than $500,000 and annual gross
income as of such Act of Dissolution of less than $500,000 and from whom another
Credit Party succeeds to its assets following such Act of Dissolution.
(c) No Credit Party shall, nor permit any of its Subsidiaries
to, change its form of entity, except in connection with a Permitted
Reorganization.
(d) No Credit Party shall, nor permit any of its Subsidiaries
to, consummate any Asset Disposition without the consent of the Holders, except
in connection with a Permitted Reorganization.
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SECTION 7.6 Dividends and Distributions.
(a) No Credit Party shall, nor permit any of its Subsidiaries
to, declare or pay any Restricted Payments (other than a dividend or
distribution of any shares of its common stock and dividends paid-in-kind to
preferred stockholders); provided, however, that any Subsidiary of a Borrower
may declare and pay a Restricted Payment to such Borrower. Notwithstanding
anything herein to the contrary, but subject to the provisions of Section 2.7,
(i) the Company may redeem or repurchase its Common Stock from officers,
employees and directors of any Credit Party (or their estates) upon the
termination of employment of any such Person or from service providers pursuant
to equity incentive agreement or arrangements upon termination of their services
to the Company or pursuant to agreements entered into to evidence grants or
awards or other compensation under any stock option plan, stock purchase plan,
management incentive plan, consulting agreement or other contract or arrangement
approved by the Board; provided that (A) no Default or Event of Default is then
in existence or would otherwise arise therefrom, and (B) the aggregate amount of
all cash paid in respect of all such shares so redeemed or repurchased does not
exceed $500,000 in any fiscal year of the Company or $2,000,000 in the aggregate
from and after the Closing Date, (ii) so long as no Default or Event of Default
is then in existence or would otherwise arise therefrom, the Credit Parties may
make cash Restricted Payments to the Company, if the Company promptly uses such
proceeds for the purposes described in clause (i) above and (iii) so long as the
Funded Leverage Ratio for each 12-month period ended as of the last day of the
two fiscal quarters immediately preceding such payment is less than 2.00 to 1.0,
the Company may pay cash dividends to holders of its Preferred Stock.
(b) Except as provided in the Senior Credit Facility, no
Credit Party other than the Company shall, nor permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any encumbrance or restriction on the ability of such Credit
Party or any such Subsidiary to (i) pay any dividends or make any other
distributions on its Capital Stock or any other interest or (ii) make or repay
any loans or advances to the Company or the parent of such Subsidiary.
SECTION 7.7 Transactions with Affiliates. Except as otherwise expressly
provided herein or as set forth in Schedule 4.14, no Credit Party shall, nor
permit any of its Subsidiaries to, sell or transfer any Property to, or purchase
or acquire any Property from, or otherwise engage in any other transactions
with, any of its officers, directors, management employees or Affiliates other
than another Credit Party, except that (a) the Credit Parties and their
Subsidiaries may engage in the foregoing transactions with Affiliates on terms
that are fair and reasonable and no less favorable to such Credit Party or such
Subsidiary than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate; and (b) the Company may issue or sell Capital Stock to
its officers, directors and employees under option or incentive plans approved
by the board of directors of the Company or to service providers pursuant to
equity incentive agreement or arrangements approved by the board of directors of
the Company.
SECTION 7.8 Business of Credit Parties and Subsidiaries.
(a) No Credit Party shall, nor permit any of its Subsidiaries
to, engage at any time in any business or business activity other than those
reasonably similar or related to the Borrowers' Business and business activities
reasonably incidental thereto. No Credit Party shall, nor permit any of its
Subsidiaries to, acquire or create any new Subsidiary unless such
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subsequently acquired or organized Subsidiary joins this Agreement and the
Debentures as a Borrower hereunder or a Guaranty Agreement as a Guarantor
thereunder. No Credit Party shall, nor permit any of its Subsidiaries to, change
the location of its corporate headquarters from the states in which they are
presently conducted without the consent of the Holders.
(b) No Credit Party shall, nor permit any of its Affiliates
to, directly or indirectly purchase or otherwise acquire, or offer to purchase
or otherwise acquire, any outstanding Debentures except by way of payment or
prepayment in accordance with the provisions hereof.
SECTION 7.9 Investment Company Act. No Credit Party shall, nor will it
permit its Subsidiaries to, become an investment company subject to registration
under the Investment Company Act of 1940, as amended.
SECTION 7.10 Acquisitions. Without the prior written consent of the
Holders, no Credit Party shall, nor permit its Subsidiaries to, acquire any
Capital Stock or assets of any Person (other than a Credit Party or a Subsidiary
thereof or pursuant to a Permitted Reorganization) for aggregate consideration
in excess of $2,000,000 per acquisition or $10,000,000 in the aggregate for all
such acquisitions occurring after the Closing Date to which the Holders have not
consented. To the extent that consideration is paid, in whole or in part, in
shares of the Company's Capital Stock or securities convertible, exchangeable or
exercisable into shares of the Company's Capital Stock, such securities shall be
valued in the same manner as they are valued for such acquisition.
SECTION 7.11 Employee Compensation. All executive compensation of any
Credit Party shall be approved by the respective board of directors (or
compensation committee) of such Credit Party.
SECTION 7.12 Prepayments. Except for the Senior Debt, the Debentures or
Indebtedness owed to a Credit Party from a Subsidiary, neither the Credit
Parties nor any of their Subsidiaries shall prepay any Indebtedness for borrowed
money.
SECTION 7.13 Accounting Changes. No Credit Party shall, nor permit any
of its Subsidiaries to, make any significant change in accounting treatment or
reporting practices, except as required or permitted by GAAP, or change its
fiscal year from its current fiscal year.
SECTION 7.14 Stay, Extension and Usury Laws. To the extent permitted
under applicable law, each of the Credit Parties covenants and agrees that they
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, and will use their best efforts to resist any
attempts to claim or take the benefit of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of their obligations under this Agreement or the
Debentures. To the extent permitted under applicable law, each of the Credit
Parties hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Holders, but will suffer and
permit the execution of every such power as though no such law has been enacted.
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SECTION 7.15 Inconsistent Agreements; Charter Amendments. No Credit
Party shall (i) enter into any agreement or arrangement which would restrict in
any material respect the ability of such Credit Party to fulfill its Obligations
under the Investment Documents, or (ii) supplement, amend or otherwise modify
the terms of their articles of incorporation or bylaws or any of the Investment
Documents if the effect thereof would reasonably be expected to have a Material
Adverse Effect.
SECTION 7.16 R-4 Transaction. Notwithstanding any provision of this
Agreement to the contrary, the Company may enter into a sale-leaseback or loan
transaction with R-4 Technical Center (the "R-4 Transaction"); provided that the
proceeds of such transaction are used to reduce the principal amount of the
Senior Debt outstanding (including, without limitation, the Overline Note as
defined in the 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).
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1 Events of Default. If any of the following events ("Events
of Default") occur:
(a) any representation or warranty made or deemed made in or
in connection with any Investment Document hereunder, or any representation,
warranty or certification contained in any report, certificate, financial
statement or other instrument furnished in connection with or pursuant to any
Investment Document, proves to have been incorrect when so made, deemed made or
furnished;
(b) default is made in the payment of any principal of or
premium on the Debentures when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default is made in the payment of any interest on the
Debentures or any other amount (other than an amount referred to in (b) above)
due under any Investment Document, when and as the same becomes due and payable,
and such default continues unremedied for a period of seven Business Days;
(d) default is made in the due observance or performance by
the Credit Parties or any of their Subsidiaries of any covenant, condition or
agreement contained in Section 6.12 or in Article VII;
(e) default is made in the due observance or performance by
the Credit Parties or any of their Subsidiaries of any covenant, condition or
agreement contained in any Investment Document (other than those specified in
(b), (c) or (d) above) and such default continues unremedied for a period ending
the earlier of (i) a period of thirty (30) days from the date the Credit Parties
or any of their Subsidiaries knew or should have known of the occurrence of such
default and (ii) a period of thirty (30) days after notice thereof from the
Holders to the Credit Parties,
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(f) any default occurs (after giving effect to any applicable
notice and/or grace periods) under any other material agreement of the Credit
Parties in excess of $1,000,000 (other than defaults under the Senior Credit
Facility) and the failure to cure such default could reasonably be expected to
have a Material Adverse Effect;
(g) any default is declared or otherwise occurs (after giving
effect to any applicable notice and/or grace periods) under the Senior Debt or
any other Indebtedness of the Credit Parties in excess of $500,000 (including
the Senior Credit Facility), either (i) which is in the payment of any amount
due thereunder when and as the same becomes due and payable or (ii) pursuant to
which the lenders of such Indebtedness have accelerated the maturity thereof;
(h) an Act of Bankruptcy or Act of Dissolution shall have
occurred with respect to any Credit Party, except as permitted by Section
7.5(b);
(i) final non-appealable judgments for the payment of money in
excess of $100,000 individually or $250,000 in the aggregate to the extent not
fully paid or discharged (excluding any portion thereof that is covered by an
insurance policy issued by an insurance company of recognized standing and
creditworthiness) is rendered against any Credit Party, and the same shall
remain undischarged for a period of 30 consecutive days during which execution
is not effectively stayed, or any action is legally taken by a judgment creditor
to levy upon assets or properties of any Credit Party to enforce any such
judgment; or
(j) an ERISA Event occurs that in the opinion of the Holders,
when taken together with all other such ERISA Events, could reasonably be
expected to result in liability of any Credit Party and its ERISA Affiliates in
an aggregate amount exceeding $250,000;
(k) any execution or attachment shall be issued whereby any
substantial part of the property of any Credit Party shall be taken or attempted
to be taken and the same shall not have been vacated or stayed within 30 days
after the issuance thereof;
(l) any Guarantor shall repudiate or purport to revoke its
guaranty, or any guaranty of the Obligations hereunder for any reason shall
cease to be in full force and effect as to such Guarantor or shall be judicially
declared null and void as to such Guarantor;
(m) a Transfer (excluding a Permitted Reorganization) by Billy
D. Prim or his Permitted Transferees of more than 10.0% of the Common Stock of
the Company owned or Controlled by Billy D. Prim as of the date hereof other
than a transfer by Billy D. Prim to a successor on death or to his Permitted
Transferees;
(n) Billy D. Prim ceases to devote substantially full time and
attention to the management of the Company and the Company fails to hire a
replacement satisfactory to the Holders at such time; provided that no such
default shall be deemed to have occurred as a result of the death or long-term
disability of Billy D. Prim so long as the Company hires a replacement
satisfactory to the Holders within 180 days thereafter;
then, and in every such event, (other than an Event of Default described in
paragraph (h) above) and at any time thereafter during the continuance of such
event, the Holders may by notice to the Company declare the principal amount
then outstanding under the Debentures to be forthwith due and payable in whole
or in part, whereupon the principal amount so declared to be due and
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payable, together with the Prepayment Premium calculated as if the Debentures
were prepaid on the date of the Default, if any, all accrued interest thereon
and all other liabilities of the Borrowers accrued hereunder and under any other
Investment Document, shall become forthwith due and payable, without presentment
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrowers, anything contained herein or in any other
Investment Document to the contrary notwithstanding. In any event with respect
to an Event of Default described in paragraph (h) above, the principal of the
Debentures then outstanding, together with the Prepayment Premium calculated as
if the Debentures were prepaid on the date of the Default, if any, all accrued
interest thereon and all other liabilities of the Borrowers accrued hereunder
and under any other Investment Document, shall automatically become due and
payable, without presentment demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrowers, anything contained
herein or in any other Investment Document to the contrary notwithstanding. The
Holders may, by notice to the Company, rescind and annul any declaration of
default or acceleration of maturity under this paragraph prior to the
indefeasible payment in full of the outstanding Debentures.
SECTION 8.2 Waivers. The Credit Parties waive presentment, demand,
notice of dishonor, and protest, and all demands and notices of any action taken
by the Holders under this Agreement, except as otherwise provided herein.
SECTION 8.3 Enforcement Actions. The Holders may, at their option,
collect all or any portion of the Obligations or enforce against the Credit
Parties any of their respective rights and remedies with respect to the
Obligations including, but not limited to: (i) commencing or pursuing legal
proceedings to collect any amounts owed with respect to or to otherwise enforce
the Obligations; or (ii) executing upon, or otherwise enforcing, any judgment
obtained with respect to the payment or performance of the Obligations.
SECTION 8.4 Costs. The Credit Parties shall pay all reasonable expenses
of any nature, whether incurred in or out of court, and whether incurred before
or after the Debentures shall become due at their maturity date or otherwise
(including, but not limited to, reasonable attorneys' fees and costs) which the
Holders may reasonably incur in connection with the collection or enforcement of
any of the Obligations. The Holders are authorized to pay at any time and from
time to time any or all of such expenses, to add the amount of such payment to
the amount of principal outstanding under the Debentures, and to charge interest
thereon at the rate specified in the Debentures.
SECTION 8.5 Set-off. Upon the occurrence and during the continuance of
any Event of Default, each Holder is hereby authorized at any time and from time
to time without notice to any Credit Party (any such notice being expressly
waived by such Credit Party) and, to the fullest extent permitted by law, to set
off and to apply any and all balances, credits, deposits (general or special,
time or demand, provisional or final), accounts or moneys at any time held and
other indebtedness at any time owing by such Holder to or for the account of
such Credit Party against any and all of the obligations of the Credit Parties
now or hereafter existing under this Agreement or any other agreement or
instrument delivered by such Credit Party to such Holder in connection
therewith, whether or not such Holder shall have made any demand hereunder or
thereunder and although such obligations may be contingent or unmatured. The
rights of the Holders under this Section are in addition to other rights and
remedies (including, without
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limitation, other rights of set-off) which they may have. A Holder shall give
the Credit Party notice of any set-off hereunder after such set-off has
occurred.
SECTION 8.6 Remedies Non-Exclusive. None of the rights, remedies,
privileges or powers of the Holders expressly provided for herein are exclusive,
but each of them is cumulative with, and in addition to, every other right,
remedy, privilege and power now or hereafter existing in favor of each of the
Holders, whether pursuant to the other Investment Documents, at law or in
equity, by statute or otherwise.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1 Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrowers, Blue Rhino Corporation, 104 Cambridge
Plaza Drive, Winston-Salem, North Carolina 27104, Attention: Mark Castaneda
(Telecopy No. 335-659-6750); with a copy to Womble Carlyle Sandridge & Rice,
PLLC, 200 West Second Street, Winston-Salem, North Carolina 27101, Attention:
Peter A. Zorn (Telecopy No. 336-726-6906); and
(b) if to Allied, Allied Capital Corporation, at its offices
at 1919 Pennsylvania Avenue, N.W., Washington, D.C. 20006-3434, Attention:
Thomas H. Westbrook (Telecopy No. 202-659-2053); with a copy to Piper Marbury
Rudnick & Wolfe LLP, 1200 Nineteenth Street, N.W., Washington, D.C. 20036,
Attention: Anthony H. Rickert (Telecopy No. 202-223-2085);
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given (i) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery or (iii) on the date on which it is sent by facsimile transmission with
acknowledgement of receipt at the number to which it is required to be sent in
each case to the intended recipient as set forth above.
SECTION 9.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Credit Parties herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Investment Document shall be considered
to have been relied upon by the Holders and shall survive the making by the
Holders of the investment, regardless of any investigation made by the Holders
or on their behalf and shall continue in full force and effect as long as the
principal of or any accrued interest on the Debentures is outstanding and
unpaid. The provisions of Section 9.5 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of the
Debentures, the invalidity or unenforceability of any term or provision of this
Agreement or any other Investment Document, or any investigation made by or on
behalf of the Holders.
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SECTION 9.3 Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrowers and Allied, and when Allied shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
SECTION 9.4 Successors and Assigns.
(a) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the permitted successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of the Borrowers or the Holders that are contained in this Agreement
shall bind and inure to the benefit of their respective successors and assigns
and to any future holders of the Debentures, whether or not such Persons
expressly become party hereto (but specifically excluding Section 6.14, which
shall be personal to Allied unless otherwise agreed by the Company in accordance
with the terms of such section).
(b) The Borrowers shall not assign or delegate any of their
rights or duties hereunder without the prior written consent of the Holders, and
any attempted assignment or delegation without such consent shall be null and
void. The Holders may assign or delegate any of its rights or duties hereunder
or under the Debentures other than to a direct competitor of any Credit Party
and only to a holder of Debentures in aggregate principal amount of not less
than $1,000,000.
SECTION 9.5 Expenses; Indemnity.
(a) The Borrowers jointly and severally agree to pay at
Closing: (i) to Allied, a consulting fee of $150,000; (ii) to Allied, a closing
fee of $75,000; (iii) to A.C. Corporation, a structuring fee of $112,500; and
(iv) all reasonable out-of-pocket expenses incurred by Allied in connection with
the preparation and administration of this Agreement and the other Investment
Documents, or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) incurred by any Holder in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Investment Documents, including any suit, action, claim or other
activity of the Holders to collect or otherwise enforce the Obligations or any
portion thereof, or in connection with the Transaction, including, without
limitation, the reasonable fees, charges and disbursements of Piper Marbury
Rudnick & Wolfe LLP, counsel for Allied, and, in connection with any such
enforcement or protection, the reasonable fees, charges and disbursements of any
other counsel for Allied.
(b) The Credit Parties, jointly and severally, agree to
indemnify each Holder, and its respective directors, officers, employees and
agents (each such Person being called an "Indemnitee") against, and to hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, charges and disbursements,
incurred by or asserted against any Indemnitee arising out of or in any way
connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Investment Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder or the consummation of the Transaction and the other
transactions contemplated thereby, (ii) the use of the proceeds of the
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investment, (iii) any claim, litigation investigation or proceeding relating to
any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv)
any actual or alleged presence or Release of Hazardous Materials on any property
owned or operated by the Credit Parties, or any Environmental Claim related in
any way to any Credit Party; provided that such indemnity shall not as to any
Indemnitee be available to the extent it resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) The provisions of this Section 9.5 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement the consummation of the transactions contemplated hereby, the
repayment of the Debentures, the invalidity or unenforceability of any term or
provision of this Agreement or any other Investment Document, or any
investigation made by or on behalf of the Holders. All amounts due under this
Section 9.5 shall be payable on written demand therefor.
SECTION 9.6 Waiver of Consequential and Punitive Damages. Each of the
Credit Parties and the Holders hereby waive to the fullest extent permitted by
law all claims to consequential and punitive damages in any lawsuit or other
legal action brought by any of them against any other of them in respect of any
claim among or between any of them arising under this Agreement, the other
Investment Documents, or any other agreement or agreements between or among any
of them at any time, including any such agreements, whether written or oral,
made or alleged to have been made at any time prior to the Closing Date, and all
agreements made hereafter or otherwise, and any and all claims arising under
common law or under any statute of any state or the United States of America,
including any thereof in contract, tort, strict liability or otherwise, whether
any such claims be now existing or hereafter arising, now known or unknown. In
making this waiver, the Holders and the Credit Parties acknowledge and agree
that there shall be no claims for consequential or punitive damages made by the
Holders against any Credit Party and there shall be no claims for consequential
or punitive damages made against the Holders by any Credit Party. The Holders
and the Credit Parties acknowledge and agree that this waiver of claims for
consequential damages and punitive damages is a material element of the
consideration for this Agreement.
SECTION 9.7 Applicable Law. THIS AGREEMENT AND THE OTHER INVESTMENT
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER INVESTMENT DOCUMENTS)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
MARYLAND (EXCLUDING CONFLICTS OF LAWS PROVISIONS).
SECTION 9.8 Waivers; Amendment.
(a) No failure or delay of a Holder in exercising any power or
right hereunder or under any other Investment Document shall operate as a waiver
thereof nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holders hereunder and under the
other Investment Documents are cumulative and are not exclusive of any rights or
remedies that it would otherwise have. No waiver of any provision of this
Agreement or any other Investment Document or consent to any departure by the
Credit Parties therefrom shall in any event be effective unless the same shall
be permitted by paragraph (b) below, and then such waiver or
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consent shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on the Credit Parties in any case shall entitle
the Credit Parties to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Holders.
SECTION 9.9 Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to the investment,
together with all fees, charges, warrants and other amounts which are treated as
interest on the investment under applicable law (collectively the "Charges"),
shall exceed the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by the Holders holding the
investment in accordance with applicable law, the rate of interest payable in
respect of the investment hereunder, together with all Charges payable in
respect thereof shall be limited to the Maximum Rate.
SECTION 9.10 Entire Agreement. This Agreement and the other Investment
Documents constitute the entire contract between the parties relative to the
subject matter hereof. Any other previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Investment Documents. Nothing in this Agreement or in the other Investment
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Investment Documents.
SECTION 9.11 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER INVESTMENT
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER INVESTMENT DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12 Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Investment Document
should be held invalid, illegal or unenforceable in any way, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties shall endeavor in good faith negotiations
to replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
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SECTION 9.13 Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together shall
constitute a single contract and shall become effective as provided in Section
9.3. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.
SECTION 9.14 Heading. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or to be taken into consideration in interpreting,
this Agreement.
SECTION 9.15 Jurisdiction; Consent to Service of Process.
(a) Each of the Credit Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Maryland State court or Federal court of the United States
of America sitting in the State of Maryland, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Investment Documents, or for recognition or enforcement
of any judgment and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in the State of Maryland or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Holders may otherwise have to bring any action or proceeding
relating to this Agreement or the other Investment Documents against such Credit
Party or their properties in the courts of any jurisdiction.
(b) Each of the Credit Parties hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit action or proceeding arising out of or relating to this Agreement or
the other Investment Documents in any Maryland state or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.1. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 9.16 Consents and Approvals; Defaults.
(a) Subject to the terms of Section 9.16(c), to the extent
that (i) the terms of this Agreement or any of the other Investment Documents
require the Borrowers to obtain the consent or approval of the Holders, (ii) any
Borrower seek an amendment to or termination of any of the terms of this
Agreement or any of the Investment Documents, or (iii) any Borrower seeks a
waiver of any right granted to the Holders under this Agreement or any of the
Investment Documents, such consent, approval, action, termination, amendment or
waiver (each, an
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"Approval") shall be made by the Holders of Debentures representing at least 51%
of the aggregate principal amount outstanding under all of the Debentures.
(b) Subject to the terms of Section 9.16(c), to the extent
that the terms of this Agreement or any of the other Investment Documents
require or permit the Holders to take any enforcement action, including but not
limited to declaring a payment default or other Event of Default or accelerating
amounts due under any of the Investment Documents, each Holder shall be
permitted to make such declaration or acceleration and to exercise all of its
rights and remedies under the Investment Documents individually as to the
obligations of the Company and its Subsidiaries to such Holder.
(c) Notwithstanding anything to the contrary contained in
Section 9.16(a) or 9.16(b), the Holders shall not, without the prior written
consent and approval of all of the affected Holders, amend, modify, terminate or
obtain a waiver of any provision of this Agreement or any of the Investment
Documents, which will have the effect of (i) reducing the principal amount of
any Debentures or of any payment required to be made to the Holders hereunder,
or modifying the terms of a payment or prepayment thereof; (ii) reducing the
Interest Rate, or extend the time for payment of interest under any Debentures;
or (iii) releasing any Credit Party or other obligor from any obligation under
this Agreement or any of the other Investment Documents.
(d) Each Holder agrees that, for the benefit of the other
Holders, any proceeds received upon enforcement by such Holder of its rights and
remedies under this Agreement, will be divided, pro rata, among all Holders.
SECTION 9.17 Relationship of the Parties; Advice of Counsel. This
Agreement provides for the making of an investment by the Holders, in its
capacity as an investor, in the Borrowers, in their capacity as borrowers, and
for the payment of interest and repayment of principal by the Borrowers to the
Holders. The provisions herein for compliance with financial covenants, if any,
and delivery of financial statements are intended solely for the benefit of the
Holders to protect their interests as investors in assuring payments of interest
and repayment of principal, and nothing contained in this Agreement shall be
construed as permitting or obligating the Holders to act as a financial or
business advisor or consultant to the Company, as permitting or obligating the
Holders to control the Company or to conduct the Company's operations, as
creating any fiduciary obligation on the part of the Holders to the Company's,
or as creating any joint venture, agency or other relationship between the
parties other than as explicitly and specifically stated in this Agreement. The
Holders are not (and shall not be construed as) a partner, joint venturer,
alter-ego, manager, controlling person, operator or other business participant
of any kind of the Company; neither the Holders nor the Borrowers intend that
the Holders assume such status, and, accordingly, the Holders shall not be
deemed responsible for (or a participant in) any acts or omissions of the
Company or any of its partners. Each of the Holders and the Borrowers represent
and warrant to the other that it has had the advice of experienced counsel of
its own choosing in connection with the negotiation and execution of this
Agreement and with respect to all matters contained herein.
SECTION 9.18 Regulation FD. Each of the Holders agrees to maintain the
confidentiality of all Information (as defined below) and to refrain from
trading shares of any class of the Capital Stock of the Company while in
possession of any material Information, in
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each case so long as such information is not publicly available, except that
Information may be disclosed (a) to its directors, officers, employees and
agents, including accountants, legal counsel and other advisors (limited, in the
case of outside directors, agents, accountants, legal counsel and other
advisors, to those who expressly agree to keep all such Information
confidential) (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential and to refrain from trading the
Capital Stock of the Company while in possession of any material Information),
(b) to the extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (e) to any permitted transferee of any of its rights or
obligations under this Agreement who becomes a party to this Agreement; or (f)
with the consent of the Company, as applicable. For the purposes of this
Section, "Information" means all non-public information received from the
Company, or its Subsidiaries relating to the Company or its Subsidiaries or
their business.
SECTION 9.19 Registration and Transfer of Debentures.
(a) The Company will keep at its principal office a register
in which the Borrowers will provide for the registration of the Debentures and
their transfer. The Borrowers may treat any Person in whose name any Debenture
is registered on such register as the owner thereof for the purpose of receiving
payment of the principal of and interest on such Debenture and for all other
purposes, whether or not such Debenture shall be overdue, and the Borrowers
shall not be affected by any notice to the contrary from any Person other than
the applicable Holder. All references in this Agreement to a "Holder" of any
Debenture shall mean the Person in whose name such Debenture is at the time
registered on such register.
(b) Upon surrender of any Debenture for registration of
transfer or for exchange to the Company at its principal office, the Borrowers
at their expense will execute and deliver in exchange therefor a new Debenture
or Debentures, as the case may be, of the same type in denominations of at least
$100,000 (except a Debenture may be issued in a lesser principal amount if the
unpaid principal amount of the surrendered Debenture is not evenly divisible by,
or is less than, $100,000), as requested by the holder or transferee, which
aggregate the unpaid principal amount of such Debenture, registered as such
holder or transferee may request, dated so that there will be no loss of
interest on such surrendered Debenture and otherwise of like tenor.
(c) Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of any Debenture and, in
the case of any such loss, theft or destruction of any Debenture, upon delivery
of an indemnity bond in such reasonable amount as the Company may determine (or
an unsecured indemnity agreement from the Holder reasonably satisfactory to the
Company), or, in the case of any such mutilation, upon the surrender of such
Debenture for cancellation to the Company at its principal office, the Borrowers
at their expense will execute and deliver, in lieu thereof, a new Debenture of
the same class and of like tenor, dated so that there will be no loss of
interest on (and registered in the name of the holder of) such lost, stolen,
destroyed or mutilated Debenture. Any Debenture in lieu of which any such new
Debenture has been so executed and delivered by the Borrowers shall be deemed to
be not outstanding for any purpose of this Agreement.
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SECTION 9.20 No Shorting Provisions.
(a) Until the Debentures held by a Holder are repaid in full,
neither the Holder nor any of its Affiliates shall, directly or indirectly,
engage in, or advise, encourage or knowingly assist any third party to engage
in, any practice that would commonly be understood to constitute a short sale of
the Company's Common Stock. Without limiting the generality of the foregoing,
neither the Holder nor any of its Affiliates shall (i) sell shares of the
Company's Common Stock that the Holder or such Affiliate does not own,
consummate a sale of the Company's Common Stock with shares borrowed by or for
the account of the Holder of such Affiliate or otherwise hold a net short
position in shares of the Company's Common Stock or (ii) lend shares of the
Company's Common Stock to short sellers.
(b) Nothing in Section 9.20(a) shall limit any Holder or its
Affiliates from engaging in bona fide cap or collar transactions on shares of
the Company's Common Stock owned by such Holder or such Affiliate or from
selling its shares of the Company's Common Stock to the highest bidder in a
public or private transaction.
{Signatures next page}
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
COMPANY:
BLUE RHINO CORPORATION
By:/s/ Billy D. Prim (SEAL)
---------------------------------------
Name: Billy D. Prim
Title: President and Chief
Executive Officer
OTHER BORROWERS:
USA LEASING, L.L.C.
By: Blue Rhino Corporation, as Manager
By:/s/ Billy D. Prim (SEAL)
---------------------------------------
Name: Billy D. Prim
Title: President and Chief
Executive Officer
RHINO SERVICES, L.L.C.
By: Blue Rhino Corporation, as Manager
By:/s/ Billy D. Prim (SEAL)
---------------------------------------
Name: Billy D. Prim
Title: President and Chief
Executive Officer
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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ALLIED:
ALLIED CAPITAL CORPORATION
By:/s/ Thomas H. Westbrook (SEAL)
---------------------------------------
Name: Thomas H. Westbrook
Title: Managing Director
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